Aircraft Manufacturer Project Management Case Study

Background Information

Murasaki Aircraft Corporation (MAC) is an organization that is based out of Japan. The company is majorly involved in the production of regional jets and is a prime supplier of aircraft wings for Boeing 787.  The aim of the company is to launch lightweight aircrafts and has analyzed the functions and business operations of Airbus A380 and Boeing 787 Dreamliner. The analysis is done to have an understanding of the major issues and risks that shall be identified in advance. The analysis is done on the two case studies and the procedures followed in each. The primary cases behind failures, understanding of the major risk areas, lessons acquired, and recommendations have been provided.

Murasaki Heavy Industries (MHI), Toyota Motor Corporation, Mitsubishi Corporation are the primary shareholders of the company with 64%, 10%, and 10% shares respectively. The other shareholders include Mitsui & Co. and Sumitomo Corporation.

During the project lifecycle, MAC will be the primary decision-maker. MHI will be major supplier of aircraft wings and necessary equipment. MHI will be actively involved in the process of defining the policies and strategies. Mitsubishi Corporation and Sumitomo Corporation will provide regional support and technical assistance respectively.  

Airbus A380 was started in 2007 and the first take off were from Singapore to Sydney. One year later, there was an additional route added that covered Melbourne to Los Angeles.  There are several leading market players associated with the company as its clients, such as Emirates, Air France, Lufthansa, and many more. There were certain issues that the company experienced in the areas of production and delivery.

The company worked on the idea of launching a triple decker aircraft, first of its kind. The overall capacity would have been 1405 comprising of 850 economy and 555 separate seating spacing. The project aimed to include several advanced facilities covering beauty salons, bars, and many more. The cost of the project was determined as $347m covering all the costs (Bbc, 2012).

• Poor Risk & Issues Management: The risk and issue avoidance approach followed and applied in the project was not up to the mark.
• Non-Realistic Expectations: The initial launch date of the project was set up as 2006 with initiation in 2000. It takes at least 5 years for a normal aircraft to be launched. In this case, there were new and unexplored functionalities and services involved that demanded increased timeframe. The expectations that were set were not relevant (Freimuth, 2016).
• Project Conflicts: There were conflicts among the engineers and the project management team. The management was willing to adopt and implement 3D models while the engineers supported the use of 2D models. Due to these conflicts, the engineers showed resistance which negatively impacted their productivity levels. The company management made use of Catia and Circe software packages that were not supported by the operational staff and engineers.  
• Errors in calculations: Wire installation process witnessed several errors which contributed in the overrun of schedule and also added to the project complexities.
• Communication Gaps: The Company has 16 operational units in different geographical locations. Integration and active communication of all the units and their respective staff members was necessary and the strategy of re-structuring and re-location was adopted. It further impacted the project team which led to the emergence of ownership disputes.
• Design complexities: Consistency issues and design complexities were associated with the project. For instance, Hamburg plant made use of outdated Catia version whereas Toulouse plant incorporated updated version. As a result, incompatibility of the results came up.

• The nature of issues involved in the failure of a project may be technical issues or others. It is not certain that the projects always fail because of technical complexities and errors. It needs to be ensured that integrated handling of the project is done and the role of management is active to avoid issues under any category (Dorfler & Baumann, 2014).
• The work culture and organization structure has a direct implication on the levels of employee productivity and performance. It must be ensured that the work environment is employee-friendly.
• There are specific requirements of the project in terms of the material and tools that are needed. The requirements shall be handled in advance and the environments needed for executing the project activities must be ready for the employees prior to the initiation of the project (Shore, 2009).
• The project expectations must be set as per the project attributes and properties. For this purpose, enhanced level of planning shall be carried out and all the team members must be involved in the process. The project planning must be done for all the project areas well in advance (Rochfort, 2006).

Boeing came up with the Dreamliner in 2003. The design and technique associated with the project was advanced and the use of composite material was done in the same. The project was a success and achieved to enhance the fuel efficiency by 20%. Maintenance costs also decreased with the release of the aircraft and the organization received the order of 500 aircrafts soon after the launch.  

In spite of the successful results and outcomes, the project was a failure from the aspect of project management. It is because there was overrun of schedule and budget along with decrease in revenues and customer base that was experienced. The delay in the launch was 3 years which had an impact on the project costs.

Project Management Lifecycle

The problems were detected in early 2007 which resulted in an initial overrun of the schedule by six months. In order to tackle the issue, the company incorporated additional number of resources to manage the problems and issues. However, the issue could be resolved in 3 years and the launch took place in 2009. The initial sets of problems were witnessed in the year 2007 that led to a delay of six months. Following are some of the reasons that led to the emergence of the issue.

• Supply chain issues: There were less number of fasteners required by the engineers and members of the project team. The suppliers were wishing to target the larger orders and did not show high levels of interest in the deliveries. It led to the delay in delivery of the fasteners which impacted the project schedule. There were also poor training mechanisms involved and the resources were not adequately trained. It resulted in the increased amount of re-work which had a negative impact on the cost and time (Tang & Zimmerman, 2009).
• Outsourcing Complexities: There was a lot of outsourcing involved in the execution of manufacturing tasks and only a handful of activities were executed in-house. Boeing gave shape to the activities that were specific to general designs and assemblies. However a major portion of the activities were outsourced to the vendors as Alenia Aeronautica, Spirit AeroSystems, and many others. These vendors also outsourced the tasks to their supplier groups and the cycle went on. It led to difficulties in tracking the supplies and only 16% of the overall delivery could be made by the end of first supply of the aircraft (Baker, 2013). Many of the technical errors and design issues were reported which led to the loss of effort, time, and costs. For example, Crane delivered a brake controlling system that was not in adherence to the defined standards and a loss of $18.9 million was witnessed (Elahi, Sheikhzadeh & Lamba, 2012).
• High Development Costs: There were high development costs associated with the project that resulted in the inability to control the costs in the advanced lifecycle.
• Lack of competency: Boeing decided to play the role of the system integrator and it was not the strongest area of expertise. The Dreamliner project was also new and there were areas that were not previously explored. The multi-layered outsourcing model was associated that further enhanced the number of complexities. The absence of required skills and experience levels led to the compromise of the performance and outcomes (Mseitif, 2014).

• It is necessary for the organization to define and work upon their core skill sets. The roles and responsibilities shall be allotted as per the matching skill sets. The failure to do so may result in the compromise of the productivity levels which may enhance the likelihood of the risks (Denning, 2013).
• It is best to utilize in-house capabilities to a larger share of business operations. The use of such an approach eliminates the complexities that may be involved (Amalraj, 2007).
• It is necessary for the management to remain involved in the monitoring and control phases so that the audits and inspections can be given shape accordingly.
• There shall be a tracking system involved in the process of outsourcing to avoid the performance and execution issues.

• MAC shall ensure that integrated handling of the project is done and the role of management is active to avoid issues under any category. The management must carry out reviews, audits, and inspections at the regular intervals to tackle any issues on a real-time basis (Shariff, 2013).
• Gaining of buy-in will prove to be beneficial for the project and the organization as a whole. The internal and external stakeholders shall be made aware about additional responsibilities to handle the process. Also, they must be explained the benefits associated with the decision to maintain the motivation and engagement.
• Training is one of the most significant activities that MAC shall include in its architecture. The training activities shall be given shape to enhance the skill sets and competencies of the employees (Newton, 2015).
• There shall be use and implementation of iterative & adaptive methods so that the outcomes are in accordance with the project requirements. The use of iterations will ensure that short-term goals are defined that are easy to carry out. There will also be customer interactions involved which would enhance the overall quality and will make it easier to improve upon the results. The scalability and flexibility will also improve (Csbdu, 2004).
• The selection of the supplier groups shall be done as per the needs assessment and the results on the market analysis. The suppliers shall be made aware of the contractual norms and agreements along with the terms of services in the legal document. The legal contract must be signed by both the parties.
• There must be in-depth information collection processes executed so that the requirements that are collected are real and in accordance with the defined standards. Also, the data sources must be explored to make sure that the relevant data sets are collected for the project (Bilkent, 2010).
• The risk and issue avoidance approach followed and applied in the project was not up to the mark in Airbus and Boeing that led to negative implication (Crane, 2013). MAC shall adopt a risk management strategy in accordance with the management methodologies.

Conclusions

The report covered the reasons of failure for Airbus and Boeing projects and included the measures to be taken by MAC to avoid the same set of problems. In case of Airbus, there were new and unexplored functionalities and services involved that demanded increased timeframe. Wire installation process witnessed several errors which contributed in the overrun of schedule and also added to the project complexities. Communication gaps, design complexities, and non-realistic expectations were also involved. In the case of Boeing, there were also poor training mechanisms involved and the resources were not adequately trained. The vendors outsourced the tasks to their supplier groups and the cycle went on. It led to difficulties in tracking the supplies and the complexities also increased. The multi-layered outsourcing model was associated that further enhanced the number of complexities. MAC shall ensure that integrated handling of the project is done and the role of management is active to avoid issues under any category. The management must carry out reviews, audits, and inspections at the regular intervals to tackle any issues on a real-time basis. There must also be enhanced planning and analysis involved to make sure that the successful results are achieved.

References

Amalraj, J. (2007). Project Management: Challenges & Lessons Learned. Retrieved 11 October 2018, from https://www.beg.utexas.edu/energyecon/ua_2007/AB_Project_Mgt_challenges.pdf

Baker, M. (2013). Boeing 787-8 Design, Certification, And Manufacturing Systems Review. Faa.gov. Retrieved 11 October 2018, from https://www.faa.gov/about/plans_reports/media/787_Report_Final.pdf

Bbc. (2012). Factfile: Airbus A380. BBC News. Retrieved 11 October 2018, from https://www.bbc.com/news/uk-11693164

Bilkent. (2010). A Guide to the Project Management Body of Knowledge. Cs.bilkent.edu.tr. Retrieved 11 October 2018, from https://www.cs.bilkent.edu.tr/~cagatay/cs413/PMBOK.pdf

Crane, L. (2013). Introduction to Risk Management. Extensionrme.org. Retrieved 11 October 2018, from https://extensionrme.org/pubs/IntroductionToRiskManagement.pdf

Csbdu. (2004). A Guide to the Project Management Body of Knowledge. Retrieved 11 October 2018, from https://www.csbdu.in/csbdu-old/pdf/A%20Guide%20to%20the%20Project%20Management%20Body%20of%20Knowledge.pdf

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Dorfler, I., & Baumann, O. (2014). Learning from a Drastic Failure: The Case of the Airbus A380 Program. Taylor & Francis. Retrieved 11 October 2018, from https://www.tandfonline.com/doi/abs/10.1080/13662716.2014.910891

Elahi, E., Sheikhzadeh, M., & Lamba, N. (2012). “An Integrated Outsourcing Framework: Analyzing Boeing’s Outsourcing Program for Dreamliner (B787). Scholarworks.umb.edu. Retrieved 11 October 2018, from https://scholarworks.umb.edu/msis_faculty_pubs/26/

Freimuth, D. (2016). Financial evaluation of the Airbus A380 Neo program. Brage.bibsys.no. Retrieved 11 October 2018, from https://brage.bibsys.no/xmlui/bitstream/handle/11250/2442498/MSc0152016.pdf?sequence=1

Mseitif, J. (2014). Boeing’s Behavior in a Liberalized Marketplace: The 787 Dreamliner Project and Impact on Puget Sound Workers. Digital.lib.washington.edu. Retrieved 11 October 2018, from https://digital.lib.washington.edu/researchworks/bitstream/handle/1773/26912/Mseitif_washington_0250O_13381.pdf;sequence=1

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Rochfort, S. (2006). Delay issues cloud A380 visit – Business – Business – smh.com.au. Smh.com.au. Retrieved 11 October 2018, from https://www.smh.com.au/news/business/delay-issues-cloud-a380-visit/2006/11/28/1164476179330.html

Shariff, S. (2013). Assessment of Project Management Skills and Learning Outcomes in Students’ Projects. Retrieved 11 October 2018, from https://www.sciencedirect.com/science/article/pii/S1877042813020363/pdf?md5=16f498b0203d44eb0bb95f5b83d90b6f&pid=1-s2.0-S1877042813020363-main.pdf

Shore, B. (2009). Airbus A380 – Project Failure Lessons Learned. Globalprojectstrategy.com. Retrieved 11 October 2018, from https://globalprojectstrategy.com/lessons/case.php?id=23

Tang, C., & Zimmerman, J. (2009). Managing New Product Development and Supply Chain Risks: The Boeing 787 Case. Retrieved 11 October 2018, from https://eng.umd.edu/~austin/ense622.d/lecture-resources/Boeing787-Outsourcing2009.pdf