CASE STUDY

In 2001, Senior Project Manager Pat was working for a power company, Frenon Power Company (FPC), based in Minneapolis, that
serviced a large customer base in Minnesota and surrounding areas in bordering states. All of their service maps were contained in
thousands of paper files, housed in large drawer files in their Minneapolis office. As technology capabilities began to grow and the
capability of digitizing all of these maps began to emerge, Pat was asked to take on a project to look at vendor options for digitizing the
maps, then using digitized maps in the field for locating service areas and updating the maps in real time.

Pat began working on this project as a three phased project.

Phase 1 – Put out a Request for proposal (RFP), select a vendor, and provide a proposal to company executives on cost and timeline to
complete the project. The final milestone for phase 1 was to gain approval to move forward with the project. The estimated time for this
phase was 3 months. Estimated budget for this phase was $100k.

Phase 2 – Purchase software, define business requirements, then work with the vendor to develop functional specifications and user
experience design. The final milestone for phase 2 was user buy-in for the functional specification and design. The estimated timeline for
this phase was 6 months. Estimated budget for this phase was $1.7 million.

Phase 3 – Implement and test the software, digitize the maps, and train the end users. The final milestone for the 3rd phase was to gain
user and sponsor sign-off on the final, working application. The estimated timeline for this phase was 9 months. Estimated budget for
this phase was $1.1 million.

Phase 1
The project began on time and started out successfully. After supplying a strong cost-benefit analysis based on a request from the
executives, the sponsor and executives approved the project. After reviewing the RFP responses, it was determined that the software
was not fully developed or functional although this was the case from every vendor. The technology around document digitization was
still in its infancy although there was great promise of a pending breakthrough in technological capability that would facilitate this
development on time with the project plan. It was decided that FPC would pay the vendor for time and materials instead of a fixed price
as the software was being developed. This was noted as a significant risk for this project but approved by the stakeholders. Phase 1 was
completed on time and on budget.

Phase 2
Even though payment was for time and materials during software development, the second phase started with a strong confidence in
the vendor’s ability to deliver the software as expected. The project manager traveled frequently to the vendor site in Denver Colorado,
sitting in planning meetings with developers to review the business requirements, functional specifications, and UX design. As phase 2
progressed, there seemed to be a lack of progress in the development and the PM began to suspect that the vendor was struggling with
the technology.

Meanwhile, the PM was meeting with the project sponsor, executives and other business stakeholders and consistently being told how
much the business needed this software. It was also clearly stated that because this was a highly regulated business, there had to be
strong justification for the project in order to recoup the funds from power rates. The PM struggled with how much to tell the sponsor
and executives about the growing uneasiness over the viability of the software. On one hand blowing the whistle too soon and then
seeing the product materialize and come together in the end, could end up with the sponsor and executives losing faith in the PMs ability
to run a project well. On the other hand, not blowing the whistle could have devastating impact on the PM’s career if the project was a
total failure.

About halfway through the 2nd phase, the PM did a deep analysis, looking at how much money had been spent to date, about $1 million,
then comparing with the stage of development and what functionality was or was not being realized as development started to take
shape. The software was about 10% developed even though early estimates indicated the project should be about 50% complete based
upon what was already spent. The PM used this analysis to develop a confidence level for the project at that moment. The confidence
level was very low that the project would realize even half of the desired outcomes of the project based on the findings in the
development process about the lack of maturity of the technology.

The dilemma for the PM at this point was whether or not to go to the executive team and recommend stopping the project after $1
million had already been spent. The PM knew the sponsor and executives would not be happy about this recommendation, possibly even
resulting in the PM being fired.
Case Study Project Estimates
Assumptions Average hourly cost used for budget purposes $45
There may be multiple positions per role, depending on need, except for the PM

Project Hours Project Cost

Phase 1 RFP & Project Proposal
PM Analyst Super User
Develop RFP 200 400 200 $36,000
Vendor Selection 160 320 300 $35,100
Executive Proposal 80 160 80 $14,400
Gain Approvals 80 160 80 $14,400
Phase1 TOTAL 520 $99,900

Phase 2 Software purchase, Project Hours Project Cost

business requirements, and UX
design
PM Analyst Super User
Purchase Software $1,500,000
Business Requirements 400 1800 1800 $180,000
Functional Specification 140 140 140 $18,900
UX Design 340 440 440 $54,900
Sign-off 160 40 40 $10,800
Phase 2 TOTAL 1040 $1,764,600
Phase 3 Software
Implementation, load maps, Project Hours Project Cost
train users
PM Analyst Super User
Implement SW 480 2400 2400 $237,600
Test SW 240 1500 1500 $145,800
Digitize Maps 240 3600 3600 $334,800
Train End Users 320 1800 2400 $203,400
User Sign-off 160 1500 1500 $142,200
Sponsor Sign-off 40 80 60 $8,100
User Sign-off 80 800 800 $75,600
Phase 3 TOTAL 1560 $1,147,500
TOTAL PROJECT COST $3,012,000