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Unformatted text preview: Acme Corporation
Acme Corporation embarked upon an optimistic project to develop a new product for the
marketplace. Acme's scientific community made a technical breakthrough and now the
project appears to be in development rather than pure or applied research.
The product is considered to be high tech. If the product can be launched within the next
four months, Acme expects to dominate the market for at least a year or so until the
competition catches up. Marketing has stated that the product must sell for not more than
$100 to $120 per unit to be the cost-focused market leader.
Acme uses a new product development (NPD) project management model consisting of five
life cycle stages: 1.
Production At the end of each life cycle stage a gate or phase review meeting is held with Dan Jones,
the project sponsor and other appropriate stakeholders. Gate review meetings are formal
meetings. The company has demonstrated success following this methodology for
INITIAL PHASE REVIEW MEETING
At the end of the first life cycle stage of this project (detailed planning), a meeting is held
between Jones and Harry Sanders, the project manager. The purpose of the meeting is to
review the detailed plan and identify any future problem areas that will require involvement
by Jones. The meeting proceeded as follows:
Jones: "I simply do not understand this document you sent me entitled Risk Management
Plan. All I see is a work breakdown structure with work packages at level 5 of the WBS
accompanied by over 100 risk events. Why am I looking at more than 100 risk events?
Furthermore, they're not categorized in any manner. Doesn't our project management
methodology provide any guidance on how to do this?"
Sanders: "All of these risk events can and will impact the design of the final product. We
must be sure we select the right design at the lowest risk. Unfortunately, our project
management methodology does not include any provisions or guidance on how to develop
a risk management plan. Perhaps it should."
Jones: "I see no reason for an in-depth analysis of 100 or so risk events. That's too many.
Where are the probabilities and expected outcomes or damages?"
Sanders: "My team will not be assigning probabilities or damages until we get closer to
prototype development. Some of these risk events may go away altogether." 1 Acme Corporation
Jones: "Why spend all of this time and money on risk identification if the risks can go away
next month? You've spent too much money doing this. If you spend the same amount of
money on all of the risk management steps, then we'll be way over budget."
Sanders: "We haven't looked at the other risk management steps yet, but I believe all of the
remaining steps will require less than 10 % of the budget we used for risk identification.
We'll stay on budget."
1. Was the document given to Jones an effective risk management plan? Why or why not?
2. Was the appropriate amount of time and money spent identifying the risk events? What
improvements would you make?
3. What are your thoughts on Sanders' statement that he must wait until the prototyping
phase to assign probabilities and outcomes? 2 ...
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This note was uploaded on 03/01/2010 for the course IE 5555 taught by Professor Aabb during the Spring '10 term at Minnesota.
- Spring '10