systematic biases and culture in project failures instructor: dr. celeste ng student number: (pm)...

Systematic Biases and Culture in Project Failures

Instructor: Dr. Celeste NgStudent Number:

(PM) 941637 周士為 941621 江秉憲 941622 黃政明 941627 張書銘 941634 黃峻亨 941635 吳宜憲 941405 戴志宇 967321 蔣欣燕 

Table of Contents Purpose Influences of Project Outcome Methodology Case Study

Airbus 380 Coast Guard Maritime Domain Awareness Project Columbia Shuttle Denver Baggage Handling Mars Climate Orbiter and Mars Polar Lander Merck Vioxx Microsoft Xbox 360 NYC Police Communications System

Conclusion

941637 周士為

Purpose

To understand how cultures can create an environment in which systematic biases would be occurred naturally.

Not only can through studying the systematic biases help us to know about a failure project easily but also helping us to prevent failures from occurring in the future.

Why do Projects Fail?

Failures occur despite what we have improved on any process related to projects.

Failures can be attributed to management and decision-making process.

“Espoused theory” of organizations. “Theory-in-practice” of organizations.

The Influences of Project Outcome

Methodology The first step is to identify and define the

systematic biases as followed:

Data collection

From public & government 8 cases study 9 systematic biases 22 business professionals divided into 5

groups Using a modified Delphi Method

Methodology (cont.)

The second step of the this article, the following project failures are briefly summarized: Airbus 380 Coast Guard Maritime Domain Awareness Project Columbia Shuttle Denver Baggage Handling Mars Climate Orbiter and Mars Polar Lander Merck Vioxx Microsoft Xbox 360 NYC Police Communications System

Airbus A380 Founded in 1970 Consortium of 16

independent companies with facilities in France, Germany, Britain, and Spain

A380 project- in 2000 Goal: a 800 passengers

superjumbo jet Problem

versions of CATIA designed for wiring harness were incompatible (software)

the ability to share design specifications was compromised (hardware)

967321 蔣欣燕

Airbus A380 (cont.) Result

wiring failed to fit halt production postpone deliveries of the

aircraft for two years redesign the wiring system cost expected to exceed $6

billion placed the program two years

behind schedule Stock lost one-third of its value Co-president was accused

Airbus A380 (cont.)

Reasons of project failure

failed to transform itself (balkanized organization integrated company)

Managers made political rather than economic decisions

Systematic biases?

Available data

1. Management at each of the plants was limited to the data that was available to them.

2. Thereby concluded that the project was meeting its local objectives. From their perspective, they were on schedule and within budget.

Groupthink

1. Insular nature of the separate organizations created a limited communication project culture.

2. A breeding ground for groupthink.

3. Many of the practices and procedures within these organizational units went unchallenged.

Illusion of Control

1. Management at the central facilities in Toulouse initially envisioned a centralized organization with some control over its divisions.

2. The inability of these divisions to use the same version of CATIA suggested that this transition was far from effective.

Selective Perception

1. Selective perception occurs when a problem is viewed from a limited or narrow frame.• Organization was unable to

move toward an integrated enterprise

• Top managers acted to protect their former constituents, unaware that incompatible software would jeopardize the project.

Coast Guard Marine

In 2001 ,the U.S. Department of Homeland Security and the U.S. Coast Guard undertook a project that promised to create the maritime equivalent of an air traffic control system.

It combine long-rang e surveillance cameras, radar systems, and information technology to automatically identify vessels as they entered U.S.

It span 24 federal agencies responsible for the protection of water-ways and coast s

941634 黃峻亨

Coast Guard Marine (cont.)

Phase One in Port of Miami In the first phase of the project a complete surveillance

system, called Project Hawkeye, was to be developed and implemented for the port of Miami.

It would track larger vessels with radar and smaller vessels, even jet skis, using infrared cameras. Finally, a software system would process the data to determine which vessels posed a security threat and deserved closer scrutiny.

Coast Guard Marine (cont.)

System Fails First Test The cameras were ineffective in tracking the small boats,

the radar system proved unreliable when it incorrectly identified waves as boats, the Automated Identification System used for large boats failed to meet its objectives, and the software systems, needed to make sense out of these data, had yet to be installed.

While some data from the system was available to the Coast Guard, they were unable use it.

Each separate agency focused only on its immediate task, with apparently little effort directed at integrating their role

with that of others.

Each separate agency focused only on its immediate task, with apparently little effort directed at integrating their role

with that of others.

Selective perception

Selective perception

This was especially evident when federal, state, and local agencies were unable to coordinate their efforts in responding to the Katrina hurricane disaster of 2005.

Illusion of control

These leaders assumed that they had control over the agencies and subcontractors, when in fact they did not.

Illusion of control

Control issues should have been resolved before the project was undertaken, not after.

Merck Vioxx In 2000, the New England Journal of

Medicine published an article suggesting that Merck misrepresented clinical trial data on the risks of Vioxx

Journal of the America Medical Association, published a paper in 2001 finding that those who took Vioxx were more than five times more likely to experience a cardiac event

Merck denied these claims, insisting the findings were “flawed”. Then revised the Vioxx label in 2002 to reflect these added risks

Merck Vioxx (cont.)

On September 30, 2004, after 84 million people had taken the drug, and after three years of denying the drug could induce heart attacks and stroke, it was pulled from the shelves.

The legal consequences were significant. Over 27000 claims incriminating data were withheld during the FDA review process.

Merck Vioxx (cont.)

New Jersey jury ruled unanimously in March 2007 that Merck committed consumer fraud by intentionally suppressing, concealing, or omitting information on the risks of Vioxx.

Merck proposed an out-of-court settlement to the remaining complainant at a cost of over $5 billion

Sunk cost

Financial pressuresThe average cost to bring a drug to market exceeds $1 billion. As drug trials proceeded from animal to human trials and eventually to FDA review, it was not unreasonable to conclude with the project increased as investment increased.

Sunk cost

After incurring nearly $1 billion to develop the drug, after generating $2.5 billion in sales during 2003, it was not difficult to understand why the company resisted pressure to remove Vioxx from the market.

Conservatism & Selective perception

Merck suppressed early data suggesting that the drug could have serious and sometimes tragic side effects.

Columbia Shuttle

On February 1, 2003, seven astronauts perished when the shuttle disintegrated as it re-entered the earth’s atmosphere.

During launch, a piece of foam insulation broke away from the propellant tank and struck its left edge.

941405 戴志宇

Seven astronauts

Problem

Is it just the technology problem?

Columbia Accident Investigation Board(CAIB) said there are some problem in NASA’s culture and politics.

NASA’s culture : Better, Faster, and Cheaper.

Recency effect

Foam insulation also broke away on previous flights and caused no harm.

NASA thought the break of foam insulation was not a problem that have to revise.

Conservatism

The data from pervious flights was ignored by senior managers.

They failed to revise their belief that the system was operating properly.

Overconfidence

After foam striking, engineers concerned that it may cause some problems and request satellite imagery of the spacecraft.

Managers was too confident that there was no safety issue and did not authorize.

Overconfidence (cont.)

If they authorized satellite imagery, the damage will be discovered.

Astronauts can fix it immediately and nobody will die.

Selective perception

Management of shuttle program had shifted from an engineering focus to a managerial focus.

Engineering problems were less likely to be recognized and more likely to be dominated by schedules an budgets.

Mars Climate Orbiter & Mars Polar Lander

• Mars climate orbiter – Between metric units and English units.– It was the failure of NASA`s systems engineering,and the

checks and balances in our processes to detect the error.

• Mars polar lander– The vehicle`s descent engines prematurely shut down.– The inappropriate respones of its engines was

attributed to software glitches.

• Culture– “Better,Faster,and Cheaper.”

941622 黃政明

Overconfidence

Inadequate robustness in processes,designs or operations,and

failure to heed early warnings.

Sunk Cost

With budgets unable to tolerate a substantial delay.However,it was important not to “waste”

the effort put into the project to that point.

Selective Perception

With countless activities,it is very possible that teams may

take a narrow view of their own activities.

Conservatism

Even as the data showed that it was drifting off

course,controllers largely ignored the real data and

assumed it was on course.

New York City Subway Communications System

Because of a radio network that keeps transit officers underground from talking with officers patrolling the streets above.

The new system is hobbled by widespread interference that garbles communication and creates areas where radios cannot receive properly.

Overconfidence

Project managers were apparently conviced that the proposed design

would work or that all problems could eventually be solved.

Conservatism

When the project managers failed to take the interference warning seriously enough to

change their plans early in the project.

Illusion of Control

That somehow they had enough control to assure a

successful outcome and believed that the vendor would take responsibility to solve the

problem.

Denver Baggage Handling

New Denver airport One of nation’s largest public project work

Baggage–handling System It’s very complex project in Denver The steps of Baggage handling flow is

complicated 4000 baggages carts traveling throughout the

airport under control of 100 computer Processing up to 1400 bags per minute

941635 吳宜憲

Time frame1993 Scheduled for completion

1995 Real completionAttend a demonstration but instead witnessed a public disaster

1996 Scaling back the scope of the baggage system and making necessary design changes Still have problemOnly United Airline use it

2005 The system was abandonedUnited Airline should be liable for 60 million per year for 25 years

Overconfidence

United Airline insisted that the airport have fancier baggage handling system which it contended would sharply reduce the delays

The prime contractor for the project declared that no one would turn down a $193 million contract

No one questioned whether it could be done

Sunk Cost

City of Denver and United Airlines had already incurred high costs and unwilling to disregard these past expenditures

Illusion of Control

Illusion of control is identified for its role on keeping the project alive too long

941627 張書銘

Xbox 360

Available on Market

Product Life Timeline

Nov. 2005

Xbox 360 (cont.)

Dec. 2006 Jul. 2007

Warranty prolong

Product Life Timeline

Xbox 360 (cont.)

Internet connection problem

Product Life Timeline

Xbox 360 (cont.)

Internet connection problem Ruin game disk, Power cord fire hazard

Product Life Timeline

Xbox 360 (cont.)

Red Ring of DeathInternet connection problem

Ruin game disk,Power cord fire hazard

Product Life Timeline

Red Ring of Death( 三紅 )

Normally cause in overheating whichwill deal unrecoverable damages to thegame console.

Xbox 360 (cont.)

Dec. 2006Warranty prolong, 90days → 1 yr

Red Ring of DeathInternet connection problem

Ruin game disk,Power cord fire hazard

Product Life Timeline

Xbox 360 (cont.)

Warranty prolong, 1yr → 3 yrsJul. 2007

Red Ring of DeathInternet connection problem

Ruin game disk,Power cord fire hazard

Product Life Timeline

Xbox 360

New chipsetDec. 2008Red Ring of Death

Internet connection problem

Ruin game disk,Power cord fire hazard

Product Life Timeline

Expecting cause $1 billion cost.└Every defect console cost $100.

Top gaming executive of Microsoft left the company.

Game Consoles Announce Time

Xbox 360Nov. 2005

SonyP.S. 3

Nov. 2006

NintendoWii

Dec. 2006

Game Consoles Announce Time

Xbox 360Nov. 2005

P.S. 3Nov. 2006

WiiDec. 2006

First mover advantage

1 year

Conservatism

Sell a product with many flaws known by

Microsoft. And unwilling to acknowledge problems.

Xbox 360 (cont.)

Dec. 2006Warranty prolong, 90days → 1 yr

Red Ring of DeathInternet connection problem

Ruin game disk,Power cord fire hazard

Product Life Timeline

About 11 months

Groupthink

A big organization, but no one stop this.

They got collective myth.

Sunk cost trap

Developing, recalling, advertisement,

etc costs influence decisions they make.

Discussion 941621 江秉憲

Culture does affect outcome

Organizational factors explain about twice as much of the variance in profit as do economic factors. (Hansen & Wernerfelth, 1989)

Culture may be a significant factor in project failure. (Ajmal & Koskinen, 2008)

A significant role of the project manager is to merge several different organizational and professional cultures into one project culture.

Biases vs CVM

Summary

The objective of this article has been to determine if bringing these two traditions together could prove useful in learning more about project failures and then in understanding how culture may provide the environment within which there biases may emerge.

A logical strategy for some organizations would be to change management practices, which in turn may set into motion events that may minimize the emergence of systematic biases.

EX. Boeing777 & Merck

Conclusion

The real objective of this study was not to conclusively relate specific systematic biases to project failure.

Providing insight into why projects fail. Understanding how project culture may

inadvertently create an environment within which these very natural biases emerge.