CASE STUDY: THE BLUE SPIDER PROJECT
“This is impossible! Just totally impossible! Ten months ago I was sitting on top of
the world. Upper-level management considered me one of the best, if not the best
engineer in the plant. Now look at me! I have bags under my eyes, I haven’t slept
soundly in the last six months, and here I am, cleaning out my desk. I’m sure glad
they gave me back my old job in engineering. I guess I could have saved myself a lot
of grief and aggravation had I not accepted the promotion to project manager.”
History
Gary Anderson had accepted a position with Parks Corporation right out of college.
With a PhD in mechanical engineering, Gary was ready to solve the world’s most
traumatic problems. At first, Parks Corporation offered Gary little opportunity to do
pure research, which he eagerly wanted to undertake. However, things soon
changed. Parks grew into a major electronics and structural design corporation
during the big boom of the late fifties and early sixties when the Department of
Defence (DoD) contracts were plentiful.
Parks Corporation grew from a handful of engineers to a major DoD contractor,
employing some 6,500 people. During the recession of the late sixties, money
became scarce and major layoffs resulted in lowering the employment level to 2,200
employees. At that time, Parks decided to get out of the RD business and compete
as a low-cost production facility while maintaining ane engineering organisation
solely to support production requirements.
After attempts at virtually every project management organisational structure, Parks
Corporation selected the matrix form. Each project had a program manager who
reported to the director of program management. Each project also maintained an
assistant project manager, normally a project engineer, who reported directly to the
project manager and indirectly to the director of engineering. Program managers
spent most of their time worrying about cost and time, whereas the assistant program
managers worried more about technical performance.
With the poor job market for engineers, Gary and his colleagues began taking
coursework towards an MBA degree, should the job market deteriorate further.
In 1975, with the upturn in DoD spending, Parks had to change its corporate strategy.
Parks had spent the last seven years bidding on the production phase of large
programs. But now, with the new evaluation criteria set forth for contract award,
those companies winning the R&D and qualification phases had a definite edge on
being awarded the production contract. The production contract was where the big
profits could be found. In keeping with this new strategy, Parks began to beef up its
R&D engineering staff. By 1978, Parks had increased in size to 2,700 employees.
The increase was mostly in engineering. Experienced R&D personnel were difficult
to find for the salaries that Parks was offering. Parks was, however, able to lure
some employees away from the competitors, but relied mostly upon the younger,
inexperienced engineers fresh out of college.
CASE STUDY: THE BLUE SPIDER PROJECT
1
With the adoption of this corporate strategy, Parks Corporation administered a new
wage and salary program that included job upgrading. Gary was promoted to senior
scientist, responsible for all R&D activities performed in the mechanical engineering
department. Gary had distinguished himself as an outstanding production engineer
during the past several years, and management felt that his contribution could be
extended to R&D as well.
In January 1978, Parks Corporation decided to compete for Phase I of the Blue
Spider Project, an R&D effort that, if successful, could lead into a $500 million
program spread out over twenty years. The Blue Spider Project was an attempt to
improve the structural capabilities of the Spartan Missile, a short-range tactical
missile used by the Army. The Spartan Missile was exhibiting fatigue failure after six
years in the field. This was three years less than what the original design
specifications called for. The Army wanted new materials that could result in a longer
life for the Spartan Missile.
Lord Industries was the prime contractor for the Army’s Spartan Program. Parks
Corporation would be a subcontractor to Lord if they could successfully bid and win
the project. The criteria for subcontractor selection were based not only on low bid,
but also on technical expertise as well as management performance on other
projects. Parks’ management felt that they had a distinct advantage over most of the
other competitors because they had successfully worked on other projects for Lord
Industries.
The Blue Spider Project Kick-off
On November 3, 1977, Henry Gable, the director of engineering, called Gary
Anderson into his office.
Henry Gable: “Gary, I’ve just been notified through the grapevine that Lord will be
issuing the RFP for the Blue Spider Project by the end of this month, with a thirty-day
response period. I’ve been waiting a long time for a project like this to come along so
that I can experiment with some new ideas that I have. This project is going to be my
baby all the way! I want you to head up the proposal team. I think it must be an
engineer. I’ll make sure that you get a good proposal manager to help you. If we
start work now, we can get close to two months of research in before proposal
submittal. That will give us a one-month’s edge on our competitors.”
Gary was pleased to be involved in such an effort. He had absolutely no trouble in
getting functional support for the R&D effort necessary to put together a technical
proposal. All of the functional managers continually remarked to Gary that, “This
must be a biggy. The director of engineering has thrown all of his support behind
you.”
On December 2, the RFP was received. The only problem area that Gary could see
was that the technical specifications stated that all components must be able to
operate normally and successfully through a temperature range of –65° to 145°F.
Current testing indicated the Parks Corporation’s design would not function above
130°F. An intensive R&D effort was conducted over the next three weeks.
Everywhere Gary looked, it appeared that the entire organisation was working on his
technical proposal.
CASE STUDY: THE BLUE SPIDER PROJECT
2
A week before the final proposal was to be submitted, Gary and Henry Gable met to
develop a company position concerning the inability of the preliminary design
material to be operated above 130°F.
Gary Anderson: “Henry, I don’t think it is going to be possible to meet specification
requirements unless we change our design material or incorporate new materials.
Everything I’ve tried indicates we’re in trouble.”
Henry Gable: “We’re in trouble only if the customer knows about it. Let the proposal
state that we expect our design to be operative up to 155°F. That’ll please the
customer.”
Gary Anderson: “That seems unethical to me. Why don’t we just tell them the truth?”
Henry Gable: “The truth doesn’t always win proposals. I picked you to head up this
effort because I thought that you’d understand. I could have just as easily selected
one of our many moral project managers. I’m considering you for program manager
after we win the program. If you’re going to pull this conscientious crap on me like
the other project managers do, I’ll find someone else. Look at it this way; later we
can convince the customer to change the specifications. After all, we’ll be so far
downstream that they will have no choice.”
After two solid months of sixteen-hour days, the proposal was submitted. On
February 10, 1978 Lord Industries announced that Parks Corporation would be
awarded the Blue Spider Project. The contract called for a ten-month effort,
negotiated at $2.2 million at a firm-fixed price.
Selecting the Project Manager
Following contract award, Henry Gable called Gary in for a conference.
Henry Gable: “Congratulations Gary! You did a fine job. The Blue Spider Project
has great potential for ongoing business over the next ten years, provided that we
perform well during the R&D phase. Obviously you’re the most qualified person in
the plant to head up the project. How would you feel about a transfer to program
management?”
Gary: “I think it would be a real challenge. I could make maximum use of the MBA
degree I earned last year. I’ve always wanted to be in program management.”
Henry Gable: “Having several master’s degrees, or even doctorate’s for that matter,
does not guarantee that you’ll be a successful project manager. There are three
requirements for effective program management: you must be able to communicate
both in writing and orally; you must know how to motivate people; and you must be
willing to give up your car pool. The last one is extremely important in that program
managers must be totally committed and dedicated to the program, regardless of
how much time is involved.
“But this is not the reason why I asked you to come here. Going from project
engineering to program management is a big step. There are only two places you
CASE STUDY: THE BLUE SPIDER PROJECT
3
can go from program management; up the organisation or out the door. I know of
very, very few engineers that failed in program management and were permitted to
return.”
Gary: “Why is that? If I’m considered to be the best engineer in the plant, why can’t I
return to engineering?”
Henry Gable: “Program management is a world of its own. It has its own formal and
informal organisational ties. Program managers are outsiders. You’ll find out. You
might not be able to keep the strong personal ties you now have with your fellow
employees. You’ll have to force even your best friends to comply with your
standards. Program managers can go from program to program, but functional
departments remain intact.”
“I’m telling you all this for a reason. We’ve worked well together the past several
years. But if I sign the release so that you can work for Grey in Program
Management, you’ll be on your own, like hiring into a new company. I’ve already
signed the release. You still have some time to think about it.”
Gary: “One thing I don’t understand. With all of the good program managers we
have here, why am I given this opportunity?”
Henry Gable: “Almost all of our program managers are over forty-five years old. This
resulted from our massive layoffs several years ago when we were forced to lay off
the younger, inexperienced program managers. You were selected because of your
age and because all of our other program managers have worked on only
production-type programs. We need someone at the reigns who knows R&D. Your
counterpart at Lord Industries will be an R&D type. You have to fight fire with fire.”
“I have an ulterior reason for wanting you to accept this position. Because of the
division of authority between program management, who can I communicate with
concerning R&D work? The program managers we have now are interested only in
time and cost. We need a manager who will bend over backwards to get
performance also. I think you’re that man. You know the commitment we made to
Lord when we submitted that proposal. You have to try to achieve that. Remember,
this program is my baby. You’ll get all the support you need. I’m tied up on another
project now. But when it’s over, I’ll be following your work like a hawk. We’ll have to
get together occasionally and discuss new techniques.
“Take a day or two to think it over. If you want the position, make an appointment to
see Elliot Grey, the director of program management. He’ll give you the same
speech I did. I’ll assign Paul Evans to you as chief project engineer. He’s a
seasoned veteran and you should have no trouble working with him. He’ll give you
good advice. He’s a good man.”
The Work Begins
Gary accepted the new challenge. His first major hurdle occurred in staffing the
project. The top priority given to him to bid the program did not follow through for
staffing. The survival of Parks Corporation depended upon the profits received from
the production programs.
In keeping with this philosophy Gary found that
CASE STUDY: THE BLUE SPIDER PROJECT
4
engineering managers (even his former boss) were reluctant to give up their key
people to the Blue Spider Program. However, with a little support from Henry Gable,
Gary formed an adequate staff for the program.
Right from the start Gary was worried that the test matrix called out in the technical
volume of the proposal would not produce results that could satisfy specifications.
Gary had a milestone, ninety days after go-ahead, to identify the raw materials that
could satisfy specification requirements. Gary and Paul Evans held a meeting to
map out their strategy for the first few months.
Gary Anderson: “Well Paul, we’re starting out with our backs against the wall on this
one. Any recommendations?”
Paul Evans: “I also have my doubts in the validity of this test matrix. Fortunately, I’ve
been through this before. Gable thinks this is his project and he’ll sure as hell try to
manipulate us. I have to report to him every morning at 7:30 a.m. with the raw data
results of the previous day’s testing. He wants to see it before you do. He also
stated that he wants to meet with me alone.
“Lord will be the big program. If the test matrix proves to be a failure, we’re going to
have to change the scope of effort. Remember, this is an FFP contract. If we
change the scope of work and do additional work in the earlier phases of the
program, then we should prepare a trade-off analysis to see what we can delete
downstream so as to not overrun the budget.”
Gary Anderson: “I’m going to let the other project office personnel handle the
administration work. You and I are going to live in the research labs until we get
some results. We’ll let the other project office personnel run the weekly team
meetings.”
For the next three weeks Gary and Paul spent virtually twelve hours per day, seven
days a week, in the research and development lab. None of the results showed any
promise. Gary kept trying to set up a meeting with Henry Gable but always found
him unavailable.
During the fourth week, Gary, Paul and the key functional department managers met
to develop an alternate test matrix. The new test matrix looked good. Gary and his
team worked frantically to develop a new workable schedule that would not have an
impact on the second milestone, which was to occur at the end of 180 days. The
second milestone was the final acceptance of the raw materials and preparation of
production runs of the raw materials to verify that there would be no scale-up
differences between lab development and full-scale production.
Gary personally prepared all of the technical handouts for the interchange meeting.
After all, he would be the one presenting all of the data. The technical interchange
meeting was scheduled for two days. On the first day, Gary presented all of the data,
including test results, and the next day the test matrix. The customer appeared
displeased with the progress to date and decided to have their own in-house caucus
that evening to go over the material that was presented.
CASE STUDY: THE BLUE SPIDER PROJECT
5
The following morning the customer stated their position: “First of all, Gary, we’re
quite pleased to have a project manager who has such a command of technology.
That’s good. But every time we’ve tried to contact you last month, you were
unavailable or had to be paged in the research laboratories. You did an acceptable
job presenting the technical data, but your project office personnel presented the
administrative data. We, at Lord, do not think that you’re maintaining the proper
balance between your technical and administrative responsibilities. We prefer that
you personally give the administrative data and your chief project engineer present
the technical data.
“We did not receive any agenda. Our people like to know what will be discussed, and
when. We also want a copy of all handouts to be presented at least three days in
advance. We need time to scrutinize the data. You can’t expect us to walk in here
blind and make decisions after seeing the data for ten minutes.
“To be frank, we feel that the data to date are totally unacceptable. If the data do not
improve, we will have no choice but to issue a stop work order and look for a new
contractor. The new test matrix looks good, especially since this is a firm-fixed-price
contract. Your company will bear the burden for all costs for the additional work. A
trade-off with later work may be possible, but this will depend upon the results
presented at the second design review meeting, ninety days from now.
“We have decided to establish a customer office at Parks to follow your work more
closely. Our people feel that monthly meetings are insufficient during R&D activities.
We would like our customer representative to have daily verbal meetings with you or
your staff. He will then keep us posted. Obviously, we had expected to review much
more experimental data than you have given us.
“Many of our top quality engineers would like to talk directly to your engineering
community, without having to continually waste time by having to go through the
project office. We must insist upon this last point. Remember, your effort may be
only $2.2 million, but our total package is $100 million. We have a lot more at stake
than you people do. Our engineers do not like to get information that has been
filtered by the project office. They want to help you.
“And last, don’t forget that you people have a contractual requirement to prepare
complete minutes for all interchange meetings. Send us the original for signature
before going to publication.
Although Gary was unhappy with the first team meeting, especially with the requests
made by Lord Industries, he felt that they had sufficient justification for their
comments. Following the team meeting, Gary personally prepared the complete
minutes. “This is absurd,” thought Gary. “I’ve wasted almost one entire week doing
nothing more than administrative paperwork. Why do we need such detailed
minutes? Can’t a rough summary just as well suffice? Why is it that customers want
everything documented? That’s like an indication of fear. We’ve been completely
cooperative with them. There has been no hostility between us. If we’ve gotten this
much paperwork to do now, I hate to imagine what it will be like if we get into trouble.”
A New Role
CASE STUDY: THE BLUE SPIDER PROJECT
6
Gary completed and distributed the minutes to the customer as well as to all key
team members.
For the next five weeks testing went according to plan, or at least Gary thought that it
had. The results were still poor. Gary was so caught up in administrative paperwork
that he hadn’t found time to visit the research labs in over a month. On a Wednesday
morning, Gary entered the lab to observe the morning testing. Upon arriving in the
lab, Gary found Paul Evans, Henry Gable, and two technicians testing a new
material, JXB-3.
Henry Gable: “Gary, your problems will soon be over. This new material, JXB-3, will
permit you to satisfy specification requirements. Paul and I have been testing it for
two weeks. We wanted to let you know, but were afraid that if the word leaked out to
the customer that we were spending their money for testing materials that were not
called out in the program plan, then they would probably go crazy and might cancel
the contract. Look at these results. They’re super!”
Gary Anderson: “Am I supposed to be the one to tell the customer now? This could
cause a big wave.”
Henry Gable: “There won’t be any wave. Just tell them that we did it with our own
R&D funds. That’ll please them because they’ll think we’re spending our own money
to support their program.”
Before presenting the information to Lord, Gary called a team meeting to present the
new data to the project personnel. At the team meeting, one functional manager
spoke out: “This is a hell of a way to run a program. I like to be kept informed about
everything that’s happening here at Parks. How can the project office expect to get
support out of the functional departments if we’re kept in the dark until the very last
minute? My people have been working with the existing materials for the last two
months and you’re telling us that it was all for nothing. Now you’re giving us a
material that’s so new that we have no information on it whatsoever. We’re now
going to have to play catch-up, and that’s going to cost you plenty.”
One week before the 180-day milestone meeting, Gary submitted the handout
package to Lord Industries for preliminary review. An hour later the phone rang.
Customer: “We’ve just read your handout. Where did this new material come from?
How come we were not informed that this work was going on? You know, of course,
that our customer, the Army, will be at this meeting. How can we explain this to
them? We’re postponing the review meeting until all of our people have analysed the
data and are prepared to make a decision.
“The purpose of a review or interchange meeting is to exchange information when
both parties have familiarity with the topic. Normally we (Lord Industries) require
almost weekly interchange meetings with our other customers because we don’t trust
them. We disregarded this policy with Parks Corporation based upon past working
relationships. But with the new state of developments, you have forced us to revert
to our previous position, since we now question Parks Corporation’s integrity in
communicating with us. At first we believed this was due to an inexperienced
program manager. Now, we’re not sure.”
CASE STUDY: THE BLUE SPIDER PROJECT
7
Gary Anderson: “I wonder if the real reason we have these interchange meetings
isn’t to show our people that Lord Industries doesn’t trust us. You’re creating a hell of
a lot of work for us, you know.”
Customer: “You people put yourself in this position. Now you have to live with it.”
Two weeks later Lord reluctantly agreed that the new material offered the greatest
promise. Three weeks later the design review meeting was held. The Army was
definitely not pleased with the prime contractor’s recommendation to put a new
untested material into a multi-million-dollar effort.
The Communications Breakdown
During the week following the design review meeting Gary planned to make the first
verification mix in order to establish final specifications for selection of the raw
materials. Unfortunately, the manufacturing plans were a week behind schedule,
primarily because of Gary, since he had decided to reduce costs by accepting the
responsibility for developing the bill of materials himself.
A meeting was called by Gary to consider rescheduling of the mix.
Gary Anderson: “As you know we’re about a week to ten days behind schedule.
We’ll have to reschedule the verification mix for late next week.”
Production Manager: “Our resources are committed until a month from now. You
can’t expect to simply call a meeting and have everything reshuffled for the Blue
Spider Program. We should have been notified earlier. Engineering has the
responsibility for preparing the bill of materials. Why aren’t they ready?”
Engineering Integration: “We were never asked to prepare the bill of materials. But
I’m sure that we could get it out if we work our people overtime for the next two days.”
Gary: “When can we remake the mix?”
Production Manager: “We have to redo at least 500 sheets of paper every time we
reschedule mixes. Not only that, we have to reschedule people on all three shifts. If
we are to reschedule your mix, it will have to be performed on overtime. That’s going
to increase your costs. If that’s agreeable with you, we’ll try it. But this will be the
first and last time that production will bail you out. There are procedures that have to
be followed.”
Testing Engineer: “I’ve been coming to these meetings since we kicked off this
program. I think I speak for the entire engineering division when I say that the role
that the director of engineering is playing in this program is suppressing individuality
among our highly competent personnel. In new projects, especially those involving
R&D, our people are not apt to stick their necks out. Now our people are becoming
ostriches. If they’re prevented from contributing, even in their own slight way, then
you’ll probably lose them before the project gets completed. Right now I feel that I’m
wasting my time here. All I need are minutes of the team meetings and I’ll be happy.
Then I won’t have to come to these pretend meetings anymore.”
CASE STUDY: THE BLUE SPIDER PROJECT
8
The purpose for the verification mix was to make a full-scale production run of the
material to verify that there would be no material property changes in scale-up from
the small mixes made in the R&D laboratories. After testing, it became obvious that
the wrong lots of raw mate…
