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• Tonya Somerton

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MSTM- 6034 Project Management in the Offshore, Health, Fisheries and Engineering Technology Environments Module 1: Project Management Fundamentals Gino, F. & Pisano, G., 2006: Teradyne Corporation: The Jaguar Project.

Submitted by Tonya Somerton Tuesday, October 15, 2013

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Table of Contents Overview …………………….………….………………………...……….. 2 Problem Statement ……………………….……………………...………… 4 Alternatives ………………………………….………………...…………... 4 Alternative Analysis ………………….…….……………………………… 5 Course of Action ……………………………..…………………………….. 9 References …………………..…………………..…………………………. 10

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Overview Company: Teradyne Corporation

Founded: 1960 by Alex D’Arbeloff and

Employees: Over 6000 Business: Production of equipment for

Nick DeWolf. Classmates from MIT Market: World’s largest supplier,

testing semiconductors

Worldwide.

Sales: $1.8 billion in 2004.

Reputation: Known for reliability, test

Business Units:

speed and technical performance Culture: Engineering, driven by

1) Semiconductor test,

performance. Casual dress, cubicle office

2) Assembly Test, 3) Broadband Test,

spaces, encouraged individual initiative.

4) Connection Systems, 5) Diagnostic

Long hours is the norm, recruitment &

Solutions. retention were no issue. Operating/ project processes in place prior to the Jaguar Project: Introduced in the 1990’s- Total Quality Management (TQM), Revolutionizing product development (RPD), Engineering Process Improvement Team (EPIT), Aggregate Process planning (APP), Phase-gate model, and “after-action” review. Situation: 

By 1996 it is clear that TQM is not taking hold in engineering. Projects continued to be late and over budget. RPD was introduced along with EPIT, APP, Phase-gate & “After-action” review. None were used consistently.

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Progress remained highly variable. Some divisions were still over committing and they continued to come up with unrealistic schedules.

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In 2001, to respond to a changing market, Teradyne senior management made a pivotal strategic decision. The company decided to embrace the flexible platform strategy, abolishing the market-segment focused platform, folding it into a single platform engineering group, producing a test system that could test multiple types of devices. This project group was code-named “Jaguar”.

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The project was lead by a 25 year veteran of Teradyne’s engineering organization, Jack O’ Brien.

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A critical target date of June 30th, 2004 was decided for beginning the shipment of the new tester. 2

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O’Brien presented a 75 page presentation to Senior Management in May of 2002 detailing the system architecture, design, and function specifications, target performance specifications and the project execution plan.

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The project was organized into a set of project teams, each focused on a particular subsystem task. A “core team” of leaders from each subsystem team as well as the program manager Kevin Giebel and the project lead O’Brien was formed. This team met monthly in person & weekly via teleconference to ensure appropriate levels of integration across all sites.

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Formalized project management tools were used during the Jaguar project. These tools included; Work breakdown structure, 3-point estimation, critical path analysis & earned value analysis.

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The team was flexible and responded to delays by reallocating resources, never changing the fixed customer-ship date. Hardware remained ahead of schedule using these metrics.

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Some teams did not rely on the project management tools metrics, software’s metrics indicated issues with completing planned tasks but, they were “in denial” and constantly communicated that they could catch up.

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In September of 2003 Teradyne received word that one of the largest semiconductor companies in the world, AlphaTech was about to commit to a competitors system.

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Teradyne’s system was not scheduled to be ready for evaluation until June, ten months later. Teradyne convinced AlphaTech to wait for them to finish their product, to give them a chance to bid on the business. AlphaTech had one condition; they wanted the system for evaluation by March 30, 2004.

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Additional resources were committed to the Software team. As the deadline closed in the software team shifted its effort to fixing bugs, having to make concessions on originally planned features.

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On March 30th, 2004, as promised the first complete system was shipped for evaluation. All of the hardware met specifications but, software did not incorporate all features initially requested by the customer. The software was functional but, was also laden with bugs. Teardyne spent the next six months 3

upgrading the system for AlphaTech. Their work paid off, in September 2004 AlphaTech selected the Teradyne system. 

There was a cost to this victory, the remainder of the project- including development of features for other customers- was delayed. Software teams were consumed with fixing bugs and fell further behind schedule by six months.

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In the “after-action” review. Issues with the application of Project management tools are identified and there are lessons to be learned for future project management at Teradyne. (Gino, F. & Pisano, G., 2006)

Problem Statement In keeping with Teradyne’s process of continuous improvement, O’Brien and the senior management are now beginning the process of dissecting the project to identify lessons learned. It was evident that the project did not meet customer specifications; it was over budget and was beyond deadlines. The team had struggled with the use of Project Management tools. According to Pinto 2013, “the quadruple constraint is the standard of project success.” A project is seen as successful if, the project is on time, within budget, meets the projects goal specifications, and is acceptable to the intended client. Using this definition, the Jaguar project was not successful. What went wrong with PM tool application in this project for the outcome to be a project that was; over budget, off scope and beyond the expected timelines and, what can be improved upon to prevent similar occurrences in future projects at Teradyne?

Alternatives A project manager is faced with a number of responsibilities. Among these responsibilities are; selecting a team, developing project objectives and a plan for execution, performing risk management activities, cost estimating and budgeting, scheduling and managing resources. If we take these responsibilities into consideration and analyze how O’Brien approached managing them during the Jaguar Project, we are able to identify the projects strengths, and evaluate weaknesses to enhance future projects.

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Alternatives to successfully manage Teradyne projects revolve around the application of formalized Project management tools. These tools include processes traditionally used at Teradyne, as well as those introduced for specifically for the Jaguar project: 1) Total Quality Management

2) Phase-gated Model

3) Work breakdown structure, (WBS)

4) 3-point estimation (PERT)

5) Critical path analysis, (CPA)

6) Earned value analysis, (EVA)

Analyzing each tool applied at Teradyne may reveal what happened during the Jaguar project and, offer opportunities to more effectively manage future projects at Teradyne.

Alternative Analysis

Alternative 1: Total Quality Management Pros  Provides employee problem solving techniques & tools.  Reduces lead time  Decreases production defects  Eliminates waste, reduces production costs.  Identifies redundancies, adding profit.  Improves productivity  Improves morale

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Cons Requires extensive employee training Productivity may be reduced during training. Implementation takes employees away from duties. Requires change in mindset, attitude & methods. Requires clear effective communication otherwise fear of change leads to resistance. Takes time, small incremental improvements.

(Kelchner, 2013) At Teradyne the engineers resisted TQM and felt it was, “an encroachment on their freedom”. Ineffective communication and lack of employee education may have been a factor leading to the resistance and failure of this approach. Management then focused on a product development initiative, “revolutionizing product development”. The company’s problems were seen as falling into two categories. The first, was over commitment. This was addressed by the application of Aggregate Project Planning (APP) which would see the company; only taking on projects that were 5

aligned with their strategic plan and; only committing to projects when adequate and appropriate resources were available. The second category was poor project planning. Goals and scope were not clearly defined, projects tended to expand, and became delayed. Milestones were not well defined and were often missed. Schedules had little rigor as they were not tracked and management could not tell when they needed to intervene. There was no one individual responsible for a given project. These concerns were addressed by implementing a phase-gate model.

Alternative 2: Phase-gated Model Pros  Accelerated product development  Breaks down complex processes  Provides overview enabling prioritization and focus  Cross functional, involves employees  Can be combined with performance metrics. (Cooper, 2013)

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Cons The approach is sequential. Experts believe product development should be parallel. Does not support creation of new ideas. Tension exists between organizing and creativity.

The intent of the phase-gate model at Terdyne was to provide well defined milestones and review points for projects. However, Teradyne “did not mandate the use of any specific tools and left it up to individual divisions and managers to decide which recommendations to follow” (Gino & Pisano, 2006). While some divisions embraced the approach others ignored it. Progress varied, and frustration grew. There was very little behavioral change, projects were still overcommitted and unrealistically scheduled. A strict adherence to the use of these tools/ models would have decreased the scheduling & resource issues within the company. O’Brien attempted to address scheduling, budgeting and definition of responsibilities with the additional tools for the Jaguar project: WBS, 3-point estimation, CPA & EVA.

Alternative 3: Work breakdown structure Advantages of a good WBS  Forces the team to create detailed steps

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Dangers of a poor WBS The timeline may be longer Budget may be mismanaged

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lays the groundwork for schedule and budget  Creates employee accountability.  Creation breeds employee engagement. (Egeland, 2011) 

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Assignments of team members may not be clear Employees are not as likely to be engaged in the work because they are not accountable for outcomes.

Alternative 4: 3-point estimation Pros  Provides boundaries on expectations around time and costs  Best used in unique projects where there are many unknowns. (Product & process innovation, 2012)

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Cons Takes a lot of work, requires 3 estimates. Still utilizes estimations, actual may be much better or worse.

Alternative 5: Critical path analysis Pros  Can calculate exactly how long a project will take.  Provides ability to tell customers completion timelines.  Identifies which activities are time critical.  Provides opportunity to create slack time reducing processing at critical points to tighten up turn around.

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Cons Based upon ideal situations, does not take into account unforeseen events. Timelines may be skewed if things go wrong. Relies on past data to formulate completion time predictionsdifficult for new companies. Focuses primarily on time, neglects quality and cost control.

(Ingram, 2013)

Alternative 6: Earned value analysis Pros Cons  Uses quantitative metrics to  Relies on assumption that future can evaluate past project performance. be predicted from past performance.  Predicts future performance  There is no guarantee that the EVA extrapolating from the past. will be true.  Encourages taking corrective action in response to analysis results. (Hillson, 2004) O’Brien’s formation of a single team was a significant change. These changes were more than process changes they required changes to core cultural values. The

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change from working independently to becoming a part of a larger reporting structure that makes cross functional decisions was foreign and removed previous autonomy. Teradyne did use a WBS during the jaguar project. O’Brien’s 75 page presentation laid the groundwork for schedule, budget, and employee accountability. This was an element that had not been undertaken at Teradyne. Goals, scope, and milestones had never been clearly defined before. People resisted the tools because they forced them to commit. Refusing to commit was a part of the reason why the software team got critically behind schedule. The tools produced metrics, advising teams of where they were in the project timeline however; the “red flags” were essentially ignored by some teams, the software team especially. This scheduling issue meant the team had to make concessions to meet deadlines. Original customer requested features were cut to save time changing the scope of the project. Employee engagement and buy-in was low. The tools were new and some employees felt they were more cumbersome than useful. The feeling at Teradyne was that, sometimes the tools got in the way. Valuable time was spent deciphering tool metrics and whether they were reliable rather than responding to them. A rigid predetermined schedule became less meaningful over time. They worked to stay on schedule but, missed that they were making concessions and changing the project deliverables. The metrics that were ignored by management regarding the software delays may have been avoided if additional resources were added as soon as they noticed the timeline slipping. When the schedule was even further shortened this put enormous pressure on software team and the end result was a product that was not as specified initially. It was the tools that allowed the company to respond to AlphaTech and their use made them confident they could meet the milestones. However, the jaguar project ignored quality, and cost control when placed under pressure to meet the deadlines, one of the identified disadvantages of the CPA.

Course of Action A lot of lessons were learned from the Jaguar project. First, project management

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tools are valuable to successful projects however; the people using these tools must understand the significance of the tools and how to utilize them to their advantage. Training staff to understand and effectively use the project management tools would have seen a response to metrics, and may have possibly avoided the software catastrophe. Second, tools that are being used must be supported and encouraged by management. Having some teams use the tools, and others not, breeds confusion and inability to speak the same language when reporting goals and progress. The ability to be flexible and to mitigate risk is essential to project management. All of the tools used in the jaguar project were good, valuable tools but their effective application was lacking due to ineffective communication throughout the project. “Tools make things better if people using them accept and understand what they are for and how they work” (Brown, 2004). This was not the case for those implemented at Teradyne There was very little discussion of risk management planning. Utilizing risk scoring analysis and risk mitigation strategies can assist teams to deal with unknowns. Risk management prepares teams to identify, analyze, mitigate and control risk. The TQM concept took the better part of five years to be incorporated in most aspects of work at Teradyne. The Jaguar introduced changes in project management methodology that would have been better implemented, had Teradyne spent time upfront to change the organizational culture. These were significant project management changes. Time to understand, embrace and embed them into daily operations was required. If I were O’Brien, I would continue to use all of the identified tools to successfully manage projects. They each have strengths if applied correctly. I would apply the lessons learned to future projects at Teradyne. Providing companywide education and training in an effort to change the culture to include employee level responsibility, understanding and accountability is essential. Teradyne had great people, highly educated and capable of delivering but, they simply did not buy-in to the processes that O’Brien was attempting to use. Frustration and decreased engagement lead to delay, overspending, and a less than adequate product at project end.

References

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Cooper, R. (2013) Managing Product Development. Explanation of the Stage-gate model of Robert G. Cooper. (’88) in 12Manage: The executive fast track. Retrieved from http://www.12manage.com/methods_cooper_stage-gate.html Egeland, B. (2011, February 22) Benefits of the Work Breakdown Structure. In Project Management Tips. Retrieved from http://pmtips.net/benefits-work-breakdownstructure/ Hillson, D. (2004). Earned Value and Risk Management: A Practical Synergy. In Risk Doctor. Retrieved from http://www.risk-doctor.com/pdf-files/cev-b1004.pdf Ingram, D. (2013) CPM & PERT Weaknesses & Strengths. In Small Business Demand Media. Retrieved from http://smallbusiness.chron.com/cpm-pert-weaknessesstrengths-1082.html Kelchner, L. (2013) Advantages & Disadvantages of Total Quality Management Strategies. In Small Business Demand Media. Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-total-quality-managementstrategies-22160.html Pinto, J.K. (2013). Project Management: Achieving Competitive Advantage. Toronto, ON: Pearson Education Inc. Product & Process Innovation Inc. (2012) Project Management Estimating Tools & Techniques. In Process Management Guru. Retrieved from http://www.projectmanagementguru.com/estimating.html

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