In recent years, Keflavik Paper Company has been having problems with its project management process. A number of commercial projects, for example, have come in late and well over budget, and product performance has been inconsistent. A comprehensive analysis of the process has traced many of the problems back to faulty project selection methods.
Keflavik is a medium-sized corporation that manufactures a variety of paper products, including specialty papers and the coated papers used in the photography and printing industries. Despite cyclical downturns due to general economic conditions, the firm’s annual sales have grown steadily though slowly. About five years ago, Keflavik embarked on a project-based approach to new product opportunities. The goal was to improve profitability and generate additional sales volume by developing new commercial products quickly, with better targeting to specific customer needs. The results so far have not been encouraging. The company’s project development record is spotty. Some projects have been delivered on time, but others have been late; budgets have been routinely overrun; and product performance has been inconsistent, with some projects yielding good returns and others losing money.
Top management hired a consultant to analyse the firm’s processes and determine the most efficient way to fix its project management procedures. The consultant attributed the main problems not to the project management processes themselves, but to the manner in which projects are added to the company’s portfolio. The primary mechanism for new project selection focused almost exclusively on discounted cash flow models, such as net present value analysis. Essentially, if a project promised profitable revenue streams, it was approved by top management. One result of this practice was the development of a “family” of projects that were often almost completely unrelated. No one, it seems, ever asked whether projects that were added to the portfolio fit with other ongoing projects. Keflavik attempted to expand into coated papers, photographic products, shipping and packaging materials, and other lines that strayed far from the firm’s original niche. New projects were rarely measured against the firm’s strategic mission, and little effort was made to evaluate them according to its technical resources. Some new projects, for example, failed to fit because they required significant organizational learning and new technical expertise and training (all of which was expensive and time-consuming). The result was a portfolio of diverse, mismatched projects that was difficult to manage.
Further, the diverse nature of the new product line and development processes decreased organizational learning and made it impossible for Keflavik’s project managers to move easily from one assignment to the next. The hodgepodge of projects made it difficult for managers to apply lessons learned from one project to the next. Since the skills acquired on one project were largely non-transferable, project teams routinely had to relearn processes whenever they moved to a new project.
The consultant suggested that Keflavik rethink its project selection and screening processes. In order to lend some coherence to its portfolio, the firm needed to include alternative screening mechanisms.
Question 1 (25 Marks)

Organisations generally tend to only select projects which are aligned with their strategic goals and objectives where they can derive maximum benefits. At Keflavik paper company it was seemingly different. Appraise the comparative overview of portfolios, programs and projects and recommend to the project manager of Keflavik on the merits of classifying initiatives correctly.

Question 2 (25 Marks)

Appraise the portfolio, programs and projects relationships in light of the challenges experiences by Keflavik. In your discussion explain some factors that influence project success.

Question 3 (25 Marks)

Control scope deals with ensuring that actual project work is equivalent to the baseline scope plan. Many methods can be used to control scope. By referring to the inputs, tools and techniques and outputs, evaluate and recommend to the Keflavik project manager scope control of the project.

Question 4 (25 Marks)

Like any human undertaking, projects need to be performed and delivered under certain constraints (limits or restrictions). Using the theory that you have studied on project constraints, identify the constraints of the case study projects/initiatives and recommend to the project manager on ways to manage each constraint. Use a suitable diagram to demonstrate that constraints.

Answers to Above Questions on Keflavik Case Study

Answer 1: The selection of a project needs to be carried out by considering different factors and it is not only the profitability metrics to consider in such a process. In the given case scenario of the Keflavik portfolio, an analysis indicates that the selection process of projects of the company is entirely based on its profitability, and the management is not even considering whether the projects are aligned to its mission and strategic goals. The portfolio of projects therefore becomes unrelated to each other and this makes it difficult for the employees to manage each and every project effectively, as each one of them requires distinctive skills and knowledge to carry out them, which is a costly and time consuming matter leading to delays and cost overrun.


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