Case 26 A Critical Government Contract
Setting: Manufacturing Firm; Your Position: Manager, Custom Products
In the past your group has lost a great deal of business due to inflexibility in manufacturing processes. You are part of an experiment to rectify this problem. Your newly created position is manager of custom products, i.e., those requiring special engineering and adaptation of the firm's standard lines. The manufacturing would continue to be done by the various departments involved, but your new group would be responsible for doing any necessary re-design or coordination. Each of the four manufacturing departments chose one person to work with you in this experimental unit. You played no role in their selection, and so far, you have not been impressed with the skills of those selected, their attitudes toward the project, or even their ability to work together collaboratively. It is apparent that none of them relish their new assignment and that each would not be unhappy if they were returned to their previous assignments.
One of the first potential orders came from a large government agency requesting a proposal for a very substantial contract. If you land the project, the manufacturing would be done by one of the departments and would require little in the way of coordination by your group. Given the importance of this proposal and your uncertainty of the capabilities of your group, you have written the first draft of the contract proposal.
The final task is to estimate the costs. In many respects this phase is the most critical. You have strong competition in this field, and too high an estimate could cause your firm to lose the contract. On the other hand, too low an estimate could cause the company to face the choice of losing a great deal of money or defaulting on the contract. You have had lots of experience in cost estimation, and this part of the project should be fairly easy for you.