Project Management: Avoiding Boeing & Airbus Mistakes

This assignment analyzes common project management mistakes made by companies like Boeing and Airbus, leading to delays and cost overruns. It proposes strategies for MAC (the company being analyzed) to avoid similar issues. Key recommendations include leveraging core competencies for in-house development, outsourcing non-core activities, providing employee training, implementing an iterative development methodology, conducting thorough requirement gathering, and utilizing a robust vendor selection process.

M A C C A S E S T U D Y
CONTENTS
Introduction........................................................................................................................................................................... 1
Overview of MAC Project............................................................................................................................................1
Stakeholders – Key Players & their roles.............................................................................................................2
Airbus A380 Case................................................................................................................................................................ 2
Background....................................................................................................................................................................... 2
Factors that contributed to failure.........................................................................................................................3
Analysis of key issues................................................................................................................................................... 4
Aftermath & dealing with project failure.............................................................................................................4
Lesson Learned............................................................................................................................................................... 4
Boeing 787 Dreamliner Case..........................................................................................................................................5
Background....................................................................................................................................................................... 5
Factors that contributed to failure.........................................................................................................................5
Analysis of key issues................................................................................................................................................... 6
Aftermath & dealing with project failure.............................................................................................................6
Lesson Learned............................................................................................................................................................... 7
Recommendations for Murasaki Aircraft Corporation (MAC)........................................................................7
Conclusions............................................................................................................................................................................ 8
References.............................................................................................................................................................................. 9
INTRODUCTION
OVERVIEW OF MAC PROJECT
Murasaki Aircraft Corporation (MAC) is new Aircraft manufacturer from Japan that produces Regional jets
and supplies Wings for Boeing’s 787 aircraft. The company is currently looking to produce an aircraft
which is lightweight using Boeing’s 787 Dreamliner lightweight construction technologies through
international consortium with Boeing and Airbus. Before a concept for this new aircraft can be
developed, the management needs to study the cases of 787 and A380 aircraft development projects to
identify problems they faced. The project phases as initiation, planning, execution, monitoring and
control will be explored. Lessons learned from the two cases would be used for making recommendations
to MAC to avoid similar mistakes.

STAKEHOLDERS – KEY PLAYERS & THEIR ROLES
MAC: Owner and decision maker responsible for development, production, and sales of the
aircrafts.
MHI (60% shares): Major supplier of wings and looks into manufacturing of aerospace
components, hydraulic equipments, air conditioners, power generation equipments and more.
Toyota & Mitsubishi Corporation (10% shares each): The Company develops, produces and
provides support for regional jet airline passengers. The company has a small share in the
company and would provide the support for sales for the aircraft project.
Sumitomo Corporation (Minor shares): Technology developer that also has business in
trading and real estate. It has a minor share in the project and thus, was a part of
communication that was sent about the project to them.
AIRBUS A380 CASE
BACKGROUND
Airbus A380 made its debut in October 2007 with an Aircraft that flew from Singapore to Sydney
followed by another route between Melbourne and Los Angeles in 2008. Airbus has Air France,
Emirates, and Lufthansa as its major customers. The company faced several issues related to
production and delivery.
The project involved development of the first "triple-decker" freight aircraft for long-haul flight
market that could challenge Boeing as it was designed to carry 35% more passengers, consume 12%
less fuel per seat, weigh less with the use of GLAss-REinforced fibre metal laminate, and was
powered by Rolls-Royce Trent 900 or Alliance GP7200 turbofan engines. The average list price of
A380 was decided to be $347m (£215m). The aircraft was to carry 555 in separate seat classes and
850 passenger’s economy class. It was to include various facilities like duty free shops, bars, lounges
and beauty salons.
FACTORS THAT CONTRIBUTED TO FAILURE
Incompetence of the company: Inability to deal with the issues led to a delay of two years.
Overambitious timelines: The project started in 2000 and was estimated to be delivered in 2006
which was unrealistic as the time required to deliver a normal aircraft is 5-6 years. There were added
functionalities in this case that required additional time.
Lack of buy-in from staff and management: 3D models and technology was needed in this case but
the engineers preferred sticking to a tool called ComputerVision that could only produce 2D models.
These older systems were labour intensive and saved jobs while the new system would result into

loss of some jobs. So, despite resistance, company installed Catia and Circe that was two powerful
modelling software developed by Dassault Systèmes. This led to increase in cost and time.
Miscalculations: In 2004, 200 German mechanics were involved in installation of copper
and aluminium wires around the floor panels and walls of the airframes but after taking
many efforts, they were found to be too short. The cause behind this problem was the
mistakes in calculation and the result of replacement of all wires from scratch causing a
delay of six months. This delay resulted from the problems of wiring, cabin design
complexities, and weight issues.
Failed communication & Management Conflicts: Airbus was formed by a combination of
16 companies from 4 different countries. The project demanded integration for which
reorganization was planned with introduction of new administrative structures where top
managers were located from each of the 16 divisions. However, this increased conflicts in
management. By the year 2005, management problems escalated with the battle of
ownership between Airbus, EADS, DaimlerChrysler, Enders and Forgeard. Different
customers demanded different functions in the aircraft (Clarke, 2006).
Design complexities: A major reason behind delays was the level of complication in manufacturing
design caused by the use of 100,000 different wires running over 330 miles and performing 1,150
functions. In designing the wiring harnesses, Hamburg plant used older version of CATIA while
Toulouse used the updated version causing compatibility issues. Wiring had to be redone
because of which costs were escalated by $6 billion (Shore, 2009).
ANALYSIS OF KEY ISSUES
The Airbus product suffered major delays after its launch in 2005. Initial delays were caused
different software was used for installing 330 miles of wiring than those used for British and
French producers. The first production was delivered in October 2007 to Singapore Airlines.
Originally planned for 2006, the first planes suffered three major delays, with the launch
customer, Singapore Airlines, finally getting hold of the first production model in October
2007 followed by Emirates with 20 planes and Quantas with 15 planes delivered by 2008
(Dörfler & Baumann, 2014).
In a Quantas A380 plane, one of the engines exploded after takeoff and the flight had to
take an emergency landing. In 2011, one of the Quantas flight faced an oil problem. In 2012,
investigations were made on 68 aircrafts by European Aviation Safety Agency that revealed
problems like cracks in the wing components and lack of grounding.
In subsequent months, there were more delays and the delay extended to 2 years. By 2007,
the company could deliver only 9 out of 25 aircrafts promised. The delivery delays resulted
into reduction in earnings by €2 billion and reduction in the share value by 26% (BBC, 2012).
AFTERMATH & DEALING WITH PROJECT FAILURE
The ambitious project failed as the production completion was delayed by 2 years that resulted into
a loss of confidence of stakeholders and customers of airbus. Moreover, the development costs

escalated to $13 billion which the company could not recoup anytime before 2017. The market
for such a huge aircraft was not sufficient as it demanded more of fuel-efficient jets. By 2005, the
company could get only 172 orders as compared to 354 orders received by Boeing for its Dreamliner
(Rochfort, 2016).
LESSON LEARNED
• It is not always the technical problems that is the main cause of failure
• Organizational culture is very important aspect in any project and affects its success
majorly.
• A positive organizational culture is needed for project success that is characterized
by multiple factors including identity, team emphasis, management focus, unit
integration, control, risk tolerance, reward criteria, conflict tolerance, means versus
ends orientation, and open system focus. Airbus failed to establish member identity,
achieve unit integration and tolerance for conflicts.
BOEING 787 DREAMLINER CASE
BACKGROUND
Dreamliner 1 was introduced by Boeing in January 2003 with a latest design of the airplane that was to
build a fuel efficient jetliner made of composite material. The Dreamliner was a success by Boeing with
20% increase in fuel efficiency, better in-flight experience, reduced maintenance costs and 30,000 to
40,000 pounds lighter in weight. The company bagged orders for 500 aircrafts within 3 years of the
launch of 787 Dreamliner.
The project involved longest delays suffered, escalated costs, loss of revenues, loss of customers, loss of
investor confidence and reshuffling of management which made it a failure for management. An initial 6
months delay itself caused extra costs of $1 billion and revenues reduction of $3.5 billion. As the
problems escalated, the delays were increased to 3 years and the cost escalated manifolds (Denning,
2013).
FACTORS THAT CONTRIBUTED TO FAILURE
Supply chain problems: The count of fasteners dropped in case of this project which led to the lack
of enthusiasm by the vendors to make the deliveries on time. They were looking on larger deliveries
and it contributed in the complexities in supply chains and associated delays (Shenhar, et al., 2016).
Outsourcing Complexities: The role of Boeing was limited to general design and assembling while
90% of manufacturing activities were outsourced. Major suppliers of Boeing such as Spirit
AeroSystems and Vought Aircraft Industries from USA, Alenia Aeronautica from Italy, Kawasaki
Heavy Industries, Fuji Heavy Industries, and Mitsubishi Heavy Industries from Japan further
outsourced the contracts to sub-contractors. As a result, only 16% of the aircraft structure could be
completed after receiving the first supply. There were also more problems with sub-suppliers like
Brake Control Monitoring System (BCMS) developed by Crane that had serious feedback problems

and a designing of code was demanded. This lead to an additional cost of $18.9 million for Boeing as
Crane was not willing to take the ownership of risk (MarketLine , 2012).
High Cost of Development: The initial cost of development was itself high caused by several desired
of Boeing such as reduction in risks, a system integrator role, and availability of suppliers willing to
invest in development. To achieve this objective, Boeing decided to use GSP model.
Lack of competency: The Company chose to play a role of a system integrator which was not its core
competency. This led to mismanagement issues and conflicts (Elahi, et al., 2014).
ANALYSIS OF KEY ISSUES
Major causes of delays on the project included:
• Alternative suppliers should have been selected in advance to deal with the scenarios
associated with lack of enthusiasm for orders of fasteners and likewise.
• Because of multilayered supply chain structure that involved a large number of suppliers
caused delays as they acted independently and made deliveries with their own speeds.
• Outsourcing of core competencies and increased reliance on the suppliers.
Causes behind increase in the costs include:
• Lack of training and competency of workers caused rework that incurred extra costs
• Initial development cost was already more and with the first six months delay, the company
invested more into project for speeding up the work despite the losses faced.
AFTERMATH & DEALING WITH PROJECT FAILURE
Production delays had many consequences on the company and some of these were huge increase
in the cost and reduction in the stock prices post first delay announcement. To deal with the project
costs, the company decided to use cost cutting to save on the expenses. The company was more
ignorant about the problems at the initial stages as they were minor. The company invested more to
speed up the work.
LESSON LEARNED
• Identification of core competency is essential as it can affect the success of the
project
• Using existing core competency is always more beneficial than creating a new
competency to deal with a project.
• Developing new core competencies can result into the reduction in the strength of
the existing core competencies of an organization
• If high value adding functions of a project are transferred to suppliers such as
designing and manufacturing can lead to increase in dependency over suppliers

RECOMMENDATIONS FOR MURASAKI AIRCRAFT CORPORATION
(MAC)
Based on the lessons learned from the two cases, certain recommendations can be made for
MAC such as:
• Identification of core competencies and development of strategies accordingly with
selection of tasks to be outsourced.
• Necessary to gain buy-in from the staff as well as from the top management for which
the company must clearly communicate the cultural and procedural changes as well as
benefits to each stakeholder and staff member on additional responsibilities and
support.
• Training schedule and requirements must be planned in advance.
• Phased and iterative development procedure so that the bugs can be detected in a timely
manner.
• Improved vendor selection process based upon the past experience, market trends,
customer comments and reviews.
• Advanced requirement gathering and stakeholder analysis activities shall be carried out.
• An advanced risk management plan and strategy shall be in place.
CONCLUSIONS
The objective of the report was to ensure that the company did not make similar mistakes on
the project as done by the two cases discussed including Boeing and Airbus. Both project saw
major delays in deliveries and cost overruns that made the projects unprofitable. Other issues
included lack of buy-in from the management, incompetence of the project organization,
inaccurate estimation or inefficient designing. Some recommendations made for MAC included
use of core competencies for in-house development, outsourcing of activities that are not core to
the company, training to employees on equipments, use of iterative methodology for
development, in-depth requirement gathering, and use of strong assessment procedure for
project vendors and contractors.

REFERENCES
BBC, 2012. Factfile: Airbus A380.. [Online]
Available at: www.bbc.com/news/business-41773715
[Accessed 30 October 2017].
Clarke, N., 2006. The Airbus saga: Crossed wires and a multibillion-euro delay - Business -
International Herald Tribune. [Online]
Available at: http://www.nytimes.com/2006/12/11/business/worldbusiness/11iht-
airbus.3860198.html
[Accessed 30 October 2017].
Denning, S., 2013. What went wrong at Boeing. Strategy & Leadership, pp. 36-41.
Dörfler, I. & Baumann, O., 2014. Learning from a Drastic Failure: The Case of the Airbus A380
Program.. Industry and Innovation, pp. 197-214..
Elahi, E., Sheikhzadeh, M. & Lamba, N., 2014. An Integrated Outsourcing Framework: Analyzing
Boeing's Outsourcing Program for Dreamliner (B787).. Knowledge and Process Management. , p.
13–28.
MarketLine , 2012. Boeing Case Study. The 787 Dreamliner.. [Online]
[Accessed 30 October 2017].
Rochfort, S., 2016. Delay issues cloud A380 visit.. The Sydney Morning Herald, 28 November, pp.
1-2.
Shenhar, A. J., Holzmann, V., Melamed, B. & Zhao, Y., 2016. The Challenge of Innovation in Highly
Complex Projects: What Can We Learn from Boeing's Dreamliner Experience?. Project
Management Journa, p. 62–78.
Shore, B., 2009. Airbus 380. [Online]
Available at: http://globalprojectstrategy.com/lessons/case.php?id=23
[Accessed 10 October 2017].