Strategic Project Management For Fonterra

This report discusses the Fonterra milk processing plant project in New Zealand and how all these practices have resulted in the company gaining a competitive edge over its competitors. It focuses on all the relevant theories and models which will best suit here in this situation as well, allowing Fonterra to be sustainable in future. The report covers the scope of the project, planning, quality assurance, control system, leadership, completion and review, recommendations, and governance.

Strategic Project Management For Fonterra
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Executive Summary
Project management is an essential process of any company’s well-functioning project
needs, and it is important that the project undertaken is always completed with the best
results.
In this report, we will be discussing the Fonterra milk processing plant project in New
Zealand and how all these practices have resulted in the company gaining a competitive
edge over its competitors, allowing for optimum utilisation of its resources and the best
possible returns for all the investment which is made into achieving it as well. We will also
focus on all the relevant theories and models which will best suit here in this situation as
well, allowing Fonterra to be sustainable in future.
Fonterra is a New Zealand based dairy cooperative. Fonterra is comprised of as many as
10,000 farmers who have joined hands together to form this dairy cooperative.

Table of Contents
Introduction.......................................................................................................................4
The scope of the Project.....................................................................................................5
Planning.............................................................................................................................6
Quality Assurance..............................................................................................................7
Control System...................................................................................................................9
Leadership.......................................................................................................................10
Completion and Review...................................................................................................10
Recommendations...........................................................................................................11
Governance......................................................................................................................11
Conclusion........................................................................................................................11
Reference.........................................................................................................................13
Appendix 1 WBS- Work Breakdown Structure..................................................................14
Appendix 2- RACI MATRIX................................................................................................15

Introduction
Fonterra is a dairy cooperative which is based in New Zealand. It is made up of as many as
10,000 farmers who are an integral cog in the Fonterra machinery and work hard to ensure
good quality milk produces are sent to the people of New Zealand. The company has an
extremely well established customer base in New Zealand and Australia, and then a major
base in other Asian nations like China, Singapore, Malaysia etc. The company is said to be
one of the major sources of New Zealand’s economy and said to function as a builder of
wealth, job and opportunities.
Fonterra has a diverse product portfolio and sells various products like ice cream, flavoured
milk, cheese, pasteurised milk etc. it has a total of more than 300 products to its name. it is
said to be world’s one of the largest dairy exporter, with a total of 28+ production sites in
New Zealand of which all are well functioning and productive. Fonterra has an
uninterrupted supply chain and production management system, which has been growing
constantly and becoming better.
Fonterra has been self – reliant in so many aspects that it has ensured even producing
electricity for itself in some of its plans. It was established in 2001 by merging two other
dairy cooperative of New Zealand and was subsequently listen on the stock exchange as
well. Later on, the company is now being run by a well-established management along with
the inputs of 10,00 farmers.
The company has a valid presence overseas as well, and enjoys it similarly in New Zealand,
with very names as its competition. The company is all the more innovative and has grown
in it when news came out that they are implementing AI for production operations in
Fonterra.
This reports will help us in understanding the project management carried out in Fonterra
and all the factors which have influenced it so far. We will also aim to understand the
intricacies of project management by using the example of the new Fonterra plant in
Taranaki, New Zealand.

The project we are talking about here is the Taranaki plant of Fonterra which is being
massively built on a huge scale. The project is said to be really ambitious since it will be a
next generation dairy experience given to the people. This is a 24,0000 m dry plant cum
store. It took nearly nine months to finish the construction and plant setting.
The plant was a success as the company eventually shifted their operations from Whereroa
plant to here.
The plant is a state of the art facility and is known to carry out all the dairy functions with
better speed and in an optimised way to allow the production to create some value.
The scope of the Project
The project scope is an essential document stating all the requirements of the project like
deadlines, the future need for the project, functions and deliverables. This document along
with the Project Charter allows us to ensure that the project remains in sync with what it is
being done for and ensures how it will achieve the final cut.
For Fonterra, the following is the function of the project scope:
 It is essential to define the requirements of the project. It helps in realising what all
products are needed to carry out the project, in this case, construction material and
the software requirement for running the plant, along with the machinery
 It was also essential as it helped in process requirement ie, helped in analysing how
people and processes interact with each other while the process is going on
 Identifying the limits of the scope to ensure nothing goes overboard and all the
resources are utilised properly, without waste
 Clear the communication between the stakeholders to ensure that no
miscommunication happens (Gotto, 2013).

In order to create a well functioning project, it is essential to define its scope. And this
ideally happens during the RFP process. RFP or Request for Proposal process is the first
stage during which the company, as well as the project firm, interact.
Here, the project management firm interested to take the project from the company sends
in a written proposal mentioning the scope of the project ie, what will they do in it, the cost
incurred, the design of the project, future need of the project, functions and deliverables.
Based on the evaluation of various tenders that come in from various different project
houses, the company then chooses the project house with the most suitable, innovative and
sustainable project design which goes well with the cost as well (Rouse, 2016).
In this process, the draft RFP is submitted and the bidders then evaluate this draft. After
evaluation suggestions are sent. In the final round, whichever company sets the record, gets
the project.
Fonterra has subsequently gone through with this process to choose Calder Stewart as their
ideal job partner for this project (Nelson, 2006)
Planning
For this project to come to life, it was essential that the planning phase of it was carried out
in the right manner. Planning phase was important because major decision making for the
part of the project was to be done here, and this is where the execution had to start off
from (Taherdoost. H, 2015)
Executing the product was of great importance as it involved the entire process of team
building, communication with the stakeholders, fund management etc.
Following are the things which were focussed on planning discussed in detail:
 Activities and deliverables: Calder Stewart was given the responsibility of creating a
new plant for Fonterra in Taranaki, to replace their old plant in Wherefore on an
immediate basis. While the plant was well developed with state of the art

infrastructure, it took nine months and a rigorous amount of hard work to ensure
that it completes in the best way possible
 Next important thing which was to be ensured in this plan was to take care of
stakeholder communication. This was important because a state of clarity and
mutual understanding of what is going on in the project is important from both
sides. It was important otherwise because Fonterra was pumping in money and
loads of it, and any mishap or issues in construction would have resulted in a lot of
wastage of time and money
 Role and responsibilities were fairly divided, Calder Stewart had bought on board for
this project one of the best project managers available with them, and an
exceptionally well-named team of architects and dairy technicians to ensure this
project was successful for Fonterra
 The project ran for nine months in which a lot of changes happened in the team and
the plan
 The total cost that went into its making was nearly $20 million including the plant
facility and the construction
Quality Assurance
Every project manager is aware how a poorly done project or a project resulting in failure
can hamper their image and can result in losses to the company as well as the client. Quality
is an important aspect of project management and it is extremely important to ensure that
the project comes out high in quality in terms of infrastructure, utility and sustainability.
If any of these factors above go unfulfilled it can result in a problem for the client company,
here Fonterra (Marjorie, 2011)
Calder Stewart is known to give quality project management services to its client, and this
time too they did not disappoint Fonterra anywhere.

Figure 1: Success Factors in Complex Projects
For the success of any project, the following are the quality checks that it has to go through:
 The project should be completed in a maximum of three years or the duration
should be less than three years
 The people working on the team should have an experience of at least 5 years and a
good number of projects (Gustavsan, 2006)
 Changes to the scope of the project should be open or, the scope of the project
should be flexible and open to changes
 The project should be well settled with the organisation and in sync with its culture
as well
 The project should happen under a very successful leadership that is able to guide
the project during times which were unforeseen and difficult to manage through
(Boyonton, 1984).
There is always some risk associated with any project, of any magnitude and type. These
risks ensure that the project is done in the best way possible to avoid any future
complications (Bridges, 2014)
In this Fonterra project, there was a huge risk associated as the plant installation had to be
done with simultaneous production ie while one portion of the plant was running to
produce milk powder, the rest of it was being completed. Now this was a challenge since
any trouble in one part of the plant could reflect on the day’s production (Freffer, 2018)

Thus, a very meticulous and smart approach was taken to ensure that this was done in the
best way possible.
Control System
The control system of a project is initiated to see what all factors are responsible for the
control of things in a project it can be a control on wastage, control of growth and many
such things.
Here, the iron triangle method comes into use. The Iron triangle method is used to show the
constraints of a project like:
 The quality of the project being constrained by the budget of the project
 Trading between constraints by the quality manager
 Changes in one constraint necessitate changes in others to compensate or quality
will suffer (Aston, 2018)
It focuses on three major things: time, cost and the quality of the project.
Figure 2: Iron Triangle
Total quality management is known as the process by which elimination of any and so errors
encountered during the production process. It involves synchronising the supply chain,
streamlining it and improving the employee functioning which subsequently reflects in
customer satisfaction (Arya, 2010).
Total quality management or TQM is an important concept and is much needed when we

discuss the functioning of a well-developed production facility like that of Fonterra
(Crammer, 2017)
Leadership
As mentioned above, for a high-level project like these, the leadership plays an important
part. The person who works towards ensuring the proper working of the project. This can
happen only when the leader himself is experienced, knows a great deal about managing
such high stake projects, conflict resolution and can do damage control (Hussang, 2-17)
Mistakes are bound to happen in a project, and thus, the ideal leader is there to ensure that
they swiftly sail by correcting it and making sure that it does not happen again.
Following are the quality of a good project leader, that helped Fonterra reach their goal:
 The person is experienced in project management
 Has managed a diverse team and knows how to handle situations arising out of
conflicts and ego
 Is clear in his or her approach towards communicating with the management
(Fonterra)
 Is honest and has a clean record
 Knows the value of time and ensures that (Marsh, 2018)
Completion and Review
After the project was completed, it got some very good reviews to form the inspection team
of Fonterra. The plant was set up exactly as the thought of and was completely up to the
mark in terms of safety and infrastructure appeal (Prabhakar, 2009)
This ensured that the project management team of Calder Stewart has done an exceptional
work (ROUSE, 2017)
The plant was set up in the highest quality and was state of the art, that too in a situation of
parallel running. Next,

Recommendations
Even though the project came out just as nicely done as expected, it is important to know
that the project managers have to make sure that their working is completely foolproof in
nature. This can be taken care by following the proper recommendation:
 Hiring the right people on the team
 Ensuring that the project is completed ahead of time
 Staying within budget and not exceeding it
 Doing a proper gap analysis of the situation ensuring how things will be taken care of
 Clearly communicating with the client them and updating them regularly on the
progress of the project (Ahn, 2016)
Governance
Calder Stewart and Fonterra both ensured that the governance of this project was fairly
carried out without any issues. The companies had divided the scope of the project in such a
way that each of them had their own different areas to look after, and the communication
was flawless in the entire course of the project.
This clarity in their communication ensured that the project was not hampered and
maximum results were obtained out of them.
This was an open window for them, as both the companies were aware of each other’s
expectations and knew how deliverables were to be done, ensuring full convenience for
each other (Alie, 2015)
Conclusion
With this, we can conclude that the project for Fonterra plant carried out by Calder Stewart
was a success because it followed some very good measures of quality control and planning

strategically its project requirements and ensure that there were no loopholes or gap left off
in this process.
We also saw various different aspects of how project management is taken care. For
instance, in order to create a well-functioning project, it is essential to define its scope. And
this ideally happens during the RFP process. RFP or Request for Proposal process is the first
stage during which the company, as well as the project firm, interact. Quality is an
important aspect of project management and it is extremely important to ensure that the
project comes out high in quality in terms of infrastructure, utility and sustainability.
If any of these factors above go unfulfilled it can result in a problem for the client company,
here Fonterra (Khurram, 2014)
Calder Stewart is known to give quality project management services to its client, and this
time too they did not disappoint Fonterra anywhere. Lastly, the concept of TQM was well
carried out by the project.
Total quality management is known as the process by which elimination of any and so errors
encountered during the production process. It involves synchronising the supply chain,
streamlining it and improving the employee functioning which subsequently reflects in
customer satisfaction. (Ljungblom, 2016)
Focus was given on leadership as well. Leadership plays an important part. The person who
works towards ensuring the proper working of the project. This can happen only when the
leader himself is experienced, knows a great deal about managing such high stake projects,
conflict resolution and can do damage control.
After the project was completed, it got some very good reviews to form the inspection team
of Fonterra. The plant was set up exactly as the thought of and was completely up to the
mark in terms of safety and infrastructure appeal (Nijhuis, 2018)
This ensured that the project management team of Calder Stewart has done an exceptional
work.
Thus we could see how this project came to life and how it ensured success for both the
companies, and established a relation between them for a long time.
Reference

Gotto, J. (2013). How to define the scope of a project. Retrieved from
https://www.totallycommunications.com/latest/how-to-define-the-scope-of-a-
project/
Rouse, M. (2016). Request for Proposal (RFP). Retrieved from
https://searchitchannel.techtarget.com/definition/request-for-proposal
Taherdoost. H. (2015). Critical Factors Leading to Project Success or Failures . Science Direct,
22(6).
Boyonton, Z. (1984). An assessment of critical success factors . Sloan Management Review ,
25(4).
Gustavsan, Z. (2006). A Multi Project Setting - Finding Success. International Journal of
Project Management (3).
Marsh, F. (2018). 10 Great Leadership Skills of Project Management. Retrieved from
https://aboutleaders.com/10-great-leadership-skills-of-project-management/
#gs.2hbWzM8
Prabhakar, G. P. (2009). What is Project Success: A Literature Review . International Journal
of Business and Management , 3(9).
Freffer, A. (2018). Overview Success Criteria and Critical Success Factors in Project
Management. Industrial Engineering & Management.
Nelson, R. (2006). Evaluating Project Success, Failure -- and Everything in Between.
Crammer. (2017). TQM . Retrieved from https://www.smartsheet.com/blog/demystifying-5-
phases-project-management
ROUSE, M. (2017). What is TQM. Retrieved from
https://searchcio.techtarget.com/definition/Total-Quality-Management
Marjorie. (2011). 11.1 DEFINING RISK. Retrieved from https://pm4id.org/chapter/11-1-
defining-risk/
Bridges, J. (2014). What Is Project Risk? Retrieved from
https://www.projectmanager.com/training/what-is-project-risk
Arya. (2010). Project Management Triangle . Retrieved from
https://www.stakeholdermap.com/project-management/project-triangle.html
Khurram. (2014). Introduction and Implementation of Total Quality Management (TQM).
Retrieved from https://www.isixsigma.com/methodology/total-quality-

management-tqm/introduction-and-implementation-total-quality-management-
tqm/
Ljungblom, M. (2016). Virtues and Vices in Project Management Ethics. Journal of Project
Management , 4.
Nijhuis, S. (2018). Tackling Project Management Competence Research. 5.
Alie. (2015). Project governance #1 critical success factor. Project Management Institute .
Ahn, L. (2016). 10 RULES OF HIGHLY SUCCESSFUL PROJECT MANAGEMENT. Retrieved from
https://www.projectsmart.co.uk/10-rules-of-highly-successful-project-
management.php
Hussang, T. (2-17). 8 Strategies for Successful Project Managemen. Retrieved from
https://online.king.edu/business/successful-project-management/
Aston, B. (2018). 7 Essential Project Management Skills for 2018. Retrieved from
https://thedigitalprojectmanager.com/project-management-skills/
Appendix 1 WBS- Work Breakdown Structure
The WBS Structure or the Work Breakdown Structure is defined as the standardisation of
the project goals and activities and breaking the down into simplified stages. Every project
has some goals, ways of completion and certain other things which help in determining its
success.
For Fonterra plant, the WBS played an important role as it helped in breaking down the
tasks into smaller units to be achieved easily.
Following is the WBS for Fonterra:

Appendix 2- RACI MATRIX
RACI Matrix is a table which is used to initially define and describe the involvement of the
stakeholders in the process.
RACI Matrix works in coordination with the business charter, business proposal and all
relevant business documents for this purpose.
Fonterra Taranaki
Plant
Grounds Production
Plant
Decide a
construction plan
Get materials for
construction
Start the
construction
Rectify the
design
Install Machinery
Subsystem Base Facility
Create Safety
Plans
Work on
electifcity and
water supply
Project
Management

RACI Stands for: Responsible, Accountable, Consulted, Informed
The RACI Matrix for Fonterra Plant is:
Executive
Team
Sponsor Architect Project
Manager
Project
Owner
Creating and
implementing
roadmaps
A R R I
Identifying
the risk in
project
R I C R I
Implementing
the project R I R A I
Maintaining
the work flow I A R C
Monitoring
the progress R R A C/I
Coaching and
mentoring
the team
A I R R