CASE STUDY: Payton Corporation

MART LOZA, Rubn

1. What is the basis for the problem?

The main problem of Payton Corporation is the potential conflict that exists
in the labour rates. There is a disagreement in the rates that actually exist
and the exact labour rates that were budgeted at the beginning of the
project. This creates a conflict between the workers and the company. The
project manager firm is going to spend 50% more on the project than they
thought about that.

2. Who is at fault?
The project manager is at fault. When drawing up a budget for a project, all
the relevant factors that affect costs, such as the amount of work needed,
must be effectively taken into account. For the case of Payton Corporation,
the project manager did not analyze all the factors that could affect to the
final cost.
The manager should have been better informed about the cost and duration
of the different tasks before signing the contract and, therefore, carry out
the project.

3. How can the present situation be corrected?

The situation could be solved by the suitable review and analysis of the pay
structure of the employees within the organization who are involved in a
project. Only, a conflict appears between the project manager and the Lab
manager about the expenses due to the hours worked. Therefore, they
should fit the salaries of these workers based on the rates by the
government.

4. Is there any way this situation can be prevented from

recurring?
This situation may be prevented from recurring by the implementation of
strong compensation policies for our employees that are in line with the
functional tasks performed by the employees and the regulatory measures
by the government.

5. How would you handle this situation on a longer-duration

project, say one year, assuming that multiple departments are
involved and that no new departments were established other
than possibly the project office?

One of the most important factors in a long-term project that involves

different departments is the communication between them.
Through communication, different factors that affect the duration and cost
of the different activities can be identified, monitored and analyzed. In
addition, problems can be detected more quickly and, therefore, the project
manager can apply the appropriate solution faster in order to reduce the
impact that could have on the scope and cost of the project.
Once analyzed each of these departments, the manager can implement new
policies in order to reduce the costs associated with these activities such as
balancing the pay structure of some employees, analyze if different
departments can interact between them to perform same tasks by reducing
the necessary staff, etc.

6. Should a customer be willing to accept monetary

responsibility for this type of situation, possibly by permitting
established standards to be deviated from? If so, then how
many months should be considered as a short duration
project?
In my opinion, the client should not accept the monetary responsibility in
this type of situations because the error has been performed by the project
manager who has not realized an appropriate analysis about the budget of
the project before arriving to an agreement. However, many times, the
customer does not have the option of choosing and, therefore, just
accepting the new policy although they do not agree with it.
Sometimes, the decision of the customers is also related to the duration of
the project. Generally speaking, short-term projects take a few hours, days
or weeks to complete. Long-term projects take months or even years to
finish.
Short-term projects typically have a limited impact. In this case, customers
can withstand this situation because time is very limited and, therefore,
decide to continue with the project. Once the problem is solved, the project
team disbands.
Longer-term projects tend to have a larger impact on the business,
community or employees. The time during which the client has to support
this situation can be very high. For this reason, many times, the situation
becomes unsustainable and customers decide to leave the project.