The Boeing 787 Dreamliner Project
The Boeing 787 Dreamliner project, also known as the Yellowstone project, was an ambitious and complex project by Boeing Commercial Airlines, a large American commercial airline manufacturer based in the United States. The project aimed at developing a new aircraft to replace the Boeing 767 and safeguard the competitive advantage of the company in the aviation industry, which was threatened by the European competitor, Airbus. Indeed, the Dreamliner project was executed in a highly competitive, complex and high-pressure environment in the civil aviation sector. This required the leveraging of global collaboration to benefit the project from the highly-developed and innovative technologies that were dispersed globally, to gain a competitive edge in the industry (Kotha and Srikanth 42). Although the project managed to deliver an improved jetliner, it did so after significant time and budget overruns. Notably, the first aircraft was delivered in 2011, 3 years after deadline and over 20 billion dollars over budget (Shenhar et al. 62). The project not only changed the research and development practices at Boeing but also introduced new ways of managing the supply chain by abandoning the in-house design and manufacture model and instead, adopting the systems integration model that was anchored in outsourcing (). Indeed, while the project objectives, scope and deliverables were clearly envisioned, the design, implementation and control process had not been ascertained until in the later stages. Moreover, some major decisions made by the project team had significant ramifications on the success of the project.
The Dreamliner project demonstrates the project management challenges experienced in complex mega projects that have ambiguous goals, numerous uncertainties and risks due to the application of untested project models and processes, evolving activities shifting milestones (Midler, Killen and Kock 4). The ensuing analysis focuses on the various project management practices used in the development of the Dreamliner, and their pros and cons based on the project outcomes. Various alternative project management approaches that would improve a project of similar kind are proposed, with a view of arriving at a feasible recommendation.
2.1 The business scenario
The Boeing 787 Dreamliner project was commissioned in 2003 as a new products development (NPD) project, although it was formulated in the 1990 and was delayed by the terrorist event of September 2001 (Naghi Ganji, Shah, and Coutroubis 180). The business case of the project was premised on internal and external factors. Internally, the Boeing 767 was in the decline phase of its lifecycle, having been remodeled severally. As such, developing a new aircraft series that would enhance and extend the product line of the company was justified. Externally, various changes in the commercial aviation industry necessitated a new aircraft model. Firstly, jet fuel prices has sky rocketed in the aftermath of the 2001 terrorist attack. As such, the aviation industry demanded a fuel-efficient aircraft to keep airlines profitable. In this regard, the project promised to deliver an aircraft that cut fuel consumption by 20 %. Secondly, due to increasing congestion in airports, the airline industry was shifting from the hub-and-spoke model to the point-to-point model. As such, airlines demanded a smaller but long-haul aircraft that required fewer stopovers. Thirdly, Airbus was outcompeting Boeing in new orders and sales, diminishing Boeing’s market share. This necessitated the development of a new aircraft that would excite airlines and passengers, driving up demand. Altogether, research and development was a significant component of the Dreamliner project.
2.2 Project Management Practices
2.2.1 Project formulation
The value-creation strategy was used to formulate the project and develop its scope. The project sought to develop a new fuel-efficient, cost-effective and quiet aircraft that would satisfy airlines and passengers (Naghi Ganji, Shah, and Coutroubis 180). Therefore, the project scope included the increase of fuel efficiency by 20 % and improvement of passenger comfort.
The advantage of the value creation strategy is in its focus on the most significant stakeholders, in this case, airlines and passengers, who are also important in the aviation industry. The project focused on improving value for airlines by improving the fuel efficiency of the new aircraft through using composite materials, which were lighter than the traditional aluminium and the use of lithium-ion batteries to reduce the power demand of the electrical systems, while improving power stability (Suchandra 242). This would have extended the flight range of the plane, thus reducing uneconomical stopovers. Similarly, the project focused on improving the passengers’ flying experience by increasing the pressure and humidity, while reducing noise in the passenger cabin. This was to be achieved by using composite materials and improving the engine and aircraft designs. However, the disadvantage of this scoping approach is in its ambiguity of the deliverables. Notably, the deliverables were pegged on comparison to the existing performance of other commercial aircrafts in the industry. Nonetheless, the scope of the Dreamliner project managed to deliver a new aircraft that impressed the airlines and passengers, which drove up demand.
2.22 Project planning
Planning of projects is undertaken by a project team constituted by the project manager. Project managers are expected to be well-versed with the project and technically competent in the field addressed by the project. Moreover, the project team should have diverse competencies to address all aspects in the project effectively. In this case, the Dreamliner project team comprised of employees of Boeing and headed by a program manager, who was part of the senior management.
The advantage of having a competent project manager and team that are technical sound in the project area is the ability to identify and resolve technical issues before they arise. Moreover, a technical project manager can fill in the knowledge gaps that lack in the project team, enhancing its capabilities and competencies. In this case, the project manager and team were drawn internally, considering that Boeing was an established aircraft innovator, developer and manufacturer. In this case, Boeing expected to save money that would have been spent on external consultants by engaging and internal team. Moreover, such a team was expected to safeguard the secrets of the projects from competitors like Airbus.
However, an internally-drawn project team may be disadvantaged when dealing with complex project issues that are outside their competence areas. The Dreamliner project team, which comprised of the senior management in the company, may have suffered from the illusion of control bias. This phenomenon afflicts project managers that overestimate their abilities to influence the project outcome, while underestimating the complexities of the risks inherent in mega projects that use unconventional approaches (Kardes et al. 910). Major deviations from organizational project management practices can challenge internal project teams, as was evidenced by the Dreamliner project. Besides, they can inhibit accurate forecasting due to the high degree of uncertainty that is inherent in mega projects, resulting in underplanning (Kardes et al. 910). In this case, the company changed from its traditional internal aircraft development approach to an outsourced model, which tasked strategic suppliers with developing aircraft components. In this regard, Boeing’s senior management suffered from self-justification by deciding to adopt the tiered outsourcing model, even when it was against the technical advice (Kardes et al. 911). The project team was overconfident in their ability to deliver the Dreamliner, considering that they had successfully delivered previous projects. However, the team underestimated the complexity of the new project management processes. Notably, it was not equipped sufficiently to deal with the supply chain management required in an outsourced aircraft development model. As such, the project team did not plan to support the third-parties, especially the integrators tasked with assembling parts from other suppliers, some of whom were located in culturally-different countries such as South Korea and Japan. Good outsourcing practices recommend the presence of an on-site liaison from the project owner to help translate the specifications of the project to the suppliers.
Besides, the project team proposed the just-in-time supply model, in which they were incompetent and inexperienced. Although this model was justified by its success in Toyota, a highly-successful Japanese automotive manufacturer, the project team did not consider the organizational culture requirements that underpinned it. Therefore, the model was partially implemented and led to supply delays. Moreover, the build-to-performance project contracts with the suppliers focused on penalties for non-delivery rather than incentives for timely delivery. This contract model introduced a dispersed risk and revenue sharing approach that was to pay suppliers from the sale proceeds of the Dreamliner (Shenhar et al. 63). The suppliers would be paid once the new aircraft was delivered to customers, while they were expected to shoulder the cost of component development upfront. However, due to many faulty parts and component integration challenges, the project team was forced to support struggling suppliers, which overran the project budget. Also, poor management of suppliers by integrators emerged as the tier-1 suppliers were unable to correctly evaluate and select the tier-2 and tier-3 suppliers who were to manufacture the aircraft component and develop its systems. Consequently, major project delays and budget overruns.
2.2.3 Project implementation
The project used outsourcing as the project implementation strategy, based on a tiered supply chain. This strategy was used in the research and development process of developing the new aircraft. Boeing engaged 700 third-parties dispersed globally to develop and supply parts for the new aircraft, while the company focused on systems integration and assembly, as illustrated in figure 1 (Shenhar et al. 63).
Figure 1. The tiered supply chain in the outsourcing model
Source: Naghi Ganji, Shah, and Coutroubis (181)
A tiered outsourcing approach comprising of three tiers of suppliers as strategic partners, was used in the project. The first-tier suppliers (figure 2) acted as integrators of the parts produced by the second and third tier suppliers. To coordinate the implementation process, Boeing used Exostar, a web-based information system, hoping to eliminate geographical constraints while providing supply chain visibility and instantaneous monitoring.
Figure 2. Some tier-1 suppliers
Source: Shenhar et al. (64)
The advantage of this strategy is in the shortening of new product development time, which reduces project costs. Third parties have specialized competencies that may lack in a company. Moreover, the project can leverage the dispersed cutting-edge knowledge and technologies in the world. For instance, Boeing did not have competencies in batteries or composite materials, which other companies in and out of the United States has specialized in these areas. But Japan and South Korea were advanced in these technologies (Shenhar et al. 64). In addition, the outsourcing approach can be integrated into the supply chain required to manufacture the product, once the new product is approved. The third parties involved in the part development would be the ones who would supply the parts when the new aircraft went into production. This enhances supplier relations, which is vital in the production phase. Theoretically, Boeing hoped to cut aircraft development and cost, and assembly time from 6 to 4 years and from 10 to 6 billion dollars, respectively. In reality, the development took 7 years and overshot the budget by more than two-fold.
However, outsourcing is disadvantaged by firstly, the loss of control of the project commissioner/owner. In this case, outsourcing excluded Boeing management and employees from being directly involved in the development of the new aircraft. Secondly, the outsourcing model increases cost when the third-party suppliers are located in far-flung countries. This challenge is aggravated by the need for special vehicles for delivering huge and awkward parts. As such, Boeing had to remodel its aircrafts to carry the parts from foreign countries. Thirdly, outsourcing can present communication challenges when numerous culturally diverse and geographically dispersed partners are involved. Although the Exostar system was intended to enhance communication, many suppliers did not update the system with accurate information due to mistrust. Fourthly, the model can incur huge costs and time delays if a third-party supplier delays delivery or has to redo a faulty component. This problem is worsened if the supplier does not have sufficient financial and technological capacity required for revising defective parts. In this case, Boeing experienced periodic postponements due to supplier delays.
To address the communication issues and supply delays, Boeing had to buy out Vought Aircraft Industries, which was struggling financially, send out its engineers to suppliers who were producing faulty components, which escalated the project costs (Drew).
3.0 Suggestions for improvement
To improve the project formulation process, it is recommended that the complexity of projects be reduced. Clearly defined aims may clarify the project scope and objectives, thus avoiding scope creeps.
Project planning at Boeing can be improved by constituting a diverse, multidisciplinary and competent project team that not only understands the industry dynamics but is also able to plan for innovative and complex project processes that have not been used previously in the aviation industry. While the use of new project management approaches is desirable when undertaking innovation projects, the contingency planning approach instead to the traditional product development planning approach, is recommended for such complex projects. This allows the project team to anticipate changes in project scope, product designs, and innovation execution by creating sufficient allowance for multiple testing and redesigning (Midler, Killen and Kock 6). This would not only help Boeing leverage the globally dispersed and advanced knowledge and technologies, it would also enhance the collaborative capacity of the company, when is pertinent in the globalization era of crowdsourcing.
Project implementation at Boeing can be enhanced by improving the risk management and project control systems to ensure that risks are identified and mitigated early and exhaustively. Moreover, fluent coordination and tighter controls of the implementation process can help avoid project risks, while increasing the chances of project success. It is unlikely that Boeing will abandon the outsourcing model of new aircraft development. Indeed, the experience gained and lessons learnt by Boeing will incentivize the refinement of this project management approach. Therefore, Boeing’s project team should focus on improving the monitoring and control of the outsourced processes and components, considering that it was able to deliver an innovative and advanced aircraft to the civil aviation industry. To make monitoring and control effective and efficient, effective communication is pertinent because plays a key role in translating project goals and objectives into high quality products. While information technology systems can improve the promptness and visibility of information sharing, it should not only be complemented by the supply of accurate and detailed specifications to the offshore supplier but should also be accompanied by the physical presence of liaisons. Such presence would help resolve misunderstanding from cultural differences and specification ambiguities, while fostering supplier relations and development.
Agile project implementation approaches are recommended because they would allow Boeing to vary project execution promptly when challenges emerge in the project lifecycle. The implementation process should accommodate the uncertainties accompanying new technologies and innovation. This would avoid the expansive and lengthy changes in assembly plants that were experienced by Boeing as it sought to resolve the component and systems integration difficulties encountered by suppliers.
The analysis demonstrated the challenges that complex projects, such as the Boeing 787 Dreamliner project, may encounter when new and untested processes are used without exhaustive, prudent project planning. While the Dreamliner project was ambitious in developing a new and improved aircraft aimed at repositioning Boeing Commercial Airlines as the aviation industry leader in the commercial aircraft segment, it grappled with supply chain management issues and perennial delays, which threatened its success. Poorly scoped and planned projects are challenging to implement because they present numerous uncertainties that may cause the creeping of scope and time and budget overruns. Developing new aircrafts will always be complex and full of uncertainties as aircraft manufacturers compete for market share and respond to industry demand and global concerns. In addition, the management of innovation projects will continue pushing the advancement of project management approaches. As such, Boeing can appreciate having used the Dreamliner project as a learning experience on how its future aircraft development projects would be approached in the future.
To avoid future challenges, stricter project controls that are reinforced by comprehensive risk management approaches may improve the implementation of aircraft development projects at Boeing. Besides, close monitoring and control of supplier processes would not only improve the effectiveness and efficiency of the outsourcing model in management of megaprojects but would also improve the supply and value chain management during the implementation of such projects. Indeed, these considerations would ensure that defective parts would not be escalated to the integration stage before they are tested adequately and their performance ascertained. Also, Effective communication that integrates information technology systems with physical presence in supplier locations would help streamline supplier performance, and enhance the effectiveness of monitoring and control. Indeed, trust and commitment from suppliers would be enhanced when communication is used to foster supplier relationships. This is because the project execution phase of the project proved to be most challenging in the Dreamliner development project.
Drew, Christopher. “Boeing buys plant that makes crucial part of Dreamliner.” The New York Times, 7 July 2009. https://www.nytimes.com/2009/07/08/business/08boeing.html. Accessed 5 December 2019
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