Lucas Remisz
Pablo Subra-Gomez
ESCE 308
Fitzburg Company Cuernavaca’s audit
May 1997
Localisation:
Hierarchy:
Head office
Represented by:
Ann Block
V.P.OverseasOperations
Max Bierman
General Construction
Manager, Cuernava...
Actual situation in terms of cost & achievement:
0
5
10
15
20
CostinM€
+46%
May.97April.97Mar.97Feb.97Jan.97Dec.96Nov.96Oc...
Existing Situation:
• There is some major problems in terms of :
-Communication
-Intercultural Differences
-Ethic Differen...
Communication:
• John and Bierman don’t have any experience in Mexico.
• They try to work in Mexico as they would do in th...
Intercultural Differences:
• Americans are more close minded
• They have an individualist culture
• They pay more attentio...
Ethic Differences:
• TheAmerican managers always try to find out what the
Mexicans workers could have done wrong.
• They t...
Management:
• There is less dialogue between American managers and the
workers
• They want to do it the American way, inst...
Statement of the problem:
Difficulties in the management of all those factors
led to problems of costs and delays
Option 1: status quo
Measures to take Intermediary impacts Possible risks
 High number of errors
 Supplementary purchase...
30M€
90%
100%
20M€
40M€
80%
30%
10M€
5M€
60%
70%
35M€
50%
40%
0
25M€
20%
15M€
10%
0
Mar.98Oct.97Sept.97Aug.97July.97June.9...
Option 2: Tighter supervisory control by a
Mexican manager
Measures to take Intermediary impacts Possible risks
 Hire a m...
20M€
10M€
20%
30M€
32M€
34M€
4M€
6M€
2M€
8M€
16M€
18M€
22M€
24M€
26M€
12M€
14M€
28M€
100%
10%
00
50%
90%
80%
70%
60%
40%
3...
Option 3: Tighter supervisory control &
pressure by John Perkins
Measures to take Intermediary impacts Possible risks
 Co...
50%
60%
30%
40%
70%
20%
10%
0 0
15M€
90%
25M€
10M€
5M€
35M€
20M€
30M€
80%
100%
Oct.97 Nov.97 Dec.97 Jan.98
100%
Cost
Achie...
Option 4: Increase workers personal
implication
Measures to take Intermediary impacts Possible risks
Offer to workers:
 t...
20M€
15M€
45M€
40M€
35M€
30M€
25M€
10M€
10% 5M€
50M€
80%
100%
0 0
70%
90%
60%
50%
40%
30%
20%
Cost
Achievement
Nov.97
50 M...
Option 5: Hiring
Measures to take Intermediary impacts Possible risks
 Hiring 30 unskilled
workers
 Hiring 4 young engin...
25M€40%
50%
35M€
40M€
45M€
50M€
55M€
60M€
0
90%
100%
10%
80%
70%
5M€
60%
30%
30M€
20%
20M€
15M€
10M€
0
Achievement
Oct.97S...
Recommendations:
Reduce delays Reduce costs
Option 5 Option 3
Fitzburg company cuernavaca's audit - 2014
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Fitzburg company cuernavaca's audit - 2014

  1. 1. Lucas Remisz Pablo Subra-Gomez ESCE 308 Fitzburg Company Cuernavaca’s audit May 1997
  2. 2. Localisation:
  3. 3. Hierarchy: Head office Represented by: Ann Block V.P.OverseasOperations Max Bierman General Construction Manager, Cuernavaca Leopoldo Sanchez Garcia Project's chief engineer Other employed workers Maestro Munoz Employed worker Subcontractors workers John Pekins Assistantof Mr. Max Bierman
  4. 4. Actual situation in terms of cost & achievement: 0 5 10 15 20 CostinM€ +46% May.97April.97Mar.97Feb.97Jan.97Dec.96Nov.96Oct.96Sept.96Aug.96 76% 48% 38% 25% 15%10%5% 82% 72% 61% 53%50%45% 35% 15%10% 58% 23% 5%2% 0% 20% 40% 60% 80% 100% Achievement May.97April.97Mar.97Feb.97Jan.97Dec.96Nov.96Oct.96Sept.96Aug.96 Observed Forecast Forecasted and observed achievement of the project between August 1996 and May 1997: Forecasted and observed cost of the project between August 1996 and May 1997: Observed Forecast
  5. 5. Existing Situation: • There is some major problems in terms of : -Communication -Intercultural Differences -Ethic Differences -Management
  6. 6. Communication: • John and Bierman don’t have any experience in Mexico. • They try to work in Mexico as they would do in the US.
  7. 7. Intercultural Differences: • Americans are more close minded • They have an individualist culture • They pay more attention to cost saving processes rather than focusing on quality. • Mexicans accord more importance to tradition • They are attached to the group, and solidarity • « La siesta » is very important to Mexicans workers.
  8. 8. Ethic Differences: • TheAmerican managers always try to find out what the Mexicans workers could have done wrong. • They tend to blame only one worker… • …Whereas the Mexicans Managers try to share the fault, and avoid conflict.
  9. 9. Management: • There is less dialogue between American managers and the workers • They want to do it the American way, instead of adapting themselves.
  10. 10. Statement of the problem: Difficulties in the management of all those factors led to problems of costs and delays
  11. 11. Option 1: status quo Measures to take Intermediary impacts Possible risks  High number of errors  Supplementary purchase of raw-materials  High increase of costs and delays  High negative financial impacts (lower margin, lower profitability of the investment, late positive cash flows) 87.5%
  12. 12. 30M€ 90% 100% 20M€ 40M€ 80% 30% 10M€ 5M€ 60% 70% 35M€ 50% 40% 0 25M€ 20% 15M€ 10% 0 Mar.98Oct.97Sept.97Aug.97July.97June.97May.97 Achievement Cost 36M€ Jan.98Nov.97 Feb.98Dec.97 100% Cost curve Achievement bars Forecasted cost and achievement of the project following option 1 between August 1996 and May 1997:
  13. 13. Option 2: Tighter supervisory control by a Mexican manager Measures to take Intermediary impacts Possible risks  Hire a mexican engineer (the supervisor)  Establish a daily control & report Training of the workers  Decrease of construction errors  Increase of productivity  Increase of costs and delays  Negative financial impacts (lower margin, lower profitability of the investment, late positive cash flows) 75%
  14. 14. 20M€ 10M€ 20% 30M€ 32M€ 34M€ 4M€ 6M€ 2M€ 8M€ 16M€ 18M€ 22M€ 24M€ 26M€ 12M€ 14M€ 28M€ 100% 10% 00 50% 90% 80% 70% 60% 40% 30% Cost Achievement Feb.98 34M€ Jan.98Dec.97Nov.97Oct.97Sept.97Aug.97July.97June.97May.97 100% Cost curve Achievement bars Forecasted cost and achievement of the project following option 2 between August 1996 and May 1997:
  15. 15. Option 3: Tighter supervisory control & pressure by John Perkins Measures to take Intermediary impacts Possible risks  Convert the siesta break (90’) in a 30min lunch break  Establish a daily control & report  Establish a climate of pressure on workers about deadlines  Negative relations between workers & the management  Decrease of construction errors  High Increase of productivity  Strike of workers 60%
  16. 16. 50% 60% 30% 40% 70% 20% 10% 0 0 15M€ 90% 25M€ 10M€ 5M€ 35M€ 20M€ 30M€ 80% 100% Oct.97 Nov.97 Dec.97 Jan.98 100% Cost Achievement 33M€ May.97 July.97 Aug.97 Sept.97June.97 Achievement bars Cost curve Forecasted cost and achievement of the project following option 3 between August 1996 and May 1997:
  17. 17. Option 4: Increase workers personal implication Measures to take Intermediary impacts Possible risks Offer to workers:  the possibility to work longer with the same salary  Significant bonus for the most productive workers  Some opponents  High increase of productivity  Low increase of staff cost  Resignation of severals workers / sub-contractors 75%
  18. 18. 20M€ 15M€ 45M€ 40M€ 35M€ 30M€ 25M€ 10M€ 10% 5M€ 50M€ 80% 100% 0 0 70% 90% 60% 50% 40% 30% 20% Cost Achievement Nov.97 50 M€ Oct.97Sept.97Aug.97July.97June.97May.97 100% Achievement bars Cost curve Forecasted cost and achievement of the project following option 4 between August 1996 and May 1997:
  19. 19. Option 5: Hiring Measures to take Intermediary impacts Possible risks  Hiring 30 unskilled workers  Hiring 4 young engineers (to supervise sub- contractors)  Decrease of construction errors  High increase of staff cost  High increase of the construction’s speed  Supplementary unexpected delays due to the training of the newly hired staff 75%
  20. 20. 25M€40% 50% 35M€ 40M€ 45M€ 50M€ 55M€ 60M€ 0 90% 100% 10% 80% 70% 5M€ 60% 30% 30M€ 20% 20M€ 15M€ 10M€ 0 Achievement Oct.97Sept.97Aug.97July.97June.97 100% 58M€ May.97 Cost Achievement bars Cost curve Forecasted cost and achievement of the project following option 5 between August 1996 and May 1997:
  21. 21. Recommendations: Reduce delays Reduce costs Option 5 Option 3
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