ABI: The Stanhope Project Case Analysis Essay Example

trained in almost every skill necessary to complete any job within one of the four skill classes in the plant which cuts back on the costs of machine maintenance, product inspection, and number of workers in general. While they ended up deciding on the most expensive equipment system, it made the most sense because of the versatility, better quality and longer life span that the system could provide for ABI.

This also met another strategic goal of the company stating that the company should pick projects with the most advanced technologies to help them stay ahead in the market. ABI is using a top-down process in this project, meaning that determination of the final budget comes almost strictly from a compilation of experiences and judgments of the top and mid-level managers in the company. The higher-level managers break down costs into major categories, pass down their cost estimates to the next lowest level, lower-level managers break the major categories down into subcategories and so on until the estimation process reaches the lowest level of the company.

By the end, each level knows the specific amount of money that it is allotted to complete the project tasks required at that level. Because the project is so extensive in price and risk, it would have been smarter for them use a bottom-up process which would have involved the employees who would actually be part of the work team so that management could get a more accurate estimate of the time and money that would be required to complete the project.

Ultimately, I believe that though the Stanhope project is an expensive and risky one for

ABI to take on, that the predicted return on it would pay off in the long run. Almost every part of the project proposal stayed in line with the company’s strategic goals which the main requirement for it to be passed. However, even though I believe ABI to have done a decent job in forecasting the risk and taking into consideration different possible scenarios, it is extremely risky due to the sluggish market demand and high competition stemming from the Japanese.

I feel like the company should try the bottom-up budgeting process first to see the differences in opinion of the projected costs of the project and come to a conclusion based on the combined results before making a decision. Regardless of the decision that is made, ABI does need to do something if it wishes to remain on top and ahead of the Japanese.