The Volkswagen emissions scandals is one of the largest and most expensive scandals in our history. When VW was unable to get their cars to meet emission standards, they decided to take a shortcut that may have cost billions. This failure can be traced back to poor project management within the company.
VW created a device that connected to the emission device that would help “massage” the emission readouts during tests. This device would return a vehicle to lower emissions when it was being tested so that the car would receive better emission standards. The problem with this is that it was not only misleading, but it also covered up the fact that Volkswagen Diesel cars were putting more than 40 times the nitrogen oxide rate than the national standard. So why did VW decide the implement this device?
The head of the project that created these vehicles decided something early on in the project life cycle: the device that would reduce emissions was too expensive for the budget allotted for the project. So instead of trying to allocate money from other parts of the project (or simply scrapping the project altogether), they decided to create a shortcut that wrong from both an ethical and legal standpoint. The fallout from this disaster was not only historically expensive being estimated at over $25 billion dollars in fees, but it has also potentially caused permanent damage to the company’s image as well.
A lot can be learned from this case that can help project managers. A budget is a budget no matter what. Ask for an increased budget may be necessary in some cases, but more often than not a project manager will need to get creative to solve budget issues. This story is an example of a project manager who was lazy, and simply wanted to cut cost no matter what ethical or legal issues stood in the way of the project. A project manager must be able to balance the scope, time, and cost in a way that sees that project to completion.
The project manager also did not take into account all of the stakeholders affected by this project. They acknowledged the companies need to stay within the budget, but they did not acknowledge the public's response to the outcome of the project. The result of not acknowledging this has led to a public backlash against the company, and losing public support has lead to a damaged company image. This will dissuade new/potential customers, and may result in Volkswagen losing existing customers as well.
Citation:
Volkswagen . N.p., Oct. 2015. Web. 28 Jan. 2016.
http://calleam.com/WTPF/?p=7666.
Great article. Here is a nice description of how VW conducted their scam from NY Times, updated on Jan. 5. VW emissions scandal explained
ReplyDeleteAnd it's less about the budget than about maintaining a competitive advantage, no matter what. Many examples of this. Fraud is just one way around the budget.
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