Risk Management Case Study Boeing Dreamliner

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  • Topic: Boeing 787, Composite material, Competition between Airbus and Boeing
  • Pages : 5 (1402 words )
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  • Published : April 8, 2012
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Development of the Boeing 787 Dreamliner

Introduction
In 2003, Boeing launched a project to build a new airframe that had the original designation of 7E7 Dreamliner. In January 2005, the aircraft was redesigned the 787 Dreamliner. Boeing’s intent was to utilize new technology and procurement processes to build two versions of the aircraft. The 787-8 was designed to carry 210 to 250 passengers on routes of 7,650 to 8,200 nautical miles and the stretch version (787-9) was designed to transport 250 to 290 passengers on typically longer routes of 8,000 to 8,500 nautical miles. The advanced technology would allow Boeing to produce aircraft that were more fuel efficient, would produce fewer emissions and had a significantly better cash seat mile cost than competitor’s planes.

Some of these changes in technology and process resulted in new risks. This paper identifies and analyzes two of the most challenging risks that Boeing has faced with this project; those being program completion delays and program costs over-runs. Fault trees will be used to aid in the description of causes or systems states for which the primary risks are predicated. The fault trees illustrate the relationship between the primary risks, the secondary risks and the root causes of each. Although these primary risks are generally identified in all projects, it can be shown that there are root causes that are unique to the Boeing 787 Dreamliner Project.

Fault Tree One- Cost Over-runs
The potential of cost over-runs are common in most projects or programs and should be part of any risk management plan because it affects one of the three project constraints: time. Because of this, it is important to not only understand the primary risk, but to also identify secondary risks and ultimate causation. The risk tree below represents several of these factors as they affect the Boeing 787 program.

When Boeing began the 787 program, the company leadership decided to outsource many of the engineering functions to their other vendors. In the past, Boeing would produce all the engineering specifications (including mandating construction processes) to its vendors who, then, produced the aircraft subassemblies and ship them to a Boeing assembly facility for final build-out. In the risk sharing scenario, Boeing would give its vendors the dimensions that were required and the vendors would be responsible for the design and building of the subassembly. The benefit to this was that because the design responsibilities were given to the vendors, some of Boeing’s risks and expenses would be reduced. This reduction in expense would result in greater net and gross profit margin and, thus, greater revenue.

Unfortunately, Boeing did not foresee some of the risks in this change in design and procurement process. Because of the lack of controls that should have come from Boeing, several vendors invested in unnecessary materials. There was not a complete understanding by the vendors of Boeings needs. Another precluding factor was the vast amount of change orders that were subsequent to the vendors not understanding Boeing needs initially. The large numbers of change orders were compounded by the need for the vendors to go back to Boeing to make the prevailing changes valid. The combination of these two factors resulted in immense cost over-runs as a result of change orders.

During the course of the program, Boeing also recognized that some of their vendors were experiencing a lack of quality in their processes and products. Some of these deficiencies were due to the lack of communications between managers at Boeing and those at the external suppliers. Some were just because the vendors did not have adequate quality assurance processes in place. Another factor involved intellectual properties that were not being shared between Boeing and the vendors. That gap went both ways as the vendors sometime did not give Boeing adequate specifications information and...
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