Project Management Evaluation For Fonterra’s Taranaki Plant

Fonterra – An Overview

Fonterra is a dairy cooperative which is based in New Zealand. It is made up of as many as 10,000 farmers who are an integral cog in the Fonterra machinery and work hard to ensure good quality milk produces are sent to the people of New Zealand. The company has an extremely well established customer base in New Zealand and Australia, and then a major base in other Asian nations like China, Singapore, Malaysia etc. The company is said to be one of the major sources of New Zealand’s economy and said to function as a builder of wealth, job and opportunities.

Fonterra has a diverse product portfolio and sells various products like ice cream, flavoured milk, cheese, pasteurised milk etc. it has a total of more than 300 products to its name. it is said to be world’s one of the largest dairy exporter, with a total of 28+ production sites in New Zealand of which all are well functioning and productive. Fonterra has an uninterrupted supply chain and production management system, which has been growing constantly and becoming better.

Fonterra has been self – reliant in so many aspects that it has ensured even producing electricity for itself in some of its plans. It was established in 2001 by merging two other dairy cooperative of New Zealand and was subsequently listen on the stock exchange as well. Later on, the company is now being run by a well-established management along with the inputs of 10,00 farmers.

The company has a valid presence overseas as well, and enjoys it similarly in New Zealand, with very names as its competition. The company is all the more innovative and has grown in it when news came out that they are implementing AI for production operations in Fonterra.

This reports will help us in understanding the project management carried out in Fonterra and all the factors which have influenced it so far. We will also aim to understand the intricacies of project management by using the example of the new Fonterra plant in Taranaki, New Zealand.

The project we are talking about here is the Taranaki plant of Fonterra which is being massively built on a huge scale. The project is said to be really ambitious since it will be a next generation dairy experience given to the people. This is a 24,0000 m dry plant cum store. It took nearly nine months to finish the construction and plant setting.

The Taranaki Plant

The plant was a success as the company eventually shifted their operations from Whereroa plant to here.

The plant is a state of the art facility and is known to carry out all the dairy functions with better speed and in an optimised way to allow the production to create some value.

The project scope is an essential document stating all the requirements of the project like deadlines, the future need for the project, functions and deliverables. This document along with the Project Charter allows us to ensure that the project remains in sync with what it is being done for and ensures how it will achieve the final cut.

For Fonterra, the following is the function of the project scope:

• It is essential to define the requirements of the project. It helps in realising what all products are needed to carry out the project, in this case, construction material and the software requirement for running the plant, along with the machinery
• It was also essential as it helped in process requirement ie, helped in analysing how people and processes interact with each other while the process is going on
• Identifying the limits of the scope to ensure nothing goes overboard and all the resources are utilised properly, without waste
• Clear the communication between the stakeholders to ensure that no miscommunication happens (Gotto, 2013).

In order to create a well functioning project, it is essential to define its scope. And this ideally happens during the RFP process. RFP or Request for Proposal process is the first stage during which the company, as well as the project firm, interact.  

Here, the project management firm interested to take the project from the company sends in a written proposal mentioning the scope of the project ie, what will they do in it, the cost incurred, the design of the project, future need of the project, functions and deliverables.

Based on the evaluation of various tenders that come in from various different project houses, the company then chooses the project house with the most suitable, innovative and sustainable project design which goes well with the cost as well (Rouse, 2016).

In this process, the draft RFP is submitted and the bidders then evaluate this draft. After evaluation suggestions are sent. In the final round, whichever company sets the record, gets the project.

Fonterra has subsequently gone through with this process to choose Calder Stewart as their ideal job partner for this project (Nelson, 2006)

For this project to come to life, it was essential that the planning phase of it was carried out in the right manner. Planning phase was important because major decision making for the part of the project was to be done here, and this is where the execution had to start off from (Taherdoost. H, 2015)

Executing the product was of great importance as it involved the entire process of team building, communication with the stakeholders, fund management etc.

Following are the things which were focussed on planning discussed in detail:

• Activities and deliverables: Calder Stewart was given the responsibility of creating a new plant for Fonterra in Taranaki, to replace their old plant in Wherefore on an immediate basis. While the plant was well developed with state of the art infrastructure, it took nine months and a rigorous amount of hard work to ensure that it completes in the best way possible
• Next important thing which was to be ensured in this plan was to take care of stakeholder communication. This was important because a state of clarity and mutual understanding of what is going on in the project is important from both sides. It was important otherwise because Fonterra was pumping in money and loads of it, and any mishap or issues in construction would have resulted in a lot of wastage of time and money
• Role and responsibilities were fairly divided, Calder Stewart had bought on board for this project one of the best project managers available with them, and an exceptionally well-named team of architects and dairy technicians to ensure this project was successful for Fonterra
• The project ran for nine months in which a lot of changes happened in the team and the plan
• The total cost that went into its making was nearly $20 million including the plant facility and the construction

Every project manager is aware how a poorly done project or a project resulting in failure can hamper their image and can result in losses to the company as well as the client. Quality is an important aspect of project management and it is extremely important to ensure that the project comes out high in quality in terms of infrastructure, utility and sustainability.

The Project Scope

If any of these factors above go unfulfilled it can result in a problem for the client company, here Fonterra (Marjorie, 2011)

Calder Stewart is known to give quality project management services to its client, and this time too they did not disappoint Fonterra anywhere.

                                              

For the success of any project, the following are the quality checks that it has to go through:

• The project should be completed in a maximum of three years or the duration should be less than three years
• The people working on the team should have an experience of at least 5 years and a good number of projects (Gustavsan, 2006)
• Changes to the scope of the project should be open or, the scope of the project should be flexible and open to changes
• The project should be well settled with the organisation and in sync with its culture as well
• The project should happen under a very successful leadership that is able to guide the project during times which were unforeseen and difficult to manage through (Boyonton, 1984).

There is always some risk associated with any project, of any magnitude and type. These risks ensure that the project is done in the best way possible to avoid any future complications (Bridges, 2014)

In this Fonterra project, there was a huge risk associated as the plant installation had to be done with simultaneous production ie while one portion of the plant was running to produce milk powder, the rest of it was being completed. Now this was a challenge since any trouble in one part of the plant could reflect on the day’s production (Freffer, 2018)

Thus, a very meticulous and smart approach was taken to ensure that this was done in the best way possible.

The control system of a project is initiated to see what all factors are responsible for the control of things in a project it can be a control on wastage, control of growth and many such things.

Here, the iron triangle method comes into use. The Iron triangle method is used to show the constraints of a project like:

• The quality of the project being constrained by the budget of the project
• Trading between constraints by the quality manager
• Changes in one constraint necessitate changes in others to compensate or quality will suffer (Aston, 2018)

It focuses on three major things: time, cost and the quality of the project.

                                                                           

Total quality management is known as the process by which elimination of any and so errors encountered during the production process. It involves synchronising the supply chain, streamlining it and improving the employee functioning which subsequently reflects in customer satisfaction (Arya, 2010).

Total quality management or TQM is an important concept and is much needed when we discuss the functioning of a well-developed production facility like that of Fonterra (Crammer, 2017)

As mentioned above, for a high-level project like these, the leadership plays an important part. The person who works towards ensuring the proper working of the project. This can happen only when the leader himself is experienced, knows a great deal about managing such high stake projects, conflict resolution and can do damage control (Hussang, 2-17)

Planning and Execution

Mistakes are bound to happen in a project, and thus, the ideal leader is there to ensure that they swiftly sail by correcting it and making sure that it does not happen again.

Following are the quality of a good project leader, that helped Fonterra reach their goal:

• The person is experienced in project management
• Has managed a diverse team and knows how to handle situations arising out of conflicts and ego
• Is clear in his or her approach towards communicating with the management (Fonterra)
• Is honest and has a clean record
• Knows the value of time and ensures that (Marsh, 2018)

After the project was completed, it got some very good reviews to form the inspection team of Fonterra. The plant was set up exactly as the thought of and was completely up to the mark in terms of safety and infrastructure appeal (Prabhakar, 2009)

This ensured that the project management team of Calder Stewart has done an exceptional work (ROUSE, 2017)

The plant was set up in the highest quality and was state of the art, that too in a situation of parallel running. Next,

Even though the project came out just as nicely done as expected, it is important to know that the project managers have to make sure that their working is completely foolproof in nature. This can be taken care by following the proper recommendation:

• Hiring the right people on the team
• Ensuring that the project is completed ahead of time
• Staying within budget and not exceeding it
• Doing a proper gap analysis of the situation ensuring how things will be taken care of
• Clearly communicating with the client them and updating them regularly on the progress of the project (Ahn, 2016)

Calder Stewart and Fonterra both ensured that the governance of this project was fairly carried out without any issues. The companies had divided the scope of the project in such a way that each of them had their own different areas to look after, and the communication was flawless in the entire course of the project.

This clarity in their communication ensured that the project was not hampered and maximum results were obtained out of them.

This was an open window for them, as both the companies were aware of each other’s expectations and knew how deliverables were to be done, ensuring full convenience for each other (Alie, 2015)

Conclusion: 

With this, we can conclude that the project for Fonterra plant carried out by Calder Stewart was a success because it followed some very good measures of quality control and planning strategically its project requirements and ensure that there were no loopholes or gap left off in this process.

We also saw various different aspects of how project management is taken care. For instance, in order to create a well-functioning project, it is essential to define its scope. And this ideally happens during the RFP process. RFP or Request for Proposal process is the first stage during which the company, as well as the project firm, interact.  Quality is an important aspect of project management and it is extremely important to ensure that the project comes out high in quality in terms of infrastructure, utility and sustainability.

Quality Control

If any of these factors above go unfulfilled it can result in a problem for the client company, here Fonterra (Khurram, 2014)

Calder Stewart is known to give quality project management services to its client, and this time too they did not disappoint Fonterra anywhere.  Lastly, the concept of TQM was well carried out by the project.

Total quality management is known as the process by which elimination of any and so errors encountered during the production process. It involves synchronising the supply chain, streamlining it and improving the employee functioning which subsequently reflects in customer satisfaction.  (Ljungblom, 2016)

Focus was given on leadership as well. Leadership plays an important part. The person who works towards ensuring the proper working of the project. This can happen only when the leader himself is experienced, knows a great deal about managing such high stake projects, conflict resolution and can do damage control.

After the project was completed, it got some very good reviews to form the inspection team of Fonterra. The plant was set up exactly as the thought of and was completely up to the mark in terms of safety and infrastructure appeal (Nijhuis, 2018)

This ensured that the project management team of Calder Stewart has done an exceptional work.

Thus we could see how this project came to life and how it ensured success for both the companies, and established a relation between them for a long time.

Reference 

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Alie. (2015). Project governance #1 critical success factor. Project Management Institute .

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Hussang, T. (2-17). 8 Strategies for Successful Project Managemen. Retrieved from https://online.king.edu/business/successful-project-management/

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