When using the free-cash flow model, cash flows are discounted at the weighted average cost of capital (WACC) and when using the dividend discount model, dividends are discounted at….
THE INVISIBLE SPONSOR1
Some executives prefer to micromanage projects whereas other executives
are fearful of making a decision because, if they were to make the wrong
decision, it could impact their career. In this case study, the president of
the company assigned one of the vice presidents to act as the project
sponsor on a project designed to build tooling for a client. The sponsor,
however, was reluctant to make any decisions.
Assigning the VP
Moreland Company was well-respected as a tooling design-and-build
company. Moreland was project-driven because all of its income came
from projects. Moreland was also reasonably mature in project
When the previous VP for engineering retired, Moreland hired an
executive from a manufacturing company to replace him. The new VP for
engineering, Al Zink, had excellent engineering knowledge about tooling
but had worked for companies that were not project-driven. Al had very
little knowledge about project management and had never functioned as a
project sponsor. Because of Al’s lack of experience as a sponsor, the
president decided that Al should “get his feet wet” as quickly as possible
and assigned him as the project sponsor on a medium-sized project. The
project manager on this project was Fred Cutler. Fred was an engineer
with more than twenty years of experience in tooling design and
manufacturing. Fred reported directly to Al Zink administratively.
Fred understood the situation; he would have to train Al Zink on how to
function as a project sponsor. This was a new experience for Fred because
subordinates usually do not train senior personnel on how to do their job.
Would Al Zink be receptive?
Fred explained the role of the sponsor and how there are certain project
documents that require the signatures of both the project manager and the
project sponsor. Everything seemed to be going well until Fred informed
Al that the project sponsor is the person that the president eventually holds
accountable for the success or failure of the project. Fred could tell that Al
was quite upset over this statement.
Al realized that the failure of a project where he was the sponsor could
damage his reputation and career. Al was now uncomfortable about
having to act as a sponsor but knew that he might eventually be assigned
as a sponsor on other projects. Al also knew that this project was
somewhat of a high risk. If Al could function as an invisible sponsor, he
could avoid making any critical decisions.
In the first meeting between Fred and Al where Al was the sponsor, Al
asked Fred for a copy of the schedule for the project. Fred responded:
I’m working on the schedule right now. I cannot finish the schedule
until you tell me whether you want me to lay out the schedule based
upon best time, least cost, or least risk.
Al stated that he would think about it and get back to Fred as soon as
During the middle of the next week, Fred and Al met in the company’s
cafeteria. Al asked Fred again, “How is the schedule coming along?” and
Fred responded as before:
I cannot finish the schedule until you tell me whether you want me to
lay out the schedule based upon best time, least cost, or least risk.
Al was furious, turned around, and walked away from Fred. Fred was now
getting nervous about how upset Al was and began worrying if Al might
remove him as the project manager. But Fred decided to hold his ground
and get Al to make a decision.
At the weekly sponsor meeting between Fred and Al, once again Al asked
the same question, and once again Fred gave the same response as before.
Al now became quite angry and yelled out:
Just give me a least time schedule.
Fred had gotten Al to make his first decision. Fred finalized his schedule
and had it on Al’s desk two days later awaiting Al’s signature. Once
again, Al procrastinated and refused to sign off on the schedule. Al
believed that, if he delayed making the decision, Fred would take the
initiative and begin working on the schedule without Al’s signature.
Fred kept sending e-mails to Al asking when he intended to sign off on the
schedule or, if something was not correct, what changes needed to be
made. As expected, Al did not respond. Fred then decided that he had to
pressure Al one way or another into making timely decisions as the
project sponsor. Fred then sent an e-mail to Al that stated:
I sent you the project schedule last week. If the schedule is not signed
by this Friday, there could be an impact on the end date of the project.
If I do not hear from you, one way or another, by this Friday, I will
assume you approve the schedule and I can begin implementation.
The president’s e-mail address was also included in the CC location on the
e-mail. The next morning, Fred found the schedule on his desk, signed by
1. Were Al Zink’s actions that of someone trying to be an invisible
2. Did Fred Cutler act appropriately in trying to get Al Zink to act as a
3. What is your best guess as to what happened to the working
relationship between Al Zink and Fred Cutler?