Thursday, October 11, 2007

How significant is Boeing's 787 delay?

The Wall Street Journal reported today (link - $$) that Boeing has pushed back the launch of their 787 Dreamliner aircraft by six months, due to delays from partners supplying key subcomponents. Boeing's stock fell nearly 3% on the news.
But what's the long-term impact? Using the framework set out in "Reinventing Project Management," by Aaron Shenhar and Dov Dvir, we can evaluate the project and get an idea of the long-term cost of a schedule slip. (Here is a prior post on this book.)

"RPM" looks at projects over four dimensions: novelty, technology, complexity, and pace.

Novelty: on Shenhar and Dvir's scale of extension, platform, breakthrough, the Dreamliner project is a new platform.

Technology: on their scale of low-tech, medium-tech, high-tech and super-high-tech, Dreamliner is high-tech--using technologies proven in military applications in commercial aircraft for the first time.

Complexity: scale is assembly, system, array. Dreamliner is an array project (most new product developments are system projects, but given Dreamliner's unusual complexity--e.g., subcontractors work on their pieces across the world, then subassemblies are shipped for final assembly to the US inside 747 transport planes, I'd rate it an array project).

Pace: on scale of regular, fast/competitive, time-critical, blitz, the Dreamliner project is fast/competitive--typical of new product introductions.

The "RPM" map, then, would look like this.

Projects of array complexity in particular are subject to delays. As mentioned in the WSJ article, Boeing's extensive use of subcontractors lessens the control it has to respond to issues in the supply chain. (See this prior post for discussion about how outsourcing, regardless of its benefits, lessens direct control.)

But the Dreamliner will be a platform that contributes to Boeing's income for thirty years or more, if the 737 and 747 are any predictors. So on the face of it, a six-month delay is not significant.

What would be significant is if the project management approach that Boeing used differed from the needs of the project. As far as I can determine, Boeing knows what it's doing. The biggest risk would be to rush the plane out prematurely, in which case any operational problems would raise questions about the suitability of the entire platform. Paradoxically, announcing a delay should raise confidence in the project, as it demonstrates that Boeing won't put the plane in the air until it works.

So, a six-month delay is... embarrassing? yes. Costly? yes, in the short run. Long-run significant? No.