Kitchen Heaven Project Case Study
You are a project manager for Kitchen Heaven, a chain of retail stores specializing in kitchen utensils, cookware, dishes, small appliances, and some gourmet foodstuffs, such as bottled sauces and spices. You’re fairly new to the position, having been hired to replace a project manager who recently retired. Kitchen Heaven currently owns 49 stores in 34 states and Canada. The world headquarters for Kitchen Heaven is in Denver, Colorado. Counting full‐time and part‐time employees, the company employs 1,500 people, 200 of whom work at headquarters. The company’s mission statement reads, “Great gadgets for people interested in great food.”
Recently, the vice president of marketing paid you a visit. Dirk Perrier is a very nice, well‐dressed man with the formal air you would expect a person in his capacity might have. He shakes your hand and gives you a broad, friendly smile. “We’ve decided to go forward with our 50th store opening! Sales are up, and our new line of ceramic cookware is a hot seller, no pun intended. I don’t know if you’re familiar with our store philosophy, so let me take a moment to explain it. We like to place our stores in neighborhoods that are somewhat affluent.
The plain fact is that most of our shoppers have incomes of more than $150,000 a year. So, we make an effort to place our stores in areas where those folks usually shop. “We’re targeting the type of customer who watches the Food Network channel and must have all the gadgets and tools they see the famous chefs using. So, the stores are upbeat and convey a fun, energetic feel, if you will. “Our next store is going to be right here in our home area— Colorado Springs. Because this is going to be our 50th store, we plan on having a 50th grand‐opening celebration, with the kind of surprises and activities you might expect for such a notable opening. “Our stores generally occupy from 1,500 to 2,500 square feet of retail space, and we typically use local contractors for the build‐out.
A store build‐out usually takes 120 days from the date the property has been procured until the doors open to the public. I can give you our last opening’s project plan so you have a feel for what happens. Your job will be to procure the property, negotiate the lease, procure the shelving and associated store furnishings, get a contractor on the job, and prepare the 50th store festivities. My marketing folks will assist you with that last part. “You have six months to complete the project. Any questions?”
You take in a deep breath and collect your thoughts. Dirk has just given you a lot of information with hardly a pause between thoughts. A few initial ideas drift through your head while you’re reaching for your notebook. You work in a functional organization with a separate projectized department responsible for carrying out projects of this nature. You’ve been with the company long enough to know that Dirk is high up there in the executive ranks and carries the authority and power to make things happen. Therefore, Dirk is the perfect candidate for project sponsor. You grab your notebook and start documenting some of the things Dirk talked about, clarifying with him as you write: The project objective is to open a new store in Colorado Springs six months from today. The store should be located in an affluent area. The store will carry the full line of products, from utensils to gourmet food items. The grand opening will be accompanied by lots of fanfare because this is the 50th store opening.
You have a question or two for Dirk. “Is there a special reason we have to open, let’s see, six months from now, which is February 1?” He responds, “Yes, we want the store open the first week in February. Early February is when the Garden and Home Show conference hits the Springs area. We’ll have a trade show booth there. We know from experience in other areas that our stores generally see a surge in sales during this month as a result of the trade show. It’s a great way to get a lot of advertising out there and let folks know where we’re located.”
“Another question, Dirk. Is there a budget set for this project yet?” “We haven’t set a hard figure,” Dirk replies. “But again, from past experience we know it takes anywhere from $1.5 to $2 million to open a new store— and we don’t want to forget the big bash for the grand opening.” “Thanks, Dirk. I’ll get started writing the project charter right away. I’ll put your name on the document because you’re the project sponsor.” Dirk concludes with, “Feel free to come to me with questions or concerns at any time.” One week later. You review your notes and reread the project charter you’ve prepared for the Kitchen Heaven retail store one last time before looking for Dirk. You finally run across Dirk in a hallway near the executive washroom.
“Dirk, I’m glad I caught you. I’d like to go over the project charter with you before the kickoff meeting tomorrow. Do you have a few minutes?” “Sure,” Dirk says to you. “Let’s have it.” “The project charter states the purpose of the project, which of course is to open the 50th Kitchen Heaven store in Colorado Springs. I also documented some of the high level requirements, many of which we talked about last time we met. I documented the assumptions and constraints you gave me with the understanding that we’ll define these much more closely when I create the scope statement. I’ve included a section that outlines a preliminary milestone schedule, and I’ve included some preliminary ROI [return on investment] calculations. Using your estimate of $2 million as our initial budget request and based on the projected inflows you gave me last week, I’ve calculated a payback period of 19 months, with an IRR [internal rate of return] of 6 percent.” “That’s impressive,” replies Dirk. “That’s even better than our Phoenix store. If I recall, the payback period there was just over two years. Let’s hope those numbers hold true.”
“I think they’re reliable figures,” you say. “I researched our data based on recent store openings in similar‐sized cities and factored in the economic conditions of the Colorado Springs area. Since they’re on a growth pattern, we think the timing is perfect. “As you know, the project kickoff is scheduled for tomorrow. What I’ll need, then, is for you to talk about the project and the goals, talk about the commitment you’ll need from the management team to support this project, and introduce me as the project manager. I’ve already forwarded a copy of the project charter to the meeting attendees so that they can review it before the meeting. I included a list of the assumptions we’ve made so far as an appendix to the charter. Last, I’ll need you to ask everyone present to sign a copy of the project charter.” “Sounds like you’ve covered everything,” Dirk says. “I don’t anticipate any problems tomorrow, because everyone is looking forward to this store opening.”
Project Case Study Checklist
· Project objective: To open a new store in Colorado Springs six months from today.
· Business need or demand for project: Company data concludes that the Kitchen Heaven consumers have incomes of more than $150,000 a year. The Colorado Springs area is home to a large number of people with that income. Currently, there is no Kitchen Heaven in the area, but there appears to be a demand for one.
· Project sponsor: Dirk Perrier, VP of marketing.
· Organizational structure: Functional organization with a separate projectized department.
· Project selection methods: Payback period calculated at 19 months and IRR calculated at 6 percent.