• liability reduction project

Liability Reduction Projects

Product Liability Project Background

Product liabilities are a unfortunate thing.  It happens that something that is not understood before a product is released for sale emerges afterwards leaving the company to scramble to repair sold products.

Often the remedy requires a technical solution and effecting repairs is disruptive to normal business process.  People are nervous about things like who allowed the error to pass in the first place, or is the repair adequate to eliminate future liabilities. Will repairing a defect be enough to mitigate future risk or will a settlement be necessary.

These concerns are real and should be managed carefully. This is the worst time to let emotions interfere with the decision making process. Full internal disclosure and effective external communication are necessary to correct the condition and situation.

Should we manage this project ourselves?

It really depends on the severity of the liability and the skill of your assigned project manager. It may be best to contract the project management services to mitigate the emotional toll such projects will have on the customers and the employees.

Liability Project Background

A small business created a product that was used in an industrial setting. The business was losing money and defects began to develop in the outsourced manufacturing of a critical component that if it failed could cause injury or death.

The small business was a joint venture between to large companies.  The companies wanted to sell what was left of the business but could not divest themselves of the business unit due to the existing liabilities.

The Project Solution

The solution was to sell the business units but retain the liability.  I was asked to lead the project effort to eliminate the liabilities.  An operating unit was established for the sole purpose of engineering solutions, manufacturing, testing, and confirming a satisfactory result was obtainable.  One of the co-owners had extensive engineering resources and was called upon to offer assistance in the evaluation processes.

Once a technical solution was agreed upon, negotiations were entered into by the project team and the customers.  The choice was given tot he customers to accept the solution or accept a reimbursement of the original system costs.  It was in the co-owners best interest to have the customer agree to one of the solutions so as to not prolong the liability.

Initially all the customers agreed to the proposed fix and construction crews and contractors were hired to implement the repairs.  As the repairs were drawing to a close one customer became unhappy with the repair and began legal proceeding.

After additional negotiations a settlement was reached.  With all customers either settled or repaired, the liabilities were concluded with a formal legal release from each customer.

Project Overview

Project Type:  Liability Elimination

Project Budget: No more than $15 million

Project final budget: Just over 3 million

Customers repaired : 5

Customers Settled: 1

Project emphasis: Extensive materials and strength testing of failing components, prototyping alternate fix strategies, implementation of repairs though direct construction management and contacted workforce (both union and nonunion labor)

  • Date June 27, 2015
  • Tags liability reduction project

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