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Litton Wins $500M Settlement in Shipbuilding Project Dispute

Litton Industries Case: Part 1

(Narrated by Ken Cooper) 11:28 minutes

In 1980, Ken Cooper published his paper “Naval Ship Production: A Claim Settled and A Framework Built,” that described the now famous Litton Industries case. This case yielded a $500 million dollar settlement for Litton and launched the largest claim ever of System Dynamics commercial practice. Additional details for this case in Litton Industries in the Case Repository.

Litton Industries Case Part 2 – The Back Story

(Narrated by Ken Cooper) 4:05 minutes

Ken Cooper narrates interesting aspects of the Litton case that have never appeared in the published literature.

 

 

The Issue You Tackled

The Litton shipbuilding project modeling established lasting precedents on several fronts, ones that go far beyond winning $500 million for the client in a strongly contested legal battle. (See “Naval Ship Production: A Claim Settled and a Framework Built”, Kenneth Cooper, Interfaces, Vol. 10, No. 6, December 1980.)

In the System Dynamics world, it was the first large-scale modeling of a complex project. The Litton project modeling work, which began in 1976, introduced the basic dynamics, including the core “rework cycle”, seen in project models that have followed in the decades since. Indeed, project modeling has become one of, if not the most studied and practiced domains of SD modeling in the world.

This unprecedented use of System Dynamics in support of a legal dispute models the history of a project and poses the what-if question, “What would have happened, but for…?”. This became the most powerful means of quantifying damages, the “gold standard” for complex contract disputes.

The work raised awareness of System Dynamics in other arenas, from publications in project and engineering management journals, to the legal world, to the management science world outside SD (where it won multiple awards), to corporations in many industries facing persistent project performance problems, and beyond.

The story here focuses on the issues at stake for the client, and the seminal project that launched project modeling in System Dynamics.

What You Actually Did

The Litton work came to have large implications for arenas in business, law, academia, and the field of System Dynamics itself. But the origin of the work really begins with one person at Litton who was determined to find a better, more defensible, more accurate means of quantifying and explaining project cost and schedule impacts. The “story behind the story” of the Litton work illustrates the importance of an executive champion who is willing to venture out from the easy traditional path despite high stakes and formidable opposition.

The Results

The Litton claim modeling work ushered in an entire domain of System Dynamics modeling of project and program management. Not only did Litton remain an active SD client for two decades (all of which was proactive management aid), but the work was adopted by other shipyards, many aerospace contractors, construction firms, automobile companies, and more. And that was all at one SD firm. Project modeling has gone on to become one of, if not the, most studied and practiced areas of SD modeling in the world.

The “rework cycle” was not named such until well over a decade beyond the first 1980 publication, in a 1993 series of papers*, but its structure as designed for the Litton model in the 1970s remains a centerpiece of project models, one that has stood the test of time (decades) and hundreds of applications.

*“The Rework Cycle: Why Projects are Mismanaged” and “The Rework Cycle: How it Really Works…and Reworks…”, both published in PMNetWork February 1993, and “The Rework Cycle: Benchmarks for the Project Manager”, Project Management Journal, March 1993. Both PMNetWork and Project Management Journal are publications of the Project Management Institute. Ken’s Rework Cycle series was selected as among the best published papers of the year, and was combined and published in its entirety as a Special Report in Engineering Management Review, Fall 1993.

Name Modeling with Litton Industries
Modelers Kenneth Cooper
Client/Participant Litton Industries
Client Type Corporation
The Official Website For added information, or with any questions, see CooperSDNetwork.com, or contact Ken via email: Ken.Cooper@CooperSD.com

Do you want to know more?

Related Publications

Naval Ship Production: A Claim Settled and a Framework Built Download
The Rework Cycle: Why Projects are Mismanaged Download
The Rework Cycle: How it Really Works…and Reworks… Download
The Rework Cycle: Benchmarks for the Project Manager Download
The $2,000 Hour:How Managers Influence Project Performance Through the Rework Cycle Download
Managing the Dynamics of Projects and Changes at Fluor Download

Did You Know?

Franz Edelman Award and System Dynamics Application Award

The first published description of the project model (and the structure that would later become known as the Rework Cycle) was in The Institute of Management Sciences Journal Interfaces in December 1980, “Naval Ship Production: A Claim Settled and a Framework Built”, Kenneth Cooper. The work won global recognition in the Institute’s (now INFORMS) Franz Edelman competition for the best applications of any form of management science in the world.

Thirty years later, Ken received the same Edelman award recognition for his work with Fluor Corporation on a SD model-based system to avoid project disputes. See “Managing the Dynamics of Projects and Changes at Fluor”, Kenneth Cooper; this was also the 2009 System Dynamics Society Applications Award winner. Please review the Fluor Case here.

Commercial Applications of System Dynamics as Oral Histories page

In the winter of 2016, Ken Cooper visited the System Dynamics Society home office. During that meeting, a series of videos were recorded in which David Andersen interviewed Ken Cooper. In these videos, Ken narrates several of the high impact and more interesting commercial applications from his distinguished career. This series of nine short videos can now be found on the Commercial Applications of System Dynamics as Oral Histories page.

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