Theater High Altitude Area

Defense (THAAD) Five

Failures and Counting
Case Analysis

Summary
Theater High Altitude Area Defense (THAAD) was a program developed by the US government
consisting in a defensive weapon system easily portable to protect against threats from hostile. However,
after a lot of money spent, the project was given as blemished since the targets were not achieved in the
test sequences.
This case demonstrates strategic problems occurred in the THAAD and solutions in order to improve the
gaps involving all participants and take the project to success.

Questions
1) This case describes a project audit. Define a financial audit. Describe
how you would implement a financial audit on the THAAD project,
listing specific steps and using examples.
According to the literature, project management audits are used to regulate and control the excellence,
conclusion, and effectiveness of a project. The Financial audit performs an audit in order to obtain
reasonable assurance about if the financial statements are free of misstatement, examining the evidence
about the amounts of the project and as a result, providing a reasonable basis opinion of these statements
to the project.
I would like to implement this type of audit to obtain the following results according to the steps bellow
To seek financial statement accuracy of the project
o To make sure that all the information is being verified in accordance with criteria listed,
e.g. deal with the prototype cost/model, and contract requirements (invoices, statements)
Focus
o When the project is being verified by the financial side is necessary only focus in this
area, unlike what is currently being applied. (internal control)
Veracity
o In this case addressing financial audit, the veracity of financial status is important in
order to meet the stipulated budget, as the project is a military project using tax money.(
verify if the bank statements matches with the organization records, internal controls)

2) Define the four independent dimensions of project success. Evaluate

how the THAAD audit performed using each of these four dimensions.
Provide specific examples.
1. Project efficiency
Defines if the project was done on the specified time and with the stipulated budget.
(Cover in the first bullet contract performance lessons learned)
Correlating with the case it is possible to see this bullet when they decided to build
new hardware to attempt the necessity of the new design
2. Impact on the customer
Correlates the result of the project execution between the customer and the final user
(Meeting performance procedures, technical specifications)
It is possible to analyze this bullet in the contract administration lessons learned when
they pointed that the prime contractor DCMA Commander needed to participate
actively in the Award Fee process, and THAAD stakeholders needed to participate in
the Award Fee process to guarantee success in all the missions
3. Business and direct success
Shows the direct project impact that occurred in the organization (efficiency, profit,
experience).
Correlating with the case it is possible to see this bullet being covered when the
project has a solid team in the program life cycle, including all the people, as a result,
it was critical to solving potential problems prior to any major milestone/funding
decision points.
4. Preparing for the future
Shows the projects contribution to the organization in order to increase the prospects
and challenges.
It is possible to see this bullet when they faced all the problems and came with
solutions (restructured program), they could indicate some contributions to the
organization to increase all the strengths and decrease the weakness. Also, the stable
program funding and guidance show a good prospect to the organization.

3) The THAAD audit was triggered by crises. To avoid such crises on

subsequent projects, recommend and define alternative audits and
suggest a schedule for these recommended audits.
I would recommend financial, performance and quality audits to avoid such crises on the subsequent
projects because for this case is important to have a multi dimension to cover possible gaps. First of them,
the financial audits will seek financial statement accuracy of the project, as a result, making sure that all
the information is being verified in accordance with criteria listed, such as prototype cost/model, and
contract. Second, the performance will take care of the security of the system in order to examine their
success in satisfying the objectives. Third, this project will need a quality audit in order to verify the
effectiveness of a quality management system, and therefore ensure that the project has no failure as
occurred several times during the time of component production.
A good schedule for this case would be to use the current audit in dependence on others cited in the
following way:
o
o

Project audit + Financial

Performance + Quality

In this order is possible to cover all the gaps mentioned as negatives and thus obtain a satisfactory result
in the project.

4) Gaining access to target audit sites, personnel and records and

engendering trust tends to be difficult. Explain how you would facilitate
access and trust if you were part of this cases audit team using
examples.
Being part of this case on the side of auditors, facilitating access and trust would require stimulating the
engagement between the auditors and THAAD. Rather than pointing all the organizations gaps, I would
get as close as possible to create a bidirectional relation, e.g. I would use a continuous audit, and as a
result, the reports would be in real time or closer by, showing to the organization that the information is
able to be verified constantly for errors, creating the trust that we are looking for. This kind of service will
enable to show that I want to work together with them, not for the organization

5) The restructured THAAD program addresses the problems cited in the

lessons learned sections of the case. Explain how it does this with
specifics.
The first part of the case it is possible to find all the gaps faced for this program and why they failed.
Subsequently, the program listed four main problems that are:

o
o
o
o

Flight-test schedule
Early prototype
Quality of the project
Contract (Cost-plus-fixed-free)

The restructuring program for the contract performance side asserts that acquiring a lot of missiles to
support certain demand was not a good strategy because the current model does not match in order to
improve the missiles with the older hardware, as a result, the project was wasting time, money, and
accuracy tests. Another lesson learned was that if they had a greater attention to the quality tests, the
missile could be improved and generated greater confidence for the project. Other negative point that was
taken as lesson learned was the fact that an established program funding and guidance was essential for
program success.
For the contract administration side, a solid team was acute to solve problems before major decisions, for
instance, problems with milestones. This resulted in a real time resolution of the gaps. Another aspect was
that the Prime contractor DCMA Commander needed to participate actively in the Award Fee process to
guarantee success in the project. Also, the use of new technologies, such as an electronic data
management system can provide a real time information of the project for the parties involved.

6) Discuss how you would measure the results of the program after
applying the lessons learned described in the case. List specific examples
describing your recommended measurements.
Applying all the lessons learned describe in the case it is possible to measure the results via these criteria:
Development results
o Quality
Acquiring new hardware that match with the missiles is going to increase the quality of
the system (manufacturing), which means that the time to flight-test would increase and
improved the level quality testing, performance, design and reliability. Also, the criteria
listed in the textbook of testing, for instance, pre-, post-testing analysis, and corrective
action would be cover in this evaluation in order to obtain a successful project.

Operational effectiveness
o Time

Using correct systems that match with each other is going to save more time in the
process and it is possible to obtain better results. The problem around the flight-test
schedule would not appear.
Organizational effectiveness
o Budget
Measuring this criteria it is possible to observe the focus in cover if the project is on
budget and the effectiveness in relation of using resources.