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Crisis Management
Decision Making in Crisis Situation
Application project on
Bill Harbert International Construction, INC.


PART A: Introduction to Crisis Management
I-Introduction:

  Companies face problems all the time, and solve them one way or another. Sometimes one of these problems is difficult-at least at the time it occurs-and it becomes public interest with the help of the press.  This problem is then known as a Crisis, where the company is faced with legal, political, financial and governmental impact on its business. The most serious property of crises is the element of surprise. The worst part in their handling is being unprepared.
  Crisis can come from nowhere at any time; natural disasters, human error, and industrial accidents can all cause crisis.  Sometimes the cause of a crisis is management itself; managers may insist that they face no crisis, and they fall into the brink of lying and rejection of its existence. Then, when the time of the deadline comes their answer to why the job is not finished will be: "We faced trouble and stopped the operation." Some managers fall into the crises fallacies, and they overdo their denial of its existence. With time, the problems accumulate, causing absolute failure.
  We can categorize crises according to the cause of their existence, or in another way based on the warning time. Crises, like any business activity, have life cycles. The length of each phase depends on the efficiency of the management in dealing with the crisis.
  It is the management responsibility to try to solve the crisis using everything it can, beginning with self confidence, going through using all the skills, and ending by having the ability to absorb the public’s anger or fear without harming the firm’s income or reputation.  If a crisis is solved by a manager without the public hearing about it then the manager has proven his brilliant capability.



II-Basic Definitions:

 Expression Definition
Crisis problem A serious difficulty requiring immediate action.
Non-crisis problem An issue that requires resolution but does not simultaneously have the importance and immediacy characteristics of a crisis.
Programmed decisions Decisions made in routine, repetitive, well-structured situations through the use of predetermined decision rules.
Non-programmed decisions Decisions for which predetermined decision rules are impractical because the situations are novel and/or ill-structured.
Complacency A condition in which the individuals do not see the signs of danger or opportunity or ignore them.
Defensive avoidance A condition in which individuals either deny the importance of a danger or an opportunity or deny any responsibility for taking action.
Panic A reaction in which individuals become so upset that they frantically seek a way to solve a problem.
Deciding to decide A response in which decision makers accept the challenge of deciding what to do about a problem and follow an effective decision making process.
Escalating situations Situations that signal the strong possibility of escalating commitment and accelerating losses.
Decision making biases (fallacies) These are the biases that managers fall into during the decision making process, which are: overconfidence, framing, prospect theory, representativeness, availability, anchoring and adjustment.
Crisis:  A significant business disruption that stimulates extensive news media coverage. The resulting public scrutiny will affect the organization normal operations. Moreover, it could have political, legal, financial, and government impact on its business. (Institute for Crisis Management)
 



III-The Crisis Life Cycle :
   There are five stages of a crisis:
1-Pre-Crisis stage:  Here the conditions for a crisis to occur are waiting for a small error, so that the crisis can step in.  This seed that starts growing in this stage can be ignorance or neglect from a manager concerning some aspect of the company, such as: risky operations, or lack of crisis planning.
2-Warning: This is considered one of the most important stages in a crisis-if not the most important. In it, a problem is first recognized and it can be either solved and ended forever, or it can expand and lead the way to complete destruction.  Crisis can occur after this stage easily because of fear of facing the "storm" or the problem by ignoring it. The general response in this stage is either shock, or denial and complacency.
3-Acute Crisis: Beginning from here the crisis begins to occur, and the press (with the people) starts to know about the problem.  Managers may try to avoid or ignore the problem, but the crisis has already reached a stage where it must be dealt with, because actual losses have already started.  This is the time where the documents and modules for facing crises are taken out and put in effect, and it is shown whether the crises' management staff are well prepared or not. If not, then it is too late for the management to hide the problem anymore.
4-Clean-Up: When the problem passes the warning stage without being solved, then it has struck the company and damage has happened. It is then time to recover the losses or at least save what is left of the firm’s stock price, reputation, and production line.  In recovering, a company must deal with legal cases, press and people's pressure, and litigation.  From all this a company can  see and determine the reasons for such crisis to occur, to make sure that it never happens again.
5-Post-Crisis: This is the stage mentioned before which a company should reach when the warning of a crisis occurs.  It is where a company finds remedy for the damage caused by the crisis (if not stopped from the beginning).  If the company wins back the peoples’ trust, and work is back to normal, then the crisis has officially ended.
 

IV-Responsibility for preventing and handling the crisis:
  The most dangerous thing in a crisis is not knowing about it or not being prepared for it, whether it is natural, mechanical, human error, or management problem. The natural causes are hard to control as they happen unexpectedly.   For other causes, they can be faced with the proper planning, and sometimes the plans are well designed to suit and deal even with the natural causes.
Still, who are those who design all these protecting plans?  The answer is not clear as many people are related.  First, there is the spokesman who is responsible for saving the company’s image in front of the press.  Second, there is the manager who should be intelligent enough to sense the crises in the first stages to eliminate immediately before things get out of hand.   The manager can go on in fighting the crisis until it is out of his hand, but before that happens the whole case is transferred to specialized persons who is experienced in facing crises. In the States, they call the team, which is responsible to take over in time of disaster, corporate SWAT . It is like having a team of consultants that get paid for helping the company in the early or late stages of a crisis.  Other consultants work 24 hours a day to find crisis solutions. These individuals may offer objective solutions that if used in time can prevent great damage. A company can sometimes make another action, that is stimulating "Mock disasters" as a rehearsal for what can happen and how to prevent it. Other companies have shifted their planning completely towards crisis planning after a grinding crisis.
  Any action is better than nothing, and it is surly better than denial that some managers tend to do with the public and the press.  Still, a bigger mistake is lying to cover for the crisis.  If this is the case, then the company has dug its grave as people will lose faith in the firm’s honesty, and the crisis is doubled. A better action is to choose a well-trained spokesman that can give the bad news in a "sweet" way in order to gain the respect of the people and at the same time not expose every detail that is harmful.  Then, investigation for the causes should take place to find the proper precaution to avoid the same crisis  in the future. (Barbara Rudolph, Time magazine)
 

V-Types of Crises according to the cause of their existence :
 Crises are divided into nine categories, based on their causes, which are : natural disasters, industrial accidents, product failure, public perception of a crisis situation, industrial relations, business management, management turnover, hostile takeover, and criminal events.

1 Natural Disaster Crisis The most relevant type of crises is the one that happens because of a natural disaster. This natural disaster happens in the environment and the human beings have nothing to do with it, such as: earthquakes, volcanoes, floods, and fire.
2 Industrial Accidents Crisis The industrial accidents may vary from fires to machine dysfunction to electrical short-circuit. These crises lead to full-scale emergency. Other crises lead to a limited local response. The danger in the industrial accidents is because they are termed as: "Media Magnet.";because these accidents cause serious casualties.
3 Product Failure Crisis This type of crises is a potential crisis for the company, because the product may fail even if appropriate research and development techniques are followed. The magnitude of this crisis depends on the speed of decision making in the company, and their resistance to any kind of escalation for the problem.
4 Public Perception Crisis During a crisis, a company may fall into another crisis because of failure in dealing with the crisis in a public way. This may lead to confusion, along with financial and personal losses due to poor public image. This crisis is a kind of consequence or a satellite crisis for an emergency crisis. Dealing with this crisis reflects the quality of the organization response to a crisis, and the efficiency of their decision making process.
5 Industrial relations Crisis Poor industrial relations between the workers and the administration may lead to a major crisis. This crisis may lead to serious disorder in the operations. Sometimes business is forced to react aggressively. Sometimes the labor force may force the industry to stop. Therefore, the relationship between the labor and the management should never reach the level of animosity.
6 Business Management Crisis The real danger in this crisis is that it is subtle and non-predictable. The real cause is hidden within a plan followed by the organization, that is proved to be erroneous later on. This happens due to a sudden market shift that the management did not plan for. However, management is responsible for this crisis because they did not foresee the potential market threat. There are other causes, such as: the consequences of other crises, failure to adjustment to the market regulations, or international events that have indirect impact on the business.
7 Criminal Events Crisis These events are currently becoming more frequent. They consider a major threat for some industries, such as: tourism, banking, and airlines' industry. Common examples are hostage taking, terrorism, hijacking, and theft. This crisis requires a very precise response because this type of crises is "Media Magnet."
8 Management Turnover Crisis Sometimes change in the organization management is considered as a type of crisis. Some companies think about their CEOs as indispensable, or as a figurehead. Thus his leaving is a real crisis. Some companies follow succession plans to ensure that such a crisis will never happen.
9 Hostile Takeover Crisis This type is becoming more frequent nowadays, because of tough competition between companies. Some companies that monopolize the market may lead other companies into hostile takeover crises, that direct them to losses, and cost the management its name and reputation.
 



Conclusion:
  All these causes fall into four general categories:
  1 -  Acts of God (storms, earthquakes, volcanic actions, etc).
  2 -  Mechanical problems (ruptured pipes, metal fatigue, etc).
  3 -  Human errors (wrong calculations, miscommunication, etc).
  4 -  Management decisions/indecision.
  Most of the crises fall in the last category, and this is a result of management response to crises, and the efficiency of their decision making process. There is another type of classification that classifies crises according to the amount of warning time.


VI-Types of crisis based on the time of the warning time:
1-Sudden Crisis:
 "This is a disruption in the company’s business that occurs without warning and is likely to generate news coverage and may adversely impact: employees, investors, customers, suppliers, and other publics." (ICM). It will directly harm the company’s reputation, offices, franchises, and revenues.
  The sudden crisis may happen because of the following reasons:
1-Natural Disaster, which endangers the employees and puts obstacles in front of operations.
2-Industrial accident, which disrupts normal operations.
3-Industrial relations, which may lead to workplace violence or demonstrations by the workers or any kind of disruption.
4-Management turnover, due to the death of a key executive.
  Sudden crises have four levels, upon which dealing with them differs.
Level Description  Example

Sudden Level 1 A situation that can be handled by  the on-duty personnel responsible for manipulating this kind of situation. A machine is out of order in a factory. The machine technician manages to repair it without any help in a short time.
Sudden Level 2 A situation that can be handled by the assigned personnel, with the support of other employees. Some employees may be called. A machine is out of order in a factory. The machine technician calls the maintenance unit, and they send a crew that can repair the machine.
Sudden Level 3 A situation that requires more resources, and people more than the on-duty personnel or the company employees. They may be from other corporate offices or consultants.  The machine had a serious malfunction, and there is a need for spare parts. Neither the technician nor the maintenance crew is able to repair it. The company calls in a mechanical consultant.
Sudden Level 4 A situation that is out of control, and it will have serious consequences on the whole business. Some duties will be delayed because of that error. The machine motor had a short circuit, and it needs to be replaced. However, the spare parts are not available in the city, and they need to be purchased. Production is behind schedules, and the customers start feeling uneasy towards the situation.



2-Smoldering Crisis:
  "This is any serious business problem which is not generally known within or without the company, which may generate negative news coverage if or when it goes "Public" and could result in more than a predetermined amount in fines, penalties, legal damage, unbudgeted expenses and other costs." (ICM)
  The smoldering crisis may happen because of one of the following causes:
1-Internal problems within the organization that were not previously discovered.
2-Investigations by a government agency, and the indications of some judicial actions against the company.
3-Customer problems because of poor management planning.
  The smoldering crisis falls into four levels, depending on the severity of the problem. The classification recommends a way to treat these problems to minimize the danger of the disclosure the crisis into public.
Level Description  Example
Smoldering level 1 An internal business problem, which can be dealt with and resolved by the management assigned to respond for such a situation The employees working within a certain unit feel that they are not equally treated like other units. They talk with their boss to find a solution for this problem.
Smoldering level 2 An internal business problem, which can be resolved by the management assigned, with the help of other management that may act as mediators.       The employees decided to boycott their work temporarily until their problem is solved. Their boss and other higher management discuss the problem with them.
Smoldering level 3 An internal business problem that has the potential of going to the public through media, or any official or judicial authority. The employees decided to stand in demonstration to achieve what they asked for. They decide to send a grievance to their syndicate to find a resolution for their problems.
Smoldering level 4 A very serious situation that is more likely to spread to the public. It will have a direct and strong impact on the business.  The employees are resisted and they were not given the chance to demonstrate. They decided however to demonstrate. Hence clashes occur between them and the management, and the media knows the whole story.


VII-Dealing With Crisis Management: Crisis Communications :
 Considering the wide range of crisis situations that may occur in an organization, there consequently needs to be separate responses from different groups of people. These groups are primarily three: The operational people, who are responsible for keeping the disruption under control; the top management people, who are responsible for allocating resources and for making critical decisions needed to resolve the situation; and the communications people, who are responsible for making sure that those who need to know are informed initially, and are kept informed until the crisis is resolved. When a crisis occurs, the organizational management should proceed in a way that guarantees the most efficient coordination of these three groups with each other, which would help generate a unified response to the crisis, in case it reaches the public. The key, hence, is in having an integrated, coordinated approach by all three groups.

 
Case in point #1:  The crisis response to a toxic gas release at a Union Carbide chemical plant in Bhopal, India, that killed more than 2,000 people, was managed very effectively by the Bhopal team. This team consisted of 10 of Carbide’s managers and executives, and which was headed by the CEO, who worked for months in coordinating the operational, management and communications response to the worst industrial accident in industry.
 
Case in point #2: In contrast, one of the worst environmental accidents in history, the Exxon Valued oil spill, is generally regarded as on of the worst managed in history, because of the lack of coordination between management, operations and communications. The extraordinary work that were done by the Exxon oil spill response crew in terrible weather conditions is generally not known because of the company’s inept and insensitive communications with the community, government officials, and the two weeks it took CEO Lawrence Awl to visit the scene and make any kind of substantive statement regarding the tragedy. Such an example makes one consider the cost of lack of crisis communications. Exxon, in addition to the damage to its reputation as a leading oil company, faced heavy costs of the cleanup which were approximately $1 billion. Moreover, the Alaskan courts forced the company to pay an additional $3 billion in compensatory and punitive damages. One can only speculate on how much less the punitive damages would have been if Exxon had expressed any empathy, in the first three days after the accident, to the fishermen, local citizens, and millions of TV viewers, who were appalled and outraged by the gross damage done.
 
Case in point #3: More recently, another oil company, Texaco, had a major crisis of its own. A disgruntled employee secretly tape recorded an inflammatory discussion about racial discrimination among several Texaco managers. When he gave the tape to the plaintiff’s attorney in a law suit against the company, alleging racial bias in its promotional practices, the tape was distributed to the New York Times, causing an exponential rise in the crisis level.
To its credit, Texaco responded quickly and decisively, where CEO Peter Bijur, served as Texaco’s principal  spokesperson on the ensuing media onslaught, while Texaco took action to discipline the employees involved, resolve the lawsuits, and defuse a boycott called by Reverend Jesse Jackson. The dispute was resolved for $175 million, and probably cost the company at least that much more in internal costs related to the crisis. However, it could have been far worse for Texaco’s reputation, and much more damaging financially, if it had not been resolved so quickly. This fast response was due to "8 am meetings" that took place until the crisis was eliminated.
Each morning, in these meetings, anyone from Texaco’s human resources, legal and communications staffs who was involved in the crisis met with Mr. Bijur to review the situation as it stood, and discuss what was anticipated that day, as well as discussing the strategies for resolving the crisis as quickly as possible. This method may be labeled as good crisis management, involving crisis communications at its best.



VIII-Rankings and Examples of Crises in Crisis-Prone Industries:
A study conducted in 1995 showed that the crisis factors that caused businesses the most grief in 1995 were the increased militancy of the labor movement, the growth in class action lawsuits, and business crime (both white collar and workplace violence).  The Institute of Crisis Management (ICM) conducted an analysis on the negative news coverage of crisis in industry. The analysis revealed that several industries are more crisis-prone than others, due to the nature of their business. The list involving those industries unfortunately grew with new industries in 1995.
The following table displays the list of crisis-prone industry ranked in descending order of number of crisis stories.
Rank Industry Crisis Stories
1 Security Brokers and Dealers 354
2 Automobile Manufacturing 341
3 Aircraft Manufacturing 320
4 Commercial Banks 281
5 Software Companies 255
6 Newspaper Publishing  208
7 Professional Sports 196
8 Commercial Airlines  195
9 Telecommunications 149
10 Legal Services / Attorneys 125

Security brokers and dealers ranked in 1995 as the most crisis prone industry. The dubious distinction resulted primarily from trading scandals involving some of the biggest names in industry. Examples of these are Kidder Peabody, Prudential Securities, Smith Barney, Merill Lynch and Paine Webber, who found themselves in the glare of the media spotlight admitting guilt and paying millions in fines and lawsuit damage settlements for illegal actions by their brokers and traders.
The biggest scandal that occurred in this industry in 1995 involved, Nick Leeson, a Singapore-based trader for the Barings Bank in London, who ran up over $29 billion in illegal trades. Leeson subsequently went underground, triggering a worldwide manhunt that ended in his arrest and return to Singapore for trial.
The automobile industry always ranks among the most crisis-prone, coming in second in 1995. One factor was the number of recalls, for everything from trash trucks to police cars.
Chrysler led the industry in generating crisis news as it faced a hostile take-over threat from Kirk Kerkorkian along with government investigations of defective fuel tanks and rear door latching mechanisms on its industry-leading minivans.
In addition to having to appear in government hearings, auto executives also came under fire in court with a number of managers and dealers being found guilty of criminal actions involving sales of the cars. Meanwhile, the number and intensity of strikes against the auto makers and their suppliers increased.
Aircraft manufacturing also had more than its share of crises in 1995 with majority of the negative news centered around the machinists’ strike against Boeing. The 69-day walkout disrupted aircraft deliveries to the airlines and was marred by violence on the picket line before it was finally settled.
Airline executives also found themselves in crisis situations including "informational picketing" and outright strikes by employees, accusations of predatory pricing and illegal reservation systems, fraud suits by frequent flyers, fines for false advertising on the Internet, and delayed delivery of badly needed airplanes, all these due to the strike against Boeing.
The ousting of two consecutive CEO’s by Kiwi International Airlines in less than a year was one of the bizarre airline crises in 1995. Another was the in-flight asphyxiation of a load of pigs on a South African Airways Cargo plane. They were inadvertently gassed when an air quality sensor failed.
Commercial banking  made the list in 1995 primarily due to the scandals at Daiwa Bank in Japan, where one of its US branches forced the bank to absorb $1.1 billion in bond trading losses, and Barings Bank in London in the aftermath of the Nick Leeson trading scandal.
Leeson’s arrest multiplied difficulties for the regulatory and public relations for the bank’s officers, who already were faced with trying to explain how $29 billion in
questionable trades could have been made without management knowledge or review. Eventually, the bank went out of business.
An additional crisis in the banking industry was tied to hostile takeovers. Most notable was the protracted takeover battle between Wells Fargo and First Interstate Bank in California.
The computer industry faced a major uproar in 1995. Microsoft continued its running battle with the government, which stepped in to block Microsoft’s planned acquisition of Intuit, the leading producer of checkbook software.
Intel’s Pentium chip crisis, which began in the last quarter of 1994 and was the computer equivalent of a tempest in a teapot, continued into the early months of 1995. Then Apple took over in generating negative news with management decisions that led to a back-log of unfilled orders of more than $1 billion, the departure of key management and declining profit margins making the headlines during the last half of 1995.
The telecommunications industry, particularly Bell Atlantic, was the focus of a series of labor disputes and strikes in 1995. This was due to the expiration of three-year agreements between the "Baby Bells" and the Communications Workers of America.
Newspaper publishing was one of the newcomers to the list as a result of the strike against Detroit News and Detroit Free Press. The strike had all the earmarks of bitter labor disputes in the 1950’s with accusations of "goon tactics" and replacement workers being held hostage, picket line violence and mass rallies of union workers.
Newspapers also had more than their share of bizarre crises in 1995. The New York Times and the Washington Post wrestled with the dilemma of whether to go along with the demands of the Unabomber to publish his 35,000-word manifesto in return for the promise of no more letter bombs. They did, and the bombing stopped.
Professional sports was another newcomer. While most people think of sports as simple athletics, the major league baseball strike made it clear that baseball has become very much a business for both the owners and the players.
The economic impact of the conflict cost the spring training communities in Florida and the Southwest US millions in lost income. These losses were subsequently multiplied within the professional baseball itself as attendance dropped sharply; many teams lost money, and two of the TV networks canceled their broadcasting contracts as a result of the eight-month strike.
Painfully aware of  public relationship with the baseball strike, the National Hockey League resolved a "lockout" just before the start of the 1995 season. The NBA players also saw how the fans felt and voted not to follow the highest-paid players, who urged a strike.
The legal profession was another surprising newcomer in the list. Part of the credit or blame goes to the Rose Law Firm attorneys, including the First Lady, involved in the WhiteWater Scandal. The Other contributors include the attorneys and prosecutors in the O.J. Simpson trial. They had enough negative media coverage to make each of them household words and the topic of countless jokes on the level of the media and the nation as a whole.
On the US regional level, a federal prosecutor and six Miami attorneys were convicted and sent to prison for aiding the Cali drug cartel in smuggling 200 tons of cocaine into the US. Other similar legal crises stories include the arrest of attorneys with an American legal firm in London who were laundering money for Russian gangs, and charges against another attorney for destroying important physical evidence in the ongoing investigation of the Bank of Credit and Commerce International.
Another legal crisis was triggered by a noteworthy class action lawsuit against the tobacco industry, which included the subpoena of the records from several of the industry’s law firms. A paralegal leaked copies of the documents to government officials and the news media, prompting a furor of legal action, government hearings and damaging news stories.
Although not on the top-ten list, the tobacco industry has operated in a crisis mode since the Congressional testimony in 1994 by seven tobacco company CEO’s denying cigarettes were addictive. Their televised statements in 1995 contradicted the leaked information of a former executive, suggesting that cigarette manufacturers knew of, and controlled the addictive qualities of the nicotine in their products to boost their sales.
The following table ranks the top-ten companies that experienced crises in 1995:
Rank  Company Name Crisis Stories
1 Boeing Co.  108
2 Chrysler Corp. 82
3 Barings Bank PLC 55
4 Ford Motor Company 54
5 IBM 51
6 Daiwa Bank 50
(tie) Caterpillar 50
8 American Honda 45
9 General Motors  43
10 Detroit News. 42



IX-Crisis Management and Critical Incident Debriefing
There are several consequences to incidents associated with organizational crises. They include financial loss, increases security and insurance costs, and faltering of the company’s image in the customers’ eyes. Additionally, costs may be staggering from an employment perspective. The psychological trauma following a traumatic workplace incident from both an individual and from an organizational standpoint, can result in decreased productivity, increased absenteeism, and increase in workers’ compensation claims.
A company called Baron Center, Inc. aims at assisting organizations in developing and implementing crisis management protocols in preparation for a critical incident, and to provide caring, effective and immediate intervention following a critical accident. One of the steps that Baron Center Inc. takes in assisting the organization is providing pre-crisis dealing. The goal of pre-incident crisis management training is to identify where the organization can implement policies and procedures which can be utilized during and following a critical incident. Through preparation and education, management and employees can gain knowledge and understanding of the trauma response, and obtain the chance to rehearse emotional and behavioral responses to threats or traumatic incidents. The expectation is that through preparation for such an event, the physically harmful effects of the traumatic event will be minimized. Such preparation might include: Identification of the most likely to occur crisis situation, and establishment of crisis plan. Additional factors to consider are how to respond to customer reactions and questions, and how to respond to the media.


PART B: Background About the Company

I-Bill Harbert International Construction, INC.
 
  Bill Harbert is a privately owned construction company whose headquarters is in Birmingham, Alabama. Over the 45 years, Bill Harbert has completed a multimillion dollar projects worldwide, in 37 countries to be exact.  Its initial work was on highways and bridges then it moved on to water, wastewater, and oil and gas distribution systems. Bill Harbert has worked in many countries in the world, one of which is Egypt. For 15 years, it has gained great experience in the civil work which gave the company the opportunity to secure many projects in different parts in Egypt, some of which were in Embaba, Lagoon, Safaga, Al-Haram, and Alexandria. There has never been a case in which the company has not fulfilled a contract commitment.  Each project, though, was different from the other.  For example, Safaga project which cost 78 million dollars was an industrial project to build 4 major buildings.   Whereas in another project like in Rod El Farag, the project was different as it was for waste water and water treatment that cost 198 million.  There are, of course, many other projects and other places. However, the company has faced an enormous amount of crises.  Some of them were simple that were solved alone, but others had a great negative effect on  the company.   Many of  the crises had to do with problems and law suits with the people.  Noise, excavations in land, and other problems that exist in any construction work were the main reason for these crises.
   Concerning Bill Harbert work in Egypt, it had many projects and not all of them were under the same management.  This does not mean that the policy for dealing with crises has changed much, except for some situations in which the decision of the manager really made the difference. This change of managers resulted in having different experiences.  This was easy, having worldwide branches where a manger can work in wastewater projects one day and on a oil refinery in the middle of the sea the next. Still, the crew has nearly been the same in the branch of Egypt for  the last 15 years, and the manager is changed only according to the mission or the project.
  The experience of this company includes projects in water treatment plants, wastewater treatment facilities, pumping stations, water/sewer lines, airfield facilities, oil and gas pipelines, hotels, office buildings, and many other fields.  In Egypt, projects have been limited to wastewater and water treatment projects as it is necessary because of the lack of underground sewage design where many buildings and projects were built in the last few years without planning or designing.  This is a result of the enormous number of people who live in the crowded cities and build their houses without planning.  It is now the responsibility of the government to redesign and rebuild trying to save what can be saved.  Bill Harbert is then one of those foreign companies that is assigned by the government under the American Aid Program to improve the Egyptian cities until Egypt is capable of doing its projects on its own depending on the local companies.
 


II-Profile
 Bill Harbert International Construction, INC.
From the official INTERNET website
Bill Harbert International Construction, Inc. is a privately held construction  company headquartered in Birmingham, Alabama.  The development of Bill Harbert International's current business began in 1949 when Bill joined his brother John in the formation of Harbert Construction Corporation. Over a span of 43 years, construction capabilities evolved from highways and bridges to water, sewer, and natural gas distribution systems. In the latter years, construction capabilities of airfield facilities, marine ports, military bases and commercial/industrial buildings   were added.
  When Harbert Corporation decided to get out of the construction business, Bill L. Harbert founded Bill Harbert International to continue the work he had  entered with his brother in 1949.
  Today, Bill Harbert International operates throughout the world delivering   high quality at a low price.  Bill Harbert International believes that versatility and the ability to quickly mobilize both personnel and equipment are key elements to the success of
 the company's performance. Our unyielding commitment to excellence will carry us into the 21st century as a leader in both the domestic and international construction markets. But above all, is our commitment to serve   the people of the world in their hopes to build a better community and a better way of life.



III-Problems Of Bill Harbert In Egypt
   Fifteen years is a time long enough to be filled with thousands of crises in every year for a construction company.  For Bill Harbert in Egypt, there were problems almost every single day.   This is because:  1) it deals with the government where deadlines must be strictly respected and committed to; 2) most projects are held in the center of very crowded cities, such as: Embaba, Saft El-Laban, and El-Haram, and 3) because most of the company’s work is excavating and inserting pipelines and building, creating great amounts of noise and vibrations which makes the nearby residents uncomfortable, forcing them to cause problems for the company.  For example, one time the vibrations coming from a hammer that plants metal sheets in the ground caused the buildings around to shake like an earthquake, making the people so angry that they started throwing empty glass bottles on the workers.    This problem is nothing compared to other problems that took longer years and millions of pounds.


IV-Examples Of Crises in Bill Harbert
 There are endless types of crises in construction corporations, especially when working in crowded areas and under pressure.  It has been proven, nevertheless, that with all the crises, Bill Harbert has always passed through all its obstacles safely.  Here are some of these crises and the methods used in solving them.


  1 )  Crisis Tree line :
Location :  Cairo Alex. Road.
Crisis with  :  Bill Harbert & a land owner
Crisis  :  The company had this project of excavating and inserting pipelines in a part of the road between Cairo and Alex. One of the lands in between the area under work was owned to a man who took the land from the government without informing it, and planted a tree line near the road so that he would become a legal owner after a while.  Unfortunately for him, construction work required that the trees be cut because they were in the way.  This meant that he would lose the land because the government cannot take back the land if there were some trees or plants. His reaction was to gather his men with their guns and weapons along with his gun, and threaten the workers with death if anybody came near the site. This caused two major problems for the company. First, the need to meet their deadline and go on to the next stage without delay and losses.  Second, this kind of threat (which goes under terrorist threat) caused fear to the workers and some even left the site and their jobs. The company cannot afford losing its staff and good workers, so action had to be taken.
àAction :The company thought of two methods immediately.  One, to listen to the owner and try to find a new path for the pipeline, and for this a team of engineers met at once to study the possibility and they had with them a financial manager to estimate the cost.  Two, the manager sat with this team that was organized just to solve the problem because they are specialists and listened to them , but he also listened to another team which had engineers along with a Colonel this time who had a big influence in the police and was assigned by the company to face such problems.  As the first team decided that it would be insufficient and costly to find a new path, the second team started working. The Colonel called the people in charge in the police and few hours later, the company was protected by 110 soldiers and a few officers. The owner did not have a chance but to comply and leave the company to excavate.
After That :  Many cases were filed by the owner in court, but all of them were lost.
Conclusion  :   The crisis here illustrates two things, time and fear.  The company with all competitors around cannot afford losing time or good reliable workers because of a problem like this, so it needed the effort of the different teams that found the solution as soon as possible and was implemented immediately.


  2 )  Crisis Steel Sheets :
Location :  Lagoon wastewater dump.
Crisis type :   Industrial crisis.
Crisis  :   A sewage pipeline had to be planted in the ground from Abo-Rawash to a dump in Lagoon.  Sewage pipes are two to three meters in diameter which takes great effort in carrying and placing.  The company also has a known technique which is covering the pipes after 7 meters with sand and finish it totally.  The surveying engineer in the company made a fatal calculation error knowing that he had laser devices, which are computerized, giving maximum accuracy and eliminating any chance for error.  The mistake resulted in the land excavated having a small slope.  In water pipes there is no problem, but with sewage, it would be a problem as this way it will accumulate at the
middle making the pipe smaller in diameter and causing other technical problems.   From the company side there were many meetings.  One of these was a team of the government engineer, the engineer of the company , and the consultant who is assigned only by the company in time of crises.  They decided after meeting that the  problem is minimal and can be avoided by just making the slope go up again.  They also decided that this will take two weeks of discussion and recalculating everything as they had already done 200 meters, and it needed long measurements all over again.  At the same time, the manager formed a crisis team that consisted of four engineers, his assistant manager who is a management graduate and not an engineer, and himself as a coordinator.  The four engineers agreed that it was not that big problem, but it is a defect and it will be marked forever that Bill Harbert made a mistake.  Also, on the long run, the accumulated sewage water would start causing problems to the flow of fluids. The assistant manager also got a magazine that pointed out the mistake in a specialized magazine in the US, which means a loss of reputation.  The Final decision then was given by the manger.  He decided not wait for the two weeks of calculations, and to excavate the 200 meters again and make the right slope.  The great part is that it was finished in 4 days only which was a brilliant construction effort and the same magazine pointed out this effort with admiration.
Conclusion:  The company has teams that are not present all the time, but at the time of crisis they gather with the help of the manager.  The decision was well-taken and at the right time, and this saved time and reputation, which much more important than the financial costs. The good point about this is that the manager gave confidence to the survey engineer as he was one of the 4 engineers who took the decision of re-excavating the site.
 
Everyday Crises
 Unlike the previous crises, these will be day to day crises that did not take long time or effort to be solved. These crises result mainly from a minor mistake that accumulates into a crisis. They could also result from an environmental problem.  To sum up, in such crises, no need for a management SWAT or a group of experts to come and meet to solve them because they are not that critical or they must be solved at once without delay waiting for help to save the job.
   Again it is a construction company where its main concern is to finish the projects on time and according to the contracts it signed.  Here are some of these crises and how they were handled.
 

3) Crisis Mine field :
Location :   The Abo-Rawash project at Lagoon area near 6th October City.
Crisis Reason :  The Army.
Crisis :  The crisis is not with the army, but it was caused by the army that used this area in the past as a training area. Definitely, this spot near 6th October city is ideal for military purposes such as training and protection as well being a desert and at the same time close to Cairo the capital.  After the war and by improving weapons and finding other strategic spots around Cairo that might be used as military positions, this Lagoon area was abandoned.  Three years  ago, Bill Harbert had this project which was connecting a sewage pipe line from Cairo to Lagoon to dump the sewage in it.  By now, the crisis should be clear.  At the first two or three weeks of excavation, the workers found old mines and old ammunition that were left by the army.  Hence, these had to be removed from the area before working because the possibility of finding live ammunition could result in a big crisis if workers are killed with it.
 The crisis is mainly a time crisis as excavations in this area must start as the pipes have all ready been put into the ground in Cairo and were approaching  the Lagoon, which in turn have to be prepared before the arrival of the pipes.  The company had two choices.  One, wait for the government to send a bomb squad and clean the area which will delay the work or, two, the company can get a specialized group to do so, and that was the case which took only two weeks, and the job was continued normally and the company made up for those lost two weeks.
 

  4 )  Crisis Glass Bottles :
Location :  Embaba.
Crisis with  :  Locals.
Crisis :   Construction work has two sides like anything else.  From one side, it is an important process that must be performed in order to build cities and so on.   But on the other hand, it tends to be a noisy process.   In order to excavate and put pipes into the ground, a company must dig the earth.  To dig they use huge machines that weigh tons. These machines cause excessive noise and vibrations as they dig into the ground. In Embaba, which is noticeably crowded, people just could not stand it anymore and they demanded that the work must stop or else.  In a way they had a point as the buildings were really shaking in a scary way and at a certain point people were afraid of the buildings collapsing on their heads, as described by the manager himself.   The first to lose her patience was a lady living nearby the construction site.  Her house was shaking as described, but she couldn’t stand it anymore and went to face the company’s officials.  She charged to the site screaming and shouting on the engineers and workers demanding them to stop, but of course they did not stop and went on trying to convince her that there is no danger. After a period of time, and like most cases, people gathered and joined the woman in complaint, but they interfered anyway. Later, things later were out of hand and the women threw a glass bottle on the machines and some other did the same.  The crisis then began as it is now an assault on workers while doing their job.  The woman did not stop at that as she went and brought the police for the company because of the noise. Unfortunately, at that day the manager was there at the site for inspection.  When the police came they arrested him as the man in charge.   This could have been a long time crisis if it was not for the bottles.  At the station, the woman and other supporters from the locals insisted on filing a suit case against the company, but the manager because he lived in Egypt for a long time and he knew law very well, he said that if a suit case is filed by any person not only the lady against the company, then the company will press charges because glass bottles were throw on them.  This could put the locals in jail. Therefore, the charges were dropped and the crisis ended, at least for the company which had a signed document from the locals not to try and protest again.
 

Major Crisis Solved on its Own
  This crisis has appeared and been solved on its own.  The solution does not mean that the losses has been recovered, but it has stopped and no more losses were added.  The good thing about this crisis is that it includes many aspects that cause crises as we will see.
 It begins at the end of a project in Lagoon.  As indicated earlier, the company is an international company with 37 branches all over the world one of which is Qatar where the company won a project.  It was the first time to have a project there and because Egypt was the closest branch to it, they decided to use the equipment in Egypt specially as the work in Lagoon had finished.  The problem started when Egypt’s branch wanted to transport the equipment to Qatar using a ship as it is the only way because of the heavy load and huge expense it would cost to transport it on land.  As an American Company that follows the American standards and laws, it is forbidden on the company to deal or work with countries that are listed to be terrorist protecting ones.   At the time, the equipment had to be transported at once, and within 15 days.  From the thousands of ships that cross the canal and form the hundreds of ships that stop at its ports, the only ship the company found was a Sudanese ship.  Of course for the USA strangely enough, it is considered a terrorist country and no American equipment should be transported on non-American ships.  This was the first sign of the crisis.  This took about 7 days just trying to convince the American government to agree on using this ship which is not only  non-American, but it also Sudanese.  After a while, the permission came, but where is the ship?.  The ship at that time was 50 kilometers south, and by the time it came it took another 3 days.  When it came it had a cargo of food products from Sudan going to Aqaba port in Jordan where the authority refused to deliver the cargo because it was ruined. Therefore, it went back to Sudan and back again to Jordan then it came to Egypt.  In Egypt, the manager of Bill Harbert nearly lived in Suez for 2 weeks trying to put the equipment on the ship.  And at last he did, but the captain of the ship did not go to Qatar as he had an order to take another cargo with him to Emirates before Qatar.   Bill Harbert had to agree on this as it was the  only ship big enough to take all the equipment in one trip.   In all this, first, the company lost two and a half month instead of 15 days to transport the equipment.  Two, a lot of time was wasted in finishing business concerning paying for storage of the equipment in Suez, and the manger traveled all the time between Cairo and Suez to finish business in both cities.  Three, some problems and hard feelings existed and are still there between the company and some authorities that were forced to accept something that was forbidden.
 We can see that in this crisis there was nothing that could have been done. an enormous effort was done to end the crisis, but it was solved on its own at the end.


PART C: Case Analysis
  This part of the report will aim at analyzing the case at hand, concerning the crises that occurred at Bill Harbert. This will be executed through first recognizing the type of each crises, and categorizing it according to its cause of existence, and according to its time of warning. Second, the different parts of the life cycle for each crisis are crystallized in their chronological order, and the methods by which the crisis are dealt with are briefly commented upon.


Case # 1: Crisis Tree Line
A) Crisis Categorization
Clearly, this crisis is a criminal event crisis. The land owner chose to obstruct the company’s project through use of threat of violence, i.e.  threatening the company workers with guns and other weapons. The attitude of the owner, or the size of the threat with which the company workers were faced, specifies the crisis type as a terrorist act. With respect to the warning time of the crisis, this case nay be categorized as a sudden crisis of the third level. It has been previously stated in this paper (See section titled "Types of crisis based in the warning time: 1 - Sudden Crisis) that a crisis of sudden level three is a situation that requires more resources, and more personnel, than those existing at the current time. Certainly the personnel present at the crisis location were unable to counter the threat imposed upon them; indeed the fact that some workers quit their jobs is strong evidence of this point.

B) Crisis Life Cycle
Pre-crisis Stage: This is the stage when the land owner first recognizes the aim of the company at using his land for construction works, and, in the process, cut down his trees. It is most probable that the company were net able to predict the reaction of the land owner; otherwise, they would have negotiated matters with him before he would have taken any violent actions.
Warning: This occurred when the land owners appears with his men with their weapons, and threatens to shoot down the workers if they proceed with their work. At this point, the people conducting the project realize that they have a major problem, which could have harmful effects: The project deadline may be seriously delayed, this causing financial and reputational losses, and, due to the imposed threat, and the atmosphere of fright which it caused among the workers, the company started losing its staff, which it could not afford at the time.
Acute Crisis: At this stage the company started studying two methods by which it could face its crisis. The first involved studying the feasibility of implementing a new path for the pipeline. This scheme proved financially unfeasible, such that the company was forced to adapt the second method. The second method involved asking for aid government aid, such that land owner at the end was forced to comply with company’s project and let it proceed with the project, after being opposed by a strong police force.
Clean-up: The clean-up involved here was when the company had to face the suit filed against it by the land owner in court. The company was successful at this, where it won all the cases filed by the man, hence saving its reputation, and avoiding financial losses that might have been implemented, had the land owner won his case.
Post Crisis: The company was able to continue its project safely, and was also able to meet its deadline. It did not have to face courtroom consequences, since the land owner had lost his case; hence, work went back to normal, and the crisis officially ended.



Crisis # 2: Crisis Steel Sheets
A) Crisis Categorization
This case may be defined as a product failure crisis, where the company’s product, which is the piping system, is defective. The magnitude of this crisis is elevated by the story of the defect being published by the media, hence jeopardizing the company’s reputation. The crisis is also of the smoldering type, level 3, since it was existent for some time, until its news reached the media, and it took management some time to realize its existence. Actually, the company was a bit too late, where it should have perceived the defect by checking the engineer’s work, before its news reached the media.
B)  Crisis Life Cycle
Pre-Crisis Stage: The roots of this crisis crystallized when the survey engineer miscalculated his design data, and failed to note the presence of the slope in the land. It only took that the design be implemented, i.e. the pipe to be laid out, for the crisis to start.
Warning: The warning of the crisis comes when the company realizes the mistake that had been made, and recognizes the presence of the slope in the piping system laid out, and also recognizes the underlying technical consequences of the mistake. Here the company has to make a decision in dealing with the problem it has in its hands. The company management can either choose to ignore the problem completely, and thus risk the company’s reputation, or they can deal with the problem through re-running the design calculations and conducting new cost feasibility studies.
Acute Crisis: At this stage, the management realizes that it does not have the choice of dealing with the problem over a two week period of time. News of the mistake had leaked to the media, and was published in foreign periodical. The company’s reputation was seriously at stake, and immediate action had to be taken. The decision taken by the company manager was to ignore conducting calculations and feasibility studies; instead, he ordered that constructions start at once, targeting the slope in the pipeline, and eliminating it completely.
Clean-up: The managers decision is carried out, and the defect in the pipeline is eliminated in a remarkably short period of four days. Moreover, the survey engineer responsible for the crisis through his miscalculations, regained his credibility by being part of the team that rectified the situation.
Post Crisis: Nevertheless, the effects of this crisis remain tangible, even after the clean-up. The company suffered some negative reputational impact after the article about its mistake was published. In addition, the company was forced to deal with unexpected, and unnecessary, costs of digging up the pipeline, and smoothing out the slope.


Crisis # 3: Crisis Mine Field
A) Crisis Categorization
Deciding upon the type of the crisis at hand is quite difficult because a serious crises never occurred, there were only signs of a potential crisis. That is, if the old mines and ammunition had not been discovered, the workers might have across some live mines and then the real disaster would have occurred with some of the workers getting killed. In that case, the crisis would have been labeled as industrial accident, and with respect of its timing, it would have been a sudden crisis of the fourth level, whereby there would have been  serious consequences on the business.
B) Crisis Life Cycle
Pre-crisis Stage: This stage is effected by neglect from the company to study the land on which they were carrying out their project. The company should have considered studying the history and the characteristics on which they are to carry out their work. Of course, the roots of the crisis here are contributed by the presence of old mines and ammunition in the land.
Warning: The company realizes the possibility of an upcoming crisis when the workers discover the presence of old mines and ammunition while excavating the land.
Acute Crisis: The mines and ammunition found cause fear, where the possibility of existence of live mines and ammunitions pertains. Thus, the work has to be delayed, until the fear is eliminated; that is, until the company is sure that the land is safe. The company has two options; either wait for the government to send a bomb squad, which would cause a large delay in the work schedule, or to employ a private specialized squad, which would finish the job in a short period of two weeks, causing negligible delay in the schedule. Inevitably, the company  chose the private squad.
Clean-up: Clean-up in this case was done literally, where the squad spent two weeks cleaning the area and removing the danger that had threatened the project.
Post Crisis: The company suffered little or no post crisis effects; the danger was removed, and the time taken to do so was easily made up for. There were no side effects to the crisis, and after the clean-up it was officially over.


Case # 4: Crisis Glass Bottles
A) Crisis Categorization
This crisis could be classified, in the sense of cause of existence, as a public perception crisis. Clearly, the company failed to perceive the harm it is causing the public (i.e. the locals). Even when they where exposed to the complaints of the public, they ignored it. As to the timing of the crisis, the case at hand may be classified as a smoldering crisis, where the company members had a problem growing each day they were excavating, and simultaneously disturbing the locals, where they failed to see the inconvenience they were causing. The crisis is of the 3rd smoldering level, which is basically when a business suffers from problem that involves unwanted contact with authority. In the case the manager was arrested, and the company may have had to face courtroom authority.
B) Crisis Life Cycle
Pre-crisis Stage: The cause of this crisis is the neglect of the company of the reaction of the people to the noise caused by the excavation. If the company had notified the residents of the surrounding area, and worked things out with them, before it had commenced its work, then this crisis could have been easily avoided. As it is, companies in Egypt are not always considerate to everyone, a trend which needs to change, even disappear completely for the sake of a more cultured society.
Warning: The first warning to the pertaining crisis was when the lady verbally objected to the work of the company. If someone had taken unto his hands working out matters with the lady, then the problem could have been avoided. That was not the case however; apparently the lady was either ignored, or scolded for interfering with the work, such that she and others were driven to attack the workers by throwing glass bottles at them.
Acute Crisis: The lady and the rest of the locals call the police, and consequently the company manager, who is present at the time, is arrested. The locals were also insisting on filing a suit against the company. At that point, the company’s reputation is dangerously at stake. It was noted however that the locals had attacked the company workers, such that the company was in a position to get the locals into as much trouble by filing a case against them. That was the company’s way out of the crisis.
Clean-up: The company is able to force the locals to drop the charges against the company and its manager, by threatening to press charges against for their assault on the workers. The company is able to avoid further harm by making the people sign a document preventing them from facing the company again.
Post-crisis:  Although has not been officially recorded, one can obviously that the problem does not completely end at the clean-up stage. The locals will still hold grudges against the company, and its reputation, at least in this part of Cairo has faltered. Moreover, all it would have taken was somebody to talk to the newspapers, and ruin the reputation of the company throughout the country. Luckily, no such thing happened, yet the company should realize that they would not necessary get away with ignoring people’s complaints all the time.

Comment: I would like to acknowledge Engineers Ahmed Al-Banhawi, and Nader Amer for their effort with me in this project.

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