Decision Making in Crisis Situation
Application project on
Bill Harbert International Construction, INC.
PART A: Introduction to Crisis Management
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
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.
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
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
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
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
All these causes fall into four general categories:
1 - Acts of God (storms, earthquakes, volcanic actions,
2 - Mechanical problems (ruptured pipes, metal fatigue,
3 - Human errors (wrong calculations, miscommunication,
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:
"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
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
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
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.
"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
The smoldering crisis may happen because of one of the following
1-Internal problems within the organization that were not previously
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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.