Lone Star Consulting Firm321 One Way Dr.San Antonio, Texas 78217April 16, 2012Alamo Research InstituteSan Antonio, TexasDear Alamo Research Institute,Enclosed is the proposal for an Innovative Capabilities Audit.As representatives of Lone Star Consulting Firm, we appreciate this opportunity to present to you our proposal for anInnovative Capabilities Audit. We recognize that Alamo Research Institute is one of the largest research &development organizations in San Antonio, Texas. We are honored to submit a proposal to assist you with increasingyour firm’s innovation, research & development, and overall quality. Based on the audit that we provide, we areconfident you will be pleased with our proposal.Our firm consists of highly qualified individuals from a variety of backgrounds and experiences in all levels ofmanagement. Our expertise consists of data and financial analytics, information security and technology, mechanicalengineering, and audit. Additionally, our consulting firm has the background and experience necessary to follow adisciplined and strict time line. Our proposal presents detailed plans that can formulate the strategic managementcapacity, resource availability and allocation, capacity to understand technological environment and performcompetition analysis.Please let us know if you would like to further discuss the details of our proposal and ask any questions regarding ourresponse.Sincerely,James GrohEnrique LoeraJohan LundSonok Rivetto
Scope StatementThe Innovative Capabilities Audit will accomplish the requirements specified by the Alamo Research Institute. Firstly,this audit will evaluate the strategic management capacity of ARI. The requirements include planning, executing, andevaluating the assessment of ARI management’s capacity to support innovation. Furthermore, it includes evaluationof the capacity for one management group to work with other levels of management groups including top, middle,and venture managers. The team will evaluate the strategic importance of the new incentives and how it lines upwith the overall ARI’s core capabilities.Secondly, this audit will evaluate the resource availability and allocation. In order to accomplish this, an assessmentof the availability, strength, range of skills, and competencies of internal resources will be performed. A review ofresource spending and allocation along with activity tracking within different organization endeavors will also beexecuted. Additionally, an assessment of how corporate funding is utilized within ARI is to determine that funding isappropriately allocated. This analysis will help support strategic and tactical management planning for ARI’s potentialgrowth and efficiency of resource use.Thirdly, the capacity to understand technological environments will be assessed. This assessment will include theability to understand the technological environment that ARI currently operates and the future technologicalenvironment it will operate in will be performed. ARI’s ability to assess and determine which technology or researchdepartment is their strongest and identifying technological opportunities for business units will be reviewed. ARI’scapacity for technological forecasting and forecasting impacts between technological areas will also be evaluated inorder to facilitate impeding external forces relevant to business units, research divisions, and opportunities.Finally, an assessment of the firm’s ability to perform competition analyses will be performed. ARI’s past competitionanalyses will be collected and pertinent data will be extracted for analysis. The analytical methods employed by thefirm will be judged based on completeness, accuracy, and timeliness, with each variable evaluated on differentcriteria. The firm’s analysis of its primary competitor will be compared to an independent study conducted by LoneStar, which will investigate the competitor’s operations, marketing, finance, and corporate strategy. Finally, the firmwill be judged on its ability to anticipate external forces such as the entry of new competitors and macroeconomicforces.A formal report will be submitted with summary of the results. ARI will be able to use the data provided to makeinformed decisions.
Work breakdown Structure Management capacity to support new initiatives 1.0 Top Management Middle Management New Venture Managers 1.1 1.2 1.3 Long term corporate Support for new Build new Business Strategy initiatives organizational (1.1a) (1.2a) capabilities (1.3a) Strategic importance of Corporate strategy initiatives framework for new (1.1b) initiatives Business Strategy for (1.2b) new initiatives (1.3b) Relate initiatives to core capabilities Coach new venture (1.1c) managers (1.2c) Resource Availability and Allocation (2.0)Corporate Funding Breadth and Depth of Skills Distinctive Competencies Distribution of Research andLevels Assessment Assessment Assessment (2.3) Development Assessment (2.1) (2.2) (2.4) Research and Current Business Development Operations Personnel (2.4a) (2.2a) Engineering Exploratory Research Personnel (2.4b) (2.2b) New Business Market Research Definitions & New Personnel Business development (2.2c) (2.4c)
Work PackagesExample work packages were included showing the details of the work that will be performed. All workpackages can be provided upon request. Project: Innovative Work Package (1.1a): Top Management Capabilities for long-term corporate Capabilities Audit development Description: Evaluate top Deliverables: Results of available capacity for top management management capacity to Input: define long-term corporate development strategy Direct Labor Activities: Labor Specialty Effort (hrs) Cost Plan for top management Senior Professional Specialist 24 $2,880.00 capacity for long term Associate Professional Specialist 16 $1,440.00 strategy Clerical 8 $160.00 Senior Professional Specialist 24 $2,880.00 Execute success of long term Associate Professional Specialist 24 $2,160.00 strategies Clerical 24 $480.00 Executive 8 $1,920.00 Evaluate Data Collection Senior Professional Specialist 8 $960.00 Total Direct Labor 136 $12,880.00 Direct Non-Labor Activities (Material Costs-Office Supplies, Computer Expense $100.00 Direct Overhead (Rated at 40% of Direct Labor Costs) $5,152.00 Total Direct Cost (Labor + Non-Labor + Overhead) $18,132.00 General Administrative Costs (Rated at 10% of Total Direct Costs) $1,813.20 Total Cost (Total Direct Cost + General Administrative Costs) $19,945.20 Profit (10% of Total Cost) $1,994.52 Total Work Package Cost $21,939.72 Project: Innovative Work Package (2.1): Resource Availability and Allocation - Corporate Funding Capabilities Audit Description: Plan and Deliverables: Results from Corporate Funding Assessment execute assessment of Input: Work Packages (1) corporate funding to determine if funding is being appropriately allocated to research and development activities. Direct Labor Activities: Labor Specialty Effort (hrs) Cost Planning for Corporate Senior Professional Specialist ($120) 24 $2,880.00 Funding Clerical ($20) 3 $60.00 Associate Professional Specialist Execute Fieldwork of ($90) 40 $3,600.00 Corporate Funding Senior Technician ($80) - Helps to pull data from database for analysis 16 $1,280.00 Senior Professional Specialist ($120) 16 $1,920.00 Evaluate Fieldwork Testing Associate Professional Specialist ($90) 8 $720.00 Clerical ($20) 1 $20.00 Review of Assessment Executive ($240) 16 $3,840.00 Total Direct Labor 124 $14,320.00 Direct Non-Labor Activities (Material Costs-Office Supplies, Computer Expense $100.00 Direct Overhead (Rated at 40% of Direct Labor Costs) $5,728.00 Total Direct Cost (Labor + Non-Labor + Overhead) $20,148.00 General Administrative Costs (Rated at 10% of Total Direct Costs) $2,014.80 Total Cost (Total Direct Cost + General Administrative Costs) $22,162.80 Profit (10% of Total Cost) $2,216.28 Total Work Package Cost $24,379.08
Project: Innovative CapabilitiesAudit Work Package (3.1 a): Understanding Technological Environment- Financial AnalysisDescription: Evaluate and assess Deliverables: Determine which areas are the strongest and which areas have the mosteach research areas financial potential for growth.situation Input:Direct Labor Activities: Labor Specialty Effort (hrs) CostEvaluate cash inflows and Senior Professional Specialist 24 $2,880.00outflows Associate Professional Specialist 16 $1,440.00 Senior Technician 8 $640.00Evaluate Budgets 24 Senior Professional Specialist $2,880.00 Associate Professional Specialist 24 $2,160.00 Apprentice Professional Specialist 8 $480.00Review Financial Resources Executive 8 $1,920.00 Senior Professional Specialist 8 $960.00Total Direct Labor 120 $13,360.00Direct Non-Labor Activities (Material Costs-Office Supplies, ComputerExpense $200.00Direct Overhead (Rated at 40% of Direct Labor Costs) $5,344.00Total Direct Cost (Labor + Non-Labor + Overhead) $18,904.00General Administrative Costs (Rated at 10% of Total Direct Costs) $1,890.40Total Cost (Total Direct Cost + General Administrative Costs) $20,794.40Profit (10% of Total Cost) $2,079.44Total Work Package Cost $22,873.84Project: Innovative Capabilities Work Package (4.1): Data CollectionAuditDescription: Plan and execute Deliverables: Results from Data Collectioncollection of firms past Input:Competition Analyses.Direct Labor Activities: Labor Specialty Effort (hrs) CostPlan Data Collection Senior Professional Specialist 24 $2,880.00Data Collection Associate Professional Specialist 24 $2,160.00 Apprentice Professional Specialist 24 $1,440.00 Clerical 24 $480.00Evaluate Data Collection Executive 8 $1,920.00Total Direct Labor 104 $8,880.00Direct Non-Labor Activities (Material Costs-Office Supplies, ComputerExpense $100.00Direct Overhead (Rated at 40% of Direct Labor Costs) $3,552.00Total Direct Cost (Labor + Non-Labor + Overhead) $12,532.00General Administrative Costs (Rated at 10% of Total Direct Costs) $1,253.20Total Cost (Total Direct Cost + General Administrative Costs) $13,785.20Profit (10% of Total Cost) $1,378.52Total Work Package Cost $15,163.72
Project ScheduleGantt chart sample from MS Project. This portion of the project Gantt chart depicts work package 2.1-Corporate Funding, of the Resource Availability and Allocation section of Lone Star’s audit. Tasks are depictedin blue and summary tasks in black. The entire project consists of 158 tasks (including subtasks) and some taskswere delayed or split due to resource constraints, therefore presenting the entire project Gantt chart herewould be cumbersome, but it can be provided upon request. 6 6 6 7 7 7 8 8 8 9 9 9 1 6 / / / 7 7 / / / 8 / / / 9 9 / / / 0 10 10 10 / 1 1 2 / / 1 2 2 / 1 1 2 / / 1 2 3 / /1 /2 /2 3 0 7 4 1 8 5 2 9 5 2 9 6 2 9 6 3 0 7 4 1 8 Executive 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Senior Professional Specialist 2 4 4 4 4 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Associate Professional Specialist 2 4 4 4 4 4 1 1 1 0 0 0 0 1 1 1 1 1 1 1 1 0 Apprentice Professional Specialist 2 3 3 3 2 0 1 3 1 0 1 1 1 0 0 0 0 0 0 0 0 0 Senior Technician 1 1 0 1 1 0 0 1 0 0 0 0 0 1 1 0 0 0 0 1 0 0 Junior Technician 0 0 0 1 1 0 1 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 Clerical 2 2 3 4 1 1 0 1 1 1 0 1 0 1 0 1 0 1 1 0 1 0Human Resource Schedule. The number of each type of labor specialty assigned to the project is provided foreach week. This schedule is designed to minimize the weeks when an individual must work more than 40 hoursper week or less than 20. Although some positions require individuals leave and return to the project whenlabor is required, many individuals will not return once they leave the project, thus, eliminating the need forpeople to reorient themselves with the project upon their return. This is the best solution given the resource
needs of the project. Lone Star will receive ARI’s requests for the retention of specific individuals during theproject, but reserves control over its labor force. Labor Specialty Hours/Week Executive 16.935 Senior Professional Specialist 26.91591 Associate Professional Specialist 26.26471 Apprentice Professional Specialist 30.9103 Senior Technician 19 Junior Technician 16 Clerical 13.07Average work week for each labor specialty. Given the number of individuals of each labor specialty assignedto each week and the specialty’s required labor hours for that week the average work week for each specialtycan be computed. Individuals in the position of Apprentice Professional Specialist devote a greater portion oftheir time to a single project and thus, are scheduled a significant amount of time on the project, while theExecutive balances multiple projects and is scheduled for less time. Furthermore, the positions more relevantto the project are allotted more time than those with less application, e.g. the various Professional Specialistsare required for more tasks than the Technicians. The exact number of hours each specialty works each weekcan be provided upon request, but this table, coupled with the Human Resource Schedule, should provide ARIwith an approximation of the hours each position is available should one need to be contacted regarding theproject.
Price Estimate for Services Innovative Capabilities Audit- Capacity to Perform Competitive AnalysesCost Description 4.1a 4.2a 4.2b 4.2c 4.3a 4.3b 4.3c 4.4Hours worked on job 104.00 96.00 96.00 96.00 120.00 112.00 116.00 112.00Direct Labor Cost $ 8,880.00 $ 10,360.00 $ 10,240.00 $ 10,240.00 $ 12,080.00 $ 10,320.00 $ 11,040.00 $ 11,760.00Overhead Cost $ 3,552.00 $ 4,144.00 $ 4,096.00 $ 4,096.00 $ 4,832.00 $ 4,128.00 $ 4,416.00 $ 4,704.00Direct Non Labor Cost $ 100.00 $ 100.00 $ 3,200.00 $ 300.00 $ 600.00 $ 100.00 $ 100.00 $ 1,100.00General and Adminsitrative $ 1,253.20 $ 1,460.40 $ 1,753.60 $ 1,555.60 $ 1,751.20 $ 1,454.80 $ 1,555.60 $ 1,756.40Profit $ 1,378.52 $ 1,606.44 $ 1,928.96 $ 1,711.16 $ 1,926.32 $ 1,600.28 $ 1,711.16 $ 1,932.04Total cost $ 15,163.72 $ 17,670.84 $ 21,218.56 $ 17,902.76 $ 21,189.52 $ 17,603.08 $ 18,822.76 $ 21,252.44Total Phase Cost: $ 150,823.68Total Direct Hours: 852.00Project Risk AssessmentKey risks were identified and written as risk statements to gain an understanding of the types of issues thatcould face the project. Risk responses were also created to help mitigate the potential that these risks were tobecome realized. # Risk Statement Risk Response 1 If each work package is not completed on time, Ensure that there is an appropriate amount of planning spent on then the project could be delayed and not each work package (assessment) to gain an understanding of completed on schedule. the scope and what needs to be completed for fieldwork assessments. 2 If a consultant is on leave, absent, or sick for During the ARI audit, ensure that other secondary resources extended period of time then the schedule may from Lonestar Consulting Firm are on standby in the case that a be delayed. selected consultant is unexpectedly unavailable. 3 If the audit has abnormally complex or Ensure the right consultants with right history of experience complicated assessments the quality of the audit from the firm are assigned to the project. results may be decreased and over schedule. 4 If the audit requirements are not appropriately Preliminary discussions with ARI management who are defined then the scope and created work requesting the innovative capabilities audit will be conducted to packages will not be completed on time or with mitigate any undefined areas that have ambiguity. the right assessments. 5 If ARI personnel do not appropriately cooperate Ensure that a kick-off is conducted emphasizing partnership with with Lonestar consultants regarding the audit ARI and enlist the help of ARI management’s commitment to then the right evidence may not be obtained and appropriately spend the right amount of time and resources on the schedule overrun. the audit. 6 If the results of the assessment do not Ensure that Lonestar Consulting Firm’s executive spends a appropriately address ARI’s concerns and portion of time on each work item that is performed and increase their innovative capabilities then delivered to ensure that the appropriate quality and insight is Lonestar Consulting reputation may decrease provided. with potential contract renegotiations by ARI. 7. If there are changes in the schedule mid-audit, Throughout the audit, apply corrections and guidance to the then there may be a delay which may potentially schedule and resources as needed to stay on schedule and cause confusion and misallocation of resources. budget.
Earned Value Plan Performance Measurement Baseline $700,000.00 FINISH $600,000.00 $581,578.80 $558,353.40 $535,112.60 $523,692.40 $500,000.00 $508,059.20 $498,517.80 $469,803.40 $443,586.00 $400,000.00 $357,321.80 $300,000.00 $282,961.80 $247,238.20 $200,000.00 START $158,274.60 $132,547.80 $100,000.00 $125,655.20 $- 11-Jun 18-Jun 25-Jun 2-Jul 9-Jul 16-Jul 23-Jul 30-Jul 6-Aug 13-Aug 20-Aug 27-Aug 3-Sep 10-Sep 17-Sep 24-Sep 1-Oct 8-Oct 15-Oct 22-Oct 11-Jun 18-Jun 25-Jun 2-Jul 9-Jul 16-Jul 23-Jul 30-Jul 6-Aug 13-Aug 20-Aug 27-Aug 3-Sep 10-Sep 17-Sep 24-Sep 1-Oct 8-Oct 15-Oct 22-Oct CUM PV $125,65 $132,54 $158,27 $247,23 $282,96 $357,32 $443,58 $443,58 $469,80 $498,51 $498,51 $508,05 $523,69 $535,11 $535,11 $558,35 $558,35 $558,35 $581,57 $581,57 PV $125,65 $6,892. $25,726 $88,963 $35,723 $74,360 $86,264 $- WEEK$28,714 $26,217 OF $- $9,541. $15,633 $11,420 $- $23,240 $- $- $23,225 $-For the Performance Measurement Baseline, fixed formula (50/50) technique was used to determine thePlanned Value (PV).Alamo Research Institute Organization Chart Chief Executive Officer Financial Office Division Marketing Division Engineering Division (Includes Aerospace Electronics, Data Systems, Biomedical CFD – Internal Engineering, Nanotechnologies, Funding Group and Materials Engineering Divisions) Engineering Division – Advanced R&D Groups Division of Business Venture Mgmt Division Legal Counsel Operations Business Continuity Group Information Technology GroupThe following divisions and groups would need to be coordinated with to have appropriate assessments anddiscussions to complete the innovative capabilities audit.
Leads in business operations, engineering, and marketing to perform an assessment on skills Management in Internal funding to understand the process of how funding is being allocated Key individuals within the Financial Office Division to discuss and assess financial investments and competitors Management in Operations will be utilized to evaluate the business operation practices Advanced R&D groups are needed to assess the allocation to exploratory research Senior Management and CEO to discuss new and developing businesses, corporate strategy & framework, and entrepreneurial initiatives Mid-level management in all divisions will need to be utilized to assess communication with top level management and to assess their capacity to coach new ventures. Leads and mid-level management in the Venture Management Division will be needed to assess capacity, and business strategy for initiatives Lawyers in Legal Counsel to discuss processes surrounding patents Key management within the Marketing Division to discuss customers, promotions, and sales Key leaders within the Business Continuity area to discuss external exposures that could impact business operations and other divisions Information Technology management to perform an assessment on technological factors, technology roadmaps, and forecastingDuring the audit, we will emphasize the importance for key individuals to participate so that accurate and validinformation will be gathered to perform a quality audit. Also during the kick-off meeting and other keymeetings with ARI executives, we will emphasize the need to have particular resources available during specificweeks which they are needed.Contract TypeLone Star Consulting is grateful to be considered by the Alamo Research Institute as a candidate to perform anInnovative Capabilities Audit. After careful evaluation, Lone Star Consulting proposes a fixed price contract.We are confident in our ability to stay on schedule and within our proposed cost.Proposed Contract Offer:Cost Estimate: Cex= $652,500.00 Fee= $10,000.00 Price= $662,500.00Our proposed start time is June 4th, with a projected completion date of October 30 th. We will operate duringthe standard work week of Monday through Friday, 8 AM to 5 PM with a one hour break. Any proposedschedule changes or anticipated inconvenience to ARI’s daily business operations should be addressed to LoneStar Consulting prior to the project’s commencement. During the duration of the five month project, Lone StarConsulting and its employees will perform an Innovative Capabilities Audit for each research division.Specifically, we will be evaluating strategic management capacity, resources availability and allocation, thecapacity to understand the technological environment, and capacity to perform competition analyses. Thedata collected will be evaluated, reviewed, and the findings presented to ARI in a formal presentation whereARI can utilize the information to make informed decisions. The value of this service is expressed in Cex, whilethe Fee is a standard contracting fee. Any significant disagreements that arise during the project regarding howLone Star is carrying out the audit should be addressed to the project’s Executive in order to satisfy thesedisputes in a timely fashion. The proposed contract offer is valid for 90 days. After 90 days, the contract andproposal will be subject to reevaluation to ensure ARI that Lone Star Consulting is assessing any market orindustry changes. Lone Star Consulting appreciates your time and we guarantee that we will satisfy thesecontractual obligations. Lone Star Consulting looks forward to satisfying Alamo Research Institutes needs.