Automation of a Coil Spring/ Wire Form line - Capstone Project

1. 2010
Automation Spring/Wire Form
Assembly Line
Working Plan
Project Managers:
Lydia Ross
Hector Rodriguez
Automotive Parts, Inc
Master Capstone Project
Keller School of Management
6/16/2010

2. Contents
1 Executive Summary ...............................................................................................................................................6
1.1 Project Baseline ............................................................................................................................................6
1.2 Project Variance ...........................................................................................................................................8
1.3 Project Expansion .........................................................................................................................................8
2 Technical Proposal ................................................................................................................................................9
2.1 Project Purpose ............................................................................................................................................9
2.1.1 Background ..............................................................................................................................................9
2.1.2 The Need ..................................................................................................................................................9
2.1.3 Objectives and Goals .............................................................................................................................10
2.2 Project Benefits ..........................................................................................................................................10
2.2.1 Stakeholders ..........................................................................................................................................10
2.2.2 Benefits ..................................................................................................................................................11
2.3 Statement of work .....................................................................................................................................12
2.3.1 Project Summary ...................................................................................................................................12
2.3.2 Scope .....................................................................................................................................................12
2.3.3 Phases and Milestones ..........................................................................................................................12
2.3.4 Schedule of Rates - Labor ......................................................................................................................13
2.3.5 Equipment and Materials ......................................................................................................................13
2.3.6 General Administration, Contingency, Others .......................................................................................14
2.3.7 Summary of Total Cost ...........................................................................................................................14
2.3.8 Payment terms.......................................................................................................................................15
2.3.9 Statement of work – Assumptions.........................................................................................................16
2.3.10 Change Management Process ...........................................................................................................17
2.3.11 Engagement Related Expenses..........................................................................................................17
2.3.12 Acceptance and authorization...........................................................................................................18
2.4 Project Plan ................................................................................................................................................19
2.4.1 Technical Description of New System ....................................................................................................19
2.4.2 Facility Design and Simulation ...............................................................................................................20
2.4.3 Future Process .......................................................................................................................................20
2.4.4 Detailed Project Schedule - Modified ....................................................................................................21
2.4.5 Specific Challenges .................................................................................................................................22
2.4.6 Risk Management Matrix .......................................................................................................................22
2.4.7 Top Risk Recommended Action Plans ....................................................................................................24
2.5 Project Completion Plan.............................................................................................................................27
2.5.1 Deliverables ...........................................................................................................................................27
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3. 2.5.2 Acceptance Test ....................................................................................................................................28
2.5.3 Acceptance Sign-off Cart........................................................................................................................29
3 Management Proposal ........................................................................................................................................30
3.1 Corporate Organizational Structure ...........................................................................................................30
3.1.1 Corporate Roles and Responsibilities ....................................................................................................31
3.2 Project Organizational plan ........................................................................................................................34
3.2.1 Work Breakdown Structure ...................................................................................................................34
3.2.2 Project Organizational Structure ...........................................................................................................35
3.2.3 Project Team ..........................................................................................................................................36
3.2.4 Responsibility Matrix ............................................................................................................................38
4 Management Systems ........................................................................................................................................40
4.1 Supplier, Selection and Management ........................................................................................................40
4.1.1 Overview - Procurement of Automated Machines and Robots .............................................................40
4.1.2 Production-Line Equipment Vendors .....................................................................................................41
4.1.3 Computer Vendors.................................................................................................................................43
4.1.4 Contract Close-Out ................................................................................................................................43
4.2 Monitoring Cost and Schedule ...................................................................................................................44
4.2.1 Overview ................................................................................................................................................44
4.2.2 Labor Cost and Schedule........................................................................................................................45
4.2.3 Major Equipment Cost and Schedule ....................................................................................................47
4.2.4 Contingency, Administration and Others Cost ......................................................................................47
4.3 Management of Scope and Change Orders ...............................................................................................48
4.3.1 Overview ................................................................................................................................................48
4.3.2 Development of Scope ...........................................................................................................................49
4.3.3 Out-of-Scope Items ................................................................................................................................50
4.3.4 Documentation of Change of Scope ......................................................................................................51
4.4 Quality Management .................................................................................................................................52
4.4.1 Overview ................................................................................................................................................52
4.4.2 Work Package Identification ..................................................................................................................54
4.4.3 Work Package Inputs, Process and Outputs ..........................................................................................55
4.4.4 Determining Possible Defects ................................................................................................................56
4.4.5 Prevention of Defects ............................................................................................................................56
4.4.6 Indentification of Defects ......................................................................................................................58
5 Project Cost Estimate ..........................................................................................................................................61
5.1 Project Cost ................................................................................................................................................61
5.1.1 Total Project Cost ...................................................................................................................................61
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4. 5.1.2 Breakdown of Project Costs ...................................................................................................................62
5.1.3 Progress Payments.................................................................................................................................63
5.1.4 Monthly Payment Distribution ..............................................................................................................64
5.1.5 Earned Value Control ............................................................................................................................65
5.1.6 Control Performance Index (CPI) & Schedule Performance Index (SPI) ................................................66
5.1.7 Estimate at Completion (EAC) and Variance at Completion (VAC) ........................................................67
5.2 Customer-Provide Resources .....................................................................................................................68
5.3 Terms and Conditions ................................................................................................................................69
6 Unexpected Event ...............................................................................................................................................73
6.1 Problem ......................................................................................................................................................73
6.1.1 General Description ...............................................................................................................................73
6.1.2 Current Status ........................................................................................................................................74
6.2 Alternative Solutions ..................................................................................................................................79
6.2.1 Overview ................................................................................................................................................79
6.2.2 Continuing Contract ...............................................................................................................................79
6.2.3 Contract Modification ............................................................................................................................79
6.2.4 Pursuing another OEM...........................................................................................................................80
6.3 Proposed Action .........................................................................................................................................80
7 Scope Expansion .................................................................................................................................................83
7.1 Project Description .....................................................................................................................................83
7.2 Initial Planning............................................................................................................................................85
7.3 Scope ..........................................................................................................................................................87
7.4 Schedule .....................................................................................................................................................89
7.5 Budget ........................................................................................................................................................91
7.5.1 Schedule of Rates - Labor ......................................................................................................................91
7.5.2 Equipment and Materials ......................................................................................................................92
7.5.3 General Administration, Contingency, Others .......................................................................................92
7.5.4 Summary of Total Cost ...........................................................................................................................93
7.5.5 WBS/ Cost Breakdown ...........................................................................................................................95
8 Appendixes .........................................................................................................................................................98
8.1 Appendix A – Risk Assessment Matrix .......................................................................................................98
8.2 Appendix B – Schedule of Rates ...............................................................................................................100
8.3 Appendix C – Weekly Payments Progress ................................................................................................102
8.4 Appendix D – Value Stream Maps ............................................................................................................103
8.5 Appendix E – Change Request Form ........................................................................................................105
8.6 Appendix F – Baseline Schedule ...............................................................................................................106
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5. 8.7 Appendix G – Earned Value Analysis Week 14 .........................................................................................107
8.8 Appendix H – Contract Close Out Checklist .............................................................................................108
8.9 Appendix I ................................................................................................................................................112
9 Tables ................................................................................................................................................................115
10 Figures ..............................................................................................................................................................116
11 Works Cited .......................................................................................................................................................117
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6. 1 Executive Summary
1.1 Project Baseline
Automated Parts Inc, (API) a coil spring, wire forming, subassembly automotive parts company is
facing a lost in market share due to its inability to increase its production rate of manufactured
parts while keeping competitive prices to customers. The company is currently stable with its
current production but would like to increase market share with the coil spring and wire forms
and increase production of value added parts. The value added parts will provide for a bigger
profit margin. In order to meet these needs, API, Inc. as engaged its project management
department to automate the coil spring, wire forming and welding equipment production lines.
The automation of the production of parts and subassembly lines require the acquisition of new
equipment, redesign of the production area, training of existing personnel, and in some cases the
job placement of existing personnel in other organizations. The project management
department has developed the team, planned the project, prepared the risk assessment and
engaged engineering, procurement, finance and manufacturing to implement the plan. API as
provided $2.5 million dollars for the entire plan which includes risk management and contingency
plans and all cost associated with the project. The project is scheduled for a 43 week duration,
starting on May 5th 2010. The Project is divided in four different phases:
Table 1.1 Project Phases
Phase Completion date
rd
1. Project Planning Phase June 3 , 2010
. 2.Manufacturing Design Phase- Execution
t
September 7 , 2010
st
3.Procurement Phase-Execution December 21 , 2010
nd
4.Production/Validation Phase –Completion Marc 2 , 2011
The project is defined in terms of quality that will increase production as well as make the
production process more efficient in time, cost and the percentage of accurate first time
production of parts. A team of 18 new skilled operators will be trained to operate the new
equipment, while current labor consisting of 42 workers needs to be reassigned for future labor
needs and placement. Figure No.1 describes the time, cost and accuracy rates the organization
estimates it can achieve with the implementation of this project.
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7. Figure 1.1: Process Performance Metrics (Ross & Rodriguez, 2010)
Current Process Future Process
Variable Measure Variable Measure
Lead Production Time 428 Minutes Lead Production Time <200 Minutes
1
Value Added Time 246 Minutes Value Added Time >150 Minutes
Non-Value Added Time 48 Minutes Non-Value Added Time 0-10 Minutes
Inventory Time ( waiting Time) <50 Minutes
Inventory Time ( waiting Time) 134 Minutes
Takt Time (seconds/part) <20 seconds/part
Takt Time (seconds/part) 28.8 seconds/part
First Time Quality : 58% First Time Quality : 90%
Change-Over time: 60 Minutes Change-Over time: <30 Minutes
 Lead time: the time needed to complete an activity from start to finis
 Value Added Time: Activities that contributes to the production of final Product, transforms material and information
 Non-Value Added time: waste time, activities that does not add value to the final product. Activities creating no value but which cannot be eliminated
based on current state of technology or thinking
 Inventory Time: waiting time to be process material, batch delays, and process delays.
 Takt Time : total time available for work time per day divided by customer-demand per day – sets the pace of production to match rate of demand
Source: The Lean Memory Jogger, Richard L. Macinnes.
The new process will require automated equipment for the Wire Gauge Checking, Wire Forming
and Robotic Welding for an investment of $1,700,000. Turnkey installation service and
specialized training will be provided to our team of engineers and production operators by the
selected Vendor. The Automation of Spring and Wire Form assembly line will bring numerous
benefits to API including improvement in precision manufacturing of parts, flexible
manufacturing, better quality control systems, empowered employees, improvement in
ergonomics and safety in the operations, increase of production capacity, and reduction of Takt
time and reduction of production cost by a range of 20%. Finally the automation of the coil
spring/wire form production line will set the grounds for Lean Manufacturing and Just in Time
Inventory as future corporate projects. It also will set the ground for new product development
and more specialty sub-assembly products.
1
Value added operations are for example those operations which require some welding or subassembly
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8. The success of the project is paramount to API, therefore risk management and contingency
plans are in place to overcome every possible foreseeable problem.
1.2 Project Variance
One problem that occurred during the working plan of the project was the vendor of the coil
springs and wire forms equipment became financially unstable and was threatening bankruptcy.
Since project management anticipated a possible financial concern during vendor selection, the
next highest scored vendor’s proposal specifications and the first phase of contract negotiations
had been conducted in case the first vendor was unable to fulfill the negotiated contract.
Project management defined the risk scenarios and contingency plan to overcome the risk. The
risk contingency plans that were developed due to the vendor’s financial dilemmas included the
following:
1. Stay with the vendor and receive the equipment without service or maintenance.
2. Wait for Vendor to be taken over by another company and renegotiate the contract.
3. Go with another OEM and continue with the project.
Section 6 of this plan will describe all of the impacts of choosing one of the above scenarios. In
order to maintain the integrity of the project in terms of time and cost the decision to pick
another OEM was employed. In this scenario, the President of API, Owen French could stay with
his initial goal of gaining more of the market share.
1.3 Project Expansion
To achieve increased market share as quickly as possible, an expansion of the automation project
was presented to project management which included new product development, as well as,
acquiring consignment parts of subassemblies. Marketing research determined coil springs for
military tanks, wire forms for NASA aerospace and subassemblies for the department of defense
were new products developments the company would pursue. These new product
developments will be launched in three separate timeframes during the project to ensure
maximum efficiency and quality. Section 7.0 of this plan describes the expansion to the
automation project.
Table 1.2: Product Development Program
Project Completion date
th
1. Wire Forms Aerospace June 8 , 2011
. 2.Coil for Tanks Defense
st
August 1 , 2011
th
3.Subassemblies Defense January 16 , 2012
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9. 2 Technical Proposal
2.1 Project Purpose
2.1.1 Background
Automotive Parts Inc. (API) is a small manufacturer of coil springs and wire forms. API’s
customers include suppliers of mechanical and electrical subassemblies to automobile, truck,
over-the-road vehicle OEMs (Original Equipment Manufacturer) and the OEMs themselves.
These types of customers include such clients as Dana, Arvin Meritor, Ford, GM and Toyota. API
is providing coil springs, wire forms and subassemblies that include welded parts for these
important clients. In order to provide better service to its clients, API also offers unique
prototypes and fast turnaround of its coil springs and wire forms. The manufacturing process to
produce the photo types, coil spring and wire forms require several steps.
The manufacturing processes involved in producing springs and flexible wire forms are wire
gauge checking, wire forming, and welding. Wire gage checking is a complex process which also
includes inspections for imperfections in the wire. Other operations in the manufacturing
process include the value added operations. Value added operations are those operations
which require some welding or subassembly. For example, the ends of a formed-wire piece
may be welded to a small metal base plate for screw-mounting within a vehicle, or for applying a
spring’s force over a larger area to hold another part in place. Value-added operations
represent bigger margin work than wire form and coil springs. Therefore the Company’s goal is
to increase business in the value added operations area.
2.1.2 The Need
The Company needs to get its cost in-line to stay competitive. Currently API is losing market
share because of its inability to meet the prices of its major competitors. The aim is to automate
the current manufacturing process of Wire Gauge checking, Wire formers and Welding. By
automating these processes, API can produce parts much quicker as well as increase its capacity.
The Company is prepared to spend $2.5 million for the automation project of its production
lines. To achieve its goals, the company will buy automated equipment for Electronic Wire
Gauge Checkers, Automated Wire Formers and Robotic Welders. In addition to the automated
resources, there will be labor resources including 2 operators for the wire gauge checking
operations, 10 operators for the wire forming operation and 4 operators for the robotic welding
operation.
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10. 2.1.3 Objectives and Goals
The objectives of the Automation of the Coil/Springs production Line is to deliver better quality
parts, with an updated production process that will make Automotive Parts, Inc more
competitive in the market and increase its market share, while reducing production cost.
Table 2.1: Goals & Objectives (Ross & Rodriguez, 2010)
Goals Objectives Method Measures of Success
Invest in new
Have top notch Production Update Process Electronic Wire Gauge The Process in full operation with
Facility for Springs and Wire with Automated Checkers, Automated 100% Installation and Start-up for
Forms Equipment Wire Formers and Production ready in 10 months
Robotic Welders
Study Current Process
Become a Cost oriented
Reduce Check for Inefficiencies
operation that contributes Reduce Production Cost by 20%
Production Cost and Cost Reduction
to the profit margin
Opportunities
Decrease Takt Time
Increase Peak Capacity
Produce the best Quality Increase Quality (time to process a part) from 28.8
as a strategic
Products with high First Increase sec/piece to less than 20
advantage.
Time Quality Production seconds/piece
Trim down the Quality
( FTQ) Capacity Raise First Time Quality (FTQ)
Inspection Process
from 58% to bigger tan 90%.
Release work force
Have the most qualified, from Mechanical
Provide New Increase the welding and value
motivated and committed Operations to include
Value Added added production throughput
teams adding more value to more value added
Operations between 25% an 50%.
the Operation operations – Ready to
Assemble Parts
2.2 Project Benefits
2.2.1 Stakeholders
Figure 2.1 lists the most important stakeholders; we have divided them into external and
internal suppliers or customers.
Figure 2.1: Stakeholders (Ross & Rodriguez, 2010)
External Suppliers
External Customers
Wire Supplier
OEM’ Suppliers
Metal Parts Suppliers
OEM’s
Other Parts in Consignment
Process
Manufacturing Eng.
Product Eng.
Quality / Production
Internal Customers
Internal Suppliers Operations Department
Human Resource Department Finance Department
Purchasing Department Sales and Marketing
Department
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11. 2.2.2 Benefits
The project benefits are classified in the five categories of the Global Manufacturing System
(GMS): People, Quality, Response Capacity, Cost and Environment
Figure 2.2: Benefits (Ross & Rodriguez, 2010)
Response
People Quality Cost Environment
Capacity
1. Cleaner/Safer
working
1. Increase environment, less
1. Savings in the cost lubricants, grease,
Professional 1. Increase
Development of the of production by production debris.
Production Volume 2. Use less energy
labor force 1. Improve FTQ for Capacity 20%
production process and fluids in
2. Elevate the 2.Increase product 2. Opportunity production
technical level of the 2. Increase Portfolio Cost to product 3. Less noise and
labor force productivity and 3. Add value added more value added distraction in the
efficiency of the components, and parts production process
3. Add better paying 3. Motivate Wokers
production line assemblies 4. Reduction of
jobs for Cost Reduction
4. Add Flexible Mfg. Incidents and
4. Increase Production Ideas Accidents
Empowerment 5. Improve
Ergonomic and
Working
Environment
Conditions
HOW
The new Equipment
The new assembly
will increase
line will require productivity and
sophisticated , state production capacity.
of the art automated The new automated The new equipment
equipment, with equipment will will allow release of Include automated Implement a Lean
better control, contribute to a equipment in the and Clean flow of
the labor force to
technical skills and more stable and add new added wire gauge checking, materials. Introduce
management precise production value processes, wire forming and the automated
decision. The labor process giving better welding production equipment to
increasing the
force will be quality of parts at a product portfolio. stations to decrease reduce mechanical
involved in this and faster production Develop a Flexible production takt time operations.
future cost rate. Operations design to
reduction initiative produce for a variety
with bonus pays per
of parts and
suggestion ideas. volumes.
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12. 2.3 Statement of work
2.3.1 Project Summary
Table 2.2: Project Description
Client/Vendor name Production Department
Client/Vendor’s administrator PMO
Automation of Spring/Wire Form
Project name
Production Line
Engagement duration 43 Weeks
th
Begin date May 5 , 2010
nd
End date March 2 , 2011
2.3.2 Scope
The project will design, develop and implement the automation of the Springs and Wire Forms
assembly line within a $2.5million budget in a 43 week period. The Project will include facility
design, equipment and process design, procurement of new equipment, installation of
equipment, accommodations of assembly line space, training and manufacturing validation of
the new production assembly line. More details on the scope development will be explained on
section 4.3.
2.3.3 Phases and Milestones
Table 2.3: Phases and Milestones (Ross & Rodriguez, 2010)
Pase Completion date
Pase
rd
Project Planning Phase June 3 , 2010
rd
Program Initiation June 3 , 2010
th
Manufacturing Design Phase- Execution September 7 , 2010
th
Layout Design June 30 , 2010
th
Equipment Design July 14 , 2010
nd
Engineering Data Release August 2 , 2010
st
Procurement Phase-Execution December 21 , 2010
st
Purchase Orders September 1 , 2010
st
Equipment Development and Shipping December 21 , 2010
nd
Production/Validation Phase –Completion March 2 , 2011
st
Installation of Equipment January 26 , 2011
nd
Validation of Equipment March 2 , 2011
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13. 2.3.4 Schedule of Rates - Labor
Additional overtime hours are required for professional staff to account for action plan in procurement,
engineering and installation of new equipment from Vendor B. See section 6 for more details. (Detailed
information on each labor resource is provided in Appendix B).
Table 2.4: Schedule of Rates (Ross & Rodriguez, 2010)
Item description Quantity Avg. Delivery Cost Cost
Rate/hour schedule Baseline Baseline
(Man - ours) Modified
2
Professional Staff 18 $29.14 7,417 $199,706 $216,141
(Engineers, Managers,
Supervisors)
Operations Staff 16 $16.50 4,800 $79,233 $79,233
(Line Operators)
Current Operations Staff 42 $15.42 12,600 $194,319 $194,319
( Line Operators, Inspectors)
Totals $473,258.58 $489,693.24
2.3.5 Equipment and Materials
A 5% increase on price for new equipment: Wire Gauge Checkers and Wire Forming CNC, is to be added
to the modified Baseline once the negotiations are revised with Vendor B. See section 6 for more details.
(Detailed information on Equipment and Materials is provided in Appendix B).
Table 2.5: Equipment Rates (Ross & Rodriguez, 2010)
3 Cost Cost
Item description Quantity Rate/unit
Baseline Baseline
Modified
Computer 5 $2,000.00 $10,000.00 $10,000.00
Terminal
Wire Gauge 2 $ 150,000.00 $300,000.00 $315,000.00
Checkers
Wire Forming CNC 5 $ 210,000.00 $1,050,000.00 $1,102,500.00
Robotic Welders 2 $ 205,000.00 $410,000.00 $410,000.00
Totals $1,770,000 $1,837,500
2
Delivery Schedule for Baseline was 6,290 hours not including additional hours for unexpected event (section 6)
3
Rates/Units for modified baseline increased 5% for Wire Gauge Checkers ($157,500) and Wire Formers
($220,500)
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14. 2.3.6 General Administration, Contingency, Others
Additional cost for trips, General Administration/Overhead are included as part of this project
only.
Table 2.6: Other Costs (Ross & Rodriguez, 2010)
Item Description Cost Cost
Baseline Baseline
Modified
General Administration $109,123 109,123
Trips $10,000 $10,000
Contingency $215,127 $131,191
Totals $334,250 $250,314
2.3.7 Summary of Total Cost
The total cost (modified) did not changed. All action plans cost to activate new Vendor B will be
absorbed by the Contingency Budget, hence reducing this contingency figure to $131,192.00
.(Detailed information on cost on Section 4)
Figure 2.3:Cost Distribution Chart (Ross & Rodriguez, 2010)
Table 2.7 : Summary Cost Structure (Ross & Rodriguez, 2010)
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15. 2.3.8 Payment terms
No including contingency. Project Manager’s professional fees are prorated on the overall project.
(Detailed information on Payments is provided in Appendix C)
Table 2.8: Payment Schedule (Ross & Rodriguez, 2010)
Pase Completion date Payments due Payments due
Baseline Baseline Modified
rd
Project Planning Phase June 3 , 2010 $1,320 $1,320
th
Manufacturing Design Phase- Execution September 7 , 2010 $48,845 $48,845
Procurement Phase-Execution December 21, 2010 $1,353,065 $1,419,573
nd
Operations/Validation Phase –Completion Marc 2 , 2011 $781,228 $798,655
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16. 2.3.9 Statement of work – Assumptions
Table 2.9: Assumptions (Ross & Rodriguez, 2010)
Product Operations/ Quality uman Resources IT Management-
Engineering Production/Supply Presidency/Finance
Small to Mid-Size Springs Intension to Keep New Current First Higher Tecnical Current ERP Top Management
and Wire Forms Products Production Rate, Time Quality is Labor Force will System in place Endorsement
Desire to increase 58% be demanded for Material and
Production Capacity Cost control
Material Sapes & Current Operations 3 There are two This is a Non- DesignCAD/CAM VSM Worksop Results
Specifications: .004 inches Shifts – 8 hours. The Six Sigma Belts Union Facility systems in Place. for improvement and
to 2.0 inches in two lines will produce Simulation opportunities
diameter,round wire simultaneously during Production
,square wire , rectangular validation Systems in Place
wire, special section wire
Body Types open-coiled , Lead Average Time to Will follow the Future New Computer, The Project will Follow
helical shaped usually coiled Produce One Part is 8 Quality Valve Placement of CNC systems will the Global
with a constant diameter, hours Review – Stage Employees will need to be Development Plan of
though they can be Gate Plan be required. installed and the Company
produced in hourglass, cone HR Plan is callibrated. Added
and barrel shapes required. Less to the TPM plan
labor force will
be required
Materials spring steel ,high Current Production Quality Must keep some New Equipment Payments Plan for
carbon steel, low carbon Average is 3000 Parts Inspection of part of the labor will be syncronize Equipment
steel , nickel plated carbon per day Production in force for value with Andon 25% @Deposit
steel, stainless alloys, non- place added Production 25% @ Reception
ferrous metals: elgiloy, operations System 25% @ Validation
astelloy, monel, inconel, 25% @Installation
Titanium
Presence of testing Lab with No Space Layout Will work along Must identify
Materials an Durability Constraints with Product high and low
Equipment Engineering for performers
Product
Validation on
new production
Equipment
Equipmet Cost already higher paying
includes Insurance rates will come
and Freigt Cost after new
equipment
installation for
Operators
Turnkey ( in-service)
installation by supplier
through validation of
production
New Automated and
Development
Equipment will be
declared and covered
by FloorShop
Insurance Equipment
Policy
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17. 2.3.10 Change Management Process
The change management process will follow three internal procedures:
1. Engineering/Process Change Notifications, release per engineering system
2. Freeze Design Dates – Red Zone will be in the project Schedule to submit changes to the
Project Council during the Red Zone Stage
3. Scope Change – Any change in scope will be submitted to the PMO office and presented to
the Project Council for approval
For more detailed Change Management process refer to section 4.4
2.3.11 Engagement Related Expenses
General Administration Expenses
All payments and disbursement of money will be done through our Finance Department. All
checks and bank transferred will need to be authorized and audited by our Finance department
which will be the only entity authorized to release the funds. All Administration expenses will
be accounted for in the Project Budget and will be released accordingly. Other departments may
enter their cost, materials, resource request on our ERP (Enterprise Resource Planning) system
for financial calculations and Finance approval and release.
Payroll
Payments of Payroll will be generated by the human Resource Department depending on the
numbers of hours reported on the project. Finance will authorize and release payments for
payroll purposes.
Materials
Material and Equipment payments will be generated by the Purchasing Department into the ERP
system, and submitted for approval to Finance Department, which will be authorizing and
releasing funds according to terms of payments agreed between Supplier and the Company.
Any payment contract arrangements needs to be prepared and reviewed by the Purchasing
Department and presented to the Finance Department for planning and provision purposes.
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18. 2.3.12 Acceptance and authorization
The terms and conditions of the Professional Services Agreement apply in full to the
services and products provided under this Statement of Work.
IN WITNESS WEREOF, the parties here to each acting with proper authority will
authorize the execution of this Statement of Work.
Full name Full name
CEO – Automotive Parts, Inc Project Manager - PMO
Title Title
Signature Signature
Date Date
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19. 2.4 Project Plan
2.4.1 Technical Description of New System
API conducted a Value Stream Mapping workshop to identify the opportunities for improvement
and to streamline the production of springs and wire forms.
Current Process
A SIPOC (Supplier, Inputs, Process, Output and Customer) depicts the current process and flow
of materials and information. A more detailed Value Stream Map of the current System is
shown on Appendix D. The Value Stream Map shows clearly where the inventory (waste) time
is, and finds where the Wiring Gauging, Wire Forming and Welding stations become
bottlenecks in the production process.
Figure 2.4: SIPOC Current Process (Ross & Rodriguez, 2010)
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20. 2.4.2 Facility Design and Simulation
In order to avoid future errors and rework, we will be using AutoCAD and other Simulation Tools
to design the new shop floor and simulate the production flow with the new equipment in
place. Both the old and the new assembly line will run simultaneously for the period of the
Manufacturing Validation Build of the new assembly Line. After production is validated the old
equipment needs to be sold or scrapped within six month of project completion (this activity is
considered out of the scope of the project)
2.4.3 Future Process
The high Inventory time (waste) before wire inspection, wire forming and welding stations is
creating bottlenecks, increasing the lead time of the production process. These three stations
will be automated in order to increase throughput and production flow.
To reduce the Lead Production Time and specially the Inventory Time and Changeover Time, the
future process will incorporate three major automated equipments, which include CNC
(Computer Numerical Control). These equipments will help release the inventory bottlenecks in
the Gauge Checking, Wire Forming and Welding, making a more productive and efficient
production flow.
2Electronic Wire Gauge Checkers
5Automated Wire Formers
2Robotic Welders
Current and Future Value Stream Maps are shown in Appendix D. Figure 2.5
summarizes the main metrics from Current and Future Process.
Current Process Future Process
Variable Measure Variable Measure
Lead Production Time 428 Minutes Lead Production Time <200 Minutes
Value Added Time 246 Minutes Value Added Time >150 Minutes
Non-Value Added Time 48 Minutes Non-Value Added Time 0-10 Minutes
Inventory Time ( waiting Time) 134 Minutes Inventory Time ( waiting Time) <50 Minutes
Takt Time (seconds/part) 28.8 seconds/part Takt Time (seconds/part) <20 seconds/part
First Time Quality : 58% First Time Quality : 90%
Change-Over time: 60 Minutes Change-Over time: <30 Minutes
Figure 2.5: Process Performance Metrics (Ross & Rodriguez, 2010)
Figure 5: Process Metrics
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21. 2.4.4 Detailed Project Schedule - Modified
Figure 2.6 shows the progress of schedule when 26% of the worked has been completed. The
Black Bar shows the Baseline Schedule; The Blue Bar shows Baseline Modified Schedule ; The
Red Bar shows the Critical Path for the Baseline Modified Schedule
Figure 2.6: Baseline Modified Schedule (Ross & Rodriguez, 2010)
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22. 2.4.5 Specific Challenges
Specific challenges in the following areas of: Supply, Communication, Operations, Systems,
People, Legal and Quality were all identified in our Risk Assessment, and included in our Risk
Assessment Matrix, with Contingency plans.
2.4.6 Risk Management Matrix
The Project Team will follow recommendations according to the detailed Risk Management
Matrix considering the major and top risks on the projects and contingency action plans. Top
Risks considered while developing the project schedule are shown in Table 2.10.
The Baseline Modified Risk Assessment includes the new risk and contingency for Supplier
Selection, and the current contingency plan that is currently in progress. Figure 2.7
summarizes the Risk Assessment considerations. Section 2.4.7 addresses action plans for
Shipping and Hiring/Placement risks. Top major risks considered during project planning phase.
Baseline Risk Matrix per activity attached on Appendix A.
Table 2.10: Risk Matrix (Modified) (Ross & Rodriguez, 2010)
Risk Severity
Activity Risk Type4 Prob. 1=Low Rank Contingency
# 5=High
1 Shipping of Equipment Delays in Shipping for Avoid winter season by pulling
Winter Season ahead project with overtime in
SUP 85% 5 4.25
the Design Phase
2 Supplier Selection Late Change of Ensure suppliers are ranked
Suppliers, limited among top Suppliers in the
Suppliers SUP 75% 5 3.75 Industry. Have a Backup
Supplier Plan Ready in Case
selected Supplier fails to comply
3 Hiring/Placement Labor Conflicts for Avoid Labor Conflicts and
new Entrants due to Stoppage by preparing an HR
Potential Layoffs - R 65% 5 3.25 Placement Plan Ahead and
Strike Presenting to Production
Management
4 Displacement of Old Damage of production Avoid Damages by
Equipment Equipment Using Experts in Transportation,
OPE 65% 5 3.25 Include Equipment in Insurance
Coverage before acquisition
5 Design Changes Late Design Changes Use ECN and Change
Engineering Management Process for
Engineering Change
ENG 75% 4 3.00 Communication. Implement Red
Zone and Freeze Date for
Engineering Changes
4
SUP=Supply, HR=Human Resource, OPE=Operations, ENG=Engineering, QUA=Quality
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23. Risk Severity
Activity Risk Type Prob. 1=Low Rank Contingency
# 5=High
6 Install/Calibration of Delays on installation Invite Supplier to Installation.
Equipment due to complexity OPE 55% 5 2.75 Turnkey In Service Installation
7 Construction Safety Regulations not Revision of legal, permits and
Requirements in Compliance ENG 50% 5 2.5 safety by Safety Committee
8 Engineering Testing Parts fails to Product Prepare Six Sigma Teams for
Engineering/Quality QUA 50% 5 2.5 Action Plans
Validation Compliance
9 Negotiations Set Target Price, Benchmark and
Negotiations exceed
SUP 75% 3 2.25 3 Quotation Process
Budget
10 Equip. Fabrication Delays of fabrication Select Expert Suppliers and Visit
due to complex of Manufacturing Engineering
customization Development, include overtime
SUP 55% 4 2.2 to pull ahead development
dates. Have Two Alternatives
Suppliers ready for contracts
11 Production Validation Worker’s absence due Prepare a list of Floater Pool
to winter and lack of OPE 50% 4 2 workers as part of the HR Plan
motivation
Figure 2.7: Risk Summary Chart - Modified (Ross & Rodriguez, 2010)
Risk Assessment Summary
5 5 5 5 5 5 5
4.25 4.25 4 4 4
3.25 3.25 3
3
2.75
2.5 2.5
2.25 2.2
2
85% 75% 75% 75%
65% 65% 55% 50% 50% 55% 50%
Prob Rank Severity
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24. 2.4.7 Top Risk Recommended Action Plans
1. Shipping/Weather Risk
Table 2.11: Weather/Shipping Action Plan (Ross & Rodriguez, 2010)
CURRENT ALTERNATIVE
Shipping of new equipment will be planned from Plan for overtime work during the Design and Purchasing
November 2010 through February 2011, which is in the Activities will mitigate Shipping Risk, pulling ahead Project
middle of winter Season, delaying the installation and Schedule almost 1 Month ahead and reducing total cost
training of the project due to MVB1 and MVB2 synchronization
COSTS (Only Project )
Project Cost – Expected Project Cost – Expected
$2,232,654 $2,184,458
w/o Overtime with Overtime
Project Cost – Pessimistic
Project Cost – Pessimistic-
2,557,217 with Overtime + Winter Storm $2,389,912
w/o Overtime + Winter Storm
Contingency Cost- Risk $324,563 Contingency Cost - Risk $205,454
Extra Overtime Cost – 342 ours $11,970
BENEFITS
Delays and bigger Inbound Cost Better Working Shipping Schedule
higher Shipping Fees Lower Shipping Fees
Installation and Training over Christmas Avoid Christmas holidays work overlapping
Expected Finish Project in March 28, 2011 Expected Finish Project in Marc 3,2011
Late Finish Risk August 10, 2011 Late Finish Risk April 26, 2011
Labor Overtime Plan to Mitigate Shipping Risk
Table 2.12: Overtime Proposal (Ross & Rodriguez, 2010)
Tasks Resource Overtime Rate Total
hrs Labor
Layout Design Facility Engineer 80 35 $2800
Equipment Design Process Engineer 54 35 $1890
Equipment Design Systems Engineer 20 35 $700
Equipment Design Material Engineer 27 35 $945
Procurement Buyer 81 35 $2835
Equipment Development Manufacturing Engineer 40 35 $1400
Equipment Development Supplier 40 35 $1400
Total 342 $11,970
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25. 2. Hiring/Placement Risk
Table 2.13: Labor Conflicts Action Plan (Ross & Rodriguez, 2010)
CURRENT ALTERNATIVE
Total: 42 Workers Total : 16 Workers
8 Wire Gauge Checkers 2 Gauge Operators
3 Gauge Inspectors 5 Wire Forming Operators Shift 1
10 Wire Forming Operators Shift 1 5 Wire Forming Operators Shift 2
8 Wire Forming Operators Shift 2 2 Welders Operators Shift 1
4 Wire Forming Operators Shift 3 2 Welders Operators Shift 2
5 Welders Shift 1 +
3 Welders Shift 2 HR Distribution of 26 Workers:
1 Welders Shift 3 46% - 12 Workers Placement with Suppliers and OEM’s
15% - 4 Floaters
27% - 7 Workers Trained for Value Added Operations
12% - 3 Workers Low Performers
COSTS
Cost/Mont $103,636 Cost/Mont $42,257
Probability of Work Probability of Work
%65 <%20
Stoppage Stoppage
BENEFITS
Mechanical Labor Automated and Controlled Labor
High Risk to incidents and accidents, Reduce the incidents and accidents,
Safety and Health issues Increase ergonomics
Higher Fixed Cost Lower Fixed cost
Technical Skills Development Professional Technical Development
High Takt time, low Productivity Low Takt time, higher Productivity
Professional Career Stagnation Career Growth Opportunities in Top Companies
High gaps to negotiate placement of labor force Close gap to negotiate placement of labor force
Human Resource Action Plan to Mitigate Risk
Table 2.14: Replacement Proposal (Ross & Rodriguez, 2010)
 Identify job opportunities with higher paying salaries for those employees that
will be released from their duties.
Placement  Employees should not be laid off until an acceptable position in a OEM’s or
Supplier has been arranged and contracted
 Identify those employees who will remain in the organization as on-call in the
organization.
Floater  These group of employees can rotate in different positions as required, and can
rd
be prepare for future 3 shift or production increments
 Identified High Performer Workers to remain in the organization and trained for
Trainees value added operations.
 Workers who will need to be laid off due to their low performance
Low Performers
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26. 3. Automated Equipment
The Project intends to install state of the art new equipment for the facility. However, this new
equipment is sophisticated and should be calibrated by experts. There is a risk to delay the
installation, setup and validation of equipment, assuming proper training and assistance is not in
place. It is recommended to close a Turnkey in Service installation from Equipment Supplier.
This means the supplier will accompany the team of engineers during the installation, training,
setup and validation of production. With this action it is intended to mitigate the uncertainty of
setup, functioning and operation of new equipment, while training the group of engineers for
future control, operation and maintenance of new equipment. The New Equipment will have
period of guarantee of 90 days and will require maintenance assistance from the Vendor
periodically. A new Contingency Plan for OEM Supplier Change is explained on section 6.0
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27. 2.5 Project Completion Plan
2.5.1 Deliverables
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Figure 2.8: Project Completion/Deliverables (Ross & Rodriguez, 2010)

28. 2.5.2 Acceptance Test
The Project will follow the Program Quality and Readiness Review (PQRR) as a Stage Gate
Model. Different Review Valves will allow for checking of metrics, deliverables and buying off
before proceeding to the next Stage of the Project. There are nine (9) Review Valves as follow:
Table 2.15: Stage Gate Reviews (Ross & Rodriguez, 2010)
Gate Name Initials Objectives
1. Preliminary Plan Review PP Test Preliminary Project Information
2. Program Initiation Review PI Test Project Plan, Team Structure and Initiation
3. Manufacturing Engineering MP Test Engineering Design and R Planning
Review
4. Verify Data Release Review VDR Validate Engineering Documentation for Procurement
5. Contract Sign-Off CSO Validated Procurement and Contract with External Suppliers
6. Production/ Operations POD Test readiness of Operations/ Production
Review
7. Manufacturing Validation MVB Validation new equipment and parts out of new production line
Build I I
8. Manufacturing Validation MVB Validation new equipment and parts out of new production line
Build II II
9. Start of Regular Production SORP Final Approval and Sign-off to regular production, Cost validation
Figure 2.9 represents the Acceptance Test to define when a PQRR Valve should be Approved,
Revised or Stopped.
Figure 2.9: Acceptance Test Chart (Motors, 2006)
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29. 2.5.3 Acceptance Sign-off Cart
Figure 2.10 shows a check list of items to be completed at each Review Valve
Figure 2.10: Acceptance Criteria/Sign-0ff Chart (Ross & Rodriguez, 2010)
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30. 3 Management Proposal
3.1 Corporate Organizational Structure
API has a Matrix Organization structured based on Projects. The Project Team will report directly to the Project Manager for task related
projects, also they will report to operations and functional managers from different departments.
Figure 3.1: Corporate Organizational Chart (Ross & Rodriguez, 2010)
President
CEO
Owen
French
Project Monitoring Director of Director of Supply and Director of Sales and Finance
& Controlling Engineering Operations Procurement Human Marketing Director
Director, Dick Ives Director Resources Director
Product Manufacturing Quality Materials Production
Purchasing Finance
Engineering Engineering Manager Manager Manager HR Manager Sales/Marketing
Manager Manager Manager
Manager Manager
Quality Materials Production Production Safety Finance
Project Product Facility Supervisor Maintenance Buyer HR
Engineer Engineer Supervisor Ergonomics Auditor
Manager A Engineer Engineer Shift 1 Engineer Specialist Salesperson
Shift 2 Supervisor
Testing Industrial Production Production Marketing
Engineer Engineer Workers Workers Specialist
Product
Engineer
System
Engineer
Manufacturing
Engineer
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31. 3.1.1 Corporate Roles and Responsibilities
The purpose of the Corporate Responsibility Matrix ( table 3.1) is to assign departments or
individuals to activity categories, define role responsibilities, and define relationships between
groups. This matrix should be completed before detailed resource allocating or scheduling. The
goals of the roles and responsibilities matrix are to:
 Define roles and responsibilities of project stakeholders.
 Improve overall project team and stakeholder communication.
 Proactively identify gaps in assignments, accountability, or resources.
 Clarify cross-functional interactions between project team members.
 Document project interdependencies with other enterprise initiatives.
 Define project team interactions with supporting resources and departments.
Table 3.1: Corporate Responsibility Matrix (Ross & Rodriguez, 2010)
Project Activity (Spring Automation)
Organization Title Project
Requirements Design Test Training
Communication
Project Management:
Monitoring & R C S A/R S
Controlling
Engineering
A/R/C A/R/C R/C C S
Finance
S C
Operations/
Production/ S S S S/C R
Manufacturing
Supply and
A/C S C/S
Procurement
Human Resources
C/S A/R
KEY:
A – Accountable for successful completion of task.
R – Responsible for completion of task. (Task can be delegated to this person.)
S – Supports task.
C – Requirements communication about the task.
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32. Table 3.2: Corporate Roles & Responsibilities (Ross & Rodriguez, 2010)
Title Role Responsibilities
Project Manager The Project Manager is responsible for  Project Plan
developing, in conjunction with the Project  Manage and lead the project team.
Sponsor, the project charter. The Project
 Manage the coordination of the partners
Manager ensures that the project is delivered
and the working groups.
on time, within budget, and to the required
quality standards.  Develop and maintain a detailed project
plan.
Engineering The Engineering department’s role is to  Layout, Facility Design
Perform as a manager or project systems  Construction Plan and Requirements
engineer for a complex project (e.g. several
 Regulations and Permits
distinct subsystems or other defined services,
capabilities, or products and their associated  Requirement and Specs. Development
interfaces).  Process Assembly Instructions
 Tools and Equipment Requirement Specs.
 Standard Procedures Operation Sheets
 Visual Aids
 Simulation of Production
 Testing
 Total Productive Maintenance
 Quality/Engineering Product Testing Plan
 Engineering Review Valve
Finance Once the organization as established goals  Audits of Financials
and associated strategies (or ways to reach
the goals), funds are set aside for the
resources and labor to the accomplish goals
and tasks. As the money is spent, statements
are changed to reflect what was spent, how it
was spent and what it obtained. Review of
financial statements is one of the more
common methods to monitor the progress of
programs and plans. The most common
financial statements include the balance
sheet, income statement and cash flow
statement.
The major work of the  Installation Plan
Project accomplished (i.e., design,
Operations/  Simultaneous Production Plan
development, construction, production,
Production/ testing, system activation, etc.).  Manufacturing Validation Plan
 Training
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