2010
Automation Spring/Wire Form
               Assembly Line
                Working Plan




                   Project ...
Contents
1     Executive Summary ............................................................................................
2.5.2       Acceptance Test .................................................................................................
5.1.2       Breakdown of Project Costs ......................................................................................
8.7          Appendix G – Earned Value Analysis Week 14 .....................................................................
1 Executive Summary
1.1 Project Baseline
          Automated Parts Inc, (API) a coil spring, wire forming, subassembly aut...
Figure 1.1: Process Performance Metrics (Ross & Rodriguez, 2010)



                       Current Process                ...
The success of the project is paramount to API, therefore risk management and contingency
          plans are in place to ...
2 Technical Proposal
2.1 Project Purpose
2.1.1 Background
         Automotive Parts Inc. (API) is a small manufacturer of ...
2.1.3 Objectives and Goals
         The objectives of the Automation of the Coil/Springs production Line is to deliver bet...
2.2.2 Benefits
                     The project benefits are classified in the five categories of the Global Manufacturing...
2.3 Statement of work
2.3.1 Project Summary
                                          Table 2.2: Project Description

    ...
2.3.4 Schedule of Rates - Labor
           Additional overtime hours are required for professional staff to account for ac...
2.3.6 General Administration, Contingency, Others
                 Additional cost for trips, General Administration/Overh...
2.3.8 Payment terms
         No including contingency. Project Manager’s professional fees are prorated on the overall pro...
2.3.9 Statement of work – Assumptions
                                                  Table 2.9: Assumptions (Ross & Rod...
2.3.10 Change Management Process

         The change management process will follow three internal procedures:

         ...
2.3.12 Acceptance and authorization



                   The terms and conditions of the Professional Services Agreement ...
2.4 Project Plan
2.4.1 Technical Description of New System
         API conducted a Value Stream Mapping workshop to ident...
2.4.2 Facility Design and Simulation
           In order to avoid future errors and rework, we will be using AutoCAD and o...
2.4.4 Detailed Project Schedule - Modified
         Figure 2.6 shows the progress of schedule when 26% of the worked has b...
2.4.5 Specific Challenges
                 Specific challenges in the following areas of: Supply, Communication, Operation...
Risk                                                                                                                     S...
2.4.7 Top Risk Recommended Action Plans
          1. Shipping/Weather Risk

                                 Table 2.11: W...
2. Hiring/Placement Risk

                             Table 2.13: Labor Conflicts Action Plan (Ross & Rodriguez, 2010)

 ...
3. Automated Equipment


         The Project intends to install state of the art new equipment for the facility. However,...
2.5 Project Completion Plan
2.5.1 Deliverables




                                                                       ...
2.5.2 Acceptance Test
         The Project will follow the Program Quality and Readiness Review (PQRR) as a Stage Gate
   ...
2.5.3 Acceptance Sign-off Cart
         Figure 2.10 shows a check list of items to be completed at each Review Valve




 ...
3 Management Proposal
                      3.1 Corporate Organizational Structure
                               API has ...
3.1.1 Corporate Roles and Responsibilities
         The purpose of the Corporate Responsibility Matrix ( table 3.1) is to ...
Table 3.2: Corporate Roles & Responsibilities (Ross & Rodriguez, 2010)

           Title                                  ...
API Project Capstone Paper
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API Project Capstone Paper

  1. 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. 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 2|Page Keller School of Management- Capstone PM600
  3. 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 3|Page Keller School of Management- Capstone PM600
  4. 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 4|Page Keller School of Management- Capstone PM600
  5. 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 5|Page Keller School of Management- Capstone PM600
  6. 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. 6|Page Keller School of Management- Capstone PM600
  7. 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 7|Page Keller School of Management- Capstone PM600
  8. 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 8|Page Keller School of Management- Capstone PM600
  9. 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. 9|Page Keller School of Management- Capstone PM600
  10. 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 10 | P a g e Keller School of Management- Capstone PM600
  11. 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. 11 | P a g e Keller School of Management- Capstone PM600
  12. 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 12 | P a g e Keller School of Management- Capstone PM600
  13. 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) 13 | P a g e Keller School of Management- Capstone PM600
  14. 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) 14 | P a g e Keller School of Management- Capstone PM600
  15. 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 15 | P a g e Keller School of Management- Capstone PM600
  16. 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 16 | P a g e Keller School of Management- Capstone PM600
  17. 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. 17 | P a g e Keller School of Management- Capstone PM600
  18. 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 18 | P a g e Keller School of Management- Capstone PM600
  19. 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) 19 | P a g e Keller School of Management- Capstone PM600
  20. 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 20 | P a g e Keller School of Management- Capstone PM600
  21. 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) 21 | P a g e Keller School of Management- Capstone PM600
  22. 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 22 | P a g e Keller School of Management- Capstone PM600
  23. 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 23 | P a g e Keller School of Management- Capstone PM600
  24. 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 24 | P a g e Keller School of Management- Capstone PM600
  25. 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 25 | P a g e Keller School of Management- Capstone PM600
  26. 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 26 | P a g e Keller School of Management- Capstone PM600
  27. 27. 2.5 Project Completion Plan 2.5.1 Deliverables 27 | P a g e Keller School of Management- Capstone PM600 Figure 2.8: Project Completion/Deliverables (Ross & Rodriguez, 2010)
  28. 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) 28 | P a g e Keller School of Management- Capstone PM600
  29. 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) 29 | P a g e Keller School of Management- Capstone PM600
  30. 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 30 | P a g e Keller School of Management- Capstone PM600
  31. 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. 31 | P a g e Keller School of Management- Capstone PM600
  32. 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 32 | P a g e Keller School of Management- Capstone PM600

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