API Project Capstone Paper

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

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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Keller School of Management- Capstone PM600

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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2.5 Project Completion Plan
2.5.1 Deliverables

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Figure 2.8: Project Completion/Deliverables (Ross & Rodriguez, 2010)

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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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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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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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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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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Title Role Responsibilities
Supply and The role of Procurement is to understand the  RFP
Procurement project management process, utilize specific  Bidding
procurement needs during the life cycle of the
 Negotiation
project including solicitation methods
(RFI/RFQ/RFP), total cost of ownership  Supplier Selection
analysis, cost/price analysis, negotiation, and  Assess Performance
understanding the benefit of integrating the
procurement tools.

Human Resources  Labor hiring
Perform structured analysis of skill types and
quantities; use resource scheduling estimates;  Recruitment Planning
plot graph of staffing requirements versus  Ensure Training.
actual and report status periodically.
Determine skill levels from work package
estimates; identify experience requirements
and gap analysis; use metrics as critical
success factor; plan hiring and training to
meet details.

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Work Package 1.3.3.2 has been added
3.2 Project Organizational plan 1.0
after unexpected event – Vendor
Springs Assembly Selection Change. This new package is
Line Automation
3.2.1 Work Breakdown Structure Project required to review all specs,
requirements and drawings of new
vendor B according to the future layout
and production and process design

1.1 1.2 1.3
General Admin Contingency Project

1.3.1 1.3.2 1.3.3 1.3.4
Project
Manufacturing Procurement Production/Operations
Planning

1.3.2.1
1.3.4.1
Layout 1.3.3.1
Design Installation
1.3.1.1 Purchasing
Preliminary Plan
13.2.2 1.3.4.2
Tools/Equip
Maintenance
Design
1.3.3.2 Training
1.3.1.2
New Tool/Specs
Communication
13.2.3 Revision 1.3.4.3
Plan
Process Design Human Resources

1.3.2.4 1.3.3.3 1.3.4.4
Buildout Tooling MVB Training
Development/
1.3.2.5 Shipping
1.3.4.5
Manufacturing
Validation Plan Finance Audit

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Figure 3.2: WBS (Ross & Rodriguez, 2010)

3.2.2 Project Organizational Structure
Figure 3.3: Project Organizational Structure (Ross & Rodriguez, 2010)

Bob Johnson
Project Manager

Dick Ives Project
Planning
Director

Director of
Director of Director of Director of Director of
Human
Engineering Operations Supply Finance
Resources

Manufact Product
Materials Production Equipment Fianancial
Engineering Engineering Quality Manager HR Specialist
Manager Manager Buyer Auditor
Manager Manager

Safety
Materials Production Production Maintenance
Facility Engineer Testing Engineer Quality Engineer Ergonomics
Engineer Supervisor Shift 1 Supervisor Shift 2 Engineer
Supervisor

Industrial Wire Gauge Wire Gauge
Engineer Operators (2) Operators(2)

Systems Wire Form Wire Form
Engineer Operators (5) Operators(5)

Manufacturing Robots Welders Robots Welders
Engineer (2) Operators (2) Operators (2) Project Team
Members

Support to
Project Team

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3.2.3 Project Team
Table 3.3: Project Team Roles & Responsibilities (Ross & Rodriguez, 2010)

Title Project Role Responsibility
Project Planning Ensure that project does not conflict with API goals. Provide assistance
Project
Director as needed to ensure completion of tasks. Ensure API Board is aware of
Sponsor
status.
Project Manager Drive project tasks to completion. Ensures that project expenses
Project remain within budget. Ensure Project Completion on estimated Timing
Manager

Director of Engineering Ensure Design and Engineering Practices are in place and according to
Engineering Support API Standards and Regulations
Manufacturing
Engineering Ensure Manufacturing Design and Engineering Practices are in place
Engineering
Support and according to API Standards and Regulations
Manager
Facility Engineer Project Team Provide project support with coordination of facility requirements.
Industrial Engineer Provide project support with coordination of Lean Manufacturing
Project Team Design, Ergonomics and Safety facility, Material Flow Design and
requirements.
Manufacturing Lead the integration of equipment, layout and process design to
Engineer completion. Supervise the construction of new equipment, installation
Project Team
and functioning. Prepare Manufacturing Validation Plan and
implementation
Product Engineering Engineering Ensure Product Design Compliance with functional, dimensional,
Manager Support durability and reliability specs.
Testing Engineer Perform Test routines in finished products for design validation
Project Team
according to specs
Director of Operations Ensure Operations are planned according to assembly line design,
Operations Support manage resources for production, maintenance, safety and ergonomics

Quality Manager Operations Ensure Quality Audits and Inspection Plans are in place to prevent
Support defects and promote improvement of operations
Quality Engineer Design the Quality Plan for the Automated Assembly line, inspection
Project Team
stations and Audits Plans
Material Handling Operations
Coordinate the Material Flow in the Operations
Manager Support
Material Supervisor Perform Rack Design, Basket and Market Design, Feeding Racks, and
Project Team
Material Flow Scheduling
Safety & Ergonomics Ensure all Safety Regulations and Ergonomics Practices are in place and
Project Team
Supervisor within regulations
Production Manager Coordinate Production Schedule, Manage and Assign Resources,
Production Coordinate Production Operations
Support

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Title Project Role Responsibility
Wire Gauge
Project Team Ensure proper selection of wire supply, ready to feed the assembly line.
Operators
Wire Form Ensure proper control and use of Wire Forming Equipment, Production
Project Team
Operators of Scheduled Wire Forms
Robotic Welders Ensure proper operations of value added operations: welding,
Project Team
Operators assemblies, others.
Maintenance Prepare Preventive and Corrective Maintenance Plans for new
Engineer Equipment and New tooling. Define a DFMEA (Design Failure and
Project Team
Mode Analysis) for Risky factors in the operations. Train, Supervise
Plans for work force
Supply Procurement Ensure Materials and Procurements are supplied on time and
Director Supply according to production schedule. Ensure purchase orders and
Support procurement process complies with internal control procedures.
Control cost of materials and Contract Agreements
Equipment Buyer Prepare Request for Proposal, Bid Solicitations, Rounds of
Negotiations, Supplier Selection and Business Assignment. Ensure
Project Team Suppliers comply with requirements and quality expected according to
the SOR (State of Requirements). Define payments terms and purchase
order release.
Director of Human Labor Force Ensure proper hiring, placement and training, payroll and benefits of
Resources Support the organization.
Human Resource Prepare Placement and hiring Plan of new and transferred employees,
Specialist Project Team prepare and support the training plan for new operations and
equipment.
Finance Director Financial Ensure project Cost is in control and within budget. Support Internal
Control Control Procedures
Support
Finance Auditor Help the project Manager control cost and report any deviations from
the Budget. Help Prepare actions plans and reports for Management
Project Team Reviews. Define, Review and Approve new Cost Structure for
Production.

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3.2.4 Responsibility Matrix
Blue text lines represent Tasks Activities for Working Packages. Package 1.3.3.2: New Tools
/Equipment Revision Specs was added to the Responsibility Matrix to validate specifications and
requirements of Vendor B.
Figure 3.4: Project Team Responsibility Matrix- Modified (Ross & Rodriguez, 2010)

Acronyms:

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WBS= Work Breakdown Structure
SOP’s = Standard Operating Procedures
RFP = Request for Proposal
MVB = Manufacturing Validation Build
SORP = Start of Regular Production

R=Responsible
A=Accountable
S= Support
I= Information
C= Consult

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4 Management Systems
4.1 Supplier, Selection and Management
4.1.1 Overview - Procurement of Automated Machines and Robots
The Procurement process is lead by our Purchasing Department under the procedure shown in
Table 4.1 and Figure 4.1. The internal procedure requires minimum of 3 Vendors for bidding and
negotiations. Selection Criteria, Scoring and Final results for vendor selection are shown on
section 4.1.2. Electro Measure was the selected vendor, however and due to financial struggles
negotiations with Vendor B are retaken to change OEM vendor as explained in Action Plan
Section 6.

Table 4.1: Procurement Process Procedures
Define Requirements Request and Evaluate Bids from Select a Source and Negotiate Contract Carry out the
and Develop Potential Sources Terms Contract and Pursue
Purchasing Plan Continuous
Improvement
The first step in the Purchasing automated machines is not a After the initial bids have been received, The contract must be
purchasing process is to simple matter of transferring pattern evaluated and ranked, the qualifying, best-value completed by two
define the product numbers and quantity desired from the bids will be selected. If the component is well actions: on-time delivery
requirements and engineering bill of materials to a defined in terms of simple shape/complexity and of a fully qualified
develop a purchasing purchase order. Careful consideration of of relatively low risk, the quotation may be product at the agreed
plan. Product technical quality, quantity and schedule sufficient for closing the contract and moving into cost by the vendor and
requirements are based factors is necessary to ensure that all production. prompt and timely
on technical pertinent and important information is payment by the buyer.
performance and targets supplied to the vendor. However, for the more complex, additional During the life of the
for quality, quantity, engineering design and contract negotiation may contract, all parties have
schedule and cost. With The vendor should receive a design be required to reach final agreement. Specifically, a valuable stake in
this information, a layout of the machine part or the it may be necessary to: continuous improvement
complete and accurate existing machining that the automated 1. perform a final review and refinement of the in quality, delivery and
request for quotation machines will be replacing. If the vendor design for manufacturability with the design best value. Specific issues
can be drafted. is to provide the most suitable and engineer that must be considered
useful components, it is important that 2. finalize technical, quality and schedule during the production
the buyer indicates the areas to be requirements; cycle include: • open and
machined and the locating points for 3. review and resolve non-technical contractual timely communication
machining. issues. (by visits, phone calls, e-
In contract negotiations, all parties should mail, etc.) between
consider the following factors: • the level and customer and supplier on
In addition, the buyer must know and project status, shortfalls,
understand the critical factors in scope of technical service, including design
consultation, production, quality control and potential problems,
specifying components and how those forecasted changes and
factors impact production and costs. product improvement:
1. detailed instructions and guidance on opportunities for value
specifications and quality assurance improvement;
A request-for-quotation will provide requirements • monitoring of quality,
component requirements to develop a 2. assigned responsibilities for and integration of delivery, cost and
comprehensive and detailed supporting engineering activities among the performance by both the
approach. It supplies the vendor with different production activities. supplier and the
complete information on requirements 3. cost of quality assessment (rejects delays, customer;
and enables the vendor to make an rework, etc.) • identification of
accurate price quotation. 4. scheduling and lead-time planning opportunities to improve
5. product liability. quality and increase
value to the final
customer by the
customer and supplier.

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Figure 4.1: Procurement Process (Garrett, 2007)

4.1.2 Production-Line Equipment Vendors
The Equipment Vendor selection consists of a three-step process. The criteria for vendor
selection is based on five (5) categories5 as shown below with their corresponding weight
factors:

5
Selection Criteria and Vendor Evaluation Forms from Excel Vendor Evaluation Analysis Template

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Based on the scoring of the three top vendors, Electro Measure was selected to supply the
Automated Wire Gauge Checkers and Wire Forming equipment, with a score of 94.50.
However, due to financial struggles of Electro Measure, Vendor B has been considered for a
new contract negotiation for the Wire Gauge and Wire Forming Equipment.

Vendor B was previously selected for the Robotics Welders, since this is their field of expertise.
The fabrication and shipping of the robotic equipment continues as planned in the original
baseline schedule.

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4.1.3 Computer Vendors
API’s computers for the automation project will be acquired through the office supply
procurement process of its normal operating procedures. All other office supplies for
administration duties will be acquired through the normal operating procedures for office
supplies. All office supplies or equipment budgeted for this project will follow the normal
operating procedures for procurement of office supplies. Therefore, for all office supplies or
equipment for this project, there will be no RFP or bid process.

4.1.4 Contract Close-Out
The Contract Close-Out with selected vendors will be following the complete assessment and
checklist as shown in Appendix H. A Contract Memorandum is to be written and signed by both
parties as a closure on the contract agreement and delivery of service.

API CONTRACT
CLOSEOUT MEMORANDUM

AGREEMENT NUMBER:

RECIPIENT:

PERFORMANCE COMPLETION/DELIVERABLES: Recipient as satisfactorily completed
performance and delivered all required reports/documentation. Recipient submitted
final expenditure report on __________ and final technical report on ___________.
[Explain actions taken.]

PAYMENT: Payment Terms will be a fixed price payable in 4 different stages: 25%
Deposit at contract agreement, 25% at delivery, 25% at installation, 25% at training and
service validation.

OTER CLOSEOUT ISSUES: all contract terms will be according the Terms and Conditions
explained in the contract agreement.

Based on my review of the agreement and closeout documentation, I have determined
that all administrative actions are complete and that the agreement may be closed.

Financial
Auditor
DateWorksheet and Checklist for Close-out terms are to be attached to this memo.

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4.2 Monitoring Cost and Schedule
4.2.1 Overview
Figure4.2 represents a flow chart for monitoring control, each box is sequenced from 1 to 14 to define the procedure that will determine
any change in cost or schedule.

Figure 4.2: Monitoring Process (Ross & Rodriguez, 2010)
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4.2.2 Labor Cost and Schedule
Labor cost was divided in three different categories:
1. Professional Staff consisting of engineers, managers and Supervisors
2. Operations Staff: Operators for the new equipped assembly line
3. Current Operations Staff: Operators, Inspectors and Assembly Line workers of current
operation, which will participate in the validation and transfer of operations to the new
Automated Assembly Line

Tables 4.2 and 4.3 show the Labor Cost and Schedule Rates for each of the labor resources.
Schedule and Cost are revised according to the Baseline Modified scenario. Baseline Cost is
shown on Appendix B.

Table 4.2: Salary Labor Cost (Ross & Rodriguez, 2010)

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6
Table 4.3: Hourly Labor (Automated Line) Cost (Ross & Rodriguez, 2010)

7
Table 4.4: Hourly (Current Line) Labor Cost (Ross & Rodriguez, 2010)

6
(1)resource for Shift 1 ; (2) resource for shift 2
7
(1) resource for Shift 1 ; (2) resource for shift 2 ; (3) resource shift 3

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4.2.3 Major Equipment Cost and Schedule
As explained in section 2.4.3, the future process will require automated equipment to improve
the production flow. The list of equipments remains the same after the Baseline Modified
explained in section 6.

Table 4.5 shows updated equipment cost for Vendor B with a 5% increment from the baseline
budget (seen on table 2.5 and Appendix B). This additional cost will be absorbed by the
contingency budget.

Table 4.5: Equipment Cost (Ross & Rodriguez, 2010)

4.2.4 Contingency, Administration and Others Cost
Contingency Cost was initially estimated at $215,123. The current problem we are facing with
the Supplier Selection will require $83,935 to be deducted from the Contingency Budget to stay
within the Planned Schedule and Budget. More details will be explained in the Cost Section 5.0.
Table 4.6 shows the Baseline Modified Budget for Administration, Travel and the remaining
Contingency Budget.

Table 4.6: Contingency Cost and Others (Ross & Rodriguez, 2010)

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4.3 Management of Scope and Change Orders
4.3.1 Overview
Table 4.7: Change Management Process (Services, 2010)
Change Request Process Roles and Responsibilities Notes
Team Lead initiates Change Request by Originate change requests based on • Requests resulting in changes to the vendor
completing the Change Request Information implementation needs using contract require approval from the Project
section on the Change Request Form and approved forms and communication Sponsor.
submitting to Project Managers. processes. Requests from team • No changes to the contract should be acted upon
members should be discussed with or conveyed as an approved change until we have
the appropriate Team Lead prior to verified that we are in compliance with the original
submitting an official change contract.
request. • Changes to Equipment, Software, budget, or
contracted ours will be reviewed, managed and
approved by the Project Manager.
• First priority will be given to change requests for
mission-critical functions and/or services.
Project Managers review with Team Lead; Facilitate the completion of change Other criteria for evaluating change requests will
identify needed information and next steps to requests and information gathering. be approved by the Change Review Team.
complete; enter into Change Request Log. Project Work directly with vendors (e.g. • Project Scope Change Management Plan
managers communicate and coordinate (as services or software estimate) and Documents:
needed) with appropriate personnel to gather with appropriate personnel, o Change Request Form
needed information. administrative and academic offices o Change Request Log
(e.g. workarounds, changes to o Scope Change Management Plan
policies and procedures) to collect
information needed to complete the
request.
Implementation
Project Managers prepare and submit Change
Request Impact Analysis section and submit to
the Change Management Team.
Institution Implementation Team receives weekly Receive updates of completed
updates of pending change requests and provides change requests pending approval.
input as needed / requested. Provide input as needed/requested.
Change Management Team approves/denies Evaluate, allow or disallow change
change request, provides Final Recommendation requests based on the submitted
on the Change Request Form and advises project information. Call upon the Project
Managers. Manager and Team Leads to provide
additional information as needed to
complete review. Escalate resolution
to Executive Steering
Committee as needed.
If appropriate, forward for review and
disposition.
Project Managers communicate the decision to:
a. The Team Lead making the request of the
Change Review Team decision.
b. Implementation Team.
c. All Project Managers and appropriate
interested parties.
d. Makes appropriate entries into the Change
Management Request Log.
Modify Implementation plan and documentation
as needed to incorporate approved change.

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4.3.2 Development of Scope
The scope of the project is evaluated within the operational tasks. There are working tasks to be
within scope and out of scope. The Project is to remain within the following scope: project
planning, facility design, manufacturing, production, procurement, installation, quality and
validation.

In-Scope

Project Planning
•Organize Project Team , Project Structure, Schedule and Activities. Earned Value Analysis (SPI CPI ) , Risk
Management, Develop the Control and Working Plan of the project. Develop the communication plan,
reports and formats to follow, develop a new Stage Gate Process for Valve approval.

Facility Design
•Design the new facility layout, define safety and ergonomics to comply with lean manufacturing
standards. Develop the new Statement of Requirements (SOR) for new equipment to include in the new
layout. Define new product and raw material requirements to feed the new assembly line.

Manufacturing/Production
•New Jigs and Tooling Development and Design Plan , Production line balancing/leveling, Production
Volume/Capacity study, definition of new takt time, production plan learning curve, production plan
training and work force requirements. New tools and equipment for material transportation to and inside
the assembly line. Build Out plan to replace old assembly line with new assembly line layout.
Incorporation of some Lean Manufacturing visual aids and layout, and flexibel manufacturing design.

Procurement
•Ensure to follow the Statement of Requirements issued by Manufacturing Engineering for new Tools, Jigs
and Equipment, Rounds of Quotations, Negotiations, and Award of new equipment business.

Installation of Tools and Equipment
•Define the equipment installation plan,
•Layout setup, equipment initial setup, electrical/utilities, water, air outlets installation, jigs installation,
painting and signage installation. Also hiring of contractors for installation of equipment and tooling
development.

Quality/Manufacturing Validation
•Define the validation and quality plan to validate production on new assembly line, audit of new
production, quality control and inspection points, manufacturing production ramping plan, approval of
production badges, dimensional plan, product engineering, bench and durability test plan, start of regular
production.

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4.3.3 Out-of-Scope Items
Out of Scope

Detailed Quotation or Negotiation Strategies
•This project will not include activities regarding RFP or Quotation Strategies. As a customer to the Procurement Process,
Manufacturing Engineering will only consider the input timing given by the Purchasing Department, only controlling the
bidding of RFP preparations based on the Statement of Requirements, and the output, a supplier selection.

Revenues and Financials
•This project will not control payments or bank disbursement. While controlling project Cost, any payments will be done
through the regular financial methods of the company. Also the Revenues and potential new revenues will not be
estimated in this project

Sales and Marketing Strategies for new production capacity
•The project will not cover neither promotion strategies for the new production capacity nor the reach of new sales
targets or customers.

Testing, Engineering Validation
•This project will not address any new equipment or improvements of the quality or testing of finished products

New Pricing Structure
•The project will not establish the new price per product, the outcome of the project should be use as an input to establish
new pricing structures.

Shipping/Material Handling of input supply or output finished Products
•The Project will not control any logistics, loading and unloading of shipped materials, regarding the supply inputs,
material handling or shipping prior or after the assembly line process.

Warrantee and Claims Issues
• The project will not cover the warrantee claim process.

Manufacturing/Production
•The Project will not cover the incorporation of a Total Lean Manufacturing Implementation or Just In Time implemeation,
this are separate projects to be considered in later or parallel with a different Project Team after the Automation project
is in place.

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4.3.4 Documentation of Change of Scope
The process for Change Request is shown on figure 4.3. In order to request a change, Change
Request Form (Appendix E ) needs to be filled out, explaining details on the problem or scope
change. This information is added to the Problem Resolution System to share with the Project
Team. The changes are submitted to the appropriate Change Committee for Approval, Rejection
(Deny) or Revision (Undecided)

Figure 4.3: Change Management Process (Nicholas & Steyn, 2008)
Change Management Process FlowChart.igx

Change
Generated

Yes
De facto?

No

Document
( Change Proposal or Request)

No Yes Review
Change Minor
Committe or
Control Board Change?
Individual

Formal Review
Change Commitee

Undecided Approve Deny

Update System
configuration
Futher Analysis
and Project
Plan

Implement
Changes

Notify
Monitor Customer and
Changes Other affected
Stakeholders

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4.4 Quality Management
4.4.1 Overview
The Quality Management Process is controlled through the Program Quality Revision Review
(PQRR), which defines different stages in the Project to be evaluated for Performance Metrics.
The Completion Plan on section 2.5 summarizes the PQRR reviews, deliverables and task to
complete on each stage. Each review will have a supplier and customer, who will buy off the
review, if all deliverables and items for that review are completed and if the metrics (shown in
figure 2.5.3 Acceptance Sign-off) are in compliance.

The Acceptance criteria (seen on Figure 2.5.4) will define the actions to take at each review.
Additional action plans may be drawn from each review if the review is close in yellow status.

The Quality System will be defined by identifying and tracking the performance and metrics for
working packages and tasks. Work Packages are shown in Figure 4.5. More detailed information
about the inputs, process and outcomes of each Work Package are shown on Figure 4.6, with
the responsible organization to the process, supplier and customer of information and materials
for each package.

Failure Mode and Effect Analysis (FMEA) was developed to identify, prevent and have actions
plans ready for potential defects on the product, process and the system. FMEA are shown on
section 4.4.4. FMEA will be part of the Process Design Engineering.

Statistical Process Control (SPC) will be in place for critical production variables. SPC is a
methodology for monitoring the process to identify special causes of variation and signaling the
need to take corrective action, when it is appropriate. (Evans, 2008).Critical dimensions, parts
positioning, material flow, and assembly process of new parts and components will be defined
in other to determine when specifications are out of control and when relevant corrective
actions are needed to keep the production within high quality standards.

Figure 4.4 summarizes API, Inc Quality Control System.

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Figure 4.4: Quality Control System (Machinery, 2010)

Quality Control System.igx

Material
Yes Inspection
IQC
Material
Certificate
No

SPC Control

CONTINUOS IMPROVEMENT
Efficienty
Manufacture
Improvement
Training

Proces Study
Process
Capability Process
Yes Control
Gage R&R IPQC
FMEA Gage Plan
Failure SPC
Analysis No
Candid
Feedback 100%
Yes Inspection
OQC Inspection
Record Check
Packaging List
No Check

Packing and
Shipping

Customer Quality Service
Feedback Feedback

IQC: Internal Quality Control
IPQC: In-Process Quality Control
OQC= Operational Quality Control
FMEA: Failure Mode and Effect Analysis
SPC: Statistical Process Control

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4.4.2 Work Package Identification

Figure 4.5 : Work Packages (Ross & Rodriguez, 2010)

WBS numbering is drawn from the WBS section 4.1.2.
There are 4 main phases: Project Planning, Manufacturing,
Procurement and Production/Operations. Each phase
consist of Working Packages and activities/tasks.

Each Working Package has a number of Tasks to complete.
Each Task is correspondingly indentified according to the
numbering of the Working Package.

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4.4.3 Work Package Inputs, Process and Outputs

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Figure 4.6: Work Package Inputs, Process, Outputs (Ross & Rodriguez, 2010)

4.4.4 Determining Possible Defects
Failure Mode and Effect Analysis (FMEA) (McCoy, 2009)

An FMEA can be described as a systemized group of activities intended to:

1) recognize and evaluate the potential failure of a product or a process and its effects,
2) identify actions which could eliminate or reduce the chance of the potential failure occurring
3) document the process. It is complementary to the design process of defining positively what
a design must do to satisfy the customer.

There are three basic cases for which FMEAs are generated, each with a different scope or
focus.

Case 1: New designs, new technology, or new process. The scope of the FMEA is the complete
design, technology or process.

Case 2: Modifications to existing design or process (hopefully there is an FMEA for the existing
design or process). The scope of the FMEA should focus on the modification to design or
process, possible interactions due to the modification, and field history.

Case 3: Use of existing design in a new environment, location or application. The scope of the
FMEA is the impact of the new environment or location on the existing design.

The responsible engineer is in charge of ensuring that all recommended actions have been
implemented and adequately addressed. The FMEA is a living document and should always
reflect the latest relevant actions including those occurring after the start of production.

4.4.5 Prevention of Defects
FMEA Implementation (McCoy, 2009)

The responsible engineer has several means of assuring that recommended actions are
implemented. They should include, but are not limited to the following:

a) Reviewing designs, processes and drawings to ensure that recommended actions have
been implemented.

b) Confirming the incorporation of changes to design-, assembly- or manufacturing
documentation.

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c) Reviewing design and process FMEAs, special FMEA applications and control plans.

The figure 4.7 illustrates the difference and the connection of System FMEA, Design FMEA and
Process FMEA.

The preferred application method during the Integrated Product Development and Launch
Processes (PDLP) is flow-down, where the customer requirements cascade down from one
FMEA level to the next. FMEA is used during the early concept phase, as well as the detailed
phase, to assess the risk of not delivering a product to the customer with the intended
functions. It is also a useful means to document the decision-making process, to identify
potential key characteristics and to identify elements of an analysis and a test plan.

The flow-up method is commonly used with the Engineering Change process. It is used to
evaluate changes to existing or new applications for existing systems, products, options, parts or
processes, as well as a structured problem-solving tool. For Engineering Changes the local
Engineering Manager may decide whether a System FMEA is needed or if the Severity can be
determined by the FMEA team.

The Severity rating should reflect the severity of the highest known FMEA level Failure Effect
(i.e. the Failure effect in the Process FMEA should be the same words as the Failure Effect of the
System FMEA).

Figure 4.7: FMEA Development Process (McCoy, 2009)

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Statistical Process Control

Statistical Process Control is a methodology for monitoring the process to identify special
causes of variation and signaling the need to take corrective action , when it is appropriate.
(Evans, 2008).

The Key application of SPC is to use control charts for variables that are critical to the product
and process. Some examples of variables to control fo the coil spring and wire forms are related
to material and dimensional attributes. For instance the diameter of the wire form and
tolerances within +/- 1% of the dimension will need to be considered when controlling product
variables, assuming the automated equipment is very précise. Additional to the product
dimensions, the calibration of new equipment will also need to be under control for specific
variables related to the machine operation.

4.4.6 Indentification of Defects
Design FMEA and its Process counterpart (McCoy, 2009)

The Design FMEA is a living document and should be initiated before or at design concept
finalization, be continually updated as changes occur or additional information is obtained
throughout the phases of product development, and be fundamentally completed before the
production drawings are released for tooling.

Considering that manufacturing /assembly needs have been incorporated, the Design FMEA
addresses the design intent and assumes the design will be manufactured and assembled to this
intent. Potential failure modes and/or causes or mechanisms which can occur during the
manufacturing or assembly process might be identified in the Design FMEA, but their
identification, effect and control are covered by the Process FMEA.
The Design FMEA does not rely on process controls to overcome potential weaknesses in the
design, but it does take technical/physical limits of a manufacturing and assembly process into
consideration, e.g.:

 Necessary mould drafts.
 Limited surface finish.
 Assembling space and access for tooling.
 Limited harden-ability of steels.
 Tolerances, process capability, process performance.

The design FMEA can also take into consideration the technical/physical limits of product
maintenance (service) and recycling, for example:

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 Tool access
 Diagnostic capability
 Material classification symbols (for recycling)

Statistical Process Control Charts

SPC control charts have three basic applications:

1.Establish the state of the statistical control ; 2. To monitor the process and to signal when the
process goes out of control; 3. To determine the process capability. Figure 4.8 show the steps
required to develop and use control charts. Figure 4.9 shows the interpretation of points out of
control for SPC.

Figure 4.5: Control Chart Process (Evans, 2008)

1. Preparation 2. Data Collection 3.Determination of
trial control limits

•Choose the •Record the data •Draw the center
Variable or •Calculate relevant line
attribute to be statistics: •Compute the
measure averages, ranges, lower and upper
•Determine the proportions, and control limits
Basis, size and so on
frequency to be •Plot the statistics
measure on the chart
•Setup the control
chart

4.Analysis and 5.Use as a problem 6.Determination of
Interpretation solving tool process capability

•Investigate the •Continue data •Use control chart
Chart for Lack of collection and data
Control plotting •Constantly
•Eliminate out of •identify out-of update and
control points control situations review process
•Recompute and corrective capability
control limits if actions
necessary

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Figure 4.6: Control Points InterpretationInvalid source specified. (Machinery, 2010)

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5 Project Cost Estimate
5.1 Project Cost
5.1.1 Total Project Cost
Project Cost will be distributed in Labor, Material, Trips, General Administration and
Contingency, based on our Risk Assessment. Table 5.1 shows Actual Cost at week 14. The
Baseline Budget and the Forecasted Budget (week 14 + 29 weeks ). Final Project cost is to
remain the same after the unexpected event, contingency plan cost is to be absorbed by the
contingency budget.

Table 5.1: Project Cost Status (Ross & Rodriguez, 2010)

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5.1.2 Breakdown of Project Costs
The WBS shown on figure 5.1 breakdowns the cost in different packages. Estimates for each cost
package are shown in black figures as the original Baseline Cost Budget; in red as the new
Modified Baseline Budget and in white as the Actual Cost. There is a new work package added
to the Procurement Package: Engineering Tooling/Specs Revision is required for new Vendor B’s
engineering inspection and specifications revision. Materials - the highest account - will be
broken down in 4 payments: 25 % deposit, 25 % at Shipping, 25% at receives, 25% after
Installation and Validation once the new contract is signed.

8
Figure 5.1: WBS/ Cost Package Breakdown (Ross & Rodriguez, 2010)
Springs Assembly Line
Automation Project
$2,557.608.3
$2,557,608.3
$113,157

Contingency General Admi Project (7)
$215,127.0 $109,223.0 $2,253,258.3
$131,191.6 $109,223.0 $2,337,193.7
$0 $35,561.0 $77,596.25

Project Manufacturing Procurement Production/Operations
Planning $48,845.3 $1,353,065 $781,228.0
$1,320.0 $48,845.3 $1,419,573.1 $798,655.2
$1,320.0 $43,290.3 $15,585.8
$1,320.0
Layout Installation
Design Purchasing
$19,273.0 $15,840.0
$8,580.0 $16,128.7
$8,580.0 $22,485.0
Preliminary Plan
$8,580.0 $15,585.8
$1,320.0
$1,320.0 Tools/Equip Maintenance
$1,320.0 Training
Design
$11,072.0 New Tool/Specs $10,032.0
Communication $11,072.0 Revision $10,295.4
Plan $11,072.0 $0
$0 $7,392
$0 Process Design Human
$0 $10,120.0 Resources
$10,120.0 $11,900.0
$10,120.0 $11,900.0
Tooling
Buildout Development/
$4,840.0 Shipping
MVB Training
$4,840.0 $1,333,792.0
$738,396.0
$4,840.0 $1,389,696.1
$755,271.0

Manufacturing
Validation Plan Finance Audit
$14,233.3 $5,060.0
$14,233.3 $5,060.0
$8,678.3

8
The difference of $17,400 in Project Actual Cost (in White) corresponds to Salary of Project Manager up to week 14

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5.1.3 Progress Payments
Monthly payments have been adjusted to the modified payment plan. Table 5.2 shows both the
baseline and modified baseline payment plans. Figures 5.3 shows the deferred payments from
the month of August,2010. Vendor change will defer the initial deposit payment for the Wire
Gauge and Wire Forming equipment. Later installment payments, as agreed in the contract will
have one month lag time for the first two payments, all corresponding to the action plan
explained in section 6.

Table 5.2: Monthly Payments (Ross & Rodriguez, 2010)

Figure 5.2: Progress Payments Chart- Modified (Ross & Rodriguez, 2010)

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5.1.4 Monthly Payment Distribution
Table 5.3 shows the payments distribution with the baseline modified. Figure 5.3 shows a
graphical representation of the current payment distribution per month according to the
modified budget. Notice how the contingency budget will be allocated in the months of August
and November to accommodate for Vendor Change action plan. Details of weekly payments for
baseline and modified baseline are shown on Appendix C.

Table 5.3: Monthly Payments Allocations- Modified (Ross & Rodriguez, 2010)

Figure 5.3: Monthly Payments Allocation Chart (Ross & Rodriguez, 2010)

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5.1.5 Earned Value Control
The Cost will be controlled with Earned Value Methodology. The Cost Performance Index (CPI)
will float between 0.90 and 1.05. Any deviation from these values needs to call for an Action
Plan and Project Cost Revision. Figure 5.4 shows the baseline EVA Monthly Plan. Modified
Baseline EVA Model was forecasted for the remaining of the project, after the unexpected event
with the supplier selection. Figure 5.5 shows the new values for the EVA control curve. Nnotice
displacement of the payments for equipment between the Baseline lines and Modified Plans.
Weekly Plan Values for the modified EVA model are shown on Appendix F.

Figure 5.4: EVA Control Plan- Baseline (Ross & Rodriguez, 2010)

Figure 5.5: EVA Control Plan - Modified (Ross & Rodriguez, 2010)

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5.1.6 Control Performance Index (CPI) & Schedule Performance Index (SPI)
Project was under control with SPI and CPI at 1.0 until the unexpected event happened. Due to
the unexpected event, there will be a Supplier Selection delay and metrics are affected; SPI
index went down to 0.91; CPI index remains at 0.99. Both Indicators are in good standing after a
revision plan is put in place to keep the project on track. The calculations for the CPI and SPI as
of week 14 are done considering the undergoing action plan for new Wire Gauge Checkers and
Wire Forming equipment with Vendor B contract.

Figure 5.6 shows the Actual Cost (AC) and Earned Value (EV), which are the same values except
for the Cost Variance on week 14 ( CV14=EV14-AC14 = -$739).

Cost Performance Index (CPI) (PMI, 2010)

CPI14 = EV14 / AC14 = $112,400 / $113,157 = 0.99

Schedule Performance Index (SPI) (PMI, 2010)

SPI14v= EV14/PV14 = $112,400 / $122,259 = 0.91

Figure 5.6: Earned Value Analysis (Ross & Rodriguez, 2010)

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5.1.7 Estimate at Completion (EAC) and Variance at Completion (VAC)
Estimate at Completion (EAC) is calculated based on the performance of the project thus far.
Although the Total Budget at Completion (BAC) is pretty much the same as the original baseline
budget ($2,577,608), the EAC will be our potential completion cost, for statistical purposes. The
VAC is not even detectable as seen on Figure 5.7. This is considering all the Action Plan Cost was
absorbed by the Contingency Budget.

Estimate at Completion (EAC) (PMI, 2010)

EAC = AC + [(BAC-EV)/CPI] = $117,091 + [($2,577,608 – $116,352)/0.99)] = $2,603,208

Variance at Completion (VAC) (PMI, 2010)

VAC = BAC – EAC = $2,577,608 – $2,603,208 = $ (25,600)

Figure 5.7: Estimate at Completion (Ross & Rodriguez, 2010)

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5.2 Customer-Provide Resources
The main customer is the Department of Production, including the support departments of
Quality and Engineering. The following list of resources is needed in place in order to operate the
new equipment, installation and validation process.

Table 5.4: Customer Resources (Ross & Rodriguez, 2010)
Production Floor Labor Systems Lab Testing Office

 Electrical Outlet  Current  SAP-ERP System  Materials Testing  Conference
110V/240V Production in Place Equipment Rooms
 Water Outlets Operators  Andon System  Dimensional  Training
 Air Outlets  New hires for for Production Room Rooms
 Epoxy Paint Automated Takt Time  MagnaFlux  Cardstock
 Lights Equipment monitoring Testing  Printers
 Electric Fans/VAC  Regular Quality  MS Project Equipment  Ink/Toner
 Forklift – Inspection  MS Office  Durability  PC
Capacity of  AutoCAD Testing
10,000 lbs loader  IGrafx Equipment
min  PRTS
 Floor Space
 Simulation Room

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5.3 Terms and Conditions
This agreement is made between Automotive Parts, Inc (API) and the Client/Vendor or Vendor
specified in the project proposal.
The purpose of the agreement is:
 To ensure that both parties know their roles, rights and responsibilities
 To ensure that the project is successfully completed to the satisfaction of both parties.
 Ensure the Procurement and Installation of new Equipment, Software and hardware is
completed in a satisfactory manner
 Terms and Conditions to be included in the Procurement Contract Agreement with
Vendors

Both parties are expected to perform their duties conscientiously and in a professional manner.
The services, fees, and other non-standard conditions are specified in the project proposal and
Request for Quotation documents.

The parties agree:

1. Basis of Documentation

The Client/Vendor will provide API with a copy of the software and functional instructions at the
start of the project. The documentation will be based on this. Changes to the software will incur
additional costs.

2. Access to Information

a. API requires access to one subject matter expert (SME) who can answer questions in a timely
manner. The SME is specified in the project proposal.
b. API will work with other members of the Client/Vendor’s/Supplier team as suggested by the
SME, but ultimate responsibility for the accuracy of information given to API lies with the SME.

3. Provision of Software /hardware

a. API warrants to Client/Vendor that any software that API owns and uses for the preparation
of the documentation will be a legal copy. API will notify the Client/Vendor/Vendor in regards to
any breach of this warranty.
b. If the Client/Vendor/Supplier provides any software for API to use, then
Client/Vendor/Vendor warrants that software will be a legal copy. The Client/Vendor/Vendor
will notify API in respect of any breach of this warranty.

4. Provision of Equipment

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a. API will provide its own general purpose computing and office equipment required for the
production of the documentation, installation and setup of new equipment as express in the
Customer Provided Resources of the Project Proposal.
b. If specialized equipment is required, then API may require that this be provided by the
Client/Vendor/Vendor for the duration of the project.

5. Approval of Deliverable Items

To ensure the documentation conforms to the Client/Vendor’s/Vendor’s expectations and that
the documentation is accurate, the Client/Vendor/Vendor is required at various stages of the
documentation life cycle to formally approve the deliverable items that are produced (these are
specified in the project proposal).
a. API will provide a draft of the item to be approved.
b. The Client/Vendor/Vendor will evaluate the draft in a timely manner and will provide API with
a list of required changes.
c. API will make the modifications that the Client/Vendor/Vendor requires (unless this
compromises the usability or general quality of the documentation or assembly process) and
will provide the Client/Vendor/Version with this new version.
d. Following any modifications, the Client/Vendor/Vendor will do one of the following:
i. Formally approve the deliverable item in which case it passes to the next stage. Approval can
be either on paper or by email.
ii. Ask for a further re-working, which will be at the Client/Vendor’s/Vendor’s expense (unless
any necessary re-working is due to API’s error).

6. Errors and Omissions

The Client/Vendor/Vendor must carefully check all completed documentation. While API takes
utmost care in the preparation of documentation, API does not accept liability for errors or
omissions. Payment of the final invoice indicates that the Client/Vendor has confirmed the
accuracy of the documentation.

7. Additional Fees

a. In addition to the Fees specified in the project proposal, the Client/Vendor /Vendor will pay
API at the agreed rate for:
i. Additional work required by the Client/Vendor/Vendor which is outside the scope of the
documentation as defined in the project proposal.
ii. Changes to the documentation which is required as a result of changes to the software
functionality or structure of new equipment.
iii. Changes to documentation at the request of the Client/Vendor/Vendor after the
Client/Vendor/Vendor has approved a deliverable item (see Approval of Deliverable Items).

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b. There are no fees for normal office consumables, phone calls, printing of drafts and other
small items.

8. Timely Disclosure

a. If API believes that the documentation cannot be finished on time, API will inform the
Client/Vendor as soon as is reasonably practical.
b. If the Client/Vendor is in any way unsatisfied with the progress or quality of API’s work, or if
the software, hardware changes, the Client/Vendor will inform API as soon as is reasonably
practical.

9. Early Termination

a. Either party may terminate the contract at any time if the other party fails to meet its
obligations specified in these terms and conditions. In such case, prior to termination, the
innocent party will inform the other party in writing that it is not meeting the agreed obligations
and that if this is not rectified within five working days, the innocent party will terminate the
agreement.
b. If the Client/Vendor is the innocent party, then following this notice, API will rectify the
matter without expense to the Client/Vendor.
c. If API is the innocent party, then following this notice, API will not spend time on the project.
If the matter is rectified, and API continues to work on the project, API will not be liable for any
delays to the provision of the documentation.
d. If termination proceeds
i. Full payment must be made immediately for any invoices already submitted.
ii. Any other work done (excepting that carried out under clause b), whether or not this is
complete, must also be paid for. API will charge at the standard rate, as specified in the project
proposal. API will invoice the Client/Vendor after notification of termination, and this must be
paid immediately.

10. Third Party Rights

These terms and conditions apply between API and the Client/Vendor. No third party as any
rights under the Contract (Rights of Third Parties) Act 1999.

11. Confidentiality

All information supplied by either party to the other will be treated in strictest confidence.

12. Copyright

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a. On final payment, copyright of the documentation that relates solely to the Client/Vendor’s is
automatically transferred to API. Prior to this, Client/Vendor retains copyright.
b. Once copyright is transferred, the Client/Vendor is entitled to change the documentation,
provided that the changed documentation is not attributed to API.
c. API retains copyright of all documentation that relates to publicly obtainable products or
information that resides in the public domain.

13. Intellectual Property

a. Any discoveries, inventions or other intellectual property that relate solely to the product will
be the property of the Client/Vendor.
b. Any other intellectual property will reside with API.

14. Law

This agreement is governed by the laws of New York State.

15. Circumstances beyond Control

Neither the Client/Vendor nor API shall be held responsible for circumstances beyond their
reasonable control.

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6 Unexpected Event
6.1 Problem
6.1.1 General Description
The Change Request form below describes the OEM Vendor Change problem.

Automotive Parts, Inc Change Request Form
Change Request: CR#001-2010 Page 1 of 2

Title: Wire Gauge Checkers/Wire Formers Supplier Selection Delay - Vendor OEM Change Request
Project Title Task No. 1.3.3.1.4 Revision No. 1 Date issued: 08.02.2010
Automation Wire Supplier Selection
Form/Spring Assembly Line
Description of change:
Need to change Equipment OEM vendor for Wire Gauge Checkers/Wire Formers. Initial selected supplier is in a
financial crisis and will declare bankruptcy.
Reason for Change:
Selected Supplier, Electro Measure, is going through financial struggles and will declare bankruptcy, so it won’t be
able to comply with the current contract and delivery of new equipment. The supplier is currently having
difficulties paying for materials, payroll and other overheads. Electro Measure has terminated a lot of its staff and
is very slow in making payments to their parts vendors. It has become difficult for them to even pay their
electricity and telephone bills. This situation has put the project completion, equipment installation and service at
risk.
Documentation attached: Automotive Part Inc, Part 3 – Case Study
Originated by: Hector A. Rodriguez Date: 08.02.2010
Requested logged by: Owen French - CEO Date: 08.01.2010

Cost Implications: $84,000
Schedule Implications: Changes in task activities, additional overtime work. No changes of final project delivery
date.
Implications of Performance of Deliverable(s): SPI = 0.91 CPI= 0.99 for week 14
Other Implications (risks & issues): If we stay with current vendor we could have service and installation
difficulties even if the equipment is received. Due to the instability of the company, installation and service may
not be available. Original supplier might be bought by new company in 2 months, or will cease operations within
the next month. With the new supplier, shipping of new equipment and installation will take longer than previous
supplier. Robotics and computer equipment will continue their regular fabrication and shipping schedules and are
not affected by this situation.
Proposed plan for implementation: Select new vendor, meet with new vendor to review engineering specs and
drawings, designs. Look into new schedule for supplier selection, Shipping, installation and training. MVB to remain
the same. A Decision Tree Analysis is recommended to find the best and least costly alternative.
Implications Evaluated by: Date:
Recommendation: Approve work and contract with Vendor B for Wire Gauge Checkers and Wire Forming
equipment.
Recommended by: Bob Jonson Date:
Documentation attached:

Approved by : French Owen Date: Approved by: Dike Ives Date:
08.16.2010 08.16.2010

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6.1.2 Current Status

API,Inc
Project Status Report
Sourcing/Procurement Review
Contract Sign-off
August 16, 2010

Project Name: Automation Wire Form/Spring Assembly Line

Department: PMO

Focus Area: Sourcing/ Procurement Review

Stage Gate Valve: Contract Sign-off

Product/Process: Wire Gauge Checking, Wire Forming of Springs and Wire Forms

Prepared By:

Document Owner(s) Project/Organization Role

Bob Jonson Project Manager

Hector Rodriguez Project Manager

Lydia Ross Project Manager

Project Status Report Summary

The Project Status Report is a document that Project Managers may use as a means of formal regular reporting on the
status of a project to key project stakeholders, including the Steering Committee, Project Sponsor, and Senior Manager.

Project Status summary details are shown below, focusing on milestones, deliverables and budget/cost variances for the
Reporting Period : Sourcing/Procurement Review

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Project Name: Automation Springs/Wire Forms Assembly Line
Prepared By: Date: Reporting Period:
Hector A Rodriguez 08.16.2010 Sourcing/Procurement Review
Week 14

Project Overall Status:

Project finished the project planning, design engineering/documentation phases. The Preliminary Plan, Program Initiation
Review, Manufacturing Engineering Review, and Verify Data Release Review as all were approved with success.

This will be the evaluation of the Sourcing/Procurement Review or Contract Sign-off

Project Schedule and Budget are right on track ; SPI= 0.95 and CPI= 0.99

Sourcing/Procurement Review

Validates the task for procuring new equipment and materials. Deliverables for Sourcing/Procurement Review:

 RFQ

 Bidding Quotations

 Negotiation Rounds

 Supplier Selection

 Purchase Orders

Budget Report

Total Budget at Completion (BAC) is not affected, the project budget remains at $2,577,608. The action plan cost - $83,935 -
will be absorbed by the Contingency Budget, this will be the cost variance for the implementation of this Supplier Selection
Contingency Plan.

Given the CPI=0.99 performance at the moment, we are expecting an Estimate at Completion (EAC) of $2,603,208, about
$25,600 higher than the BAC.

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Project Risk Management Status

Human Resource Placement Risk is under control, the proposal for Placement of labor force was accepted on the Verify Data
Release Review.

OEM Vendor for Wire Gauge Checkers/Wire Formers is declaring bankruptcy and is putting the Shipping, installation and
validation of the new assembly line on risk.

Purchase orders have not been released yet, hence Shipping has not been activated either.

Once Risk update is necessary in the Risk Matrix: Supplier Selection has move to be a top risk in the current status with a score
of 3.75 over 5.0.

Risk Risk
Risk and Description Chance Impact Risk Score Change from Last Review

Supplier Selection – Change 75% 5 3.75  New vendor will require more time and
of OEM Vendor support for fabrication and development
of equipment
 New Vendor will require 5% additional
cost on the Pricing of Equipment
 Both Equipments Wire Gauge Checker /
Wire Formers have to be procured
together because they are produced
consecutively in sequence
 Review Vendor B financials in detail
 Ensure Turnkey Installation and Training

Project Issue Management Status

Project Target Due Issue
Issue and Description Impact Date Status Issue Resolution

1. Delay on Vendor High 09/01/2010 Open  Start revision of negotiations and contract
Selection agreement with backup vendor B- Prepare
 Selected Vendor is in purchase order to immediate start of
financial struggle and equipment fabrication with vendor B.
threatening to stop Implement other equipment fabrication
fabrication and delivery and Shipping as modified plan.
of Wire Gauge  Vendor B for Wire Gauge Checker and
Checkers Equipment Wire Formers should be the same to avoid
system and setups delays and should be
 Change Request
Reviewed by Engineering Department
CR001.2010 for New
 Plan for overtime for Maintenance
OEM Vendor Selection
Engineering for Equipment Displacement.

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2. New Specialized Market Medium 3 Months Open  Prepare a preliminary proposal for new
Penetration after project specialized products. See section 7.0
 CEO requested to completion  A preliminary expansion plan will be
prepare the initial presented with the new automated
planning for equipment and future market
expansion projects for penetrations in other industries and value
a more specialized added products.
product with new 
automated equipment
 Change Request
CR002.2010 for Project
Expansion has been
issued

Project Budget Variance

The Project Budget Variance in Table 6.1 shows the difference between the baseline Budget at Completion and the new
modified Budget at Completion.

Justifications for variances are explained according to the action plans for new Supplier Selection.

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Table 6.1: Budget at Completion Breakdown (Ross & Rodriguez, 2010)

Budget Budget Budget Variance
Budget Item BAC Modified BAC Baseline Explanation

1.0 PROJECT SPRINGS $2,577,608 $2,577,608 $0.00

1.1 General Administration $109,223.00 $109,223.00 $0.00

($83,935.32)
1.2 Contingency Budget $131,191.68 $215,127.00
Procurement Action Plan

1.3 PROJECT $2,337,193.70 $2,253,258.3 ($83,935.32)

1.3.1 PROJECT PLANNING $1,320.00 $1,320.00 $0.00

1.3.1.1 PRELIMINARY PLAN $1,320.00 $1,320.00 $0.00

1.3.1.2 COMMUNICATION $0.00 $0.00 $0.00

1.3.2 MANUFACTURING $48,845.38 $48,845.38 $0.00

1.3.2.1 LAYOUT $8,580.00 $8,580.00 $0.00

1.3.2.2 TOOLS EQUIPMENT SPECS $11,072.05 $11,072.05 $0.00

1.3.2.3 PROCESS $10,120.00 $10,120.00 $0.00

1.3.2.4 BUILDOUT $4,840.00 $4,840.00 $0.00

1.3.2.5 MANUFACTURING VALIDATION PLAN $14,233.33 $14,233.33 $0.00

1.3.3 PROCUREMENT $1,419,573.12 $1,353,065.0 ($66,508.12)

($3,212.00)
1.3.3.1 PURCHASING $22,485.00 $19,273.00 Buyer retake of negotiations and
contract close out with new Vendor
($7,392.00)
NEW TOOLS/
1.3.3.2 $7,392.00 $0.00 Engineering Revision of New Vendor’s
EQUIPMENT SPECS REVISION
Specs
$55,904.12
1.3.3.2 TOOLING DEVELOPMENT AND SHIPPING $1,389,696.12 $1,333,792.0 Additional Pay 5% for New Vendor
Equipment Price

1.3.4 PRODUCTION/OPERATIONS $798,655.20 $781,228.00 $17,427.20

$288.75
1.3.4.1 INSTALLATION $16,128.75 $15,840.00
Overtime Maint. Eng
$263.45
1.3.4.2 MAINTENANCE TRAINING $10,295.45 $10,032.00
Overtime Maint. Eng

1.3.4.3 HUMAN RESOURCES $11,900.00 $11,900.00 $0.00

$16,875.00
MANUFACTURING/OPERATIONS
1.3.4.4 $755,271.00 $738,396.00 Additional Pay 5% for New Vendor
VALIDATION-TRAINING
Equipment Price

1.3.4.5 FINANCE $5,060.00 $5,060.00 $0.00

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6.2 Alternative Solutions
6.2.1 Overview
The Project status as of Week 14 shows that an action plan for Supplier Selection must be in
place in order to set the project back on Schedule. The CPI and SPI index are well under control
but require special action to avoid future stoppage of the Project. Vendor A has been going
through financial difficulties and is soon to declare bankruptcy putting the fabrication and
delivery of new automated equipment at risk.

This section will explain possible alternatives and the decisions to consider for the remaining of
the project. Three scenarios will be evaluated for its probability of happening and cost impact. A
decision tree will be calculated for the expected cost and the lowest cost will drive to a more
intelligent decision.

6.2.2 Continuing Contract
In this case scenario API, Inc will remain and stay with the contract with Electro Measure,
knowing there is a high risk the company will declare bankruptcy. After talking to the
representative of Electro Measure they told us there is a 95% probability that the company will
cease operations in the next month. If we decide to continue with Electro Measure and keep
the purchase of new equipment as planned, we might have to make pay the deposit within the
next month as agreed in the payment terms. The deposit will release the production order for
the fabrication of the Wire Gauge Checkers and Wire Forming Equipment.

If the Electro Measure ceases operations in the next month, we will be losing the payment
deposit and additional contingency cost, our total cost will be $623,000. The Project could be
delayed for approximately 2-4 months.

There is a 5% chance Electro Measures receives some financial assistance and gets back on its
operations, keeping the business open, hence the additional cost will refer only to delay in
supplier selection and contingency plan of $84,000.

6.2.3 Contract Modification
In conversations with the Directors and Owners of Electro Measure, it was stated there is a
possibility that a new company will absorb the debt and buy Electro Measure to make it more
efficient and operative. They won’t know of this sale/buy decision until the next 2 months from
week 14 of the project.

If the company gets bought there is a 20% probability to continue with the project, activating
the contingency plan for an additional cost of $84,000. The contingency will be used to revise
contract terms and engineering development with the new company. However, we don’t know

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if the new company will keep the current Product Line up, therefore exist a risk to training and
the service of the equipment.

If the company does not get bought within the next 2 month period, which is an 80%
probability, Electro Measure will be forced to cease operations completely. We could be losing
about $1,141,674 for the payments of equipment and labor according to contract and project
Planned Value and will need an additional $84,000 for a recovery plan to finish the project. This
will total about $1,224,674 in additional cost.

6.2.4 Pursuing another OEM
The Third option is to change the Vendor. We already explained that as part of the risk
assessment, a backup Vendor plan was considered. The purchasing team has already negotiated
some pricing terms with Vendor B. This change will include an $84,000 contingency plan to
activate the change of vendor and completion of project on time and budget.

Considering the selection criteria and score results for Vendor B, we estimate a 95% change to
continue the operations of the project and complete it on time and within the budget. There is
still a 5% chance that Vendor B will enter into some kind of financial situation, although it has be
in operations for over 40 years. This risk represents about $1,485,867, assuming this happens
when all equipment is already installed.

One major risk still exists in the project’s progress. Shipping of equipment over the Fall-Winter
season can delay the project and activate an additional resource to complete the project on
time. The full contingency of $215,127 will be used to add for overtime if necessary for the
maintenance, training and manufacturing validation and to complete the project within 1-3
months of the propose deadline. At this point we are assuming Vendor B is in good standing
with the project.

6.3 Proposed Action
There are three possible alternatives. Alternative 1: keeping the current contract; Alternative 2:
Modify the Contract and wait for Electro Measure to be sold; Alternative 3: Change the OEM
Vendor. A decision tree will be use to estimate each alternative’s cost and potential lost.

Outcomes calculations are shown on Figure 6.1, with the respective probability of the
occurrence and the potential cost to the project at the moment of the occurrence. Expected
Value for the alternative is then calculated, giving a more accurate estimation of potential lost
for each alternative. Alternative 3 seems to be the least costly of the three options. Action Plan
Activities for alternative 3 are developed in the next section.

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Figure 6.1: Decision Tree - Supplier Change Cost Analysis (Ross & Rodriguez, 2010)

Bankrupt- Closing @
1 Month $591,850
Alternative 1 95%, $623,000
+ $596,050
Continue with
Contract Stay Operative
Recovery Package $4,200
5%, $84,000

Bankrupt - No Sale@
2 Months $913,339
80% , $1,141,000
Supplier Change Alternative 2
Request Modify Contract $930,139
+
Stay Operative-Sold
$16,800
20% , $84,000

Going Bankrupt
$74,293
5% 1,485,867
+
Alternative 3
Change OEM Shipping Delays
$139,832 $243,595
65%, $215,127
Stay Operative
+
95%
Shipping on Time
$29,400
35%, $84,000

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Action Plan Activities for Vendor Change

Supplier Selection Delay
– CR#001-2010 Purchasing Work Package
Tasks 1.3.3.1.4
Sourcing/Procurement Purchasing will required 15 days to finish additional negotiations and contract
Review agreements with Backup Vendor ( as explained in the Risk Assessment)
Wire Gauge Checkers/Wire Formers equipment must be the same according to
Engineering Requirements.
New Vendor must provide both equipment to synchronize systems and setup.

New Tools/ Equipment Specs Revision Package
Tasks 1.3.3.2.1 / 1.3.3.2.2/1.3.3.2.3/1.3.3.2.4
Engineering will review new vendor’s specs to validate process and production system
design. Additional hours will be planned in parallel to purchasing the Contract Revision
with the new Vendor.

Tooling Development Work Package
Tasks 1.3.3.2.1 /1.3.3.2.2
Equipment Manufacturing will be split in: Manufacture of Wire Gauge Checker/Wire
Formers (Vendor 1) and Manufacture of Robotics Welders (Vendor 2) and Other
Computer hardware (Vendor 3) equipment which will keep same planned schedule.
New time for Vendor 1 Manufacturing and Packing is 20 days.

Tasks 1.3.3.2.3 / 1.3.3.2.4 / 1.3.3.2.5
Shipping will remain the same for Vendor 2 and Vendor 3 for Robots and Computers,
respectively. Shipping for Wire Gauge/Wire Formers will be delayed after fabrication
of new equipment. Shipping is to take 40 days as already planned.

Installation Work Package
Task 1.3.4.1.3
Installation and Setup of Wire Gauge/Wire Formers will need to be moved after arrival
of equipment. Activity time remains within 10 days.

Task 1.3.4.1.4
Displacement of Old Equipment for Robotics needs to be planned for overtime to
reduce time by 5 days to avoid overloading the Maintenance Engineer

Maintenance Installation Work Package
Task 1.3.4.1.5/1.3.4.1.6
Training and Setup of Computers and Robotics will have same timing- 10 days - but
planned after Displacement of old equipment

Tasks 1.3.4.2.1 /1.3.4.2.2/1.3.4.2.3/1.3.4.2.4
Training and System Calibration of equipments will remain with same timing – 10 Days,
but will move according to predeceasing activities. Human Resource and
Manufacturing Validation Work Packages remain unchanged.

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7 Scope Expansion
7.1 Project Description
The automation of API’s manufacture of coil springs, wire forms and sub-assemblies will
increase the capacity of the company to produce additional products with new dimensions and
specifications. The company’s capacity to produce its products at a faster rate of speed will
almost double, leaving an opportunity to acquire new business and increase its product line.
The CEO, Owen French has therefore expanded the automation project to include new business.
The increased business will include specialty areas such as aircraft and aerospace companies,
government contractors making ships, tanks and other military vehicles. The expansion project
has been presented as an addition to the existing automation project in order to be ready for
new business soon after the automation of the company has been completed.

In order to achieve the goal of new customers for specialty items, the project management
office along with marketing is developing strategies on breaking into the new market. To this
end, project management along with the Engineering Department is researching the physical
and material specifications required for the springs and wire forms used by companies in this
market. In addition, project management has designed some short pilot production of the
potential products that include prototypes of the new products. Since new raw materials are
needed in the production of the specialty wire forms, new material suppliers are also being
obtained. The project team and supporting organization formed for the expansion of the
automation project is listed in figure 7.1 below.

Table 7.1 summarizes some details about the Project Expansion for new product development.

Table 7.1: Project Expansion Summary

Client/Vendor name Aerospace/Defense

Client/Vendor’s administrator PMO - Engineering
New Product Development Program
Project name
for Wire Forms/ Springs
Engagement duration 66 Weeks
th
Begin date August 30 , 2010
th
End date January 16 , 2012

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Figure 7.1: Program Expansion Team (Ross & Rodriguez, 2010)

Project Manager

Dick Ives Project
Planning
Director

Sales and Director of
Director of Director of Director of
Marketing Human
Engineering Operations Supply
Director Resource

Marketing Manufact Product
Materials Production
Research Engineering Engineering Quality Manager Buyer(2) HR Specialist
Manager Manager
Specialist Manager Manager

Product Materials Production
Salesperson Facility Engineer Quality Engineer
Engineer Engineer Supervisor Shift 2

Industrial Maintenance
Testing Engineer
Engineer Engineer

Safety
Systems
Ergonomics
Engineer
Spervisor

Manufacturing Subassembly
Engineer Operators

Process Key
Engineer
Project
Team

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7.2 Initial Planning
The initial planning of this project was to determine the exact wire forms to develop. In order
to determine this information a marketing research specialist has been employed to review the
current market and determine which wire forms are in the most demand. Also, research is
being conducted with government agencies such as NASA and the Office of Defense to acquire
government contracts to supply the specialty items. Marketing is also reviewing specialty items
that the new equipment can produce but are not being supplied in order to gain a market share
in these new industries.

In terms of ensuring the company can produce the new products to customer specification, one
of the items or indexes that will be tracked is the process capacity. Being in control of a
manufacturing process using statistical process control (SPC) is not enough. An "in-control"
process can produce bad or out-of-spec product. Manufacturing processes must meet or be able
to achieve product specifications. Further, product specifications must be based on customers’
requirements.

Process capability is the repeatability and consistency of a manufacturing process relative to the
customer requirements in terms of specification limits of a product parameter. This measure is
used to objectively measure the degree to which your process is or is not meeting the
requirements. Capability indices have been developed to graphically portray that measure.
Capability indices let you place the distribution of your process in relation to the product
specification limits. Capability indices should be used to determine whether the process, given
its natural variation, is capable of product with the given processes.

Capability indices can be used to compare the product/process matches and identify the
poorest match (lowest capability). The poorest matches then can be targeted on a priority basis
for improvement. Figure 7.2 and Table 7.2 show the process needed to ensure the success of
the new product development. The purpose of the process is "to produce a product quality
plan which will support development of a product or service that will satisfy the customer." It
does this by focusing on:

 Up-front quality planning
 Evaluating the output to determine if customers are satisfied & support continual improvement

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Figure 7.2: Product Development Process (NPD-Solutions)

A further indication of the process is to examine the process outputs by phase. This is shown in
the table 7.2 below:

Table 7.2: Phases and Deliverables (NPD-Solutions)

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7.3 Scope
Marketing Research
The scope of the original project to automate the coil spring, wire form and welding of sub-
assembly specialty products has expanded to new product development of aerospace coil
spring, wire forms and sub-assemblies as well as government contracts for ships, tanks and
other military vehicles. In order to ensure the company has the ability to mass produce these
type of forms, the sales and marketing organizations have been employed to get the dimensions
and specifications of coil springs, wire forms and sub-assemblies as well as the design and
material requirements to meet the customer’s needs. Table 7.3 describes some of the task to
be undertaken during the marketing process for API to meet the needs of new customers.
9
Table 7.3: Marketing Research Analysis Worksheet
ID Package / Tasks
1.0 Marketing Research Tactical Plan

1.1 Scope Definition Phase
1.1.1 Define research objectives
1.1.2 Define research requirements
1.1.3 Determine in-house resource or hire vendor

1.2 Vendor Selection Phase
1.2.1 Define vendor selection criteria
1.2.2 Develop vendor selection questionnaire
1.2.3 Develop Statement of Work
1.2.4 Evaluate proposal
1.2.5 Select vendor

1.3 Research Phase
1.3.1 Develop market research information needs questionnaire
1.3.2 Interview marketing group for market research needs
1.3.3 Document information needs
1.3.4 Identify information to be gathered in research
1.3.5 Identify source of information
1.3.6 Identify research method (primary or secondary)
1.3.7 Identify research participant
1.3.8 Identify research technique (focus group or survey)
1.3.9 Identify timing requirements and budget
1.3.10 Develop research plan
1.3.11 Develop research information gathering tool
1.3.12 Conduct research
1.3.13 Document research findings
1.3.14 Develop research report
1.3.15 Review report with marketing group

9
Microsoft Excel Template: Marketing Research Tactical Plan

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The Marketing Research department will conduct research to determine the market's needs and
how and who is currently servicing it to understand the marketing share of the new products
and how to position the company to acquire a portion of the market. The marketing research
will also allow the company to analyze the current market, gain a competitive advantage and
establish a marketing plan.

Some of the questions that will be answered by the sales and marketing department include the
following:

1. What defined market is being targeted?
2. What specific companies are servicing this market?
3. Are they successful?
4. Are there other companies servicing this market with a similar product?
5. Are they successful?
6. What is their market share?
7. Is the market saturated or wide open? If so, why?
8. What is the size of the market?
9. Is it a growing market?
10. Is the industry stable, volatile, growing or trendy?
11. How can I reach this market?
12. How do API’s competitors reach the market?
13. What are the business models of the competitors?
14. What do customers expect from this type of product or service?
15. What core competencies must the product or service have?
16. What are customers willing to pay for this type of product or service?
17. What is my competitive advantage?

One of the most important questions that needed to be answered was defining the market and
making sure API could supply the targeted market with what they needed. Since API has been in
the coil spring industry for some time, the company has background experience on producing
the product. The area of uncertainty lies in the new product development and the ability of the
automated equipment to correctly produce the new products in large quantities with low reject
rates.

In addition to the research, the marketing department will need to conduct a new product sales
forecast to determine the financial impact to the company by going into the new market.

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New Product Development - Program Management

Three new products will be launched over the course of the next seventeen months. The first
launch will be for a new coil springs for military tanks. The next launch will be wire forms for
NASA aerospace equipment, and the last launch will be subassemblies for the military
applications of the department of Defense.

The launch of coil springs and wire forms will include the procurement of new raw materials.
For the subassembly project a new tooling and equipment design, development and installation
is required. Also, consignment parts for subassembly will be procured and produce in a
specialized subassembly cell. A summary of the program scope terms is shown on table 7.4.

Table 7.4: Program Scope Summary
Wire Forms Aerospace Coil Spring Military Tanks Subassembly Defense
 Market Research  Market Research  Market Research
 Procurement of Raw Materials  Procurement of Raw  Procurement of consignment
 Process Engineering Design Materials parts
 New Product Specs and  Process Engineering Design  Tooling/Jigs Development
Requirements  New Product Specs and  Equipment Development
 Product Engineering Design Requirements  Process Engineering Design
 Validation Engineering  Product Engineering Design  Product Engineering Design
 Manufacturing Validation  Validation Engineering  Validation Engineering
 Sales/Advertising  Manufacturing Validation  Manufacturing Validation
 Sales/Advertising  Sales/Advertising

7.4 Schedule
The Initial Schedule for the Product Development Program is divided into three product
development projects: Project #1: Wire Forms Aerospace ; Project #2: Coil for Tanks Defense;
Project #3: Subassemblies Defense.

Table 7.5: Program Summary Schedule

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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Each project will be planned with some separation to have a production learning curve. Project
#1 and Project #2 are very similar in schedule and cost, while Project #3 requires additional
resources, time and cost since it will be a new production development, new equipment and
tooling. Figure 7.3 shows the progress of each project through the Sales( yellow) , Engineering (
fuchsia) , Procurement ( green) , Validation ( aqua ) , Human Resources ( red) and Regular
Production Packages. Detailed Schedules of each project are shown on Appendix I.

Figure 7.3: Product Development Program Schedule (Ross & Rodriguez, 2010)

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7.5 Budget
7.5.1 Schedule of Rates - Labor
Labor cost is calculated for the Salary workers only. Production workers who will participate in
projects #1 and #2 won’t be considered as part of the Project Budget, but of regular production
overhead. Additional Production force is to be hired for Project #3.

Table 7.6: Program Schedule of Rates (Ross & Rodriguez, 2010)
Wire Forms Coil for Tanks Subassemblies
Aerospace Defense Defense
Item description Qty Avg. Delivery Cost Delivery Cost Delivery Cost
Rate schedule Baseline schedule Baseline schedule Baseline
(Man - (Man - (Man -
hours) hours) hours)
Process Engineer 1 $33.00/h 257.3 $8,492.0 257.3 $8,492.0 293.3 $9,680.0

Manufacturing 1 $33.00/h 106.6 $3,520.0 264 $8,712.0 594.6 $19,624.0
Engineer
Quality Engineer 1 $33.00/h 104.0 $3,432.0 173.33 $5,720.0 173.3 $5,720.0

Buyer 1 $33.00/h 318.8 $10,520.4 327.87 $10,819.6 327.8 $10,819.6

Buyer 2 1 $33.00/h 238.6 $7,876.0

Supplier 1 $0.00/h 344.0 $0.0 344 $0.0 1220 $0.0

Production Manager 1 $35.00/h 104.0 $3,640.0 173.33 $6,066.6 173.3 $6,066.6

Testing Engineer 1 $33.00/h 211.0 $6,963.0 210 $6,930.0 211 $6,963.0

Marketing Specialist 1 $33.00/h 668.0 $22,044.0 333.33 $11,000.0 333.3 $11,000.0

Salesperson 1 $33.00/h 480.0 $15,840.0 480 $15,840.0 480 $15,840.0

Product Engineer 1 $33.00/h 362.6 $11,968.0 432 $14,256.0 501.3 $16,544.0

HR Specialist 1 $28.00/h 320.0 $8,960

Maintenance Engineer 1 $33.00/h 306.6 $10,120.0

Subassembly 5 $15.86/h 866.85 $13,747.4
Operators

Totals 18 2,956.3 $86,419.4 2,995.16 $87,836.2 6,039.9 $142,960.6

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7.5.2 Equipment and Materials
As part of the equipment and materials we are procuring new wire materials for new product
development, consignment parts for subassembly testing; additional marketing/advertising and
sales development materials.

Table 7.7: Program Equipment and Material Cost (Ross & Rodriguez, 2010)

Wire Forms Coil Tanks Subassemblies
Cost Baseline Cost Baseline Cost Baseline
Item description Quantity Rate/unit
Name Registration $500.0
Wire Materials for 160 $5/ft $800.0 $800.0 $800.0
Prototype
Wire Materials for 2,500 $5/ft $12,500.0 $12,500.0
Manufacturing Validation
Build
Marketing Materials 5,500.0

Website Update 2,500.0

Consignment Parts 35,000.0
( Inventory for Prototype
and Validation)
Tooling Development 55,000.0
New Equipment 55,000.0
Development (air guns,
torque guns, etc)
Totals $21,800.0 $13,300.0 $145,800.0

7.5.3 General Administration, Contingency, Others
Contingency budget accounts will need a deeper risk assessment review . General
Administration Cost include overhead of the operation allocated to the expansion project only.

Table 7.8: Program General Admin, Contingency, Other Costs (Ross & Rodriguez, 2010)

Wire Forms Coil Tanks Subassemblies
Item Description Cost Cost Cost
Baseline Baseline Baseline
General Administration $11,321.9 10,613.6 27,175.3
Trips $5,000.0 5,000.0 6,500
Contingency $33,407.0 $37,779.7 $42,587
Totals $49,728.9 $53,393.3 $76,262.3

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7.5.4 Summary of Total Cost
Total cost for New Product Development Projects are shown in table 7.6. The three projects for
Aerospace, Defense and Subassemblies will total $654,793.3.
The projects will require 10,804 hours for 10 Engineers and 2 Buyers.

Table 7.9: Total Program Cost (Ross & Rodriguez, 2010)

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Figure 7. 4 shows the cost distribution for each project and the total of the new product development
program.

Project# 1 and Project #2: Wire Forms for Aerospace and Defense, has a very similar cost structure for
labor and materials.

Project 3: Subassemblies for Defense is the most costly and requires additional investment in materials,
mainly production equipment and tooling. For this reason Project # 3, will be delivered later on the
Program Plan, given it will be a new production operation for API, Inc.

Figure 7.4: Program Cost Distribution (Ross & Rodriguez, 2010)

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7.5.5 WBS/ Cost Breakdown
WBS Chart Pro serves to show ( on figures 7.5, 7.6 and 7.7 ) the WBS and Cost Breakdown for each of the project’s work packages.

Figure 7.5 : WBS/Cost Project # 1 : Wire Forms Aerospace (Ross & Rodriguez, 2010)

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Figure 7.6: WBS/Cost Project #2 : Coil for Tank Defense (Ross & Rodriguez, 2010)

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Figure 7.7: WBS/Cost Project #3: Subassemblies Defense (Ross & Rodriguez, 2010)

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8 Appendixes
8.1 Appendix A – Risk Assessment Matrix
Risk Assessment Matrix

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8.2 Appendix B – Schedule of Rates
Detailed Schedule of Rates

RESOURCE NAME QUANTITY HOURS Overtime Total hours STANDARD RATE Overtime Rate LABOR COST

Professional Staff

Project Manager 1 1720 - 1720 $40.00 $50.00 $ 68,800.00

Finance Auditor 1 193.33 - 193.33 $33.00 $41.25 $ 6,379.89

Facility Engineer 1 160 80.00 240 $33.00 $41.25 $ 8,580.00

Industrial Engineer 1 153.33 - 153.33 $33.00 $41.25 $ 5,059.89

Process Engineer 1 255.07 54.00 309.07 $33.00 $41.25 $ 10,644.81

Manufacturing Engineer 1 226.67 - 226.67 $33.00 $41.25 $ 7,480.11

Quality Engineer 1 153.33 - 153.33 $33.00 $41.25 $ 5,059.89

Buyer 1 179.75 81.00 260.75 $33.00 $41.25 $ 9,273.00

Supplier 1 516 40.00 556 $0.00 $41.25 $ 1,650.00

Maintanance Engineer 1 472 - 472 $33.00 $41.25 $ 15,576.00

Production Manager 1 73.33 - 73.33 $35.00 $43.75 $ 2,566.55

HR Specialist 1 566.67 - 566.67 $28.00 $35.00 $ 15,866.76

Material Handling Engineer 1 50.87 27.00 77.87 $33.00 $41.25 $ 2,792.46

System Engineer 1 368.67 20.00 388.67 $33.00 $41.25 $ 12,991.11

Testing Engineer 1 168 - 168 $33.00 $41.25 $ 5,544.00

Production Supervisor 2 300 - 600 $28.00 $35.00 $ 16,800.00

Manufacturing Engineer 2 1 90.67 40 130.67 $33.00 $41.25 $ 4,642.11

Subtotal Professional Staff 18.00 6,289.69 $ 199,706.58


Operations Staff

Guage Operator (1) 2 300 600 $ 13.46 $ 8,076.00

Wire Forming Operators (1) 5 300 1500 $ 15.86 $ 23,790.00


Welders Operators (1) 2 300 600 $ 16.82 $ 10,092.00

Welders Operators (2) 2 300 600 $ 18.50 $ 11,100.00

Subtotal Operations Staff 16.00 4,800.00 $ 79,233.00

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Current Operation
Checkers 8 300 2400 $ 12.00 $ 28,800.00

Inspector 3 300 900 $ 16.34 $ 14,706.00



Wire Forming Operator (3) 4 300 1200 $ 17.30 $ 20,760.00

Welding 1 5 300 1500 $ 16.34 $ 24,510.00

Welding 2 3 300 900 $ 17.78 $ 16,002.00

Welding 3 1 300 300 $ 18.75 $ 5,625.00

Subtotal Current Operation 42.00 12,600.00 $ 194,319.00

Labor Cost Total $473,258.58

Materials, Equipment, Administration Cost


Equipment Cost

1 Computer Terminal 5 $ 2,000.00 $ 10,000.00

Wire Gauge Checkers 2 $ 150,000.00 $ 300,000.00

Wire Forming CNC 5 $ 210,000.00 $ 1,050,000.00

Welding Robotics 2 $ 205,000.00 $ 410,000.00

Subtotal Equipment Cost $ 1,770,000.00


Admin Cost

Travel 1 $ 10,000.00 $ 10,000.00

Subtotal Travel $2,253,258.58

Contingency 1 $ 180,260.69 $ 215,127.00

Subtotal Contingency 1 $2,468,385.58

General Administration $ 111,324.00

FINAL TOTAL $2,579,709.58

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8.3 Appendix C – Weekly Payments Progress
Detailed Weekly Payments

Fixed - Materials Contingency
WBS Activity Month Week Closing Date Labor Cost
Cost Cost
1.3.1.1.1 PROJECT SCHEDULE 3 5/19/2010 9:20 $0.00 $0.00 $0.00
1.3.1.1.2 WBS 3 5/19/2010 9:20 $0.00 $0.00 $0.00
1.3.1.2.1 ORG. CHART/TEAM 4 5/25/2010 15:40 $0.00 $0.00 $0.00
May
1.3.1.2.3 STAGE GATE PLAN 4 5/25/2010 15:40 $0.00 $0.00 $0.00
1.3.1.1.3 PROJECT COST/EVA 4 5/26/2010 9:20 $0.00 $1,320.00 $0.00
1.3.1.1.4 RISK MATRIX 4 5/26/2010 9:20 $0.00 $0.00 $0.00
1.3.1.2.2 RESPONSIBILITY MATRIX 5 6/1/2010 12:00 $0.00 $0.00 $0.00
1.3.1.4 PROGRAM INITIATION REVIEW 5 6/3/2010 8:00 $0.00 $0.00 $0.00
1.3.2.1.1 FACILITY LAYOUT DESIGN 7 6/16/2010 17:00 $0.00 $4,290.00 $1,120.00
June
1.3.2.2.1 AUTOMATION REQUIREMENT AND SPECS. DEVELOPMENT 8 6/25/2010 10:52 $0.00 $2,792.35 $60.85
1.3.2.6 MANUFACUTRING ENGINEERING REVIEW 9 6/28/2010 8:00 $0.00 $0.00 $0.00
1.3.2.1.2 CONSTRUCTION PLAN AND REQUIREMENTS 9 6/30/2010 17:00 $0.00 $4,290.00 $1,120.00
1.3.2.2.2 TOOLING DESIGN AND DEVELOPMENT 10 7/5/2010 14:44 $0.00 $2,792.35 $60.85
1.3.2.2.4 MATERIAL HANDLING TOOLS/HANGERS DESIGN 11 7/14/2010 8:36 $0.00 $2,792.35 $60.85
1.3.2.2.3 COMPUTER HARWARE/NETWORK DESIGN July 11 7/14/2010 15:24 $0.00 $2,695.00 $93.33
1.3.2.5.2 HUMAN RESOURCE PLACEMENT PLAN 11 7/16/2010 9:20 $0.00 $6,533.33 $1,993.33
1.3.3.1.1 RFP 12 7/23/2010 9:16 $5,000.00 $7,792.35 $60.85
1.3.2.7 VERIFY DATA RELEASE REVIEW 14 8/2/2010 8:00 $0.00 $0.00 $0.00
1.3.3.1.2 BIDDING 14 8/2/2010 13:08 $0.00 $2,792.35 $60.85
1.3.2.4.1 INSTALLATION PLAN/ PRODUCTION PLAN 15 8/10/2010 9:04 $0.00 $4,840.00 $373.33
1.3.2.3.1 SOP's AND ASSEMBLY INSTRUCTION SHEETS 15 8/10/2010 16:44 $0.00 $5,060.00 $1,306.67
1.3.2.3.2 SIMULATION OF PRODUCTION 15 8/10/2010 16:44 $0.00 $5,060.00 $1,306.67
August
1.3.3.1.3 NEGOTIATIONS 15 8/11/2010 11:29 $0.00 $2,940.30 $690.20
1.3.3.3 SOURCING/PROCUREMENT REVIEW 16 8/15/2010 17:00 $0.00 $0.00 $0.00
1.3.3.1.4 SUPPLIER SELECTION 16 8/16/2010 10:09 $5,000.00 $5,748.00 $37.33
1.3.2.5.1 MANUFACTURING VALIDATION PLAN 17 8/24/2010 16:44 $0.00 $2,640.00 $1,120.00
1.3.3.2.1 EQUIPMENT MANUFACTURE-PACKING 18 8/31/2010 13:49 $442,500.00 $448,792.00 $1,941.33
1.3.2.5.3 QUALITY/ENGINEERING PRODUCT TESTING PLAN September 19 9/7/2010 9:04 $0.00 $5,060.00 $186.67
1.3.3.2.2 COMPUTER SHIPPING 24 10/11/2010 15:09 $5,000.00 $5,000.00 $1,000.00
1.3.3.2.3 EQUIPMENT WIRE GAUGE/WIRE FORMING SHIPPING October 26 10/26/2010 13:49 $675,000.00 $675,000.00 $3,000.00
1.3.4.1.1 DISPLACE OF OLD EQUIPMENT 26 10/29/2010 17:00 $0.00 $2,640.00 $1,120.00
1.3.4.1.2 INSTALLATION OF WIRING/COMPUTER 28 11/12/2010 17:00 $0.00 $2,640.00 $1,624.00
1.3.4.6 PRODUCTION/OPERATIONS DEVELOPMENT REVIEW 29 11/15/2010 8:00 $0.00 $0.00 $0.00
November
1.3.4.2.3 SYSTEM CALIBRATION AND SETUP WIRE FORMING 30 11/26/2010 12:00 $0.00 $2,508.00 $1,560.00
1.3.4.1.3 INSTALLATION/SETUP WIRE GAUGE/ WIRE FORMING 30 11/26/2010 17:00 $0.00 $2,640.00 $1,896.00
1.3.4.2.1 TRAINING ON WIRE GAUGE/WIRE FORMING EQUIPMENT 32 12/10/2010 12:00 $0.00 $2,508.00 $1,560.00
1.3.3.2.4 EQUIPMENT ROBOTICS SHIPPING December 33 12/21/2010 13:49 $205,000.00 $205,000.00 $3,000.00
1.3.4.1.4 DISPLACE OF OLD EQUIPMENT 33 12/24/2010 17:00 $0.00 $2,640.00 $1,120.00
1.3.4.3.1 LABOR HIRING/RECRUITING/PLACEMENT 35 1/4/2011 17:00 $0.00 $9,333.33 $5,373.33
1.3.4.3.2 PRODUCTION SCHEDULE PLAN 35 1/4/2011 17:00 $0.00 $2,566.67 $233.33
1.3.4.7 MANUFACTURING VALIDATION REVIEW 1 35 1/5/2011 17:00 $0.00 $0.00 $0.00
January
1.3.4.1.5 INSTALLATION OF WIRING/COMPUTER 35 1/7/2011 17:00 $0.00 $2,640.00 $1,120.00
1.3.4.2.4 SYTEM CALIBRATION AND SETUP ROBOTICS 37 1/21/2011 12:00 $0.00 $2,508.00 $1,560.00
1.3.4.1.6 INSTALLATION/SETUP EQUIPMENT ROBOTICS 37 1/21/2011 17:00 $0.00 $2,640.00 $2,120.00
1.3.4.2.2 TRAINING ON ROBOTICS EQUIPMENT 39 2/4/2011 12:00 $0.00 $2,508.00 $560.00
1.3.4.4.1.1 MVB1- TRANING SHIFT 1 39 2/4/2011 17:00 $340,000.00 $369,095.73 $24,179.47
1.3.4.4.1.2 MVB1-TRAINING SHIFT 2 39 2/4/2011 17:00 $0.00 $26,390.00 $21,890.00
1.3.4.4.1.3 ENGINEERING/QUALITY TESTING 1 39 2/4/2011 17:00 $0.00 $2,772.00 $1,008.00
February
1.3.4.8 MANUFACTURING VALIDATION REVIEW 2 39 2/4/2011 17:00 $0.00 $0.00 $0.00
1.3.4.4.3.1 PRODUCTION SHIFT 1 40 2/7/2011 14:20 $0.00 $65,124.80 $55,105.60
1.3.4.4.2.1 MVB2- TRAINING SHIFT 1 43 3/2/2011 15:40 $102,500.00 $123,762.27 $5,495.33
1.3.4.4.2.2 MVB2-TRAINING SHIFT 2 43 3/2/2011 15:40 $0.00 $19,285.00 $4,975.00
March
1.3.4.4.3.6 PRODUCTION SHIFT 3 43 3/2/2011 15:40 $0.00 $11,140.33
1.3.4.4.2.3 ENGINEERING/QUALITY TESTING 2 43 3/2/2011 17:00 $0.00
102 | P a g $2,931.67
$2,772.00
e
$1,008.00
1.3.4.5.1 AUDITS OF FINANCIALS 43 3/2/2011 17:00 $0.00 $5,060.00 $1,540.00
1.3.4.9 SORP REVIEW 43 3/2/2011 17:00 $0.00 $0.00 $0.00
Totals $1,780,000.00 $2,184,458.38 $215,127.00

8.4 Appendix D – Value Stream Maps
Current Process Mapping
Automotive Parts VSM,Inc.igx

Sales Information
Supplier Information Forecast
Customer Demand:
Prod. Market Customer
3000 pieces per Day Demand
Control (Takt Time 28.8
Prepare seconds)
Production
Information
Schedule

30 minutes
Materials Reception 5 minutes
5 minutes 1 minutes 5 minutes
Materials 60 minutes
Quality 20 minutes
Production
2 minutes
Quality 5 minutes
Paint Quality 1 minutes

Dept Dept Production Production Production Production
Dept Dept Inspector Shop Dept
Mtl Wire Gauge Pre-Assembled
Wire Forming Hardening Visual MagnaFlux Coating of Visual
Reception 8 Checking Ship Parts to VA Parts Packing Shipping
Cold/Hot Coiling 3 Inspection Inspection Parts Inspection
Value Add: 50 minutes Production by 9
22 Value Add: 30 minutes Value Add: 6 minutes Value Add: 5 minutes Value Add: 40 minutes Value Add: 5 minutes Value Add: 10 minutes Value Add: 10 minutes
NVA = 20 minutes Diameter Value Add: 35 minutes
Defect = 25% Value Add: 50 minutes NVA = 1 minutes NVA = 0 seconds NVA = 0 minutes NVA = 5 minutes NVA = 0 seconds NVA = 0 minutes NVA = 0 minutes
NVA = 5 minutes
Value Add: 5 minutes NVA = 15 minutes Defect = 15% Defect = 30% C/O = 20 mins. Defect = 1% Defect = 0% Defect = 0%
C/O = 20 mins.
NVA = 2 minutes C/O = 20 mins.
Checkers Control
Quality Paint
Defect = 5%

Operator Operator Welding Operator
Select Samples Inspector
Divide in Tempering Operator
8 Check Setup
Cold and Materials Setup
Value Add: 15 minutes 100% Painting Jig
NVA = 5 minutes Hot Coiling 3 Welding Jigs
Visually Value Add: 15 minutes
22 Value Add: 10 minutes 9
NVA = 5 minutes
Checkers Value Add: 20 minutes
NVA = 5 minutes
NVA = 0 minutes
Defect = 2%
Value Add: 3 minutes
NVA = 0 minutes
Value Add: 20 minutes C/O = 20 mins.
NVA = 5 minutes
Defect = 15%
C/O = 20 mins.
Gauge Control
Measuring Operator
8
Control Quality Welding Operator
Setup
Operator Inspector Operator Dipping
NVA = 5 minutes Forming
Defect = 10%
Welding VA Spraying
22 Jigs Check
Grinding Parts Heating or
Checkers Value Add: 15 minutes
NVA = 5 minutes
3 100%
9 Deposition
Value Add: 10 minutes Production
Separete by C/O = 20 mins. Value Add: 10 minutes Value Add: 10 minutes
NVA = 1 minutes MangaFlux NVA = 0 minutes NVA = 0 minutes
Diameter Defect = 1%

3 Operator Value Add: 3 minutes
NVA = 0 seconds
Coil, Bend, Control Defect = 10% Welding Control
NVA = 5 minutes
Form Operator Operator
Defect = 15%
22 Operator
NVA = 5 minutes Shot Tearing Test Drying
Defect = 25% Peening
Inspectors 3
NVA = 0 minutes
NVA = 0 minutes
NVA = 0 minutes
Check for Defect = 2%

Imperfections
3

NVA = 5 minutes
Defect = 15%

30 2 45
minutes 70 minutes 5 minutes 7 minutes 60 minutes 65 minutes 5 minutes 31 minutes 1 minutes 20 minutes 40 minutes minutes 5 minutes minutes 5 minutes 1 minutes Lead Time = 428 minutes
50 minutes 5 minutes 50 minutes 30 minutes 6 minutes 35 minutes 5 minutes 40 5 minutes 10 minutes 10 minutes VA / T = 246 minutes
minutes NVA = 48 minutes
20 mins. 20 mins. 20 mins. Inventory Time = 134 minutes
Defect = 58%
C/O = 60 mins.

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Future Process Mapping

Automotive Parts VSM_Future,Inc.igx

Sales
Information
Supplier Information Forecast
Prod.Control Customer Demand:
Market
3000 pieces per Day Customer
Prepare Demand
Production (Takt Time 19.2
Schedule seconds)

Information

5 minutes 2 minutes 5 minutes
Materials 5 minutes
Reception Materials Dept 1 minutes
Quality 10 minutes
Production Quality 5 minutes
Quality
Production Production 2 minutes 5 minutes
Paint Shop 1 minutes
Production Production
Dept Dept Dept Inspector Dept
Material Wire Gauge Ship Parts to Visual Pre-Assembled MagnaFlux Visual
Wire Forming Hardening Packing Shipping
VA Parts Coating of Parts
Reception 2 Checking Production by Cold/Hot Coiling 3 Inspection Inspection Inspection
2
Value Add: 12 minutes Diameter 5 Value Add: 30 minutes Value Add: 6 minutes Value Add: 5 minutes Value Add: 40 minutes Value Add: 5 minutes Value Add: 10 minutes Value Add: 10 minutes
NVA = 0 minutes Value Add: 12 minutes NVA = 1 minutes NVA = 0 seconds NVA = 0 minutes NVA = 5 minutes NVA = 0 seconds NVA = 0 minutes NVA = 0 minutes
Value Add: 5 minutes NVA = 0 minutes
Defect = 95% Defect = 15% Defect = 30% C/O = 20 mins. Defect = 1% Defect = 0% Defect = 0%
NVA = 2 minutes NVA = 1 minutes C/O = 3 mins.
C/O = 2 mins. Defect = 5% C/O = 3 mins.
Control Welding Paint
Quality
Wire Operator Operator
Wire Forming Inspector Operator
Operators Tempering Setup
Operator Check Setup Painting
Select Samples 3 Materials Robotic
100% Jig
and Insert in Value Add: 10 minutes Welder
Visually
Wire Gauge in Insert Coil Form in NVA = 0 minutes 2 Value Add: 15 minutes
Defect = 2% NVA = 5 minutes
Automated Wire Former Value Add: 3 minutes Value Add: 5 minutes
C/O = 20 mins.
NVA = 0 minutes NVA = 0 minutes
5
Wire Gauge Defect = 15% C/O = 3 mins.
Checkers
NVA = 0 minutes
Control Control
2 Operator Welding Operator
Value Add: 8 minutes Quality
NVA = 0 minutes Operator Dipping
C/O = 2 mins. Wire Forming 3
Grinding Inspector Control Spraying
Operator Value Add: 10 minutes Check Welding Heating or
NVA = 1 minutes 100% Process Deposition
Wire Defect = 1%
Calibrate CNC Production 2
Operators Geometry MangaFlux Value Add: 7 minutes NVA = 0 minutes
5 Control NVA = 0 minutes
Control Wire Value Add: 3 minutes
Selection and
Operator NVA = 0 seconds Control
Welding
NVA = 1 minutes
C/O = 3 mins. Defect = 10%
2 Sorting
Shot Peening Operator Operator
Wire Forming
3
NVA = 0 minutes
Value Add: 10 minutes Drying
Tearing Test
Operator NVA = 0 minutes
Defect = 2% Value Add: 15 minutes
Value Add: 5 minutes NVA = 0 minutes
Produce Spring NVA = 0 minutes
Wire Form in
Automated Wire
Former
5

NVA = 0 minutes
Defect = 98%

2
5 2
minutes 5 minutes 7 minutes minutes 13 minutes 5 minutes 31 minutes 1 minutes 10 minutes minutes 5 minutes 45 minutes 5 minutes 1 minutes Lead Time = 197 minutes
12 minutes 5 minutes 12 minutes 30 minutes 6 minutes 12 minutes 5 minutes 40 minutes 5 minutes 10 minutes 10 minutes VA / T = 147 minutes
2 mins. 3 mins. 3 mins. 20 mins. NVA = 9 minutes
Inventory Time = 41 minutes
Defect = 97.2%
C/O = 28 mins.

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8.5 Appendix E – Change Request Form
Automotive Parts, Inc Change Request Form
Change Request: Page of

Title
Project Title Task No. Revision No. 1 Date issued:

Description of change:

Reason for Change:

Documentation attached
Originated by Date:
Date:
Cost Implications :
Schedule Implications :
Implications of Performance of Deliverable(s) :
Other Implications ( risks & issues ):
Proposed plan for implementation

Implications Evaluated by: Date:
Recommendation

Recommended by: Date:
Documentation attached
Approved by Date: Approved by: Date:

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8.6 Appendix F – Baseline Schedule

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8.7 Appendix G – Earned Value Analysis Week 14

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8.8 Appendix H – Contract Close Out Checklist
API - CONTRACT CLOSE-OUT WORKSEET

1. PROJECT NAME 4. OTHER TRANSACTION (OT) NUMBER

2. NAME OF RECIPIENT 5. OT MODIFICATION NUMBER

3. RECIPIENT CLASS/TYPE 6. DATE OF PYSICAL COMPLETION

ACTION ITEM COMPLETED

7. FINAL REPORT ACCEPTED Yes No Date

8. FINANCIAL MANAGEMENT Yes No Date

Total Amount Obligated: $
Total Govt. Expenditures $
(Date of Final Payment )
Unliquidated Obligation $

Final Cost-Share Percentage:
Recipient $ Govt. $
% %
Negotiated % %

Final
Neg.
Recipient: In-Kind
Cash

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Yes No Date
Final expenditure audit determined necessary?
Yes No Date
Issues identified in final expenditure audit
resolved
If applicable?
Yes No Date

Modification to deobligate excess funds
and/or reflect adjustments

Notes:

9. FINAL PATENT DISCLOSURE

(Invention Disclosure - Agreement Article ) Yes No Date

All invention Proposal Disclosures Submitted to
appropriate buying office

Consortium as completed Invention Proposal
Disclosure list.

Notes:

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ACTION ITEM COMPLETED

10. LICENSES ACQUIRED

Yes No Date
Notes:

11. DISPOSITION OF PROPERTY

Yes No Date
Obtain list of applicable equipment received
from
consortium and disposition of equipment
completed.

Notes:

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OTHER TRANSACTION
CLOSEOUT CECKLIST

AGREEMENT NUMBER: THROUGHMODIFICATION NO:

RECIPIENT:

PERFORMANCE PERIOD: DATE

COMPLETED

1. Final Invention Disclosure Report Completed/Cleared ______

2. Final Patent/Royalty Report Completed/Cleared ______

3. Final Technical Report Received/Accepted ______

4. Final Business Report Received/Accepted ______

5. All Milestones Satisfactorily Completed ______

6. Verification of DTIC Reporting Completed ______

7. Disposition of Classified Material ______

8. GFE/Property Disposition Actions Completed ______

9. Plant Clearance Completed ______

10. Final Voucher/SF 269/270/272 Submitted ______

11. Method for Verifying Costs Determined ______

12. Cost Verification Process Completed ______

13. Settlement of Cost Share/Contribution Issues ______

14. Final Payment Completed ______

15. Final Removal of Excess Funds ______

16. Other Requirements Completed (Specify) ______

a. ______

b. ______

17. Issuance of Completion Statement (DD 1594) ______

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8.9 Appendix I

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9 Tables
Table 1.1 Project Phases ................................................................................................................................ 6
Table 1.2: Product Development Program ..................................................................................................... 8
Table 2.1: Goals & Objectives (Ross & Rodriguez, 2010) .............................................................................. 10
Table 2.2: Project Description ..................................................................................................................... 12
Table 2.3: Phases and Milestones (Ross & Rodriguez, 2010) ........................................................................ 12
Table 2.4: Schedule of Rates (Ross & Rodriguez, 2010)................................................................................ 13
Table 2.5: Equipment Rates (Ross & Rodriguez, 2010) ................................................................................. 13
Table 2.6: Other Costs (Ross & Rodriguez, 2010) ......................................................................................... 14
Table 2.7 : Summary Cost Structure (Ross & Rodriguez, 2010) .................................................................... 14
Table 2.8: Payment Schedule (Ross & Rodriguez, 2010) .............................................................................. 15
Table 2.9: Assumptions (Ross & Rodriguez, 2010) ....................................................................................... 16
Table 2.10: Risk Matrix (Modified) (Ross & Rodriguez, 2010) ...................................................................... 22
Table 2.11: Weather/Shipping Action Plan (Ross & Rodriguez, 2010) .......................................................... 24
Table 2.12: Overtime Proposal (Ross & Rodriguez, 2010) ............................................................................ 24
Table 2.13: Labor Conflicts Action Plan (Ross & Rodriguez, 2010) ............................................................... 25
Table 2.14: Replacement Proposal (Ross & Rodriguez, 2010) ..................................................................... 25
Table 2.15: Stage Gate Reviews (Ross & Rodriguez, 2010) ........................................................................... 28
Table 3.1: Corporate Responsibility Matrix (Ross & Rodriguez, 2010) ......................................................... 31
Table 3.2: Corporate Roles & Responsibilities (Ross & Rodriguez, 2010) ..................................................... 32
Table 3.3: Project Team Roles & Responsibilities (Ross & Rodriguez, 2010) ................................................ 36
Table 4.1: Procurement Process Procedures................................................................................................ 40
Table 4.2: Salary Labor Cost (Ross & Rodriguez, 2010) ................................................................................ 45
Table 4.3: Hourly Labor (Automated Line) Cost (Ross & Rodriguez, 2010) ................................................... 46
Table 4.4: Hourly (Current Line) Labor Cost (Ross & Rodriguez, 2010) ......................................................... 46
Table 4.5: Equipment Cost (Ross & Rodriguez, 2010)................................................................................... 47
Table 4.6: Contingency Cost and Others (Ross & Rodriguez, 2010) .............................................................. 47
Table 4.7: Change Management Process (Services, 2010) ............................................................................ 48
Table 5.1: Project Cost Status (Ross & Rodriguez, 2010) .............................................................................. 61
Table 5.2: Monthly Payments (Ross & Rodriguez, 2010) .............................................................................. 63
Table 5.3: Monthly Payments Allocations- Modified (Ross & Rodriguez, 2010) ........................................... 64
Table 5.4: Customer Resources (Ross & Rodriguez, 2010) ........................................................................... 68
Table 6.1: Budget at Completion Breakdown (Ross & Rodriguez, 2010) ...................................................... 78
Table 7.1: Project Expansion Summary........................................................................................................ 83
Table 7.2: Phases and Deliverables (NPD-Solutions) .................................................................................... 86
Table 7.3: Marketing Research Analysis Worksheet .................................................................................... 87
Table 7.4: Program Scope Summary ............................................................................................................ 89

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10 Figures
Figure 1.1: Process Performance Metrics (Ross & Rodriguez, 2010) ......................................................... 7
Figure 2.1: Stakeholders (Ross & Rodriguez, 2010) ................................................................................. 10
Figure 2.2: Benefits (Ross & Rodriguez, 2010) ........................................................................................ 11
Figure 2.3:Cost Distribution Chart (Ross & Rodriguez, 2010) .................................................................. 14
Figure 2.4: SIPOC Current Process (Ross & Rodriguez, 2010) .................................................................. 19
Figure 2.5: Process Performance Metrics (Ross & Rodriguez, 2010) ....................................................... 20
Figure 2.6: Baseline Modified Schedule (Ross & Rodriguez, 2010) .......................................................... 21
Figure 2.7: Risk Summary Chart - Modified (Ross & Rodriguez, 2010) .................................................... 23
Figure 2.8: Project Completion/Deliverables (Ross & Rodriguez, 2010) .................................................. 27
Figure 2.9: Acceptance Test Chart (Motors, 2006) .................................................................................. 28
Figure 2.10: Acceptance Criteria/Sign-0ff Chart (Ross & Rodriguez, 2010) .............................................. 29
Figure 3.1: Corporate Organizational Chart (Ross & Rodriguez, 2010) .................................................... 30
Figure 3.2: WBS (Ross & Rodriguez, 2010) .............................................................................................. 34
Figure 3.3: Project Organizational Structure (Ross & Rodriguez, 2010) ................................................... 35
Figure 3.4: Project Team Responsibility Matrix- Modified (Ross & Rodriguez, 2010) .............................. 38
Figure 4.1: Procurement Process (Garrett, 2007) .................................................................................... 41
Figure 4.2: Monitoring Process (Ross & Rodriguez, 2010) ....................................................................... 44
Figure 4.3: Change Management Process (Nicholas & Steyn, 2008)........................................................ 51
Figure 4.4: Quality Control System (Machinery) ..................................................................................... 53
Figure 4.8: Control Chart Process (Evans, 2008) ...................................................................................... 59
Figure 4.9: Control Points InterpretationInvalid source specified. .......................................................... 60
Figure 5.1: WBS/ Cost Package Breakdown (Ross & Rodriguez, 2010) .................................................... 62
Figure 5.2: Progress Payments Chart- Modified (Ross & Rodriguez, 2010) .............................................. 63
Figure 5.3: Monthly Payments Allocation Chart (Ross & Rodriguez, 2010) ............................................. 64
Figure 5.4: EVA Control Plan- Baseline (Ross & Rodriguez, 2010) ........................................................... 65
Figure 5.5: EVA Control Plan - Modified (Ross & Rodriguez, 2010) ......................................................... 65
Figure 5.6: Earned Value Analysis (Ross & Rodriguez, 2010) ................................................................... 66
Figure 5.7: Estimate at Completion (Ross & Rodriguez, 2010) ................................................................ 67
Figure 6.1: Decision Tree - Supplier Change Cost Analysis (Ross & Rodriguez, 2010) .............................. 81
Figure 7.1: Program Expansion Team (Ross & Rodriguez, 2010) ............................................................. 84
Figure 7.2: Product Development Process (NPD-Solutions) .................................................................... 86

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11 Works Cited
1. Danfoss, S. (2010). Sauer Danfoss Global Standard-GS-002-FMEA. Retrieved from
http://www.sauer-danfoss.com/: http://www.sauer-danfoss.com/

2. Evans, J. (2008). Managing for Quality and Performance Excellence.

3. Garrett, G. A. (2007). World Class Contracting, 4th Edition.

4. Machinery, L. (2010). Quality. Retrieved from http://bit.ly/d9Ix1R

5. Macinnes, R. L., & Macinnes, R. L. (2002). The Lean Memory Jogger.

6. McCoy, D. (2009). Sauer-Danfoss Global Standard GS-002 Failure Mode and Effect Analysis in
Design .

7. Motors, G. (2006). General Motors Status Criteria for PQRR.

8. Nicholas, M. J., & Steyn, H. (2008). Project Management for Business, Engineering and
Technology, 3rd Edition.

9. NPD-Solutions. (n.d.). NPD-Solutions. Retrieved from
http://www.npd-solutions.com/proccap.html

10. PMI. (2010). PMP and CAPM Quick Reference.

11. Ross, L., & Rodriguez, H. (2010). API, Inc.

12. Services, C. P. (2010). Project Scope and Change Management. Retrieved from
http://www.collegiateproject.com/articles/Preliminary%20Change%20Management%20Plan.pdf

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