GBI (PM-2) Final
- 1. GBI – EXTREME OFFROAD BIKE Tour of Oman GROUP NAMES Korry Downey Christ Atkins Ibrahim Powell Daryl Smith BMI906 – Project Management 2 Prof. Ling Hui Due Date: April 8th , 2016
- 2. 1 Table of Contents Executive Summary........................................................................................................................ 2 Background Description ................................................................................................................. 3 Statement of Work and Project Scope ............................................................................................ 4 Objectives.................................................................................................................................... 4 Scope........................................................................................................................................... 4 Completion Criteria..................................................................................................................... 4 Assumptions................................................................................................................................ 4 Constraints................................................................................................................................... 5 Deliverables................................................................................................................................. 5 Work Breakdown Structure: ..........................................................Error! Bookmark not defined. Time, Resources, and Cost Estimates ......................................................................................... 5 Perform Profit Analysis............................................................................................................... 5 Quotation for Customer............................................................................................................... 6 Risk Management Plan................................................................................................................ 6 Recommendation and Conclusions............................................................................................. 6 Appendix..................................................................................................................................... 8
- 3. 2 Executive Summary Every year the Tour of Oman raises the standard of competition with setting up new challenges to tackle on new terrains for the cyclist to compete in. The competition that is going to be held the coming year is expected to be a challenging circuit for riders. To overcome this challenge GBI was approached to develop, design and manufacture and deliver a bike before the next race season beginning 2016. GBI role in this project would be to use a combination of “TOUR” and “ORBK” parts and source other parts from different suppliers in building this project. The material for this project would feature high quality components that are of highly durable and reliable. GBI sees this “one” of design prototype bike as an opportunity to the Research and development department to develop this bike. It has the possibility or potential of racking more orders in the near future for bikes designed for specialized events. The development of the bike is complex considering the bike has to be built to the specific quality requirements. If successful, this bike has the possibility of being manufactured in their new line up called the “Extreme Off-road model” manufactured in discrete quantities. The advantage of manufacturing this bike in European facility means that there is an added advantage of EU incentive for new technology development and customer requirement of being built at the same European facility only, contributes to the win-win at both ends. GBI has used parametric method for accurate cost estimation. The prototype timeline for the bike would take 7 months to be ready, factory tested and delivered. The total cost for this project development would cost the company €261,605.78 in total. The prototype bike has a cost €13,165.78 per bike to manufacture and the cost of Research and development puts it at a total of €224,040 and the overhead cost to run the factory amounts to €37,565.78 respectively. With profit the bikes quotation price amounts to €52,663.12 plus tax. To achieve the success of this project all phases of the project need to be addressed beginning from initiating, planning, executing and closing. The objectives, scope and criteria, assumptions, constraints, deliverables need to be organized and set in place for an organized approach to project management. The milestones of the project are defined in every single step of the process and Work Break down structures help in the proper organization of the architecture of the company portfolio. A team of 14 people are working in this project to achieve the desired skill and expertise in their responsibilities. The team goal is to fulfill all the phase as planned from the responsibility of a project manager, planner, concept designer, technical specialist, assembly and test team from the objectives to the deliverables.
- 4. 3 Background Description GBI has gained a reputation for being one of the world’s top racing bike developers. The Tour of Oman is the very start of the racing season and cyclists and teams are eager to start the year off on winning note. Recently, GBI was enlisted to develop a bike under the “Engineer-to-Order” model for use at the sixth edition of the race, scheduled for February 16th -22nd in 2016. If the bike GBI develops is selected by the racing team, the order will now become a typical “Inquiry- to-Quote” situation. The bike that is to be conceptualized and engineered must be of a versatile nature. It must be as comfortable on the off-road portion of the course as it is on both the hill and flat segments of the race track. It is important to note that there are several key manufacturing conditions and customer requests that must be adhered to during project execution. They are as follows: - A revolutionary hybrid design that is lightweight, yet has rugged capabilities - Must be made primarily from existing “TOUR” and “ORBK” standard parts - The project must be completed exclusively in European facilities - Factory tested and delivered as of November 2015 The successful completion of this project will involve utilizing key members in various operational functions across the business: management, planning, concept, design, assembly, and testing. Although the majority of the bike will be manufactured from already existing parts, it will be necessary to engineer numerous components that will better satisfy the stipulation of being adept at handling various terrains. These will include: - Carbon fiber bike frame - Double butted titanium handle bars - Polymer urethane coil spring shock absorbers - Protective cases for the crank and gear assemblies - Dynamic hybrid carbon aero rims GBI will have roughly 7 months to engineer and deliver this bike to the customer in race ready condition. If successful in meeting the customer’s requirements, a larger batch of bikes will be added to the existing order, additional racing teams will also be interested, and the product created with this project will become manufactured reproducible units in discrete quantities. Even though the sales team has received a concession for the design and test of the prototype, the incentives to complete this project tare now compounding.
- 5. 4 Statement of Work and Project Scope Objectives To develop, design, build, and test an extreme off-road bike appropriate for the terrain and conditions of the Tour of Oman Scope The project scope will involve engineering a racing bike that meets the design specifications requested by the bike team and to deliver the equipment fully factory tested by November 2016. The bicycle will need to be developed utilizing as many of our standard parts and assemblies currently used in the “TOUR” and “ORBK” models as possible. Although the “inquiry to quote” has been assigned to our Dallas department, no work will be performed there as it has been requested that the build takes place in European facilities. Includes: Design an extreme off-road bike Use parts from “TOUR” and “ORBK” Build and Tested by November 2016 Excludes: Marketing to other teams who may be interested Manufacture as standard reproducible units Market bike as European-made Completion Criteria The extreme off road model would be a hybrid of a racing and mountain bikes GBI will construct this prototype from “TOUR” “ORBK” parts Must include additional gears for optimal incline performance Tire treads will need to be able withstand a variety of terrains and temperatures Design will incorporate both rear and front suspension to absorb shock Adjustable handlebars for alternating between incline and flat surfaces There will need to be engineered parts to adapt “TOUR” and “ORBK” into this concept Frame must comply to meet the demands of undulated environments Fully factory tested so riders can field test in time for adjustments Complete an “Inquiry to quote” and deliver by November 2016 Assumptions No budget constraints allow for flexible design options GBI will cover all associated costs and expenses up until prototype testing Client will be billed at cost if GBI does not get the order There is sufficient capacity to complete the project GBI has the necessary allocation of specific resources Research and Development has highly trained employees with required skills The project will commence immediately
- 6. 5 Constraints Project must be completed by November to allow for field testing and adjustments Developed exclusively in European facilities due to EU incentives for new technology development Must use standard parts from “TOUR” and “ORBK” concepts in extreme off-road model design The product design can be readily mass-produced after project approval Deliverables Extreme off-road bike prototype “Inquiry to Quote” Time, Resources, and Cost Estimates The bottom-up estimate is most appropriate for this project because the cost and time constraints are important and the customer’s specifications require detailed information on costs. The client would like the prototype to be ready and factory tested by November, which means the project has a 7 month time constraint. The project manager have asked the engineering team for a cost breakdown. GBI’s concept designer, technical specialist and design team have provided an analysis based on the requirements provided by the customer. These requirements were conveyed to the project planner who is in charge of procurement. The research and development cost including salary, wages and testing costs total at €224,040.1 These estimates are based on the duration of work done by each member. According to GBI’s engineering team, the total manufacturing cost including the factory overhead cost is €37,565.78 and the cost of manufacturing the prototype is €13,165.78.2 This means the total cost incurred by GBI for this 7 month project is € 261,605.78. If GBI does not win the order, the client will be billed at cost but, if GBI does win, a profit analysis is required. Perform Profit Analysis The costs for the project have been allocated equally during its 7 month period for simplicity. The total incurred costs after 7 months is €261,605.78.3 Upon winning the order, 10 bikes will be delivered to the client at the selling price of €52,663.12. This price includes our desired profit margin based on research of similar projects in the industry. Our profit per bike will be €39,497.34. Based on the above assumptions, we will have made back all incurred costs and gain a profit of €265,025.46 by the 8th month. The case mentioned potential business from other bike teams dependent on the success of the project. We estimate that approximately 2 teams would be 1 Table 1B 2 Table 1A 3 Table 1C
- 7. 6 interested in the near future with an aggregate demand of 20 bikes. Our profit analysis have included these potential sales for the future. Realistically, GBI will incur additional overhead costs for the factory on top of the bike manufacturing costs, so these are rough estimates of future profit. Quotation for Customer As mentioned in the profit analysis, our quotation for the customer is €52,663.12 plus tax per bike. This price is based on the typical profit margin for premium, custom made bikes. The client had requested 10 bikes. Risk Management Plan The identified risks for GBI are: lack of support from upper management, not meeting deadlines, failure of prototype testing, not achieving customer satisfaction, threats and damages, supply chain delays, labour issues, not meeting industry standards, financial issues and equipment failures. The risk strategies will include: avoiding, controlling, monitoring and transferring.4 Recommendation and Conclusions Our recommendation is we will try not to design and manufacture the bike like other competitions. We will have to surpass other bikes to meet the requirements of Tour of Oman. Our bike will have a competitive advantage to have the contract of ETO (Engineer-to-Order) with all the mechanics involve and state of the art technology. This new model will be developed by using “TOUR” and “ORBK” parts and outsource some parts to other suppliers. The project involves a business opportunity for GBI to develop, design, manufacture and deliver a bike suitable for the Tour of Oman terrain and conditions for the race beginning in 2016. Based on the cost analysis, the breakdown for resource allocation should be: €37,565.78 for factory overhead, €224,040 for research and development and the cost of manufacturing each bike is around €13,165.78 which amounts to €261,605.78 in total. The industry standards and company expertise indicate that GBI should charge around €52,663.12 plus tax. GBI has identified and analyzed the known risks to this project and developed risk strategies to address uncertainties associated with the development of the extreme off-road bike. The project scope, assumptions, constraints, deliverables will be clarified and risk assessment will be conducted to avoid project failure. GBI success criteria is based on customer’s satisfaction, achieving project completion within the time period to avoid delays and control cost effectively. 4 Refer to Risk Register
- 8. 7 Based on the uniqueness and quality specifications suitable for Tour of Oman terrain and conditions, we will ensure that project features high quality parts and functions well for the riders. The time frame of the first prototype will take about 7 months including concept, designing, manufacturing, testing and delivery phrases. The bikes’ quotation price amounts to €52,663.12 plus tax. Upon project successful completion according to our client’s specifications and satisfaction, the Bike will be used in 2016 race. Our goal is to obtain the order after confirmation with the clients. There is potential for GBI to sell to other bike teams as standard reproducible units in discrete quantities. Management is confident that our development team will succeed in meeting customer requirements, and that we will develop the best possible bike to win the Tour of Oman.
- 9. 8 Appendix Figure 1 – WBS Figure 2 - 4 Phases of GBI Figure 3A – Bill of Material Figure 3B – Research and Development Costs Figure 3C – Profit Analysis Table Figure 3D – Profit Analysis Graph Figure 4 - Risk Register