Using the results of your work from week two project Identify Overall Scope/ Ana
ID: 422763 • Letter: U
Question
Using the results of your work from week two project Identify Overall Scope/ Analysis of Unexpected Results; two additional events will be introduced. You will again analyze the impact of these events to the final project. In a 2-3 page Word document, discuss your analysis on the following events: It is discovered the refrigerated module is too large for the designed refrigerated backpack pouch. What is your course of action? The subcontractor assigned to build the radio module for the backpack has shut down. What is your course of action? In your analysis, you should discuss four areas affected by these unexpected events. Three of the areas of the project affected by the events should include changes to budget, human capital, and impact to schedule, and identify one additional area affected by these events.
Project Description:
Our company was recently awarded a delivery contract on our new product: Backpack with built in refrigerated pouch and radio module. Our targeted time is September 1st 2018 to march 1st 2020
Project Assumptions:
Product: Backpack with built in refrigerated pouch and radio module
Awarded quantity: 200 units (100 assigned to Ground Forces / 100 assigned to Special Operations)
Program Budget: Proposed award: $1,500,000
Award date: September 1, 2018
Completion date: March 1, 2020
Delivery schedule: 100 units 12mths ARO (after receipt of order). 50 units every 3 months after first delivery
Project goals:
First delivery: September 1, 2019
Second delivery: December 1, 2019
Last delivery: March 1, 2020
First milestone payment (from customer): October 30, 2018
Second Milestone payment: January 30, 2020
Final Milestone payment: May 30, 2020
Initial Program review (at the customer's site): November 16, 2018
Subsequent Program reviews: 6 months after the initial review
Project constraints (if any):
If we will go according to our planning then it will be great . But I find one constraint like initially though we will be successful to make 100 backpack successfully but after one year we have to make 200 backpack within a year.
Project limitations:
1.production of 200 backpack in next year.
2. budget is $ 1,500,000, but if in case some wastage of material would done in initial training period then our project will be at risk.
Project milestones:
First delivery: September 1, 2019
Second delivery: December 1, 2019
Last delivery: March 1, 2020
First milestone payment (from customer): October 30, 2018
Second Milestone payment: January 30, 2020
Final Milestone payment: May 30, 2020
Initial Program review (at the customer's site): November 16, 2018
Subsequent Program reviews: 6 months after the initial review
Project risks (initial assessment):
Backpack with built in refrigerated pouch and radio module, this is requirement from customer . And also customer wants 100 backpacks assigned to special operation .So we have to be very careful while making radio because there signal should not lost in critical time.
Event date
project timeline original date
Issue
Areas affected
Action plan
Oct.15 2018
Oct. 30 2018
changes to budget- first milestone payment will be 3 months delayed
Project milestones
Production will start on Jan 2019 . will produce 100 backpacks in 9 months .
March 15 2019
Sept.1 2019
Human capital: material pattern not available to meet initial start date
Delay First delivery
Will do first and second delivery together
May 15 2019
Sept.1 2019
Impact to schedule: increase initial delivery from 100 backpacks to 150 backpacks
Working hrs of employees will increase. And budget of project
Employees will divide in two groups to work in two shifts.will ask customer for more budget for extra 50 backpacks
April 5 2020
May 30 2020
Final milestone payment delayed
Project Assumption
Next time will take final payment at the time of last delivery
Event date
project timeline original date
Issue
Areas affected
Action plan
Oct.15 2018
Oct. 30 2018
changes to budget- first milestone payment will be 3 months delayed
Project milestones
Production will start on Jan 2019 . will produce 100 backpacks in 9 months .
March 15 2019
Sept.1 2019
Human capital: material pattern not available to meet initial start date
Delay First delivery
Will do first and second delivery together
May 15 2019
Sept.1 2019
Impact to schedule: increase initial delivery from 100 backpacks to 150 backpacks
Working hrs of employees will increase. And budget of project
Employees will divide in two groups to work in two shifts.will ask customer for more budget for extra 50 backpacks
April 5 2020
May 30 2020
Final milestone payment delayed
Project Assumption
Next time will take final payment at the time of last delivery
Explanation / Answer
Answer:The sequence of scheduled events are as follows:
The first milestone payment got affected but the delivery deadline of the first lot has not been moved . Hence project crashing needs to be done. This means more human capital /resource requirement . If appropriate resources are not loaded/allocated then the quality of the finished product would suffer.The revised budget needs to take into consideration the cist of crashing and needs to be increased accordingly. Also the revised budget needs to consider any appreciation in prices of the raw material due to delayed payment and hence delay in procurement of raw material.
If the human captal available is not sufficient to complete the project within schedule , then first delivery installment would be shifted. However instead of clubbing the second and third delivery together. It would have been better to increase the frequency of delivery of course considering the order set up cost and logistics cost for each delivery. This would help in keeping the supply flowing to meet the demand.The payment installments(frequency) can be increased in proportion to the delivered quantity in order to maintain sufficient liquidity .
The employee overtime can be increased but that would impact the efficiency and productivity of the employees. Operating extra shifts would mean increase in fixed costs(set up costs etc). The additional overhead needs tp be apportioned using activity based costing method.Better to use different set of employees(not the same employees working in overtime shifts). Of course this requires training the additiional staff so that the quality of the finished product is not compromised. Also this means additional spare manufacturing capacity to increase the production output.
Any delay in the final milestone payment would mean delay in the payments to suppliers as well by the manufacturer. The final milestone should be split into 2 parts ie retention and amount payable immediately after delivery.Infact in order to safeguard the intersts of both the customer and manufacturer it is better to retain a portion of the milestone payments( say 10%) whcih will be paid after say 30 days from each delivery. Any issues with the delivered product related quality,workmanship needs to be brought into the notice of the manufacturer else the money needs to be automatically released. This revolving money will help in maintaining sufficient liquidity in the system.
If it is found that the designed refrigerated module is bigger than the designed backpack then it is deifnitely an issue of lack of coordination/communication and negligence during the design phase. It means sufficient due diligence has not been done.The approach should have been developing a prototype fast .
The very purpose of doing a POC( Proof of concept ) would have been developing a prototype or MVP( Minimum viable product) with basis product features adn deploying them on field so that any improvements if any can be suggested . That is the idea is the product should fail fast so that when it goes for large scale production , any potential unanticipated defects are avoided.
Now when the issue has surfaced the course of action would be to review the design feature. Either increase the size of the backpack whcih might not be feasible or to consider a different refrigerated unit. If we consider a different refrigerated unit ,then we need to look at a more compressed version whcih might result in escalation of cost of the raw material( ie the refrigerated unit) and hence the customer needs to be consulted if they are ok with paying extra for the compressed refrigerated unit or if they are ok with increase in the size of the backpack at comparatively lesser cost.
The manufacturer should have stringent agreements with sub-contractors with provision for cost recovery/penalties for any delay in supply of raw material or liquidation of the supplier itself.Proper insolvency caluses,insurances should have been in place. The manufacturer should immediately look for alternate suppliers inthe market . Any other supplier at this stage may be ready to supply the radio units but that would definitely be at a higher cost. So one way is to compromise on the profit margins and go ahead with the new supplier or to go back to customer and explain the situation and ask for higher budget or delay in delivery timelines.The other option would be to get the radio units from new supplier and in the mean time develop inhouse capability to manufacture radio units( depends on the strength of the design team) so that future units can be supplied inhouse ( vertical integration) and at lower costs. Of course the future demand also needs to be considered.
Scheduled events Event Date Award Date 1st Sept 2018 First Milestone payment 20th Oct 2018 Initial program review 16th Nov 2018 second program review 16th May 2019 First delivery(200 units) 1st Sept 2019 Third program review 16th Nov 2019 Second delivery(50 units) 1st Dec 2019 Second milestone payment 30th Jan 2020 Last delivery (50 units) 1st March 2020 Final payment 30th May 2020Related Questions
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