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Woody 2000 Final Project

Alexander Miklyaev University of Liverpool 11.04.2012

Table of contents
EXECUTIVE SUMMARY ................................................................................................................................. 4 1. 1.1. 1.2. 1.3. 1.4. 1.4.1. 1.4.2. 1.5. 1.5.1. 1.5.2. 1.5.2.1. 1.5.2.2. 1.5.3. 1.6. 1.6.1. 1.6.2. 2. 3. 3.1.1. 3.1.2. 3.2. 3.2.1. 3.2.2. 3.3. 3.3.1. 3.3.1.1. 3.4. 3.5. 3.6. 3.6.1. 3.6.2. 3.6.3. 3.6.4. 3.6.5. 3.6.6. 4. 4.1. 4.2. 4.2.1. 4.2.2. INTRODUCTION ............................................................................................................................ 5 Brief description of company .............................................................................................................. 5 History of project proposal .................................................................................................................. 5 Project financial limits and project duration .......................................................................................... 5 Case record on contractor and company agreement ............................................................................... 5 Quotation .......................................................................................................................................... 5 Negotiations and agreement ................................................................................................................ 5 Design structure background ............................................................................................................... 6 Beginning of the design ...................................................................................................................... 6 Necessary procurements ..................................................................................................................... 6 Semi-automatic woodworking production train ..................................................................................... 6 Software design and installation .......................................................................................................... 6 Design review failures and design process failures ................................................................................ 6 Case record on project stoppage and restart .................................................................................. 6 Reasons for stoppage and restart ................................................................................................... 6 Consequences ................................................................................................................................. 6 OBJECTIVE .................................................................................................................................... 6 METHODOLOGY ........................................................................................................................... 7 Recommended process ................................................................................................................... 7 Suitable PMLC model ...................................................................................................................... 7 Pre-construction phase .................................................................................................................... 8 Scoping process .............................................................................................................................. 8 Planning ........................................................................................................................................... 8 Construction phase .......................................................................................................................... 8 Execution Process Group ................................................................................................................ 8 Work Flow drawing and documentations......................................................................................... 8 Post Construction Phase ................................................................................................................. 8 Quality assurance ............................................................................................................................ 8 Risk .................................................................................................................................................. 8 Risk management plan .................................................................................................................... 8 Risk identification ............................................................................................................................. 9 Risk assessment.............................................................................................................................. 9 Risk mitigation ............................................................................................................................... 10 Mitigation strategy.......................................................................................................................... 10 Monitoring and controlling ............................................................................................................. 11 SOW .............................................................................................................................................. 11 WBS ............................................................................................................................................... 11 Project Network Diagram ............................................................................................................... 11 Choosing methodology .................................................................................................................. 11 Critical Path ................................................................................................................................... 12

4.2.3. 4.3. 4.4. 5. 6. 7. 7.1. 7.2.

Milestones ...................................................................................................................................... 12 Gantt chart ..................................................................................................................................... 12 Success criteria ............................................................................................................................. 12 TIME AND COST SUMMARY ....................................................................................................... 12 ANALYSIS AND INTERPRITATION OF RESULTS .................................................................... 13 CONCLUSION AND RECOMMENDATION ................................................................................. 13 Concluding statement ....................................................................................................................... 13 Recommendation for future projects .................................................................................................. 13

APPENDIXES .................................................................................................................................................. 13 APPENDIX 1: POS .......................................................................................................................................... 14 APPENDIX 2: CALCULATED TIME ............................................................................................................... 15 APENDIX 3: CRITICAL PATH ........................................................................................................................ 16 APPENDIX 4: WBS ......................................................................................................................................... 17 APPENDIX 5: CRITICAL PATH REPORT ..................................................................................................... 19 APPENDIX 6: GANTT CHART ....................................................................................................................... 20 REFERENCES ................................................................................................................................................ 21

EXECUTIVE SUMMARY The Custom Woodworking Company (also known as Woodys) was started in 1954 by Ron Carpenter as a small furniture manufacturing business. Over the years the Company worked up a good reputation for producing well constructed furniture with an eyesome design. Nowadays its a small-to-medium sized company with head office and a plant site allocated at Industrial Estates, Someplace, BC dealing with furniture manufacturing, custom millwork and being the hardwood importer. Stimulated by mini-boom in commercial construction in the region, Woodys head personnel agreed to start the project named Woody 2000. The main goals of the project are to expand and modernize Woodys manufacturing business by means of building up new facilities and put the computer controlled automation into operation. The Woody 2000 project values are in successfully implementing the project, reaching the project goals and delivering the results with a good quality, within defined time and defined budget limits. Business value for people and teams involved in the project all project achievements are team efforts); hands-on management (we know our business and get things done). And business value on customer drive is to build customer trust and god communication.

1.

INTRODUCTION 1.1. Brief description of company

Woodys Company is a small-to-medium sized furniture manufacturing, cabinet making and hardwood importing company. Because of the longer production runs and higher and more consistent mark-ups, the company has started to provide the subcontracting work by installing and supplying counter-tops, cabinets and other similar fittings for a new commercial construction. At the current moment, Woodys Company gained a good reputation for supplying millwork to the construction industry and producing well constructed furniture with an attractive design. Ron Carpenter was the one, who started a small business in 1954 and now is a Chairman and a Chief Executive officer of the Custom Woodworking Company, his wife Emelia is being the Company President and their son John is the Director. The Company is privately held and has 850 employees. Companys total assets at the end of year 199X were $181,000,000, sales $93,250,000 with net earnings of $6,540,000 (Wideman, 2011). Main Woodys company shareholder is Emelia Holdings Ltd.

1.2.

History of project proposal

In the year 1989, there was a mini-boom in the commercial construction area of South-Western BC. According to Sales and Estimating VP this was a good time to extend the manufacturing business, as the Woodys company was well-placed. So, this commercial construction mini-boom became a trigger for the Company to start Woody 2000 project.

1.3.

Project financial limits and project duration

During the meeting there was estimated the approximate total project cost. Ron Carpenter agreed for the budget of $17 million as a maximum of for all works proposed. The lead project time was agreed as the period of eighteen months starting from that day. Spencer Moneysworth was chosen to be a project manager for Woody 2000 project.

1.4.
1.4.1.

Case record on contractor and company agreement


Quotation

Spencer Moneysworth was very eager to have the progress on this project, so, he made a decision not to involve anyone from the production side (as the production people are very busy all the time and waiting for them will delay progress) and invited Expert Industrial Developers (EID) to quote the scope for project expansion. EID was chosen as it was top-ranked in the market, so, Spencer considered that working with this company would be possible to have a lower total project expenses. EID submitted a fixed price quotation on $20 million and eighteen month of project duration time.

1.4.2.

Negotiations and agreement

During further negotiations between Woodys company and EID, it was agreed that EID would provide their services (responsible for engineering, procurement, construction and commissioning of the facility) on reimbursable basis, which was cost, plus agreed mark up and it would be still fixed quotation price for all sub-suppliers. For the Schemers and Plotters (S&P) were hired by EID for industrial design and building work.

1.5.
1.5.1.

Design structure background


Beginning of the design

In the beginning of the design stage Ian Leadbetter had taken responsibility for the project. Ian is a young mechanical engineer, specialized in programming of semi-automatic manufacturing machinery and who hadnt had any project management experience. Within the initial phases of mechanical design the progress for development of software program was good.

1.5.2.
1.5.2.1.

Necessary procurements
Semi-automatic woodworking production train

Early in design EID suggested that Woodys should take over the procurement of the production train directly, because they had definite information about the requirements. Miles Faster wanted to raise the capacity and, for this purpose, resolved to change specification of production train.
1.5.2.2. Software design and installation

Due to the specification of production train being changed most of SW program had to be rewritten. Because of this, it was less time for project managing and mess due to corrective adjustments required.

1.5.3.

Design review failures and design process failures

None of the project leaders (Ian and Spencer) were aware of the necessity to have any design review, specifications approval procedures and shop drawings, submitted straightly by the suppliers of the production train - Eddie Forgot or S&P. Due to both Ian and Spencer being on two week vacations at the same time, no one took care of approving the manufacturing drawings for the long lead item this resulted in 2 weeks construction delay and, as a consequence, conflicts with the other activities.

1.6.
1.6.1.

Case record on project stoppage and restart


Reasons for stoppage and restart

Failures in planning, occupancy permit issues, project completion failure consequences, costs overrun and the need for additional financing were the main reasons for project stoppage and restart. First it was a problem with the foundation long after it was decided to change production train, lt was found out that five feet to the new building has to be added. Second, it was because of not upgraded the surplus paint disposal arrangements. And last (several weeks delay in production) no control by project manager of EID getting a building occupation permit, no planning for testing or acceptance of the building activities.

1.6.2.

Consequences

Consequences were severe: at level of 85% completion the project depleted the budget, so, additional funds were to be found enormous quantity of delays reworks needed to be done for some activities loose of the customers loyalty the equipment installed was under utilized 2. OBJECTIVE

The main objectives of this Project are:

Extension of the production capacity equivalent to 25% of the existing floor area Increasing the efficiency by means of semi-automatic woodworking production train installation To make better working conditions by means of installation of air-conditioning and dust-free paint Finishing shop and completing it with additional compressor capacity (development and installation of software and hardware required) Renovation of President and Executive Vice president offices

3.
3.1.1.

METHODOLOGY
Recommended process

In accordance with Wysocki (2009) there are five process groups which are the building blocks in every PMLC model. Scoping or Initiating process group only answering the question What do you need to do?, but not doing anything on the project. The following processes belongs to this process group: finding the project manager, finding and documenting the needs of the client, discussing with the customer how those needs are to be met, the project description is to be written in one page, receiving the approval from senior management for planning the project Planning process group answering to the question How will you do it?. And the processes for this group are following: definition of project work, estimation of the work duration time/resources required/total cost for the work, the sequence of activities, build up the original schedule for the project, analyzing and adjusting it, creating a risk management plan and gaining senior management approval for project start up Launching or Executing process group includes the processes related to organizing the team the rules it should follow and get the project work started Monitoring and Controlling process group includes the processes which relate to the ongoing work Closing process group answering to the question How well did you do? and includes the processes connected to the project completion.

3.1.2.

Suitable PMLC model


Top-Down approach to implementing APF can be used, when the CIO is ready to listen and organization is suffering from failed projects (Wysocki, 2009, p.443). An APF project begins with known business problem or opportunity it similar to ATM (Wysocki 2010, p.74), so it will be no any issues due to organization existing approach. Implementation of the APF will improve both the depth and breadth of the project approach while increasing efficiency. Process improvement will lead to increased efficiency and the reduction of overall process costs. In the addition, it will increase the integrity with customer and stakeholders with results-oriented team work approach. The implementation of APF provides a strong foundation for effective management and team work in the current project. Project goals and solutions will be based on the APF model and on the Client drive approach. It will track progress towards each iteration during the project life progress. The adaptive model suppose to have the significant meaningful involvement of the client to determining the direction that the project is taking (Wysocki, 2009, p.416). Personal skills are one of the requirements in the Adaptive Management approach as technical and specific area skills as well (Mistry et al., 2011, p.202).

3.2.
3.2.1.

Pre-construction phase
Scoping process

Project starts with Condition of Satisfaction (COS) which is a communication tool. The COS is a planned conversation the client-the requestor and project manager-the provider. The deliverable from the COS is the Project Overview Statement (POS), see attachment A. The scoping phase is completed after the POS is signed by client and project manager and approved by Ron Carpenter (Wysocki, 2009, p.52), for POS see Appendix 1: POS.

3.2.2.

Planning

Design assessment, Project mobilization plane, Feasibility, Contractor methodology, type and selection Guidelines and recommendations for contractors

3.3.
3.3.1.
3.3.1.1.

Construction phase
Execution Process Group
Work Flow drawing and documentations

Develop the methodology for work flow process, for internal department procedure, between departments and final approval, do not delay the overall schedule of project. All involved parts in project shall have an liable schedule for approval, submission and review and re-issue for construction. Sub suppliers selection ,Communications model, Quality program, Risk Management Plan, HSE

3.4.

Post Construction Phase

Some important documentation shall be delivered by project such as: OMM -Operating and Maintenance Manuals, As-built drawings and sub suppliers documentations, COC. The procedure shall be prepared at the planning stage of the project. Some vital for project actions named below and they shall be performed by project. Post-Implementation audit Post-project Appraisals Final Report

3.5. 3.6.

Quality assurance Risk

Procedures follow up, Final MCCR with Punch lists, MRB Material Record Book

As the APF approach applied for this project, the risk ranges will be wildly changing during the scope implementation. Taking into consideration that this approach is without knowing the final solution and financial risk abilities. The risk management life cycle will be applied to the project with four phases (Wysocki, 2009, p181): identification, assessment, mitigation, monitoring & control. Mitigation strategy is worked out below.

3.6.1.

Risk management plan

To secure the success of the project a good risk management plan will be necessary. There were identified some areas of worry for Woody 2000 project. This plan will be carried out due to the technique mentioned above.

3.6.2.

Risk identification

Possible risks to each category are presented below. Technical risk - Complexity issues, quality and technology availability, bad communication model inside the team Project management risk - resource inexperience, not propper planning External risk - Needs of a regulatory requirements or license, permissions, certificates. Supplier & contractor risks and/or contract issues, not functional communicational model between project and supplier/or contractor as the adaptive model suppose to have the significant meaningful involvement of the client to determining the direction that the project is taking (Wysocki, 2009, p.416). Market risk, weather conditions

3.6.3.

Risk assessment

All risks evaluated according the static risk assessment - the probability: High, Medium and Low (see Table below). During the phase of planning usually the static risk assessment is applicable when the dynamic risk assessment is more useable. Technical risk Complexity issues Quality Technology availability Bad communication model inside the team Project management risk Resource inexperience, Not proper planning Organizational Risks Management changed during the project cycle life External risk Needs of a regulatory requirements or license, permissions, certificates. Supplier & contractor risks and/or contract issues Not functional communicational model between project and supplier/or contractor, and client involvement Market risk Weather conditions Table 1: Risk assessment High High High Medium Medium Assessment Medium High Medium Medium

High Low Medium

3.6.4.

Risk mitigation

To create the good risk mitigating plan there have to be considered the following responses: Accepted, Avoided, Contingency planning, Mitigate and Transfer (Wysocki 2009, p.187), see table below. Technical risk Complexity issues Quality Technology availability Bad communication model inside the team Project management risk Resource inexperience, Not proper planning Organizational Risks Management changed during the project cycle life External risk Needs of a regulatory requirements or license, permissions, certificates. Supplier & contractor risks and/or contract issues High Contingency planning High Contingency planning Medium Medium Contingency planning Contingency planning Assessment Medium High Medium Medium Action Contingency planning Mitigate Contingency planning Contingency planning

High

Transfer

Not functional communicational model between project and supplier/or High contractor and client involvement Market risk Weather conditions impact on the schedule Table 2: Risk mitigation Low Medium

Mitigate

Accepted Accepted

3.6.5.

Mitigation strategy

The client involvement and responsibility shall be defined during the project with involvement of both sides. Status meeting, interface check shall be applied during all five processes during the project life cycle. Good communication model shall be worked out. Meetings for design stages are to arranged and to be obligation for both side. Monthly, quarterly meetings and monthly reporting will improve follow up procedures and communication between sides. Assigned technical contact persons will improve the "speed" of the commutation.

Quality personal is to be assigned, internal procedure to be created for all departments. Template and requirement (for example, ATP) shall be done in the same way for all vendors and contractors. Quality audit could be performed during some of the project stages. In the planning phase will be created and agreed the final documentation and demands. Preconstruction audit, construction and post construction audit could be performed for the project as a measure to improve project processes, documentation procedures, etc. , with the purpose to highlight the failures and prevent them in the future. Intern audit can be carried out and personal training can be done at different stages of project with close cooperation with client or supplier. Procurement department shall carry out the qualification program due to vendors qualification and back up. If needs get insurance. Contingency planning will be done and responsible persons assigned for project during the planning phase. The market risk is excluded because this it is depending on the project results and the marketing, sales, etc are not specified in the project.

3.6.6.

Monitoring and controlling

Risks shall be noted during the all stages of project life. A risk log will containe: ID number, risk will be described, owner of the risk and action for this risk will be worked out, outcome (Wysocki, 2009, p.188).

4. 4.1.

SOW WBS

It used the top-down approach to define the WBS (Wysocki, 2009, p.129). See Figure 1 top level of WBS. For detailed WBS see Appendix 3.

Figure 1: WBS TOP level

4.2.
4.2.1.

Project Network Diagram


Choosing methodology

Three point technique applied to estimate the duration time of the tasks. Optimistic, pessimistic and Most likely duration estimated in weeks and calculated according to Wysocki (2009, pp.151-152).

The total project schedule is calculated to 397 working days (from 02.08.2010-07.02.2012). See
Appendix 2: Calculated time

4.2.2.

Critical Path

The critical path which determines the minimum time to complete the whole project, on the assumed order of doing the work (Alan, Twort & Rees, 2004, p.172). The longest duration chain calls a Critical Path, (Benator & Thumann, 2003). So the project duration is defined 397 working days (from 02.08.2010-07.02.2012), critical path shown on Appendix 5: Critical Path Report and Apendix 3: Critical path (shown partly)

4.2.3.

Milestones

Milestones are important actions that shall be tracked in the project life (Wysocki, 2009). From Project Microsoft calculated and presented below the milestones for Woody 2000.

Figure 2: Milestones, Woody 2000

4.3.

Gantt chart
Gantt chart shown in Appendix 6: Gantt chart

4.4.

Success criteria

Below introduced the success criteria: Finishing on budget, 17million $; Finishing on time, in 18 month; Finishing the semi-automatic woodworking production train and the free dust with high quality and according to the standards Painting; Design and finish of the Management Board offices

5.

TIME AND COST SUMMARY


Total project cost shown on the Figure 3: Total cost are within the budget.

Figure 3: Total cost

6.

ANALYSIS AND INTERPRITATION OF RESULTS

Project has been evaluated as acceptable due to it being within the planned budget costs less than $17 million, within the initially planned time limit less than 18 months and with a good quality standards.

7.

CONCLUSION AND RECOMMENDATION


7.1. Concluding statement

In total the project duration time and estimated costs are within the limits which were set in the project beginning. The main goals of the project were achieved, by means of building up new facilities and put the computer controlled automation into operation. So, most probably Woodys company will have their customers soon back, and everything will go as they have planned it from the beginnings, despite of the fact that mini-boom in commercial construction is probably going to go down to normal. But as the company initially was quite known in the region for the quality of products and their design, most probably, they will be back. 7.2. Recommendation for future projects

The WBS structure to more detailed, pay more attention for communication activities, more client involvement. Follow up as closer as possible all the ongoing activities and pay attention to the documentation follow up, update risk management plan, design reviews at every stage, more planning activities and more dynamic schedule update. Following those recommendations itll be realistic to successfully implement the project, reaching the project goals and delivering the results with a good quality, within defined time and defined budget limits.

APPENDIXES

APPENDIX 1: POS
Appendixes 1. PROJECT OVERVIEW STATEMENT (POS)
PROJECT OVERVIEW STATEMENT Problem/Opportunity Management board agreed to increase the production, plant space in equivalent to 25% of the excisting space and modernization of the production lines because of the groing financial perspectives which occured due to mini-boom in commercial construction in the region. This can give a possibility for the company to expand their market presens, increase companie's sales and earnings. In other words, thi is the opportuniny for growing. Project Name Woody 2000 Project No. 001 Project Manager Ian Leadbetter

Goal: The main goals of the project are to expand and modernize Woodys manufacturing business by means of building up new facilities and put the computer controlled automation into operation. Objectives: Extension of the production capacity equivalent to 25% of the existing floor area Increasing the efficiency by means of semi-automatic woodworking production train installation; To make better working conditions by means of installation of air-conditioning and dust-free paint; Finishing shop and completing it with additional compressor capacity (development and installation of software and hardware required); Renovation of President and Executive Vice president offices Success Criteria Finishing on budget, 17million $ Finishing on time, in 18 month. Finishing the semi-automatic woodworking production train and the freedust with high quality and according to the standards Painting. Design and fisnish of the Manangement Board offices Assumptions, Risks, Obstacles Low quality of communication and client involvement client, uncompetitive resource, to get a permissions or certificates, weather, vendors delay or no work completing.

Prepared by Ian Leadbetter

Date 25.08.2010

Approved by (Ron Carpenter)

Date 25.08.2010

APPENDIX 2: CALCULATED TIME

APENDIX 3: CRITICAL PATH

APPENDIX 4: WBS

APPENDIX 5: CRITICAL PATH REPORT

APPENDIX 6: GANTT CHART

REFERENCES
Wysocki, R.K. (2009) Effective Project Management: traditional, agile, extreme. 5th ed. Indianapolis: Wiley Publishing. Wideman, M. (2009) Project management case study: the custom woodworking company Woody 2000 project [Online]. Available from: http://www.maxwideman.com/papers/woody2000/intro.htm (Accessed: 10 April 2012) Alan C. Twort & J. Gordon Rees (2004) Civil Engineering Project Management. 4th edition. Oxford. Elsevier/Butterworth-Heinemann. Barry Benato & Albert Thumann (2003). Project Management and Leadership Skills for Engineering and Construction Projects. Lilburn, GA : Fairmont Press ; New York : M. Dekker Mistry, J., Berardi, A., Roopsind, I., Davis, O., Haynes, L., Davis, O. and Simpson M. (2011) Capacity building for adaptive management: a problem-based learning approach, Development in Practice, 21(2), pp. 190-204, Tandfonline [Online]. Available at: http://www.tandfonline.com.libproxy1.liv.ac.uk/doi/pdf/10.1080/09614524.2011.543272 (Accessed: 8 April 2012).