Greyson Corporation Project Presented by Katia Passerini Team: Miles Bingham, Yesenia Gomez, Navneet Kumar, Eugene Manning, Katia Passerini and Lisa Steiman Project Environment 1
Project Description Navy to give approval to: Produce Qualify Test 25 Propulsion systems (motors) for Neptune Missile in 20 Months. Greyson Corporation 3 Current State Greyson has existing R & D and production operations within the Aerospace industry Current projects include Hercules, Condor II missile Systems as well as smaller concurrent R and D production contracts Staff is technically experienced and seasoned. Full fabrication, production and testing capabilities Established procurement channels for all raw materials needed. Greyson Corporation 4 2
Future State Project would potentially add an additional revenue stream, and further diversify Greyson s current portfolio. In order to accomplish these goals, Greyson may need to: Hire additional qualified experienced staff, e.g. Cameron Employees with Neptune experience Consider making capital investments to either: Retrofit existing production line machinery Purchase new tooling and manufacturing equipment. Greyson Corporation 5 Organization Chart (As Is & To Be with Neptune Project) President & VP CEO / GM Matrix Organization R&D - Product Engineering Manufacturing Engineering Logistics Manufacturing Quality Human Resources Other Support Processes (Finance, IT, Legal) Hercules Condor II Other Production lines.. To be Neptune Program Office Ex-Cameron employees Greyson Corporation 6 3
Recommendations In order to integrate staff successfully, Greyson should consider implementing the Six Sigma Program The Six Sigma Program approach will help to build an atmosphere of teamwork, unity and common goals Greyson Corporation 7 Background Greyson and its chief competitor, Cameron Aerospace, previously competed to win the Neptune Missile system contract. Cameron won the contract due to technical merit. In the time since, Cameron s increasing financial difficulties have resulted in the Navy s search for and alternate vendor. The Navy approached Greyson to be the sole source contractor for the Neptune program. Greyson is the logical choice as an alternative vendor Greyson Corporation 8 4
Business Value Business Need Successful Completion of this project gives Greyson the potential for future, lucrative, non-competitive contracts for the Neptune Missile System. Financial benefit could equal that of Hercules, which was roughly 200MM over a 4-5 year period. Neptune s value can also off-set any potential contract losses which could be financially devastating to Greyson. Follow-on contracts have the potential to be more lucrative than the Hercules Project. Greyson Corporation 10 5
Fit with Strategic Vision To be a leader in the aerospace industry by developing cutting edge technology To produce high quality arms and weapons systems To be the lowest cost producer in the industry Qualifying as the sole source vendor for the Neptune missile would put Greyson at the forefront of the arms and aerospace industries in the nation and the world. Greyson Corporation 11 Project Benefits Requalification as an approved Government vendor and status as a sole source provider of the Neptune Missile System Follow on projects could potentially be more lucrative than Hercules resulting in over $200MM over a 4-5 year time period. Greyson Corporation 12 6
Alternatives Participation and success in the Neptune Project before us are absolute MUSTS. Improved competitive position within the industry Potential value of follow-on contracts is staggering There are no other alternatives. Greyson Corporation 13 Goals and Objectives Objective Design and produce a technically advanced, highquality propulsion system for the Neptune missile. Goal Produce 25 viable Neptune motors over the next 20 months Greyson Corporation 14 7
Major Constraints and s Primary Constraint TIME - Time is the primary constraint because the timeline for the completion of the 25 qualified Neptune Motors has been reduced from 30 to 20 months. Greyson Corporation 16 8
Additional Constraints Quality The Navy has strict qualification guidelines, and we have the option to meet them, or to attempt to surpass them. Resources Even though we have a significant technical foundation with regards to development and production, we may need to invest in additional staffing and infrastructure in order to meet the deadline. Cost Our costs are capped because the Navy is negotiating a cost plus incentive fee (CPIF) deal. In order to alleviate this constraint, we will either sacrifice some our fee and/or make corporate funding available to alleviate this constraint. Greyson Corporation 17 Project Scope: Boundaries In scope: Development of a viable propulsion system. Production of 25 motors in 20 months. Out of scope: Additional production beyond the 25 motors. Greyson Corporation 18 9
Project Scope: Deliverables End of month 4 design completed and certified. End of month 14 prototype finalized and raw materials procurement complete. End of month 19 production of 25 motors complete. End of month 20 QC testing complete and delivery to client. Greyson Corporation 19 Cost / Benefit Analysis Year 1 Year 2 Year 3 Year 4 Values '000 US$ 1S 2S 1S 2S 1S 2S 1S 2S Total costs for the initiative 10,000.0 5,000.0 5,000.0 (cost items were estimated based on prior projects) Recurrent Costs Gap Total Recurrent Costs Gap Potential Business Benefits Current Procurement contract 4,500.0 5,500.0 18,500.0 Future procurement & other business 20,000.0 40,000.0 40,000.0 40,000.0 40,000.0 Total Potential Business Benefits 4,500 5,500 18,500 20,000 40,000 40,000 40,000 40,000 Cash flows (5,500) 500 13,500 20,000 40,000 40,000 40,000 40,000 Discounted cash flows (5,500) 500 13,175 19,048 37,177 36,281 35,407 34,554 Discount rate Net Present Value (NPV) of the initiative IRR 5.0% Greyson Corporation 20 $ 170,641 143% 10
Payback Period (Year 1) Greyson Corporation 21 NEPTUNE PROJECT TIMELINE 4 Months* 10 Months 5 Months 1 Month R&D* and Product Engineering Prototyping Production / Manufacturing Quality Control & Testing Logistics and Supply Chain Mgt (6 months - in parallel) MILESTONES Design Completed and Certified Prototype delivered 25 missiles produced Delivery SIX Sigma Process** t (-) 6 t 0 Timeline Note: * R&D is short because of prior competencies in the 8-motor Shoot-off ** SIX SIGMA will be launched at least 6 months before the start of the Neptune project t 20 Greyson Corporation 22 11
Assumptions No Issues in Supply Chain Management / Procurement. We do not anticipate materials procurement to be an issue on this project based on our experience with key suppliers. Expectations of Future Contract leads (revenuegeneration) on Neptune or similar programs. We anticipate that the Navy will continue procurement of war weapon based on defense spending trends and needs. Greyson Corporation 23 s By adopting a modified risk template, adding a manageability column and adopting the Likert measurement scale from 1 to 3, we have identified the following three risks, which will require MITIGATION: # 1 Budget Shortage due to Corporate Emergencies # 2 Key Employees Turnover # 3 Project interdependencies Greyson Corporation 24 12
Category Assessment Factor Probabil ity Impact Rating (P x I) Manageability of Owne r Response Plan Project resources Key EmployeesÕ Turnover 2 3 6 M HR See Appendix G. Section 4. Project schedule Project dependencies Interruptions due to external system failures (weather/ electricity / quakes) Interruption of other projects impact on Neptune 1 2 2 L PM Disaster recovery plan is in place 2 2 4 M Mgt See Appendix G. Section 4. Contracted work Hired resources reallocated to different projects 2 1 2 M HR No mitigation needed (transfer to other organization) Technology Information systems failure 1 2 2 M IT Disaster recovery plan is in place Infrastructure Manufacturing equipment fault 1 2 2 M Manu Default production to another plant Management Budget cuts due to other corporate needs/ emergencies 2 3 6 L Fina / Mgt See Appendix G. Section 4. Communications Status update reliability break-down 1 3 3 H PM No mitigation necessary as PM will control daily Greyson Corporation 25 Project Strategy and Approach We adopted standard project management processes, tools, techniques and templates in addition to the traditional project management steps. We will also use PM steps in a launch and learn mode which will focus on continuous feedback at each stage of the project. Greyson Corporation 26 13
Project Management Procedures We applied standard project management procedures by abiding by the PMBOK specifications NEPTUNE PROJECT ORGANIZATION Client (Navy) Greyson VP // CEO Program Office Manager Program Office Team Projects Budget & Control Coordinator Projects Quality Assurance Coordinator PROCEDURES 1. Issues Management 2. Scope Change Mgt 3. Communication Mgt 4. Management 5. Document Mgt 6. Quality Management 7. Metrics Management Core Team Extended Team Lead Mgr Area Managers Ex-Cameron Employees (35) Key Greyson Employees (8) Rotational Resources (10-15) Negotiation team (ad hoc) Greyson Corporation 28 Specific Area / Process 14
1. Issues Management The PM will maintain and update an Issue Log Document. ISSUE LIST Projet Name Neptune Date Last Update 6/1/2008 xx/xx/xxxx Applicant Issue Responsible Dates Progress Code Role Name Team Title Area/task Status Role Name Team Start Due Date Actual End Priority Date % done Documents Actions Tasks Greyson Corporation 29 2. Scope Change Mgt Due to the 20 month deadline, all Scope Changes will need approval from the Steering Committee. SCOPE CHANGE Projet Name Neptune Code Date Last Update Role Name Team Title Reason Status Budget Role Name Team 6/1/2008 xx/xx/xxxx Applicant Scope Change Responsible Dates Start / End Analysis Anal. Budget Solutions Implementation Implementation budgt Documents Actions Consequences The PM will consolidate Scope Changes Analyses into summary Greyson Corporation 30 15
3. Communication Mgt FROM TO FREQUENCY FORMAT MEDIA Project Manager Steering Committee Monthly High Level Status Report & critical change requests Email (push) Meeting (ad hoc, at least every 2 months) Project/Prg Greyson Bi-monthly Project Newsletter Email (push) Office Core Team (Mgrs) PM Core team Employees PO Division Mgrs Extended team Weekly (Mondays) Progress report (excel) Posted on intranet (pull) Meeting Minutes Posted on project repository (pull) Monthly Meeting / Discussion Detailed project report posted on intranet (pull); Meeting minutes Ad hoc Job-alignment (scheduled rotational tasks) Face-to-face FLOW OF COMMUNICATION Source: Mingus (2002) Alpha Teach Yourself PM in 24 hrs. Greyson Corporation 31 4. Mgt The Response Plan will focus on the risk Mitigation of the top 3 risks Category Factor Probability Impact Rating (P *I) Manage ability of Owner Response Plan 1) Management Budget CUTS due to other corporate needs/emerge ncies 2 3 6 L Finan/M gt See Appendix O, Section 4 2) Project resources Key Employees TURNOVER 2 3 6 M HR See Appendix O, Section 4 3) Project Dependencies Interruption of OTHER projects impact on Neptune 2 2 4 M MGT See Appendix O, Section 4 Greyson Corporation 32 16
5. Document Mgt Project Space / Repository on our Intranet Module MH (Material Handling) User Documentation Test Plan Module Control Technical Documentation (TP) user requirements minutes functional specs. annexes communications technical specs. user manuals agenda annexes presentations 6. Quality Mgt Conforming to ISO and other quality standards in manufacturing Greyson Corporation 33 7. Metrics Management Project dashboards will dynamically display production, PM data, and customer satisfaction reports Greyson Corporation 34 17
The Greyson Case Overview and Conclusions Errors and Missteps Lack of focus (production to R&D and back) No apparent system of employee evaluation Extreme employee loyalty Career development Both are good, but can engender employee complacency Dependence on the Cameron hires Did not rely on their own technical know-how and history with the Neptune system Preferential Treatment of the Cameron hires Greyson Corporation 36 18
Errors and Missteps (contd.) Program office did not represent all relevant divisions No consideration of NPV of potential follow-on on contracts Reluctance to incur additional expense ended up costing them their very existence Costs would have been miniscule in relation to potential gains Greyson Corporation 37 19