Uac Work Plan Presentation Part Iii Ver 2

UNIVERSAL ADVANCED CONTROLS, INC.

October 23, 2010 Submitted by: Yves Juste Diane Mavronicolas

Universal Advance Controls, Inc. (UAC) History

2

Executive Summary• Project Phase I begins on 12/6/2010 and is to be completed no later than

08/27/2012

• Project Phase II begins upon completion of 1 year production Phase I, completion date 01/7/2013

• Production of 1 assembly line during Phase I – 350,000 units

• Production of an additional 2 assembly line during Phase II – 1,050,000 units

• Entire project is to be delivered within 34 months

• Penang facility to manufacture redesigned versions of the circuit boards now being produced at the Corinth factory

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Executive Summary (Cont’d)• No lapse in between start and end date of production between factories

• UAC is expected to see a breakeven point 2 years after the project is completed (2013)

– based on expected 10% increase in productivity year over year after the 3 assembly lines installed

• Project is budgeted at $4.5 Million, including $500K contingency amount

• Baseline budgeted amount of the project is at $3,895,700.00

• Unexpected Events during project Phase I (HR and Public Relations)

• Added Work to project during Phase I (to plan inauguration)

4

Project Purpose

• Internal or External Situation Driving the Project– Lower employee wage– Lower production assembly cost– Higher profit margin (Economic Advantage)– Higher volume production – Higher demand and longer-term relationship from OEM customer

• Project Concept– Redesigned versions of the products in MS to be produced– Expanding to Malaysia for Better Business Strategy

5

Project Description

• To establish an offshore manufacturing facility

• Automated Assembly line being produced in fully operational factory

• Renovations are to be completed within 10 months period

• Project is a two-phase project, budgeted at $4.5 Million

• Purchase of Sharpe Facility in Malaysia was negotiated by the Real Estate Dept.

• The majority of the project team is based in Pennsylvania

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Project Benefits

• Current profit margin is approximately 2.8% or $0.22 per circuit board in U.S. Facilities

• Current circuit board selling price is $8.00

• Profit increase of 33% or $2.65 per circuit board in Penang Facility (once production begin)

• Increase in profit allows UAC to satisfy important customer’s order and maintaining current market share on circuit boards

• Given the advances of international shipping, shipping costs are roughly the same as they were in the U.S.

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Cost and Profit Comparison

8

Project SOW• General contractor hired to complete renovation of Penang facility

• Architects and engineers are to assess the building prior to renovation

• During renovation phase this unexpected event occurred

– Human Resources Issues (causing delay to project)

• As a result of Public Relations the project incurred added work

– Inauguration to take place upon completion of project Phase I

• Renovation phase is schedule to begin in 10/2010 and completed in 06/2011 to allow time for the equipment to be installed, tested, and training to be completed.

• Production Phase I begins in 08/20119

Technical Requirements

• Renovations and installation of assembly equipment to be completed in time for the Corinth facility to transfer production (10 month deadline is the fixed deadline) – absolutely no delays are allowed

• Phase I must be able to produce at least 350,000 units by year’s end

• The first products will be redesigned versions of those currently produced at the Corinth

• Walls at the Sharpe facility are in the process of being rearranged according to the layout recording

10

Technical Requirements (Cont’d)

• An operational purchasing program has been established for purchase of components and materials

• Preventative maintenance schedules have been developed for production machines

• Shipping schedules and methods have been established

• Phase II shall triple production by adding 2 additional assembly lines

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Project Requirements

• Phase I is to produce 350,000 and Phase II is to produce 1,050,000 units

• 1st products will be redesigned versions of those currently produced in Corinth

• New products to be produced at the Corinth facility are for a long-time valued OEM customer

• The building is being renovated to accommodate manufacturing and production space as well as upgrading the compressed air and electrical lines

12

Project Requirements (Cont’d)• Production Supervisor required to establish requirements and skill levels

for hiring people to work in the factory and operate the modern production machines

• Preventative maintenance scheduled needed for production machines

• Shipping schedules and methods must be established

• Establish quality control program and training for Malaysian workers

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Project Timeline• 10 months to prep facility and hire workers

• 1 year total time expected during Phase I to produce 350,000 units

• Phase I shall take 1 year and 10 months to complete – August 2012

• Phase II is expected to begin once Phase I completes – August 2013

• Phase II shall expand production by adding 2 additional assembly lines – tripling production capability

• Phase II shall last 3 to 4 months because space will have been prepped during Phase I

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Project Timeline (Cont’d)• Project Phase I to commence on 10/18/2010 (2 months behind schedule)

actual start date 12/06/2010 and end date 06/13/2011

• Production Assembly Line I to commence on 08/26/2011

• Project Phase II to commence on 08/27/2012 and to complete on 01/07/2013

• Production Assembly Line II & III to commence on 01/07/2013

• Project to be delivered in 34 months and be ready for production of redesigned versions of older products being produced at Corinth Facility

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Project Major Tasks

• Major tasks for Phase I include:– Prep Facility– Obtain Machinery– Hire Workers– Test Run– Open Facility

• Major tasks for Phase II include:– Begin Phase II– Purchase Equipment– Hire Workers– Test New Equipment– Open Facility

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Project Major Milestones

• Phase I• Project workers recruited and hired

12/20/2010

• Workers arrive onsite for debriefing of Project12/22/2010

• Project design plan signed off and accepted12/28/2010

• Components arrive onsite 01/06/2011

• Wall demolition began01/10/2011

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Project Major Milestones (Cont’d)

• Floor inspection conducted 01/19/2011

• Restructure and redesign begin 01/26/2011

• Midpoint inspection check and sign off 05/20/2011

• Run Test and sign off 07/13/2011

• User Acceptance testing sign off 08/02/2011

• Open Facility 08/26/2011

• NOTE: Production of Phase I begins 08/26/2011 through 08/24/2012 – 1 yr in production

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• Phase II• Phase II Begin 08/27/2012

• Purchase Equipment 09/07/2012

• Machinery arrive onsite 09/25/2012

• Project workers recruited and hired 10/02/2012

• Project design plan signed off and accepted 10/12/2012

• Equipment arrive onsite 10/16/2012

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• Midpoint inspection check and sign off 11/15/2012

• Run New Equipment Test and sign off12/03/2012

• User Acceptance testing sign off12/18/2012

• Test New Equipment12/21/2012

• Open Facility 01/07/2013

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Project ScheduleID Task Name Start Finish

1 Penang Plant Mon 10/18/10 Fri 8/24/12

2 Design Space Mon 10/18/10 Fri 10/22/10

3 Hire Architect Mon 10/18/10 W ed 10/20/10

4 Hiring contract Mon 10/18/10 Mon 10/18/10

5 Design plan Mon 10/18/10 Mon 10/18/10

6 Development Tue 10/19/10 Tue 10/19/10

7 Implementation Wed 10/20/10 Wed 10/20/10

8 Hire Engineers Mon 10/18/10 Fri 10/22/10

9 Hiring contract Mon 10/18/10 Mon 10/18/10

10 Structural plan Thu 10/21/10 Fri 10/22/10

11 Development Thu 10/21/10 Thu 10/21/10

12 Implementation Fri 10/22/10 Fri 10/22/10

13 Prep Facility Mon 10/18/10 Fri 3/11/11

14 Rearrange walls between areas in the facility Mon 3/7/11 Tue 3/8/11

15 Reroute compressed air lines Mon 10/18/10 Tue 10/19/10

16 Pull out air lines Mon 10/18/10 Mon 10/18/10

17 Reroute air lines Tue 10/19/10 Tue 10/19/10

18 Reroute power lines W ed 3/9/11 Thu 3/10/11

19 Pull out power lines Wed 3/9/11 Wed 3/9/11

20 Reroute power lines Thu 3/10/11 Thu 3/10/11

21 Paint interior Wed 3/9/11 Thu 3/10/11

22 Reroute Plumbing Fri 3/11/11 Fri 3/11/11

23 Project Management Mon 10/18/10 Fri 3/9/12

24 Budget Mon 10/18/10 Fri 3/9/12

25 Schedule Mon 10/18/10 Fri 3/9/12

26 Accounting Mon 10/18/10 Mon 10/18/10

27 Expenses Mon 10/18/10 Mon 10/18/10

28 Payroll Mon 10/18/10 Mon 10/18/10

29 Billing Mon 10/18/10 Mon 10/18/10

30 Miscellaneous Mon 10/18/10 Mon 10/18/10

31 Accounts Payable Mon 10/18/10 Mon 10/18/10

10/18

10/18

LeeSiong Architect

10/18

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42010 2011 2012 2013 2014 2015 2016 2017 2018

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Project Schedule (Cont’d)

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ID Task Name Start Finish

31 Accounts Payable Mon 10/18/10 Mon 10/18/10

32 Accounts Receivale Mon 10/18/10 Mon 10/18/10

33 Obtain Machinery Mon 10/18/10 Mon 1/3/11

34 Order Machinery Thu 10/28/10 Thu 12/30/10

35 RFP Thu 10/28/10 Wed 12/29/10

36 Award RFP Thu 12/30/10 Thu 12/30/10

37 Order spare parts and spare module subassemblies Mon 10/18/10 Mon 10/18/10

38 Spare parts Mon 10/18/10 Mon 10/18/10

39 Spare module Mon 10/18/10 Mon 10/18/10

40 Receiv e machines and perform acceptance tests Fri 12/31/10 Mon 1/3/11

41 Test date Fri 12/31/10 Fri 12/31/10

42 Conduct test Mon 1/3/11 Mon 1/3/11

43 Prepare preventative maintenance sc hedule for machines Mon 10/18/10 Fri 10/22/10

44 Prepare list of electronic components needed for production Mon 10/18/10 Tue 10/19/10

45 Contract with current vendor Mon 10/18/10 Tue 10/19/10

46 RFP Mon 10/18/10 Mon 10/18/10

47 Contract Tue 10/19/10 Tue 10/19/10

48 Components for Production Mon 10/18/10 Mon 10/18/10

49 Find vendors for the components Mon 10/18/10 Mon 10/18/10

50 Components Mon 10/18/10 Mon 10/18/10

51 Installation Mon 10/18/10 Mon 10/18/10

52 Maintenance Mon 10/18/10 Mon 10/18/10

53 Warranty Mon 10/18/10 Mon 10/18/10

54 Hire W orkers Mon 10/18/10 Fri 8/24/12

55 Hire on-site supervisor Mon 10/18/10 Fri 3/4/11

56 Establish requirements for production people Mon 1/3/11 Fri 1/7/11

57 Hire machine operators Mon 1/10/11 Mon 1/10/11

58 Quality Control Training Mon 1/10/11 Mon 1/10/11

59 Maintenance Mon 1/10/11 Mon 1/10/11

60 Other Software Mon 1/10/11 Mon 1/10/11

61 Hire engineers Mon 1/10/11 Mon 1/10/11

12/31

10/18



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61 Hire engineers Mon 1/10/11 Mon 1/10/11

62 Process Mon 1/10/11 Mon 1/10/11

63 Components Mon 1/10/11 Mon 1/10/11

64 Develop qual i ty contro l tra in ing for Malays ian workers Mon 10/18/10 Fri 10/22/10

65 Hire cleaning staff Mon 1/10/11 Fri 2/18/11

66 Hire general laborers Mon 10/18/10 Fri 12/17/10

67 Hire electricians Mon 2/21/11 Fri 3/4/11

68 Test Run Mon 10/18/10 Mon 4/4/11

69 Set date for test run Mon 2/21/11 Mon 2/21/11


71 Prepare analysis to determine succcess of test Mon 10/18/10 Tue 10/19/10

72 Acceptance Test Mon 10/18/10 Mon 10/18/10

73 Acceptance sign-off Tue 10/19/10 Tue 10/19/10

74 Open facility Mon 6/13/11 Fri 8/24/12

75 Begin production Mon 6/13/11 Mon 6/13/11

76 Collect data to measure success of facility Fri 8/24/12 Fri 8/24/12

77 Phase II Mon 8/27/12 Mon 1/7/13

78 Begin Phase II of expanding Penang, Malaysia assembly plant Mon 8/27/12 Fri 9/7/12

79 Prep power lines and compressed air lines Mon 8/27/12 Fri 9/7/12

80 Assess environmental controls Mon 8/27/12 Mon 8/27/12

81 Purchase equipment Mon 8/27/12 Mon 9/10/12

82 Order machines Mon 8/27/12 Mon 8/27/12

83 Order spare parts and spare modular subassemblies Mon 8/27/12 Mon 8/27/12

84 Receive machines and perform acceptance tests Tue 8/28/12 Tue 8/28/12

85 Find vendors for the components Mon 8/27/12 Mon 8/27/12

86 Install new equipment Tue 8/28/12 Mon 9/10/12

87 Hire workers Mon 8/27/12 Fri 10/5/12

88 Hire and train machine operators Mon 8/27/12 Fri 10/5/12

89 Hire project engineers Mon 8/27/12 Fri 10/5/12

90 Test new equipment Mon 8/27/12 W ed 8/29/12


Robert Yang

4/4

Robert Yang

Robert Yang

6/13



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93 Prepare analysis to determine succcess of test Tue 8/28/12 W ed 8/29/12

94 Acceptance Test Tue 8/28/12 Tue 8/28/12

95 Acceptance sign-off Wed 8/29/12 Wed 8/29/12

96 Open facility Mon 8/27/12 Mon 1/7/13

97 Begin production Mon 8/27/12 Mon 8/27/12

98 Collect data to measure success of facility Mon 1/7/13 Mon 1/7/13


Work Breakdown Structure

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Work Breakdown Structure (Cont’d)

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Resource Loading• At this point in the project the project team expected a fairly level use of

resources throughout most of the project, however additional labor is necessary for a short time to get the renovations on track

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Project Challenges• Facility might not be ready on time (2 month delay from the purchase)

• Outdated/unknown technology and/or conditions at the Sharpe facility

• Structural integrity of the existing walls

• Floor to be inspected, must be thick enough and leveled so that the machines can operate properly

• Environmental requirements inside the factory (temps around 70°F and humidity around 55%)

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Project Challenges (Cont’d)• The need for a $500,000 contingency amount to support any and all

uncertainties during both phases, however mostly for Phase I

• The risk of investing in cheaper products, which may cause an issue with UAC’s ISO 9000 rating

• Time zone difference with Malaysia and the US

• Language barriers, both written and spoken (English, Chinese, and Bahasa Malaysia)

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Project RisksRisk Consequences

Chance of Occurrence (H,M,L)

Impact (H,M,L)

Action Trigger Responsibility Response Plan

Schedule - Facility might not be ready on time (2 month delay from the purchase)

Drop in component production between the US plant and the Penang plant

H H

Milestones set with the General Contractor are not met

Upton

Hire additional workers to work around the clock

Schedule/Quality/Budget - Little experience with aqueous cleaning

Delay to production/pilot testing

M H

If testing does not occur successfully by May 2011

Upton

Additional training for employees and supervisors

Schedule -Language barriers, both written and spoken (English, Chinese, and Bahasa Malaysia)

Difficulty completing project

M M

Too many work packages incomplete or delayed due to confusion

Yang If necessary, hire additional translators

Budget/Quality - Environmental requirements inside the factory (temps around 70F and humidity around 55%)

Difficulty creating product - not meeting production goals

M M

Temps consistently exceed 72F or 60% humidity

Yang

Install additional air conditioning units and insulate the building

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Corporate Organization

• The Board of Directors

• Franklin Parks – Chairman, President and CEO

• Jack Stern – UAC’s Real Estate Department Head

• Vern Roper – Director of Facilities

• Jeff Upton – Facilities Supervisor/Project Manager

• Hank Curry – Vice-President of Manufacturing

• John Huff – Manufacturing engineer assigned to the Project Team

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Corporate Organizational Structure

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Project Team

• Jeff Upton, Project Manager

• Jack Stern, UAC’s Real Estate Department Head

• Robert Yang, Onsite Supervisor

• Recommended new On-site Supervisor

• John Huff, Manufacturing Engineer

• Process Engineers

• Components Engineers

• Purchasing Agent

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Project Team Organizational Structure

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Equipment Costs Phase I

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Equipment Costs Phase II

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Building Costs

37

US Price – $86 per sq ft Malaysian Price – $20 per sq ft

Approx. $2,580,000 Approx. $600,000

Product Costs in the US

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Product Costs in Malaysia

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Project Cost Estimate Breakdown Phase I

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Project Cost Estimate Breakdown Phase II

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Management Systems• Monitoring Cost and Schedule – required

• We plan to use the Cost Variance (CV) and Cost Performance Index (CPI) to monitor and control the project

• We also plan to use the Schedule Variance (SV)

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Function Plan • The 2 functional plans we will implement are as follows:

– Change Control & Management– Calculations project team used to monitor and control project:

• Earned Value (EV)• Cost Variance (CV)• Schedule Variance (SV)• Cost Performance Index (CPI), etc.

– Environmental, worker safety and health management• Tropical weather (evacuation plan and customary drills conducted)• Religion (Muslim Holidays – may affect schedule)• Diseases (monitor with yearly medical screening)

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Cost and Schedule Variance• Any changes below $499 and less can be approved by the onsite

supervisor• Changes above $500 (1,500 Ringgits) must be approved by the project

team in writing• Project team expected to see a Planned Value (PV) figure of $914,841.92,

though we see an EV figure of $848,841.92

• Cost Variance (CV) is calculated as EV – AC, which computes to $0

– This indicates that project is not yet over budget

– Due to schedule variance additional resources will be utilized to make up the difference

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Cost and Schedule Variance (Cont’d)

• The Budget at Completion (BAC) was allotted for $2M with a requested $500K contingency

• Schedule Variance (SV) is currently ($66,000), and this will significantly impact the critical path if additional work is not completed soon to catch up

• Project team shall update the costs and schedule of the project accordingly and monitor and control the same

45

Procedures and Plans • The project team also expects to be briefed on how the requested change

will impact schedule and scope

• Major scope changes require approval from the contract manager or CEO

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Procedure and Plan Flow Chart

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Environmental Issues• Malaysia has a population of approximately 22.7 million, highest percentage

among Malays and Chinese

– Malay (47 percent)

– Chinese (26 percent)

– Other indigenous and ethnic group (27 percent)

• High risk of inclement weather, with tropical climate

• High risk of floods, as a result of heavy rain, known as monsoons

• The monsoons are at a peak between November and February

• The best time to visit Malaysia is between April and October.

• Average rainfall of 2500 mm, and East Malaysia thrives in 5080 mm 48

Work Safety Issues• Islam is the national religion in Malaysia, as a result the Malay laborers will be

taken frequent breaks for prayers, and will be fasting throughout the day

• During prayers men and women laborers must be separated, as part of their religion, and UAC will comply to accommodate them

• It is expected that monthly production quotas will be reduced during Muslim holidays, as a result monthly quotas can be adjusted by increasing productivity during non-holidays

• The monthly quota for Phase I production is 29,167 (350,000 units / 12 months) and for Phase II production it is 87,500 (1,050,000 units / 12 months)

• Safety protocols will be developed to prevent injuries while using machines

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Project Unexpected Events

• Human Resources ethnic conflict with Malay laborers and Chinese onsite supervisor

• Malay laborers reduced production as a result of conflicts

• Onsite supervisor failed to report the true status of the project to the project team

– As a result of the above, the project is now behind by in additional 4 to 6 weeks

– Project may face further delays as a result of necessary cost and schedule variance

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Alternative Solutions and Evaluation

• Project team must conduct a cost and schedule variance to see how much we have fallen behind schedule and gone over budget as a result

• Members of the project team may have to travel to Malaysia to manager the project onsite during these conflicts

• Project team plans to communicate with Malay Laborers regarding human resources issues resulting in conflicts

• Project team recommends several options to resolve the human resources issues

• Some of the cost of these recommendations are mitigated due to the fixed priced contracts with the general manager

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Alternative Solutions and Evaluation (Cont’d)

• If onsite supervisor is replaced, the project will incur the following additional costs:

– Air travel and accommodation costs to travel to Malaysia

– Down time on schedule to bring new onsite supervisor up to speed with the project

– Estimated cost of $17,000 to temporarily backfill Upton’s responsibilities at the Allentown facility (average man-hour cost at $208 per hour multiplied by 80 hours – 2 weeks)

– Estimated coach travel cost is $2,100

– Estimated hotel accommodations is $300 per night

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Project Planned Actions• A member of the project team will travel to Penang to oversee the project

onsite and take the following actions:

– Terminate and replace the onsite supervisor

– This is the best and quickest solution to the human resources problems

– The project team member shall remind the general contractor of the terms and conditions set forth in his contract with regard to the schedule

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Project Initial Plan (New Scope)• Inauguration has minimal impact to schedule due to its nature

• Inauguration will be scheduled in June, which is early to avoid the yearly monsoons that hit the western coast of Malaysia

• Production teams will simply have to increase production before and after the event to make up for lost productivity

• Inauguration ceremony will be a daylong event with many phases

• A dais with appropriate seating will be set up outdoors in a tent to provide shade during the outdoor

• Keynote speakers can include the President and CEO Franklin Parks and other high profile guests in the audience

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Project Initial Plan (Cont’d)• Ceremony will include ribbon cutting, a tour of the facilities which will

allow demonstrations for the equipment, and then parting words from Mr. Parks

• As a result of Human Resources Issues during Phase I of the project, the project team has been asked to recommend options to resolve issues

• Project team has provided several options in light of the arising conflict

– To hire additional onsite supervisor (Malay)

– To replace onsite supervisor with American onsite supervisor

– To replace onsite supervisor with Malay onsite supervisor (best option)

– To hire more laborers once issue resolved to get back on schedule 55

Schedule for Added Work• The schedule for added work will most likely include the following:

– Hiring Vendors– Set-up– Speeches/Introductions– Ribbon Cutting– Tour– Demonstrations– Photo-ops– Lunch– Conclusion– Clean Up

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Estimated Expense for Added Work

57

Description Cost

Air Travel $15,000 per person, round trip

Hotel Accommodations $292 per night, per person for 3 nights at the Westin

Event Costs $10,000 rough estimate based on US costs

Project Terms and Conditions• Exchange rates will be fixed at 3 Ringgits for every $1USD with UAC

conducting the exchange in Malaysia and cutting checks to vendors in local currency

• Staggered payments will be made to vendors dependent on deliverables provided on time

• Late delivery equals late payments

• Work will be completed to US quality standards

• General contractor is eligible for a $100,000 incentive if the renovations are completed early

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The Factory Space (not drawn to scale)

59

Automated Assembly Line

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Questions and Answers

UAC THANKS YOU FOR YOUR TIME AND ATTENTION

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Uac Work Plan Presentation Part Iii Ver 2

Documents

human resources

project major

cost performance

replace onsite

project initial

onsite supervisor

redesigned

project onsite