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)

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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

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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

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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

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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

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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

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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

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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

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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)

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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

Uac Work Plan Presentation Part Iii Ver 2