MS project

Brettex Performance Improvement Project

Student Name Student ID

Improving Business Performance – 6LO500

14th December 2017

Table of Contents

1. Executive Summary 4

2. Introduction 4

3. Proposed Changes 5

3.1 Training Plan / PDP 5

3.2 Upgrade Balancing Capabilities 5

3.3 Implement Contract Manager KPI’s 5

4. Project Selection Process 6

5. Business Process Re-Engineering and Continous Improvement 8

6. Project Implementation 9

6.1 Draft Project Plan 10

6.2 Project Scope 10

6.3 Draft Project Plan Costing 12

7. Risk Analysis 13

7.1 Draft Project Plan Costing 13

8. Identify Risk Factors to Consider 14

9. Quantitative Risk Assessment (QRA) 17

10. Revised, Final Project Plan 22

11. Final and Updated Costs 43

12. Project Payback Period 43

13. Conclusion 44

14. References 45

15. Appendices 46

Word Count – 3,048

Table of Figures

Fig.1 – Factor Analysis for Project Selection 6

Fig.2 – Project Selection Justification 7

Fig.3 – BPR and Continuous Improvement Comparison against Chosen Project 8

Fig.4 – Microsoft Project Draft Plan for New Balancing Machine 10

Fig.5 – Project Scope 10

Fig.6 – New Balancing Machine Draft Project Cost Estimation 13

Fig.7 – Risk Analysis Method Evaluation 13

Fig.8 – Highest Risk Factors Analysis 14

Fig.9 – Quantitative Risk Assessment for Brettex’s New Balancing Machine Project 17

Fig.10 – RPN Reduction Overview 22

Fig.11 – Updated and Final Project Plan for New Balancing Machine 23

Fig.12 – Updated and Final Costs for New Balancing Machine 43

Fig.13 – Project Payback Period Calculations 44

This report is aimed to provide Brettex with an effective and realistic project idea and subsequent plan to improve their business performance. Brettex offer the UK’s leading engineering services to 11 of the 13 major utility companies in the UK and have grown aggressively over the last 6 years.

In order to select one of the three projects that were thought to be beneficial to Brettex, a project selection was carried out using research quantified into literature reviews. The project selection was determined by the following five factors; ROI, Cost, Time, Risk, Benefit and numerical results proved the ‘New Balancing Machine’ project would prove the most effective to Brettex.

In order to decide which method was the most appropriate for this project between the two most common during the research; Business Performance Re-Engineering (BPR) & Continuous Improvement (Commonly known as Kaizen), another literature review was carried out using multiple theorists which again provide conclusive results. It was determined the BPR approach is the most suitable method for Brettex’s ‘New Balancing Machine’ project.

In order to progress the project into a realistic option for Brettex, Microsoft office was utilised to devise a project plan based on the scope that was also devised in this section. The tasks and resource were considered in order to produce a draft plan of the project which produced a predicted cost and duration.

It was proven in the research that risk analysis is extremely important in order to deliver successful projects, the identified risks were analysed, evaluated and controlled using a Quantitative Risk Assessment. The main risks that were identified using the QRA are Technology, Budget, Costs, Time, legal and Personnel or Resource Allocation.

Once the risks were proven to have been reduced, the required tasks and control measures were inputted to produce the final project plan; this plan outlines the step by step process for carrying out the project. Comparison from the draft to the final costs and duration were evaluated which showed the total cost of the project at £45,858.06 and duration of 45 days.

Researched suggested the final section was extremely important before any project is initiated at a company, the project payback period calculations were carried out which demonstrate a payback period of 9.5 months or 114 jobs using the new balancing machine.

This report will be based on a medium sized, Chesterfield based engineering services company called Brettex currently employing roughly 120 people varying from office staff, undergraduates, apprentices and engineers/fabricators (2016 Company Handbook, 2017).

Brettex originally started as a sister company to a larger manufacturing firm before, as part of an acquisition deal separated in 2008 to form as an independent business. In 9 years of independent business the organisation has become to focus on being the UK’s leading providers of service, repairs, maintenance and more recently manufacture of sludge process machinery and equipment for all major utility companies in the UK and Ireland (Brettexsiteservices.com, 2017).

Before making the strategic decision in 2013 to primarily focus their resources on the utility industry, Brettex also offered their expertise to various other industries such as Pharmaceutical, Food and Industrial Process Control Companies, Hospitals and Care Facilities, Schools and Educational Establishments, this legacy work still contributes to the company’s revenue today but does not receive the attention and focus as the main purpose of the business.

Slack et al (2010) suggests each company requires a strategic direction in order to succeed, Brettex’s mission statement reflects this theory, ‘Brettex aims to offer instant, reliable and cost effective service and repairs to maintain optimum performance of sludge processing equipment‘. The family ran company’s approach resonates throughout the friendly but focussed workforce all aiming to achieve the same goal.

The following section provides a brief introduction and detail into the possible changes that are available to Brettex that would improve their overall business performance.

Kindersley (2015) suggests the role clarity amongst a team is essential in ensuring a successful outcome. Knowing, motivating and focusing on the team will result in good individual performance contributing to the businesses’ overall output. Whittington, Scholes and Johnson (2012) also suggest resources and competences are the two main components of strategic capability. A copy of Brettex’s structural diagram (Brettex, 2017) can be found in appendix B, this shows the roles throughout the business. Although Brettex currently invest to provide generic training to their employees, there is yet to be a personal development scheme at the company to focus and tailor training and development dependent upon the individual. In order to devise the most effective training package for Brettex’s staff, there is the possibility of a ‘Personal Development Plan’ project to be undertaken so that each employee has their own regime of training.

A ‘Centrifuge’ is an asset amongst the fleet of equipment that Brettex claim they are the UK’s leader in maintaining. The Centrifuge is a high-tech piece of equipment which to avoid high vibrations requires balancing. To ensure of its condition, Brettex (amongst other OEMs) deem 12 months is the maximum period between a balance, however this is often done sooner if any mechanical repairs are required within that period. In order to balance this type of asset, a specific balancing tool is required which is available in a number of difference sizes, the size of the tool will determine the size of Centrifuge you are capable of balancing.

In order to grow this section of the business and improve Brettex’s ‘Centrifuge capabilities’, a bigger balancing machine is required. To Brettex, this type of equipment is expensive so if the requirement or benefit isn’t apparent this is not a feasible change.

Marr (2013) suggests the decisions made by effective managers are orientated around the company’s ‘successful voyage’ to prevent targets veering off the businesses’ overall path. In order for the Operations Manager to direct focus through his Contract Managers and to their respective teams, there is an opportunity to devise and implement a set of Key Performance Indicators (KPI’s), specifically for the Contract Managers to populate. A set of KPI’s could be used to monitor the strategic capabilities of each area and offer support where the KPI’s show each Contract Manager is slacking, ultimately improving the performance of the company resulting in more income.

Three possible changes that would improve Brettex’s business performance have been identified above, and Shtub et al (2014) refers to the next stage as the ‘screening’ process where one option must be chosen to progress with. Shtub et al (2014) goes on to state billions of dollars are wasted by companies every year due to projects that have been implemented and then not used or discarded because of the lack of value added to the business. As Pinto (2016) suggests, due to the wide range of project types it is difficult to clarify one or two factors which require evaluating before a company starts a project. However for the purpose of this report, (Kerzner, 2001) advisers projects should provide a business with tangible benefits or improve organisational performance and competitiveness once implemented.

With this in mind, the following literature review will evaluate the important factors of a project that multiple authors have considered in order ascertain which criteria will be for Brettex’s final project selection:-

The evaluation and subsequent results from the literature review in Figure 1 show the following five factors are the most common influences that should be considered when selecting a project are:-

· Return on Investment (ROI)

· Cost

· Time

· Risk

· Benefit

Using the literature review, it was shown ROI was the most important factor as this topic appeared in five of the seven academic sources that were evaluated. The remaining influences identified in the analysis all appeared equally, four times.

In order to select which project shall be action planned for implementation, the impact the five key influences will have on the potential projects will be evaluated. The impact will be given a value of 1 – 3 (key/explanation below) dependent of the extent of the impact, whichever project has the highest score will be the one most viable to Brettex and the one selected to initiate. As Morris (1997) suggests, a weighting of two (x2) has been applied to the influences that have the highest impact and are most crucial in improving business performance. The results of the justification can be seen below in Figure 2:-

Key

3 – Represents the highest benefit, the quickest ROI, the most efficient use of time / timescale, the lowest risk, the lowest cost.

1 – Represents the lowest benefit, the slowest ROI, ineffective time management, the highest risk, the highest cost.

Results from the figure above show the purchase of a upgraded balancing machine will be the most effective project for Brettex. The weighting on ROI and Benefit is the main reason this project accumulated the most points during the justification process, however in contrast the balancing machine project posed as the highest cost to Brettex which is something that will require particular care if the ROI is going to succeed. Interestingly none of the projects posed as a high risk to Brettex.

Barnes (2008) suggests there are two main approaches for improving business performance, Business Performance Re-engineering (also known as Radical Change) and Continuous Improvement.

Bounds et al (1994) suggests the distinction between the two approaches can be identified culturally and goes onto suggest the American’s predominantly adopt one approach whereas Japan commonly use the alternative. Imai (1986) suggests the ‘Kaizen’ approach, favoured by the Japanese, adopts the continuous improvement method which includes ‘undramatic’, ‘subtle’ and ‘systematic’ change in an incremental effort to achieve gradual change. Wild (2003) argues this progressive approach leads to higher standard in business performance whilst improving on a ‘on-going basis’ (Hill, 2003).

In contrast, Imai (1986) describes the Business Performance Re-engineering (BPR) approach historically associated with American managers as dramatically levels in performance improvement. Imai goes onto suggest BPR depends more on innovative one shot deals that provide ‘breakthrough’ results immediately. Short term, innovative methods provide a radical approach to change. Hill (2009) argues large scale changes to processes transform company performance leads to improved efficiency.

Using the results obtained from the previous section, the figure below will analyse the literature to establish the BPR / Kaizen change characteristics, the chosen project to gather which approach, from the two discussed above, is most appropriate for the implementation of the chosen project for Brettex.

Project Implementation

Using various research and analysis in the previous sections, it has been decided which from the three possible projects shall be implemented and which method out of the two evaluated demonstrates to be most suitable for the chosen project. The following section will be used to devise a step by step draft plan for the implementation.

Microsoft Project (MP) software was used to prepare the draft project plan and will be used for the final plan, the powerful tool that 67% of small businesses use can easily be used and allows project managers to devise a step by step project plan that can be easily updated as necessary (Maffeo, 2017). The following image shown in figure 4 below is a condensed version of the draft plan, the full version can be found in appendix one.

Pinto (2016) argues the project scope is ‘everything about a project’ and should include the expected outcomes but be detailed with what is included in order to achieve the outcomes. The importance of the scope is supported by the content will include all activities to be carried out, the resources which will be required, the end goal and should be supported with considerations regarding the constraints and limitations (Pinto, 2016). Shtub et al (2014) supports the importance of a project scope by suggesting the scope should only include the tasks that are required to complete the project and identification of the scope is the project manager’s responsibility and suggests the execution of the project relies of the scope.

Pinto (2016) suggests milestones are an important addition to any project plan. Pinto (2016) goes on to suggest milestones are beneficial to enable the project manager to monitor timescales, quality, the level of input from others, manage supplier performance and other various measures, ‘Milestones are road markers that we observe on our travels along the life cycle path’ (Pinto 2016). Shtub et al (2014) also relates milestones to cost monitoring, checkpoints should be set to review the status of the project in comparison with the original plan, this will then allow any corrective action to be taken at that time.

The milestones and ‘scope’ can be reflected in a way of ‘Summary Tasks’ in Microsoft project plan, the scope outlined in the figure below have been used in the final project plan to title the step by step action within the main tasks.

New Balancing Machine Project

It may be evident, however the scope that can be seen above has been devised in an attempt to eliminate any surprises, in a contingent way the scope has been developed to foresee every task that will be required so that deviation from the original plan is kept to a minimum. Although the plan has been developed with this consideration, as is was found earlier the project will be open to change (Shtub et al 2014) for the purpose of improvement, but not in an inefficient or uncontrolled manner.

Researching whether or not a project is viable which is included in the scope in the previous section, heavily depends upon the cost of the project, cost estimation should be carried out in order to identify the required budget for a project, Pinto (2013) suggests cost management is extremely important for successful projects. Different levels of detail may be required depending on the value of a project or the customer or business preferences, but the project manager should always try to identify all possible costs associated with the project and build them into their initial proposal (Pinto, 2013).

The following figure provides the cost overview for the draft project plan of installing a new balancing machine at Brettex:-

Fig.6 – New Balancing Machine Draft Project Cost Estimation

From the draft project, it can be seen above that the proposed project will take approximately 43 days to complete in full, will cost an approximate total of £41,000 and require 626 hours of labour. With the initial financial figure appearing to be high, the new machine consumes the majority of the project’s cost and equates to over half of the total spend. With the amount Brettex will be able to charge the new machine out to customers at, the project’s required investment will not take long to recoup. Payback calculation has been provided in the final section of this report.

In projects it is widely considered that risks are inherent and that no amount of planning can fully eliminate the element of risk, however precautions and plans can be put in place that will reduce the likelihood of certain risks depending on the project and to minimize their impact (Laron & Gray 2014). Larson & Gray (2014) goes onto suggest that Risk Management is what is required to recognise the evident factor of risk in the form of contingency plans or identifying as many risks as possible before the project starts.

Lock (2013) suggests methods to rank risks according to their probability of occurring and the severity of impact if they were to occur, this will allow the project managers to identify the risks that pose the highest threat to their project and therefore require attention and distinguish those threats less likely.

Lock (2013) suggests quantitative goes one further than qualitative risk analysis due to the fact it quantifies the outcome of the risk and assigns numerical score to the possible effects, most commonly on the projects time and cost. Meredith and Mantel (2011) support this quantitative approach also by ranking possible risks in numerical order and which risks should be focussed on considering their numerical risk value. Lock (2013) continues to list the other methods for risk analysis such as Fault – Trees, fishbones and Failure mode and effect analysis (FMEA). The following figure provides results from research into the most commonly advocated risk analysis methods:-

It can be seen from the figure above that failure mode and effect analysis (FMEA) has shown to be the preferred method of analysing risk in the chosen literature. All four sources that were researched supported the use of FMEA as a risk management tool hence this being the chosen method for this project, Maylor (2010) expands on this by describing FMEA as a useful tool for project managers. FMEA will be the chosen method to carry out a risk assessment in the following section for the chosen project of a new balancing machine at Brettex.

In order to comprehensively research which risks should be and are most regarded as important to consider in a project, academic resources shall be evaluated to decide which influencing factors will pose the highest threat to Brettex’s project. Norris et al (2000) suggests risks can cause serious harm to projects if they are not highlighted and controlled.

The results from figure 8 below will provide the highest risks to the balancing project and therefore be included in the risk assessment:-

According to the academic references that were researched to carry out the evaluation above, the four key risks to consider for a project are Budget (5), Cost (4), Legal (4) and Technology (7). Technology was consistently considered amongst the theories appearing in 7 of the 8 literature that was reviewed, proving to be a serious risk to projects. The other three that was identified from the review were not so unanimous but still certainly pertinent for Brettex’s project.

With relevance to Brettex’s project, the common Technology risk is extremely prominent from two perspectives. Firstly, the whole project is intended to advance Brettex’s technological abilities and reliability to broaden their scope for customers, if the new machine is installed and doesn’t achieve significant improvements the project will have failed. The second technology risk aspect is in relation to the complicated process involved in the installation and commissioning of the machine, technology will be required (i.e. cranes, power tools, PLC programming, etc) that is required. Due to the high value item the cost of the whole project is immediately high (see fig.6) which can pose as a severe risk to Brettex, however if the Budget which is now also considered as a main risk to this project is calculated in detail and correctly the cost risk can be accounted for avoiding any surprises. The installation will require legal certificates (electrical testing), and health and safety documentation adhering to. As well as insurance and the transfer of large sums of money, legal risks could certainly play a part in the project if not identified and controlled properly.

As Lock (2013) suggests it is cost beneficial to identify risks at the start of the project as the financial impact of a risk can increase the further a project proceeds. Now that the preferred method of analysing risk has been identified and following the results of the most commonly considered types of risks, in order to acknowledge and attempt to control the potential risks to Brettex’s new balancing machine project a Failure modes and Effect Analysis (FMEA) will be carried out to devise a risk assessment and action plan for the project.

1

Key for QRA:

S = Severity of risk, L = Likelihood of risk occurring, D = Detection of risk

Scale of risk = 1 - 5 scale will be used, 5 = high severity, high likelihood of risk occurring, most likely of the risk being detected, 1 = Low.

Risk Priority Number (RPN) = Severity of risk x the likelihood of risk x probability of detection. In order t proceed with the project, for Brettex the RPN must be below 30 before proceeding with the project.

Adapted from Meredith and Mantel (2011)

The severity of a risk remains the same even after the control measure as the risk will impact the project consistently, however the detectability can be reduced once a control measure is in place due to the increased consideration and plan for controlling the risk.

The FMEA analysis above has presented multiple risks relating to the risks that were evaluated during section eight and incorporating others that were not seriously considered originally. The following figure demonstrates the risk priority number (RPN) reduction following the risk assessment.

In can be seen above that the risk assessment delivered significant risk reduction (percentage), in fact all risks were reduced by at least 50%. In order to achieve the risk reduction that is demonstrated above, the project plan has been adjusted to include the control measures, this can be seen below in figure 11.

Following the risk assessment and subsequent amendments to the final plan, the costs of the project have also changed to include tasks and control measures that were missing from the original draft and also purchases that have always been required but missed. Figure 11 below shows the final costs of the project:-

It can be seen from the figure above that although the cost of the project has risen from £41K to £45K, all of the costs are now visible and the management team can be comfortable the project will not present any surprises after the revisions. Also, the duration of the project has increased by 2 days, this now includes all of the necessary time for the training, administration and closing meetings that the project requires.

Both of the increases in time and cost may be perceived as a negative, however it is important for the plan to realistically reflect what is required instead of the draft statistics where costs and time would have been missed if revisions were not made. The project would have experienced unforeseen occurrence that could have affected the time and cost more severely than in the final statistics above.

According to Pinto (2016), the project payback period is the amount of time it takes for the company’s required investment for the project to be paid back and for it to generate ‘positive cash flow’ for the company. Pinto (2016) goes onto suggest that the payback period must be determined before the decision to initiate the project is made.

In order to calculate the payback period of the new balancing machine at Brettex, the following information has been forecasted using historical statistics from Brettex’s performance of their current balancing machine:-

The project payback period has been presented in three layouts; months, weeks and also number of jobs. The table can easily show the payback period for the investment required from Brettex to achieve the project.

In conclusion, with support from theoretical research and proven theories this document has explored the risks, requirements and benefits of the proposed ‘New Balancing Machine’ Project to provide sufficient information for a decision to be made to proceed with the project or not.

Sections demonstrating the considerations of risk provide an assessment of the possible negative impacts this project could cause, but clear control measures are evident to ensure these risks are reduced. The final section of the report provides clear and specific financial data that simply show the payback implications.

The project’s financial benefit proves the clear choice of project and its suitability for implicating at Brettex.

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Appendix A - Brettex Structure Diagram (Brettex, 2017)

Appendix B - Examples of expanding the revised project plan following risk assessment

Appendix C – Draft Plan