question

Team Violet:

Grade: 92 (A-)

My chief concerns regarding your project charter lie in your economic assumptions. While I do give latitude to teams when coming up with numbers, I do expect estimates to be credible and reasonable. I believe I have clarified that a couple of times when asked about this issue.

While Apple has a lot of money to invest in your project, $130 billion seems like a lot to sink into a high-end electric self-driving vehicle. How many would you have to sell to make the $230 billion you list as anticipated revenues? Would there be enough interested wealthy people around the world willing to buy your car as opposed to a Tesla or other electric vehicles which are being produced now?

If you had provided some intermediate assumptions to back up your estimates, I would be satisfied. Someone tried to do that for the calculation of internal labor but the numbers didn’t seem to agree with the result. Credibility and consistency are important in these submissions.

Let’s discuss this and see if we can come up with more palatable results for your final team presentation.

Larry

[Project Titan] Project Charter

Project Manager: Chloe

Project Sponsor: John Giannandrea

Prepared by:

Team Violet: Ruijia (Chloe) Liang, Jing Wang, Xueyu Weng, Qiaoying Chen, Weihao Fang, Tingyu Wang

Name of Sponsoring Organization:

Apple Inc.

Name of Organization Executing the Project: Apple Inc.

Project Goal:

The goal of Project Titan is to design an autonomous and “very high-end” electric vehicle branded by Apple. This high-tech vehicle is capable of sensing its environment and moving safely with little human input. To capture the increasing interest in new energy automobiles the current market has, Apple wants to produce an electric passenger vehicle with “breakthrough battery technology” and automated vehicle technology. This electric car with high autonomous technology realizes the dream that a majority of drivers have, and it can help those customers who are uncomfortable with driving. Besides, by completing the project, Apple can successfully expand their product line and enter in an emerging electric car industry to earn more revenues. In the meanwhile, Apple can consolidate its image of an innovative company with advanced technology.

Problem/Opportunity Definition:

The electric vehicle is an emerging and highly concerned industry. The sponsoring organization wants to capture this emerging market and to earn market share. Apple has faced a problem that some employees left the company and joined Tesla since they thought the electric automobile industry will be the one of the profitable industries in the future. Besides, the competitors of Apple such as Google, Huawei also have plans to enter the autonomous vehicle market. To follow up the market trend and to keep the competitive advantage they have for now, Apple thinks the autonomous vehicle is a new market they should explore. Apple believes they have the capability to create its own autonomous vehicle and earn market share in that industry. The autonomous car Apple designed can connect to the iPhone and other products from Apple, so, it absolutely provides convenience for their clients which increases Apple’s competitive advantages. This new model of automobile requires less maintenance and it costs less than the gasoline car which makes it acceptable and attractive to the market. In addition, electricity can be a renewable resource and it is better for the environment ,environment, therefore, the government will advocate for consumers to buy. In other words, Project Titan can take advantage of obtaining the support from the government.

Proposed Project Description:

Apple’s project Titan intends to design and manufacture autonomous electric vehicles for high-end customers. Because of the autonomous features, autonomous electric vehicles can arrive at the destinations safely with “little or no human intervention” after the drivers enter the destination . Specifically, autonomous electric vehicles are capable of sensing and responding to the road conditions in a timely manner. The breakthrough in the battery technology lays the foundation of Apple’s successful production of autonomous electric vehicles in the future. The new battery design could “radically” reduce the cost of batteries and increase the vehicle’s range. Moreover, Apple’s autonomous electric vehicles will adopt a wide range of technologies, including silent motorized doors, car interiors sans steering wheel or gas pedals, augmented reality displays. Meanwhile, Team Violet will facilitate the cooperation between Apple Inc. and other major automobile manufacturers including BMW, Tesla, and Porsche in the design and manufacture process of the autonomous electric vehicles. By cooperating with other automobile manufacturers, Apple can mitigate multiple development and development challenges. Comment by Larry Mantrone: I’ll accept this for the sake of the assignment but keep in mind some of the companies involved here may prefer to develop autonomous driving technology themselves. Tesla seems to be trying to do it themselves.

Project Sponsor

John Giannandrea, Apple’s AI and machine learning chief

Other Key Stakeholders : Comment by Larry Mantrone: This seems reasonable!

Name	Title	Project Roles
Chloe	Project Manager	1.Responsible for the implementation of this project. 2.Ensure every step of the project completes successfully before the deadline. 3. Oversee the design and manufacturing process.
Wendy	Head of design department	1.Explore exterior and interior for the car to link with Apple design language.
Jack	Head of Technology department	1.Responsible for self-driving software. 2.Responsible for interaction design. Deep integration of the Apple operating system.
Stella	Marketing department	1.Advance publicity. Develop advertising and promotion strategy. 2.Determine the store locations 3. Responsible for the procurement of car parts from all over the world
Ellen	Chief engineer	1.Vehicle structure and safety design to follow MDA regularly.

Objectives:

Technical Objectives:

To invent an electronic and autonomous Apple car.

Timing objectives

Complete the final design for the vehicle by January 2025

Complete the safety test by January 2026

Complete the final manufacture of the car and ready to sell by December 2026

Resource objectives: Comment by Larry Mantrone: This is a LOT of money. I honestly don’t know how much it would cost to develop and build an autonomous electric car. Your estimate be in the ballpark, but IMHO, it seems extrmely high. As Apple is sitting on a ton of cash right now, I’ll accept that Tim Cook has the money to throw at this project. My bigger question would be whether the project could return enough money to warrant this spending. You are creating a high-end car that will only appeal to extremely wealthy people. How could you sell enough of them to get a meaningful return on investment? You provide a revenue estimate of $230 billion below but offer no details to justify it. How many cars would you have to sell to make $230 billion?

Entire cost of the project is not to exceed $ 130 billion.

Budget objectives

	Planned (High-Level Estimates)
Labor	$30 billion
Equipment,hardware or software	$80 billion
Partner with established carmaker,BMW	$20 billion
Total	$ 130

Scope objectives:

The goal of Project Titan is to design a self-driving and “very high-end” vehicle branded by Apple, and this will be a revolution to people’s life.

Project Selection & Ranking Criteria

Project benefit category:

Compliance/Regulatory Efficiency/Cost reduction Revenue increase

Project urgency The project is very critical.The electric vehicle is an emerging and highly concerned industry, and soon it will be very competitive. The sponsoring organization wants to capture this emerging market and to earn market share, since the electric automobile industry will be the one of the profitable industries in the future. Comment by Larry Mantrone: Electric vehicles are critical, but how critical are autonomous vehicles right now? Also, you are targeting the luxury market. Is that market segment clamoring for such vehicles now?

Cost/Benefit Analysis

Tangible Benefits
Benefit: · There will be a reduction in traffic deaths. Increased volumes of autonomous vehicles will likely decrease the frequency and severity of automotive accidents. · There will be a drop in harmful emissions, which helps protect the environment. · The elderly and people with disabilities, such as the visually impaired or disabled, will benefit from increased mobility. · Cars will be joining cell phones in morphing into personal computers. · Vehicular automation will revolutionize the transportation industry, making commutes more accessible for everyone. · Lower fuel consumption · Commute time would be productive time and include more entertainments · $230 billian billion car market Comment by Larry Mantrone: I see you came up with a revenue estimate that appears to generate a positive return. I would question how many cars you would have to sell to earn this amount of money.
Value & Probability: We estimate a likelihood of 85% that the Apple car will bring these tangible benefits.
Assumptions Driving Value: performance-driven benefits
Intangible Benefits
Benefit: · Through this project, Apple Inc. will gain more reputation worldwide, and receive a reputation for its world’s recognition of its advanced technology, innovation and quality. Once the project is completed, the stakeholders and management will receive tangible financial rewards. A higher employee commitment to the enterprise will be realized. There will also be a higher customer satisfaction. The project will reinforce and consolidate Apple as the most valuable brand in business history to date. Last but not the least, the entire design will be a landmark in the vehicle industry.
Value & Probability: N/A without internal data
Assumptions Driving Value: value-driven benefits
Cost Categories	Amount
Internal Labor	10 years= 8 hours * 5 days *52weeks * 10 years = 20800 hours, 40 per hour = $15 Billion Comment by Larry Mantrone: It’s nice that you offered some breakdown of the $15 billion, but if I multiply 8 x 5 x 52 x 10 x 40, I get a result of $832,000. Something’s missing here, such as the number of resources involved. Also, where do the 10 years fit in?
External costs: Comment by Larry Mantrone: It would have helped to have provided some details as to how you arrived at these other numbers.
Labor (consultants, contract labor)	$15 Billion
Equipment, hardware or software	$80 Billion
List any other cost categories as needed. · Partner with established carmaker, BMW Comment by Larry Mantrone: It might make sense to partner only with BMW rather than all of the vendors listed above. Total Estimated Costs: $130 Billion	$20 Billion

Other Business Benefits

The new energy automobile industry is an important branch of the automobile industry, and it has also changed the traditional automobile industry chain structure that has lasted for a century. Power batteries are the most important parts in the middle reaches of the industrial chain. At the same time, mineral resources such as cobalt ore and nickel ore are important components of power batteries. Therefore, such mineral resources are different from the traditional automotive upstream industrial chain.

In the traditional automobile industry chain, downstream OEMs need to master core technologies such as engines, chassis, and gearboxes; while in the new energy automobile industry chain, the research and development of core components is gradually separated from automakers, and downstream OEMs can Batteries, electronic controls and motors are sourced, and some intelligent hardware and driving assistance chips can also be developed in cooperation with other companies, which reduces the barriers to entry for OEMs and gives companies more room for development. At the same time, industries that serve the aftermarket of new energy vehicles, such as charging piles and power replacement stations, will also occupy an increasingly important position in the industry chain.

All in all, the advantage of new energy vehicles is to reduce the pollution of the atmosphere and delay the warming of the El Niño phenomenon. Secondly, the use of new energy vehicles has vigorously promoted the development and popularization of new energy technologies such as solar energy, and the impact is far-reaching. Comment by Larry Mantrone: Climate change is due to other factors than El Nino.

Assumptions

1.Sponsors and suppliers can support and provide money or materials on time 2. During the road test, no safety accidents occurred Comment by Larry Mantrone: I would suggest acknowledging that some form of accident would occur and say that an acceptable number of accidents occurred.

3. We will regularly upgrade the in-car system to ensure the best driving experience 4. Possible development space for electric vehicles 5. We will collect a lot of driving data to improve user experience

Scope [High-Level Requirements]

n Quality • Pass the DMV safety test • Ensure that the battery quality will not spontaneously ignite under severe impact Comment by Larry Mantrone: It looks like these two are the same. • Ensure that the battery quality will not spontaneously ignite under severe impact n Time • Road test completed in 2024 • 2024.11 show car enters the global Apple Store, online ordering begins • Cars began to roll off the production line 2025.02 • Complete delivery in 2025 . n Resource Allocation • Use resources to get the latest industry insights • Use human resources to assign suitable personnel to specific areas

Constraints Comment by Larry Mantrone: What you describe here seem to be threats to your project, rather than things that limit options. These certainly are factors which would affect your project, though.

1. Low demand for electric vehicles in some of the areas 2. The project requires very high-leveled education employees 3. Price instability of some of the raw materials 4. Lack of Charging infrastructure 5. Extreme high salary for professional employees 6. The reputation of automatic pilots (will affect the sales of EV) has dropped in recent years 7. Price change of raw materials (due to political reasons)

Risks: Comment by Larry Mantrone: These are indeed threats to the success of your project.

Risks	Risk level	Strategy
Increase in price of raw material	Medium	The project managers should always check the price of raw material to prevent extra cost of budget
Battery problems and replacement	Medium	The quality assurance manager should check the batteries and make sure the batteries are ready for the performance test. If not, make sure the replacement is ready to prevent this situation
Body design disagreement	Low	The CAD manager need to prepare a risk assessment report and risk control plan to prevent this situation
Increase in electricity prices	Medium	The project managers should always check the price of electricity to prevent extra cost of budget
Power shortage during performance test	High	The second test field should be including in the risk control plan by the project manager and the technical team
Low demand for electric vehicles	Medium	The CEO needs announce a discount event on the first purchase or negotiate with government if they can promote people use EV instead of gasoline vehicle
Supply shortage	High	The project managers and the financial team should always check the inventory to make sure there is no shortage of inventory. If so, conservation with supplier will be essential or find a new supplier can be ultimate choice
Professional disagreement	High	The project managers need to prepare a risk assessment report and risk control plan to prevent this situation
Data loss or stolen	High	The technical team needs to monitor the database and report back to superior on a daily basis. If accidents happened, make sure the back up plan is ready for this kind of situation (cyber attack, data leaking, or Dos, etc)
Partnership crisis	High	The CEO needs to persuade the partners with an impressive report
Tests field lockdown	Low	The second test field should be including in the risk control plan by the project manager and the technical team