Question: You are hired as a project manager by Fuel System Plc, the company is moving the entire existing plant to new premises so that to provide the social relaxation to the local community around the existing premises and to increase the productivity and profitability of the company. You have to present a project plan to the stakeholders of how can be achieved.
Fuel Systems Plc (FS. Plc), a major supplier to the automotive industry and 60% share holder of the Precision Aluminum castings Ltd (PAC Ltd.).
PAC Ltd. produce high quality , aluminum pressure die-castings under the management of managing director(M.D) , who holds 30% of the shares and Technical Director who holds 10% of the shares.
Moving the entire existing plant to new premises so that to provide the social relaxation to the local community around the existing premises and to increase the productivity and profitability of the company.
Providing social Relaxation to local community.
New expanded big factory unit.
Selling Existing plant for housing purpose.
Production Related employees should be offered a job.
Administrative staff needs to be redundant.
Shifting should not affect the supply.
The plan takes care of all deliverables and it makes sure that the deliverables should be achieved within the scheduled time and budget.
The factory is now in the middle of a housing estate and it does not have room to expand. The local people are regularly and bitterly complaining about the noise, dust, fumes and other pollution generated by the factory. The local people are very disturbed especially on nights when there is a sleep time and also on weekends when there is a relaxation and enjoying time for them and at the same time the company are working hard to try to meet the increasingly higher demand for their production.
There is also a great noise and air pollution of articulated and heavy lorries, who try to reach the site through residential areas. Also the company wants to expand itself for more production purposes so that the profitability increases, but due to residential areas around, the company is unable to do so.
Sponsors of the project
Major stakeholders that include the management of Fuel system holding 60% of the shares and Managing Director of PAC holding 30% of the shares and Technical Director of PAC holding 10% of the shares and other external shareholders who are interested in this project.
Alternative forms of investment
It is assumed that if in any case the project sponsors quit in the middle of the project or the project goes out of the budget, then company can take loans from the banks or the private financial bodies. Finance can also be provided by its customers on request or by selling its public shares.
Benefits of the project
Increases the ethics value of the company in the market.
The project provides the social relaxation to the local community around the company.
The project saves the community and environment from air and noise pollution.
The project increases the productivity of the company and hence profitability also increases.
If the profitability increases then the share value of the company in the market also increases.
Attracts more customers by increasing its turn over.
Convincing the shareholders so that they are enough satisfied to sponsor the project.
Difficulty in transferring the experienced production staff, because they are already settled and the present location of company suits them, so we might loose some experienced staff. In order to retain those experienced staff, the company needs to provide them with incentives, more salary and even new houses to those employees who are very important for the company. This increases the cost of the project.
Recruitment of new staff: It cannot be assumed that all production staff will transfer, so company should be ready to recruit the new production staff.
Redundant administrative staff: The employees who go redundant the company needs to give them full packages and pension so as to avoid the strike.
Solution1: Close the entire plant and move everything to the new location which is 70 miles away, next to the FS Plc.
Solution2: Purchase the houses near around the company and expand the current existing premises over that purchased area.
Solution3: Bring the new technology into the existing factory , Automated Technology which creates a very less air and noise pollution , additionally their efficiency is very high, which in turn increases the productivity rate of the company.
Solution4: The Company is intended to close and move the entire plant, but not at one move. The planning is to move the half plant first like heavy furnaces (electrical + induction furnaces) to the new site, include the new technology into the new site for expansion also, sidewise run the old half plant, when first new plant will run properly, and then move the remaining existing plant to the new location.
Analysis of Alternatives Considered
| Solution1 Advantages 1.Some of the lorries of the company will be free which can be used for transport purpose.2.All the non-financial benefits of the project already mentioned have been obtained.
3.The old existing location is free now and the planning can be taken to build the housing unit on the premises.
1.All of the company’s financial benefits as mentioned have been obtained.
1.Productivity rate can be increased.
2.There is a little pollution around the area.
3.The company will not suffer any opposition from its employees.
4.The customers and suppliers will not be lost.
1.The company has enough time to handle customers and suppliers.
2.The company has enough time to handle its employees. 3.All financial as well as non financial benefits have been obtained.
4.Employees have been given more time, and the employees who are in doubt of transferring can test their stay in new location for certain period of time.
| Solution1 Disadvantages 1.The supply cannot be continued during that time, because of unavailability of work.2.It is difficult to handle the existing employees who are not willing to go or who are made redundant .
3.The raw material cannot be taken for some time by the company because of no availability of area which may loose the supplier.
4.The productivity will abort for sometime which can affect the market value of company.
1.All the main primary company’s non financial benefits have not been obtained.
2.In any case, if any of local house owners refuses to sell his house, then plan will fail out.
3.There will be great opposition from other local community
1.Although productivity rate is increased, but not too much extent, because a time can come in future when company needs more machines for increasing productivity and there will no space for expansion, so in future the company can fall into the same position.
2.Replacing the old machines with automated technology make old machines redundant, thus a great financial loss can happen.
3.Pollution can be controlled but up to some extent and the lorries still are still giving pollution .The public gets disturbed due to working of company.
1.It takes long time to obtain non financial benefits.
2.Company requires more staff to handle two locations.
3.There is more overhead required during that stage, because raw materials should be available at both sides and also the profits are taken from both sides.
4.It increases the overall budget and time of the project. 5.During the second stage of the project ,you need to call again the contractors for doing their job
Solution4 is the recommended solution for the project, as it provides all the solutions to company’s problem and it satisfies both financial as well as non-financial aspects. However this option requires more overhead and time but company has enough resources and time to handle this problem.
1.Recruit a new staff and allot them their responsibilities for the smooth working of the project. The proposed and structured organization is shown below
Organizations and responsibilities: The Managing director selects project manager and clearly explains his and his team members roles and responsibilities for the completion of project.
Project Manager: Manager is needed for the managing whole project. The manager should know about construction, how to pass tenders and making the contract. Previous experience is needed in managing the new construction sites, managing the contracts, passing tenders, all leadership, managerial skills are required and at least one year experience of change management is necessary. He manages all his team members and reports updates of the project to his MD.
Accounts Officer: He is responsible for all the funds that are spent and he manages these funds within the budget so that to achieve the goals, objectives and plan of the project.
Contract manager: Contract manager manages all the tenders and contracts of the project.
Risk officer: The risk officer will identify all the risks, maintain the risk list, analyze them clearly, have the ability to resolve those risks and keep regularly informing the project team about the probability of any coming new risk. The risk officer regularly updates his project manager about the risk.
1.Convince all production related employees to move to new location. There is a kind of staff which is very important for company like the experienced production staff in order to retain the experienced staff , company needs the to provide them with incentives, more salary and even new houses to those employees who are very important for the company.
2.It is noted that the general administrative staff would be surplus. So some of the staff would be made redundant. Every effort should be made to avoid the compulsory redundancy. Redundancy would be very clear and is based on point systems, which will be designed by the HR department of the company. Redundant employees should be given the redundancy pay that will be calculated based on the employee’s age, length of the continuous employment, sick days etc. (the policy will be clearly made by HR department of the company.) .
There is a kind of staff which is fairly militant like Shop Steward , in order to take this kind of staff unto the company’s side ,company needs the to provide them with incentives, more salary and a job over there.
3.Provisions should be made so that the production of dies should not be stopped. Movement of business from one plan to another takes time (lets take one month). During this period the production rate is slow and hence supply of the product may be delayed by certain time. To avoid this situation, there are options available.
Option1: Inform in advance to the customers that due to movement of the company, there will be a delay in supply.
Option2: Manufacture the die in advance, more than the requirement, so that during the period of movement, these stored products are needed to adjust the supply.
Option3: Give the contract of manufacturing the products to some another competitor during that period, take the products from them and supply these products to your customers.
4.Informed the local community around the company about the movement so that they can cooperate with the company during the movement because we need to produce more products, so there be more noise, more pollution and also during the movement there will be large noise of vehicles moving through residential areas. It’s good to inform them that the company is trying its best to get rid of the problem and for sometime they are to bear more disturbances in terms of air and noise pollution.
5.The contract manager passes the tender for constructing new premises at a new site to the construction companies and need to select within a team the best suitable contract which is within the budget
6.The contract manager passes the tender to various transport companies, so that to arrange the best transport for movement of material from existing site to another site.
7.The contract manager passes the tender to engineering company whose role is to disassemble the current machinery and reassemble the same at new site. Their role is also to setting up some new plants, new machinery at the new site.
8.The remaining old site would be sold off, possibly for housing development. So at the period of movement, the company will pass the tenders to the construction companies for demolishing the existing site and converting it into the housing development.
9.Waste: movement from one site to another produces waste also, like rejected products, breakdown machinery, old furniture etc. so completely tools and techniques are required to handle the waste with complete health and safety regulations
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