Page 308 - Orlicky's Material Requirements Planning

CHAPTER 16 Project Manufacturing 287

The overall design and production approach is determined during this phase, and
an initial statement of work is prepared for further detail in the definition phase.

Definition Phase
The definition phase occurs when the detailed plan is prepared. This determines the realis-
tic cost, schedule, performance requirements, quantity, and timing required for human and
other critical resources. A good project manager also will identify the areas that are risky or
cause for concern. These areas then are detailed further for recovery and contingency plans.
This is very different from the traditional MRP environment, where the master schedule is
entered, supported by a bill of material and routings. In the traditional MRP environment,
the assumption is that everything will work exactly as planned. Any variability or unex-
pected events typically are covered with safety-stock inventory or available surge capacity.
In the project manufacturing industry, the likelihood of the same inventory being used again
is very small. Capacity must be scheduled carefully to provide optimal cost performance.
In the definition phase, a detailed statement of work is developed and broken down
to the necessary level for control purposes. An effective statement of work (SOW) should
clearly define the objective for the project and how success will be measured. The SOW
should include cost and schedule targets as well as quality targets and usually becomes
the contractual SOW. Since revenue is directly related to progress against the SOW, it is
very important to have agreement with the customer on the definition of key words. For
example, a customer may desire to have a product tested in water. Your intent is to test
the product in a local lake. The customer meant water as in the Pacific Ocean. The cost
implications can be significant. Even establishing the documentation format for the prod-
uct manuals can be important because manuals and drawings created using new versions
of software may not be readable by previous versions. The project manufacturer also may
be paid at certain points in the completion of the product, so having measurable com-
pletion criteria is essential for each significant step in the work breakdown structure.
Once the SOW has been defined and approved, the work begins on the work break-
down structure (WBS). A graphic representation of the WBS looks like a bill of material
(BOM) that has been laid on one side. The duration of each task and the relationship of
one task to another can be clearly visualized in this WBS, as shown in Figure 16-1.
This breakdown of activities allows scheduling materials and capacity based on the
timing that is required. When this WBS is phased against a time line, the timing for each
task can be calculated.

Production Phase
The production phase of a project begins with verification of the product production
specifications and the beginning of unit production. The final preparation and dissemi-
nation of documents is incorporated in this phase, including the development of techni-
cal and service manuals and other traceability that is required for the product. Most com-
panies have moved to releasing this information electronically owing to the cost of