Project Destiny
Brent Collver, president and chief executive officer, of Romet Limited (Romet) sat at his desk in his Mississauga, Ontario office on the morning of Friday, April 27, 2018, preparing for the Project Destiny team meeting that would start at 1:00 pm, that afternoon. Brent had just finalized the architectural design and layout for the company’s new plant and was reviewing the activities required to complete the move. He described the situation:
We are continuing to grow the company and need a larger facility. We have leased a 75,000 square foot plant on Timberlea Blvd about two blocks from our current location on Matheson Blvd. The new building will give us additional 20,000 square feet and the layout will provide for improved material flow. Our lease for the current building expires on December 31st. I would like to have the move completed before the Christmas shutdown which starts on December 21st. We face the challenge of having to ship product and move the plant at the same time. Unfortunately, I cannot discontinue operations as we move the plant. It will be a tricky balancing act, and I will require careful planning and execution.
Details about the Company – Romet
Transportation systems for natural gas consisted of a complex network of pipelines, designed to efficiently move natural gas from its origin to where it was needed. Utilities and pipeline companies used metering systems to measure and regulate the amount of natural gas entering, flowing through, and existing in their pipeline systems. Metering requirements differ based on diameter, pressure, and volume of the pipeline. Natural gas meter capacity was measured in standard cubic feet per hour (SCFH).
Founded in 1972, Romet designed and manufactured rotary natural gas meters and electric instruments to customers around the world. Its meters range in size from 600 SCFH to 56,000 SCFH and were sold mostly to gas utility companies. Although the company offered 14 standard product sizes (e.g., 600 SCFH, 1,000 SCFH, 1,500 SCFH, 2,000 SCFH, and so on), orders were also customized to customer specifications. Order sizes varied significantly, ranging from 5 to 2,000 units, and lead times were six to eight weeks, compared to the 12 to 16 weeks for Romet’s competitors. Prices ranged from $600 to $5000 per meter with an average selling price of approximately. $1500 per meter.
Romet had approximately 25 office staff and another 90 people working in four departments in the plant – machining, anodizing, assembly and proving. The company strategy was to machine in-house critical components such as impellers, pressure, body housings, and head plates. The machining department used 27 machines, including 5-axis milling machines, horizontal milling machines, lathes and grinders. All work computer metric-controlled (CNC) equipment. Romet was acquired by Signal Hill Equity Partners, a Toronto based private equity firm in 2013.
Details about Project Destiny
The plant relocation project was named “Project Destiny”. Brent had identified 14 activities required to complete the project. (See Exhibit 1). The tasks were organized based on the constraints Romet faced, as Brent explained:
We have preliminary agreement with the owners of the Timberlea building, and it will take four weeks for the lawyers to finalize the details of the lease. After we get the permitting and zoning approvals, I want to move the plant in sequence, starting with the machine shop followed by assembly, paint, line, and auxiliary equipment. We will need to build inventory to support customer deliveries while we move the plant. For example, we will build enough machine parts to keep the Assembly Department running before we shut down for the relocation. Similarly, an inventory of assembled parts will also need to be built before we move that department.
Right now, the Timberlea building is a vacant shell, without an office, so we need to build a proving room and an office pod for the quality Department and supervisors. Our contractor will be responsible for plant construction and equipment installation, and they will need to prioritize resources. Electrical and pneumatic construction will need to be completed before any equipment can be installed. Moving the approving room will require coordination with Measurement Canada, who will need to certify the testing equipment afterwards relocated to the new building. We still need to select a contractor for the office construction.
Attending the 1:00 p.m. meeting with Brent would be Romet’s director of operations, its Chief Financial Officer, and the company’s lawyer. Also, during the meeting would be the architect and the contractor responsible for plant construction and equipment installation. Brent recognized that extending the completion of the project beyond the end of the lease was impossible, and he was concerned about completing the schedule without increasing the budget:
“Before I go into the meeting this afternoon, I need to understand the expected completion date for the project based on the current schedule. If it’s going to run past December 21st, I want to be prepared to discuss alternatives and possible changes. Meanwhile, I need to complete the project on budget, which has been set based on current schedule. It will be difficult to get approval to cover expenses for additional resources”, Brent said to himself.
Exhibit 1: Activities to Complete Plant Relocation After Architectural Design and Plant Layout is Completed
Activity Description Immediate Predecessor Estimated Time (weeks)
A Finalize Lease – 4
B Obtain Permits A 10
C Zoning Approval A 8
D Electrical and pneumatic construction B, C 16
E Quality /Supervisor pod construction B, C 16
F Anodizing line installation B, C 14
G Machine Shop Equipment Removal and reinstallation D, F 2
H Climate Controlled proving room construction E 4
I Assembly relocation G 1
J Paint Line relocation I 6
K Auxiliary equipment J 1
L Office Construction E 12
M Information Technology services E 12
N Office Move L, M 1
O Project End H, K, M –
To complete this assignment and gain maximum points, you will need to do the following:
1) Prepare a network diagram /program Assessment and review technique (PERT) chart for the project and identify the critical path. Please do this by hand unless you have access to MS project, in which you can do a PERT chart using the software. Either way will be accepted as long as I can read and understand your work. I want to see both the FORWARD PASS Calculation and the BACKWARDS PASS Calculation for full credit.
2) Be sure to include the Late Start/Early Start and Late Finish/ Early Finish Data – points will be deducted if this is not included.
3) What is the completion date of the project based on the data in Exhibit 1? Or how long will it take to complete the project?
4) What activities would you consider CRASHING and why? Please write more than 1 sentence. 4 sentences to explain yourself would be expected.
5) If you were Brent Collver, what action would you take and why? Again – please write more than 1 sentence. A good explanation of your reasoning will give you favorable points for this question.
6) Brent is considering a number of possible alternatives to reduce the overall length of the project. Will any of these alternatives help him?
a) Ask the contractor to provide additional technicians to reduce the time required to complete the electrical and pneumatic construction by 2 weeks at a cost premium of $20,000.
b) contractors for office construction instead of 1. One contractor would be responsible for the office structure.; The second contractor would be responsible for installation of fire alarm and safety systems such as fire alarm, emergency lighting, and sprinklers. This approach would reduce the expected completion time. For the office by three weeks, but increased costs by $30,000.
c) Ask the contractor to work overtime on Saturdays to reduce the time to complete the quality/supervisor pod construction by two weeks at a cost premium of $35,000.
d) Use a different contractor to install the anodizing line in 10 weeks at a cost premium. Of $50,000
Extra Credit Question: Which activities do you consider having the greatest risk for delay?
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Project Destiny is a relocation project for Romet Limited, a company that designs and manufactures rotary natural gas meters and electric instruments for customers worldwide. The company has outgrown its current facility and has leased a larger 75,000 square foot plant on Timberlea Blvd, which is located two blocks away from its current location on Matheson Blvd. The new building will provide an additional 20,000 square feet of space and will improve material flow within the plant.
The project is named “Project Destiny” and the CEO, Brent Collver, has identified 14 activities required to complete the move. These tasks are organized based on the constraints Romet faces, such as finalizing the lease details, obtaining permitting and zoning approvals, and building inventory to support customer deliveries while the plant is being moved. The move will need to be done in sequence, starting with the machine shop, followed by assembly, paint, line, and auxiliary equipment.
The Timberlea building is currently a vacant shell, so the company will need to construct a proving room and an office pod for the quality department and supervisors. The company’s contractor will be responsible for the construction and equipment installation. Brent aims to complete the move before the Christmas shutdown which starts on December 21st. This will be a tricky balancing act as the company will need to ship product and move the plant at the same time, without discontinuing operations.
The company strategy is to machine in-house critical components such as impellers, pressure, body housings, and head plates. Romet has 25 office staff and another 90 people working in four departments in the current plant – machining, anodizing, assembly, and proving. They have 27 machines in their machining department, including 5-axis milling machines, horizontal milling machines, lathes and grinders. The company has an average lead time of six to eight weeks for orders, compared to the 12 to 16 weeks for Romet’s competitors.
The move of the plant is a significant project and requires careful planning and execution. This will involve coordinating the various activities, managing the inventory and building up the new facility while not disrupting the current operations. The company will have to ensure that all necessary approvals and permits are obtained, and that the move is done in a timely and efficient manner.
