PRM$1015$ Intro to Project Management

Case Study $310\%$

New Manufacturing Facility in China

At its January $15$ meeting, the board of directors of Omega Consolidated Industries made a decision to build a new manufacturing facility in China and approved funding up to $$180$ million for construction and start$-$up activities. It wants the new facility completed within two years from the date that a contractor is selected to design and build the facility. Omega is a worldwide corporation with its headquarters in London. The board asked I. M$.$ Uno, Omega$$s president, to assign a team to develop a request for proposal $($RFP$)$ and solicit proposals from contractors to design and build the facility, including installation of all production equipment, offices, and an integrated information system. The team would also be responsible for monitoring the performance of the selected contractor to ensure the contractor fulfills all contractual requirements and performance specifications.

Ms$.$ Uno selected four members of her management team:

$$ Alysha Robinson, who will be the plant manager of the new facility

$$ Jim Stewart, Chief Financial Officer

$$ Olga Frederick, Vice President of Engineering

$$ Willie Hackett, Procurement Manager

The team chose Alysha as their team leader. By April $30,$ they developed a comprehensive RFP that included:

$$ A statement of work describing the major tasks that the contractor must complete, as well as the performance specifications for the production capacity of the facility A requirement that the contractor complete the project within $24$ months after a contract is signed

$$ Criteria by which the team would evaluate proposals:

$$ Related experience $30$ points

$$ Cost $30$ points

$$ Schedule $30$ points

$$ Innovative design $30$ points

$$ That the contract would be a fixed$-$price contract

The RFP did not state how much funding Omega had available for the project.

On May $15,$ the team announced the RFP in various trade publications and websites and required that interested contractors submit a proposal no later than June $30.$

On June $30,$ the Omega team received three proposals:

$1.$ J&J$,$ Inc., an American firm, submitted a proposal for $$150$ million. However, the proposal stated that they would require $30$ months to complete the project.

$2.$ ROBETH Construction Company of Ireland submitted a proposal for $$175$ million. They had built several other facilities for Omega in the past, and its officers felt they had a good relationship with Ms$.$ Uno, Jim Stewart, and Olga Frederick$$s predecessor, who recently left Omega to become president of one of Omega$$s competitors, which is also considering building a facility in China.

$3.$ Kangaroo Architects and Engineers of Australia submitted a proposal for $$200$ million. Although Kangaroo has never done a project for Omega, they are one of the largest contractors in the world, have designed and built many and various types of facilities, and have a great reputation for innovative concepts, such as $$green$$ environmentally friendly designs, and for building award$-$winning showcase facilities. They had built facilities for several of Omega$$s competitors.

The team was disappointed that they received only three proposals; they had expected at least eight.

On July $5,$ a fourth proposal was received from Asia General Contractors, a company based in China. The proposal was for $$160$ million. They had built many facilities in China for other global corporations and stated that they have good knowledge of many credible trade subcontractors in China that would be needed to build the facility. The proposal also stated that they could complete the project in $20$ months.

The team scheduled a meeting for July $15$ to discuss the proposals and, as a team, to score each of the proposals with respect to the evaluation criteria. That provided the team members with two weeks to individually read the proposals and develop their individual comments about each proposal, but they agreed not to individually score the proposals prior to the July $15$ meeting. At the July $15$ meeting, Alysha opened the meeting and stated, $$I like the proposal from Kangaroo because it would provide a showcase state$-$of$-$the$-$art facility.$$ Jim interrupted her, saying, $$Their proposal is for more than the board has allocated for this project, I don$$t think we should consider them any further. In my mind, they are out. Alysha responded, $$Even though it would require some additional funding beyond what the board originally approved, I feel confident that I can persuade I. M$.$ and the board to approve the additional amount required.$$ Jim said, $$I like the proposal from ROBETH. We have worked with them in the past during my $30$ years here at Omega, and their proposal cost is just about what the board has allocated. I know a lot of the people at ROBETH.$$

Olga mentioned, $$I have only been here at Omega for less than a year, but I took it upon myself to review the final reports of the previous projects that R