Iron Triangle Model And Risk Analysis For TF PLC Factory Design Project

Iron Triangle Model and its importance

This report is based on Technology Futures (TF) PLC which is a technology contracting, consulting and product/software development company. In this report, the analysis is carried out to determine feasibility of a recent project being undertaken by the company. The discussions are carried out with the help of MS Project software application to present the various analysis required for the project. The schedule for the project has been prepared using MS Project application and cost estimation along with Earned value analysis has also been done in this report. Finally, some recommendations has been provided for the company to make decisions for certain activities in the project.

Technology Futures PLC, a technology contract, consults as well as product or software Development Company, which is experienced in manufacturing and design of different electronic and technology projects. The projects are specifically specialized on automation and new range of product development for the automation factories. The company got a contract on automation plant development for MMC PLC. In order to complete the project within estimated time and budget it is necessary for the company to consider Iron triangle model which is best known as project triple constrain scope, schedule and resources (Chih and Zwikael 2015). It is necessary for TF PLC to complete the project within estimated time frame and allotted budget. The Iron Triangle is being applied for almost any project irrespective of the size and complexity. The Iron Triangle comprises of three main parameters as scope, schedule and resources for which the model is presented as below:

Figure 1: Iron Triangle Model

From the above figure of Iron Triangle model, it can be said that there is interrelationship between the different parameters from various angles. The model demonstrates that a project idea has to be evaluated and analyzed from different perspectives. For instance, TF PLC has to consider every detailed aspect that is cost and time and required for completion of the identified activities while designing the schedule.

For this particular project of TF PLC both the human and physical resources are considered for successfully accomplish the automation project for MMC PLC. For reducing the workload the total project is divided into small activities and for each activity based upon skills and knowledge engineer and architects are allotted who are considered as the human resource. On the other hand the physical resource for the project are salaries, administrative cost, equipment cost, wages, material cost etc (Daniel and Daniel 2018). It is expected that the design of the automation plant implementation will be successful if these resources are accurately used.

Scope parameter importance

The resource as a parameter is additionally critical in this specific undertaking as it impacts how there is connection between scope and schedule parameters. This is the situation since the resources will help TF PLC to decide the sort of tasks that ought to be performed and those that will not. The way toward coordinating or isolating exercises will manage the undertaking plan and the time it will take to finish (Harrison and Lock 2017). The time the undertaking will affect the task cost. The more extended the task will take, the higher the cost. This is on account of the different expenses will keep on varying with time. With the resources accessible, TF PLC will have the capacity to decide its ability in consolidating exercises so the settled expenses can be shared. This will make the cost suitable as far as requirement of expense is considered.

Importance of Scope parameter

The successful accomplishment of any project is depends on its scope management approach.  For this particular project of TF PLC the scope comprises of design and construct a new factory for the automation equipment’s, design and construction of a new engineering automation plant for the train manufacturing clients, design and contract new factory for fitting the automation equipment’s accurately, control software and inverted products also. The scope of any project has not much difference with its goal and objectives (Kerzner and Kerzner 2017). Rather it can be said that after framing the project scope the project designer will be able to complete the project within proper time and budget.

It is additionally vital to bring up if a venture is not arranged well, some improbable objectives and goals might be set. This may crash the undertaking execution since the info will be misled. At the arranging level, the group will have the capacity to build up the connection between various exercises and how they impact the ultimate result. All the center exercises will wind up basic and more accentuation will be put on them. This is to guarantee most extreme fixation as far as supervision and distribution of resources (Cleden 2017). The parameter could likewise be utilized to permit space for making the alteration if there is require amid the venture. This is conceivable in light of the fact that amid arranging, the group can set up a few measures that can be taken if the undertaking never functioned as before arranged. The task group, for example, may choose to increment or lessen the quantity of basic exercises relying upon how the undertaking advances.

Schedule parameter importance

Importance of Schedule parameter

The commercial benefits of timely success of any project developed by different organization are based on its framed schedule. Interruption within the project schedule will affect the Return on Investment (RIO) and revenue of the company. According to the contract this project should be completed within 3^rd June, 2019 and the total cost allotted is £ 48.50 Million. The schedule parameter will simultaneously show the critical path through which the easiest path should have to be chosen to complete the project with lesser time and with a high profit.

The planning parameter characterizes the time every movement should take to finish. This will add to the aggregate time the task will take to reach a conclusion. The parameter can be utilized to tell if the task group will have the capacity to beat the concurred contract due date or not (Heagney 2016). In the event that the calendar, group finds that a few exercises may take moderately longer time, it might guide resource allocator to build their financial plan keeping in mind the end goal to quick track their fulfillment.

Project Name: TF PLC Factory design project
Name of the risks	Possible  Consequences	Risks	Risk mitigation strategies
Likelihood	Consequence	Risk Rating
Operational Delivery	Delay project delivery	Possible	Major	High	It order to deliver the manufacturing and construction project successfully the project manager should consider standard retention clause within the contract.
Procurement management	Decline the project	Possible	High	Moderate	In order to manage the procurement issues, professional and experienced procurement manager should be hired for the company.
Technical issues	Will develop a poor quality project for the client	Possible	Major	High	Software developer, analyst and tester should be hired to reduce even mitigate the technical issues.
Financial risks	Over budgeting of project	Possible	Major	High	At the project initiate phase a project feasibility study should be done based on the project requirement to ensure about whether the project will be beneficial or not.
Resource allocation risks	Affect the project success	Possible	Major	High	Based on skills and experience resources should be allotted for individual activities.
Faulty operations team	Decline the project	Possible	High	Moderate	Based on the project requirement proper training and development program should be arranged to reduce the operational errors that may raise for the team fault.
Manufacturing error	Negatively affect the ROI	Possible	Major	High	The pre fabricate parts of the manufacturing should be done before staring the development of the other equipment’s.
Affected ROI	Varied project cost	Possible	Moderate	High	Based on the project requirement and significant manufacturing requirements the project executives should define the expected return over the investment.
Logistic risks	Delivery issues	Unlikely	High	High	For constructing the automation plant and train equipment’s proper supply logistics risk management steps should be taken initially.
Intensive testing risks	Project output will be affected thoroughly	Unlikely	Major	High	Before final launching of the project, professional testing of the equipment’s are to be done so that changes needed can be easily incorporated within the required time.

From the network diagram, the critical path has been determined for the entire project as it has the longest duration been presented below:

BàEàFàJàKàLàMàOàP = (2+8+10+6+4+6+4+6+6) weeks = 52 weeks

According to the identified critical paths, the duration required to complete the project is 52 weeks.

The quantification of float for non-critical tasks is presented with the help of table as demonstrated below:

Non-critical Activity	Late start	Early start	Float = (Late start – Early Start)
A	2	0	(2 – 0) = 2
C	1	0	(1 – 0) = 1
D	5	3	(5 – 3) = 2
G	10	10	(10 – 10) = 0
H	13	11	(13 – 11) = 2
I	22	20	(22 – 20) = 2
N	41	20	(41 – 20) = 21

Task	Start Date	End Date	Duration (days)
B	02-Apr-18	13-Apr-18	10
E	16-Apr-18	08-Jun-18	40
F	11-Jun-18	17-Aug-18	50
J	20-Aug-18	28-Sep-18	30
K	01-Oct-18	26-Oct-18	20
L	29-Oct-18	07-Dec-18	30
M	10-Dec-18	18-Jan-19	20
O	21-Jan-19	01-Mar-19	30
P	04-Mar-19	12-Apr-19	30

The table below depicts the schedule that has been prepared for the project considering that it starts on Monday 2nd April 2018. The timeline for the project illustrates that the project will take 260 days and the completion date is Friday 12 April 2019 which is earlier than the requirement of the client. The schedule has been developed considering the activities that has been provided in the case study and it reflects that the Delivery of the completed Factory, Automation plant and Inverter Product line will be completed within 31st May 2019. This project will help to achieve bonus for the company as earlier delivery will give a bonus of £50k per day excluding weekends.

The formula for the calculating gross profit is presented as below:

Gross profit = Revenue – Costs

Revenue is considered as the total value of contract which is given as £58.5 million

The cost estimation for project is done by considering the total of fixed costs along with the cost of resources. The total fixed costs for the critical activities in the project (BàEàFàJàKàLàMàOàP) is presented as below:

Resource parameter importance

= £ (1.6+5.4+3.4+2.2+2.5+3.1+2.2+2.1+1.2) = £23.7 million

The costs for Production/Technician staff is calculated to be:

Estimate time to complete the project = 52 weeks

= (52*5 hours) = 260 hours of work

No. of Production/Technician staff in critical activities

= (5+10+5+20+5+50+5+20+16) = 141

No. of Engineers in critical activities

= (10+20+10+8+10+25+10+6+6) = 105

The total cost required for Production/Technician staff is calculated to be:

= (No. of Production/Technician staff in critical activities * Work hours) * Cost of each Production/Technician staff

= (141*260)*39 = £1429740.00

The total cost required for Engineer is calculated to be:

= (No. of Engineers in critical activities * Work hours) * Cost of each Engineer

= (105*260)*69 = £1883700.00

Hence, the total cost required for project is calculated as:

= Total fixed costs + Total cost of Production/Technician staff + Total cost of Engineers) = £ (2370000 + 1429740 + 1883700) = £ 5683440.00

Therefore, the Gross profit can be calculated as:

= Revenue – Costs = £ (5850000 – 5683440)

= £ 166560.00

Task	Planned progress (Weeks)	Actual progress (Weeks)	Percentage completion
B	2	2	100%
E	8	8	100%
F	10	6.2	62%
J	6	0	0%
K	4	0	0%
L	6	0	0%
M	4	0	0%
O	6	0	0%
P	6	0	0%

From the above table, it can be seen that only two of the critical tasks has been executed and completed as per planned for the project. From the review, it is seen that activity F has been completed only 62% which means from 10 weeks only 6.2 weeks has been progressed for the work. Further, it has been seen that the other activities has not been able to start as per the determined plan. The scheduled Gantt chart has been developed considering the results of review from the above table as below:

Scheduled Gantt chart

WBS	Task Name	Duration	WBS Predecessors	Actual progress (%)	Fixed Cost	Total Expenditure
0	TF PLC Case Study Project	260 days		39%	£48.50	£27.81
A	Commission Design of Factory	3 wks		100%	£2.80	£2.95
B	Commission outline Design of Automation Equipment	2 wks		100%	£1.60	£1.72
C	Commission outline Design-Inverter Product	1 wk		100%	£1.50	£1.58
D	Detailed design of Factory	8 wks	A	100%	£3.80	£4.08
E	Detailed design of Automation Equipment and Inverter Product	8 wks	B,C	80%	£5.40	£5.15
F	Commission and develop Software for Automation equipment and Inverter Product	10 wks	E	70%	£3.40	£3.08
G	Manufacture Automation equipment	10 wks	E	60%	£6.50	£5.75
H	Manufacture Modular Factory Units	9 wks	D,E	50%	£4.00	£3.50
I	Transport and Construct Modular Factory on site in Germany	8 wks	H	0%	£3.50	£0.00
J	Test Automation equipment	6 wks	F,G	0%	£2.20	£0.00
K	Transport Automation equipment to New Factory	4 wks	J	0%	£2.50	£0.00
L	Install Automation equipment in New Factory	6 wks	I,K	0%	£3.10	£0.00
M	Install Software for Automation equipment	4 wks	L	0%	£2.20	£0.00
N	Install software for Inverter Product Line	5 wks	F	0%	£2.70	£0.00
O	Test Inverter Production line	6 wks	M	0%	£2.10	£0.00
P	Handover and Train MMC engineers in Automation process and Product production	6 wks	N,O	0%	£1.20	£0.00

From a commercial perspective, it can be said that the project will not be profitable as the planned completion for the project is 41% for which the foxed cost has been provided as £48.50 but the actual completion of project is 39%. This means the project is beyond schedule and it will incur additional costs to complete the project. Hence, the project will require more than the estimated budget means it will not be profitable and loss of reputation for the company. In the agreement, there is a proviso about the fines and the rewards. Besides that the undertaking is finished after the concurred date, at that point the organization should pay a fine of £50k for every day deferred. Toward one side, if the venture finishes before the concurred date, it will understand a reward of £50k every day. Given the extent of the undertaking, intending to finish the venture near the agreement due date is dangerous. There are a few factors that may influence the smooth running of the considerable number of exercises like unfavorable climate and postponement in the supply of materials and hardware among others. In the event that any of the dangers happens, there are higher shots that the venture may not meet the due date. In the event that that is the situation, the organization will miss the rewards and at a similar it should pay the fine. That will influence the organization edges.

Risk Analysis

Task Name	Planned Value – PV (BCWS)	Earned Value – EV (BCWP)	AC (ACWP)
TF PLC Case Study Project	£171,110.66	£152,751.85	£160,312.94
Commission Design of Factory	£12,962.80	£12,962.80	£12,962.80
Commission outline Design of Automation Equipment	£8,641.60	£8,641.60	£8,641.60
Commission outline Design-Inverter Product	£4,321.50	£4,321.50	£4,321.50
Detailed design of Factory	£34,563.80	£34,563.80	£34,563.80
Detailed design of Automation Equipment and Inverter Product	£27,653.40	£22,121.86	£27,652.32
Commission and develop Software for Automation equipment and Inverter Product	£26,786.11	£26,786.11	£26,786.11
Manufacture Automation equipment	£25,924.03	£25,405.42	£25,923.90
Manufacture Modular Factory Units	£19,442.31	£17,929.84	£19,442.00
Transport and Construct Modular Factory on site in Germany	£0.00	£0.00	£0.00
Test Automation equipment	£0.00	£0.00	£0.00
Transport Automation equipment to New Factory	£0.00	£0.00	£0.00
Install Automation equipment in New Factory	£0.00	£0.00	£0.00
Install Software for Automation equipment	£0.00	£0.00	£0.00
Install software for Inverter Product Line	£0.00	£0.00	£0.00
Test Inverter Production line	£0.00	£0.00	£0.00
Handover and Train MMC engineers in Automation process and Product production	£0.00	£0.00	£0.00

 The formula for calculating Planned Value (PV) using EVA (Earned Value Analysis) is demonstrated as below:

PV (Planned Value) = Planned % Complete x Total Project Budget

Hence, from the above formula, the planned % figure for the project can be derived as:

Planned % Complete = [PV (Planned Value) / Total Project Budget] * 100

= [£171,110.66 / £414,817.00] * 100 (%)

= [0.4125] * 100 (%) = 41%

Therefore, the  planned % figure for the project is 41% means it has been planned that 41% of the entire project will be completed by 23rd July 2018.

Overall actual figure for the project

The formula for calculating Earned Value (EV) using EVA (Earned Value Analysis) is demonstrated as below:

EV (Earned Value) = Actual % Complete x Total Project Budget

Hence, from the above formula, the actual % figure for the project can be derived as:

Actual % Complete = [EV (Earned Value) / Total Project Budget] * 100

= [£152,751.85/ £414,817.00] * 100 (%)

= [0.3682] * 100 (%) = 37%

Therefore, the actual figure for the project is 37% means that only 37% of the entire project is completed by 23rd July 2018.

Projected completion date and final spend for the entire project

WBS	Task Name	Budget (in Million)	Planned Value – PV (BCWS)	Earned Value – EV (BCWP)	AC (ACWP)	SV	SPI	CV	CPI
A	Commission Design of Factory	£2.80	£12,962.80	£12,962.80	£12,962.80	£0.00	1	£0.00	1
B	Commission outline Design of Automation Equipment	£1.60	£8,641.60	£8,641.60	£8,641.60	£0.00	1	£0.00	1
C	Commission outline Design-Inverter Product	£1.50	£4,321.50	£4,321.50	£4,321.50	£0.00	1	£0.00	1
D	Detailed design of Factory	£3.80	£34,563.80	£34,563.80	£34,563.80	£0.00	1	£0.00	1
E	Detailed design of Automation Equipment and Inverter Product	£5.40	£27,653.40	£27,653.40	£34,565.40	£0.00	1	(£6,912.00)	0.8
F	Commission and develop Software for Automation equipment and Inverter Product	£3.40	£26,786.11	£26,786.11	£26,786.11	£0.00	1	£0.00	1
G	Manufacture Automation equipment	£6.50	£25,924.03	£25,405.42	£25,923.90	(£518.61)	0.98	(£518.48)	0.98
H	Manufacture Modular Factory Units	£4.00	£19,442.31	£17,929.66	£19,442.00	(£1,512.65)	0.92	(£1,512.34)	0.92
I	Transport and Construct Modular Factory on site in Germany	£3.50	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
J	Test Automation equipment	£2.20	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
K	Transport Automation equipment to New Factory	£2.50	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
L	Install Automation equipment in New Factory	£3.10	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
M	Install Software for Automation equipment	£2.20	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
N	Install software for Inverter Product Line	£2.70	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
O	Test Inverter Production line	£2.10	£0.00	£0.00	£0.00	£0.00	0	£0.00	0
P	Handover and Train MMC engineers in Automation process and Product production	£1.20	£0.00	£0.00	£0.00	£0.00	0	£0.00	0

The calculation of SPI is done by:

SPI = EV/PV

= £158,283.69/£171,110.66 = 0.92

This means that for every estimated hour of work, project team is completing only 0.92 hours. Hence, it can be said that the project is behind schedule and it will require additional 4 days to complete. The final completion date will be 15 April 2019.

Projected final project final spend

CPI = £158,283.69/£167,226.51

= 0.94

From the calculated CPI, it can be said that the project is (-6%) behind the determined cost.

Comparison of values with the original contract value

The planned budget for the project is £171,110.66

The actual cost is calculated to be £167,226.51

The projected profit that can be achieved from the project as per the current progress is presented as below:

Profit = Planned budget – Actual cost

= £ (171,110.66 – 167,226.51) = £ 3884.15

Recommendation for options and justification

Task	Recommendation Should be (Accepted/Declined)	Explanation and Justification
G	Accepted	This option can be accepted as it is feasible. The reduction in duration will result into decrease in labor cost. This option may incur additional cost but the project could be completed earlier than expected which would lead to earning of bonus.
P	Accepted	The reduction in staff will lead to savings on staff cost and that too the specific activity cost will also decrease. This means that there will overall savings on the estimated budget for completion.
I	Declined	The offering to work over-time for accelerating the installation schedule would save cost but it would eventually lead to resource over allocation issues. This means that the resources will be over burdened with work thus resulting delay of the project.
N	Accepted	The TF PLC team have agreed to work evenings and weekend’s means that they will be charging overtime rates for the work. However, if there is decrease in duration and cost for a particular activity then it would eventually help to reduce the overall duration and cost of the entire project.

Analysis on commercial impact on the profitability of the project

The implementation of the recommended options will lead to decrease in the actual cost required for completion thus resulting into profit being gained from the project. This project will be profitable as the estimated budget will remain the same but actual cost will decrease due to the savings on cost from the recommended options. The cost for project is £48.50m and the overall savings from recommendations is £300,000.00 which means that the project will be completed at a lower budget than the cost required for project.  

Projected completion date using EAC method

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