Oh the Rewards of a Darn Good Project!
Because of the exceptional business growth of my employers, my manufacturing career was blessed by opportunity. Although dotted with deadlines, business risks and personal sacrifices, it was very rewarding. The rewards came in the form of more than just job promotions, you see manufacturing success feels good. Working hard and failing is hard work, but working hard and succeeding doesn’t feel much like work at all. I think it’s why you can find many stock images in web searches of business professionals in suits standing on mountain tops. It’s because in business, when you succeed, you forget about the tough climb you had on your way. For me, taking that journey on the magic carpet of growth and expansion was a fun career ride indeed! you see, success reduces fatigue. Failure adds to it.
Successful capital projects are no different. Working hard to deliver a successful project doesn’t feel like work. And regardless of the scope or basis of a capital project, its success comes down to just three critical aspects:
Is the project a good idea?
- YES: Most often new production equipment is purchased to support revenue growth. This occurs through new product launches or additional volume of existing product lines. Otherwise, equipment purchases and upgrades are justified via cost-saving opportunities. All of these are excellent reasons for capital purchases. When a forecast is accurate, and a financial payback is achieved, then the idea was indeed well formed. When a project is founded on a good idea, it converts into a good project, and everyone wins!
- NO: When a capital project fails, it is often due to bad forecast or poor product design. Capital is sometimes purchased based on overly optimistic sales commitments that never materialize. Unrealistic projections and sloppy R&D execution can cause projects to fail.
Did the equipment have a robust design?
- YES: Usually, the selection of equipment falls on the shoulders of two groups; Engineering and Purchasing. Engineers select the ideal equipment and Purchasing negotiates a price that meets the ROI objectives of the project. When robust equipment is purchased, manufacturing wins.
- NO: Sometimes however, the project is a pipe dream. The financial numbers don’t add up but in order to move forward on an objective, Engineering and purchasing decide to buy a low-cost lemon of a production machine. When this happens, manufacturing gets the short end of the stick. Engineers move on from the project, but manufacturing operations can get stuck with the subpar machines for many years to come. This costly design failure often gets hidden in the day-to-day factory flow. But for those stuck trying to produce good product on a poorly designed machine (a lemon), quite frankly, it sucks!
Were design reviews used to optimize the process?
- YES: When design reviews are utilized as a component of a capital project plan, WOW! Design reviews do a few good things for a capital project. First, design reviews create some big financial wins. I’ve seen an operator recommend a design change that created huge long-term benefits to operational efficiency. Secondly, design reviews can help you to fine tune the little things. When a small improvement is identified and implemented during the planning process of a project, it will yield tens of thousands of dollars over the life of the equipment. Don’t ignore these small improvement opportunities. Lastly, design reviews create buy-in. When employees are brought onboard early-on, they become vested in the outcome of a project. Then when the equipment gets installed and begins to ramp, operators will help you succeed. Blindsiding operators with a project can cause bitterness and resentment. Avoid this via design review inclusiveness. Of course, it’s not only about including them, you also need to actually listen to them and include their feedback in your design.
- NO: If you don’t have design reviews, then you are leaving money on the table. Not just for a year, but for many years to come. Maybe the project was deemed a success because you achieved the ROI targets of the project. Well good for you. But what if you could have achieved a 20% improvement beyond that projection if you conducted pre-launch design reviews. Realize that when you fail to conduct proper design reviews, you leave money on the table.
Do it Right!
When a project idea is well founded and projections are accurate and robust equipment is purchased and design reviews completed, then you will achieve amazing long-term financial success for your plant. Take the journey to the mountain top. When you arrive, you’ll forget about all the tough work you did to get there because success feels good! Commit to managing your projects the right way. Vet the project. Vet the equipment. Be inclusive with the design.
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