Question

1. Construct a project charter for any project that you have ever worked on.  It can be for work, for school, or even somewhat fictitious.

Answer 1

Project Charter– Sourcing of raw materials for a new food processing facility

Date: 27th April, 2020

Approved by: Managing Director, Federal foods llc

Background

Federal foods is a food trading company based in UAE and supplying to a large number of clientele in the middle east market. The company in order to increase its revenue base had decided in 2018 to construct a new food processing facility that can process frozen food products like sausages, burgers etc. that can be supplied to their existing clientele. Due to their market presence, the company has received some advance orders for certain range of chicken sausages for use by retail customers.

In order to proceed with it, the company needs to source products on time to start the production.

High Level Project Approach

The project will be divided into parts:

1. Short term sourcing of products from the local market ( 3-4 months of supply)

2. Long term sourcing from import suppliers at a better pricing ( 4th or 5 th month onwards)

Business goals

The company has the below business objectives for the new processing facility

1. Start operational and scale up the business to 75% production capacity in six months

2. Break even in a years’ time

3. Supply to all their existing clientele by asking them to switch them from their existing supplier to Federal foods

4. To be known as one of the quality processing facilities in the market

Project Objectives

The objectives of the project are as below:

1. To immediately source products from the local products based on the raw material forecast shared by the production department that is required for the immediate production

2. Work closely with the sales department and the production department to understand the requirements of the products for a period of six months.

3. To source raw material from overseas suppliers at a competitive rates compared to the local market pricing and getting the products in the production factory by the 4th month.

Key Success Indicators

§ Goals to be achieved in the first three months

Ø Raw material arranged on time along with necessary certificates like Halal and health certificate for the production to start

Ø Source quality products with 99% quality acceptance

Ø Source at competitive pricing from the local sources with a credit period of 90 days

§ Goals to be achieved in the next one year

Ø Identify long term multiple suppliers who are producers of raw material and can supply products on a consistent basis

Ø Based on raw material requirement for a long term period, negotiate with suppliers for rates which are 30%-40% better than local sourcing

Ø Placing orders based on requirement based on the quantity forecast received and approved for ordering

Ø Allocate spend management for the buyers

Ø Negotiate with logistics providers who can offer rates which are stable

Initial statement of work

In line with achieving the business objectives of the company, the raw material needs to be sourced. At a high level, the project is to encompass the following subject to confirmation during detailed planning at the MRP level.

1. Shortlisting at the production level

a. Identifying the selling products of interests with the clients and shortlisting them in in conjunction with the sales team

b. Decide the nature of the raw material to be used and their specification

c. Estimate the raw material quantities required

2. Identify local suppliers and start the discussions

a. Identify the suppliers in the local market who has the right product with the right specifications

b. Initiate discussions and negotiate on price with regard to the volume and price target shared by the production team

c. Work on a favourable terms and conditions for the company

3. Long term sourcing from overseas suppliers

a. Estimate the quantities required to achieve 75% capacity utilisation

b. Preparation of the demand plan

c. Find overseas suppliers/producers who can supply products

d. Start discussions and work out commercial terms with better pricing.

e. Work out the ordering plan and ordering schedule with the suppliers

4. Discussions with Logistics partners

a. Identify the nature of logistics needs to be handled.

b. Identify the players to work along the supply chain and discuss with the prospective partners.

c. Depending the incoterms , discuss and negotiate on the pricing

Key Personnel and stakeholder:

1. Federal foods llc

a. Executive sponsor – Mr. Bram , CEO, Federal Foods

b. Project Sponsor – Mr.David, Supply chain Manager

c. Mr. Greenwood – General Manager, Processing facility

d. Mr. Raj Sekhar , VP, Finance

2. External Parties

a. Mr. Ismail, Representative from Dubai Municipality

b. Mr. Akbar Ali, Relationship Manager, Halal Institute

Special Considerations and Constraints

· The existing warehouse with the freezer facilities to be allocated for the storage of the sourced raw material

· The logistics team to allocate vehicle for the supply of the products produced to supply to the client premises

· Additional procurement team members to be recruited to handle the additional responsibilities and coordinating with the logistics partners

· All the local approval from the Dubai Municipality to be completed for the label usage including the Arabic labelling

· Listing of the new products with the authorities for supply to the client

Budget Allocation

A budget of 2 million AED has been approved by the MD for the completion of the first phase of the project and an additional 1 million AED reserve will be under the control of the Vice president Finance without whose permission the amount can neither be spent nor committed.

Further, 5 million AED has been allocated to support for the completion of the sourcing of the products under the phase 2.

It is being noted that the budget for the project will not be finalised until the project planning has been completed.

Assignment of Accountabilities and Authorities

Mr. Bram , CEO, Federal Foods has been appointed as the project manager for the project. Mr.David who is the supply chain at the company will have full responsibility for the project coordination with the respective teams and delivery of the project by achieving the desired business objectives. Once the products are sourced and supplied to the production, it will be responsibility of the General Manager of the processing facility to further handle the same.

Mr.David is assigned the authority to :

1. Plan the project in detail and following approval from the Project Sponsor and execute the p

2. Interact the authorities for the necessary approval for Dubai Municipality and Dubai commerce

3. Receive the price quotes from the suppliers and decide the pricing

4. Select the quality supplier and logistics partners based on the parameters to have a good pricing, quality products and supply at the right time

5. Bid for container loads based on the desired pricing

6. Approve budget allocations and spending up to 20,000 AED 'per invoice line tem

VP Finance is authorized to

· Allocate 2 million AED of Federal Foods Capital finds 'to the project specific account to cover the project

The Project Sponsor shall be responsible for

1. Entering into maintain relationships with the external parties

2. Approval of the overall project budget

3. Approving invoiced more than 50,000 AED

4. Approving change request changes in the projects.

Priorities

Enabling the factory to run smoothly with the necessary raw material available on time is important. During the first phase, the key importance is given to the sourcing the products on time and delivering it to the production factory. The project team will work to maintain the overall project spending within the allocated budget.