PROJECT 767

Commercial Airliner Development

Focus
What were the technological and audit related aspects attached to the project?

How was the cost defined?

What were the parametric estimates (for labor cost and time projections)? What were the go/no go decisions (in terms of the production approval for the first 767 airplane)?

TECHNOLOGY
It was important to assess available technology in order to make configuration decisions This would guide managers in the planning the development process phases and the construction
The project operational and process flow, labor requirements for the project, HR training needs Components of the aircraft, the list of parts needed for assembly

Using Knowledge Resources form previous projects: Components and technologies along with related processes from previous development projects could be utilized in the new development project if applicable and feasible at a cost benefit to Boeing

TECHNOLOGY
Structure Flight Systems Aircraft systems Aerodynamics

Technology Reviews the review of all existing technology

Value to customers; is the additional benefit worth a premium? The risk associated with implementing a new technology Impact on schedule and cost; Is it feasible to do so? Proven technologies were implemented more readily Testing: Technologies and materials were tested in partnership with Airlines in real-world scenarios (actual service conditions). Risk was mitigated through the testing of smaller components

AUDITS
Internal to 767 project (Operations / Internal Company Environment)

TECHNOLOGY

FINANCE

MANUFACTURING

MANAGEMENT

Auditors

CHAIRMAN
Auditors isolated from the project operations Experienced BOEING employees Directly report to the company Chairman

External to 767 project

These Auditors were used to assure that quality and operational standards were being followed.

COST DEFINITION
A cost estimation was necessary prior to development approval Configuration Based Cost Definition:
A single configuration of the Aircraft had to be finalized by Engineers

Cost was then estimated for this particular configuration based on the design, various components, technologies & processes used

COST DEFINITION
Parametric Estimation of development costs Parametric estimation used a benchmark platform project, the 727 development project, to estimate the costs of development of a new platform

Pre-Production Cost Estimation

Length Speed Weight Previous Projects Number of parts / airplane etc New Project Environment

Design

Historical Data from past projects

Labor Hours Req.

COST DEFINITION
Assembly Labor Hours (calculation based on 727 Benchmark)
Benchmark
727 Section 0001 767 Section 0001

727 First Unit

TARGET

767 First Unit

Historic Value
Labor Hours spent / Pound of weight of the section. [to build this section]

Historically Improving relationship B/W Weight & Labor Hours

Major Sections 727 Section 727 Section 0011 0002 Section 727 0002
Labor Hours / Pound

= Parametric Estimate for labor cost of corresponding 767 section

Expected Weight

Improvement Factor

COST DEFINITION
Adjustments for Parametric Estimates
Estimates were fine tuned according to the specific program they were being calculated for Parametric estimates were adjusted upwards or downwards for each factor, part or process used
Using automated processes and CAD/CAM could reduce the labor cost estimate The higher complexity of the new project would conversely increase the labor cost estimates

These estimates are then used to formulate a final estimate of labor hours

Parametric Estimation for the Master Phasing Plan

727
Master Phasing Plan

Compared with

747
Master Phasing Plan

Suggestions Creating and scheduling activities to; Conform to Program Objectives Conform to budgets / time-lines Achieve synergy, learn and achieve fit

G O / N O-G O D E C I S I O N S
Prior to committing to assembly of the first unit;
All technical aspects had been reviewed The board required that certain commercial criteria be met before approval for production could be given This criteria was created to ensure that the 767 development project, which was entering its most cost intensive period, would be economically viable for the company

Preconditions set to ensure commercial viability;

One foreign Airline carrier and two domestic carriers would have to commit to purchase the new aircraft Solid pre-production orders of up to 100 aircraft are received

First Customers
Risk: Conditional selling offer by Boeing, Technology risk, Safety risk etc Reward: Prices to first buyers were lower, Buyers had a say in final aircraft configuration