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P R O J E C T 7 6 7

Commercial Airliner Development

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Focus

What were the technological and audit related aspectsattached to the project?

How was the cost defined?

What were the parametric estimates (for labor cost and

time projections)?

What were the go/nogo decisions (in terms of theproduction approval for the first 767 airplane)?

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T E C H N O L O G Y

It was important to assess available technology in order to makeconfiguration 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

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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

T E C H N O L O G Y

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TECHNOLOGY

A U D I T S

MANUFACTURING

FINANCE

MANAGEMENT

Auditors isolated from the project operations

Experienced BOEING employees

Directly report to the company Chairman

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

CHAIRMAN

Internal to 767 project

(Operations / Internal Company Environment)

Auditors

External to 767 project

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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

C O S T D E F I N I T I O N

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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

C O S T D E F I N I T I O N

DesignSpeed

Weight

Length

Historical Data

from past

projects

Number of parts

/ airplane etc

Labor Hours

Req.

Previous Projects

New Project Environment

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Assembly Labor Hours (calculation based on 727 Benchmark)

C O S T D E F I N I T I O N

Benchmark

727First Unit

727 Section

0001

727 Section

0011727 Section

0002727 Section

0002

Historic ValueLabor Hours spent / Pound of

weight of the section. [to build

this section]

Major Sections

Labor Hours / Pound X

TARGET

767First Unit

767 Section

0001

Expected Weight X

Historically Improving relationship

B/W Weight & Labor Hours

Improvement Factor

= Parametric Estimate for labor cost of corresponding 767 section

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Adjustments for Parametric EstimatesEstimates 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

C O S T D E F I N I T I O N

727Master

Phasing Plan

747Master

Phasing Plan

Compared

with

Suggestions

Creating and scheduling activities to;

Conform to Program Objectives

Conform to budgets / time-lines

Achieve synergy, learn and achieve fit

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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 thecompany

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

G O / N O-G O D E C I S I O N S