Project Selection Fabricant Corporation manufactures and distributes highly specialized metal parts to over 1,000 clients across the Northeast. With state-of-the-art facilities, Fabricant is the leader in designing, prototyping, and manufacturing engineering flexible materials for solar power, medical, aerospace, and electric power applications. As Fabricant has grown and expanded its base of shareholders, its mission has evolved from merely providing quality products at a competitive price. Today, the company strives to create shareholder value and demonstrate corporate social responsibility by continuing to be a leader in energy conservation, research, and development of advanced technologies. Lee Feinberg, the company's CEO, is eager to live up to Fabricant's public commitment by engaging in activities that drive continuous improvement on key sustainability metrics. Specifically, he has tasked his senior management team to propose projects that will align with the following objectives: 1. Reduce energy consumption by a minimum of 20% 2. Raise community consciousness of environmental issues and concerns 3. Generate a return on investment of at least 15% After several months of research by her staff, Janice Scott, the Head of Strategic Planning for Fabricant, brought the following project proposals for consideration: 1. Solar panel installation on the main manufacturing facility This 200,000 square foot manufacturing facility consumes 9.5 million kWh of electricity per year. The facility has just over two acres of rooftop that is suitable for solar panel placement. According to estimates, this installation would generate about 700,000 kWh of renewable energy per year, while offsetting over 500 tons of CO2 . The installation of 1,500 240-watt photovoltaic cells would cost about $700,000, net of federal investment tax credits. With estimated energy savings of $50,000 per year and annual solar renewable energy credits (SRECs) revenue of $70,000 per year, the solar panel investment is expected to break even in 5.6 years, with a 10-year return on investment of 20% ($120,000 per year for 10 years, with a discount rate of 7%). This facility is also in a highly visible location adjacent to a major highway, with 300,000 people driving past the building on a daily basis. The public exposure to the facility's solar array will raise community awareness to renewable energy sources and create positive perception for Fabricant's commitment to environmental sustainability. 2. Interior and exterior retrofit of industrial lighting throughout facilities The second project proposal involves replacing high energy consumption lighting fixtures in all Fabricant facilities with more efficient technologies, including the following: Replace metal halides with LED technologies Replace T-12 fluorescent lighting to T-8 Vaportite fixtures Retrofit offices and break rooms with sensors and new fluorescent fixtures Install wireless sensors and motion detectors throughout offices, production stations, and break rooms to automatically turn off lights These changes are estimated to produce energy savings of over 1.1 million kWh per year as well as $142,000 annually in utility costs. After energy efficiency incentives and utility partner rebates, Fabricant's total cost of the upgrades is expected to be in the $65,000 to $75,000 range so the program will provide immediate financial and environmental returns. In the first year alone, this program is likely to produce an 89% ROI. To generate positive community and client awareness for this sustainability initiative, Scott recommends that Fabricant include the results in the company's newsletter and client literature, and on its website. 3. Adoption of less energy intensive welding processes in production facilities A third proposal is to shift from traditional fusion welding processes (arc welding and laser welding) to friction stir welding (FSW). In addition to providing solutions for persistent joining problems, FSW consumes less material and energy while reducing fumes and gases. The proposed project is to develop a prototype system that proves the suitability of FSW for a range of Fabricant's welding situations (e.g., engine components, high performance aircraft parts, fuel tanks, etc.). Based on a feasibility study using the prototype, the team will decide whether to pursue implementation of a FSW process development plan (including design, controls, and process Copyright 2022 MindEdge Inc. All rights reserved. Duplication prohibited. knowledge) at 12 welding workstations. FSW reduces welding energy and material consumption by as much as 70% (estimated savings of $2,000 per machine), compared to traditional arc welding techniques. Finally, FSW saves a considerable amount of welding time, compared to arc welding, due to higher welding speed and fewer ancillary processes. In all, Scott expects a shift to FSW, where feasible, to save $24,000 per year. FSW machine investment, licenses, tools, and personnel training would be approximately $400,000. The expected life of FSW equipment is five years. Scott believes Fabricant's clients, especially government entities, will perceive the use of FSW process and technology to be a competitive advantage, indicating high quality, cost effectiveness and energy efficiency. 3.27.2 Graded Case Study 1, Part II: Initiating Graded Case Study 1, Part II Initiating When Feinberg and his senior management team reviewed the list of proposed projects, they were pretty convinced that they should pursue the industrial lighting retrofit project, to take advantage of current programs offering tiered incentives on kWh reductions. For Feinberg, this project seemed like "low hanging fruit" when it came to energy savings for the company. Feinberg and Scott spoke with Sam Massoni, the program manager for American Grid, to learn about the utility's lighting retrofit program, including incentives and program requirements. After that, they assigned an internal project coordinator, Vivian Liu, to serve as the project manager for the initiative. Liu already had several time-consuming projects on her plate and wasn't eager to add another one, but she knew most of her colleagues were in the same boat. She knew she would have to work as efficiently as possible, while trying not to get bogged down in too many unnecessary steps. After several meetings with Scott to understand project requirements and scope, Liu created a stakeholder list. Because the lighting retrofit was largely concerned with energy efficiency, she selected the same stakeholders that were included on a recent project implementing GPS technology to remotely monitor idling and fuel consumption patterns of Fabricant's distribution vehicles. For this particular project, however, she added Massoni as an external stakeholder and project consultant. She figured it would be good to include at least one external perspective, as long as it wasn't a negative one. If there was one thing Liu had learned on previous projects, it was that negative stakeholders are incredibly difficult and time-consuming to work with. Stakeholder List Name Role Interest Power Classification Lee Feinberg CEO High High Positive Janice Scott Strategic Planning Medium Medium Positive Sam Massoni Program Manager, American Grid High Medium Positive Paul Callahan Distribution Logistics Manager Medium Low Neutral Transportation Specialists Truck Drivers High Low Neutral Elwood Vaughn Systems/IT Director Medium Low Neutral Trudy Noble Environmental Manager High High Neutral Jeff Salvatore PR/Communications Manager Medium Low Neutral When identifying the lighting retrofit project team, Massoni also listed the same team of professionals from the GPS remote monitoring technology project. From what she could tell, these people all had a solid understanding of the cost/benefit economics and environmental impacts of fossil fuel usage and could ensure a successful outcome. Project Team Vivian Liu Project Manager Before you move on to the next section of the case study, identify the problems and/or issues that you'll need to include in your analysis. Document this information, and consider how you will integrate it into your evaluation of the project.

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