Finding alternative suppliers for Kingsgrove's CNG tank certification services

Project Management

This report stipulates the final report for the planned project entitled "Finding Alternative Suppliers Of Contract Certification Of CNG On Bus Fuel Tanks For the Kingsgrove CNG Powered Fleet." As such, the report delineates the exact steps planned to obtain an alternative service provider for the certification and safety testing of Kingsgrove's CNG tanks.

Compressed Natural Gas (CNG) offers a revolutionary solution to rising fuel costs and pollution emanating from the public transportation industry. Kingsgrove is among the first to adopt the new, more environmentally friendly gas. In addition to environmental concerns, passenger safety is also at the top of Kingsgrove's priority list. The company takes pride in providing its customers with optimal prices, a focus on sustainable development, along with comfort and safety during their travel experience.

A recent price increase has made it impossible for Kingsgrove to retain their current certification company along with keeping their pricing strategies within a reasonable range. This report is then focused on strategies to obtain the services of a new certification company. The report describes the steps to be taken to achieve this.

Because of the increased use of alternative fuels, inspection and certification companies have increased, while offering competitive services and prices. This makes the process of finding a new supplier both more complicated and more effective in terms of what is required. A wide selection of companies provide competition and a drive towards excellence of service.

As such, this report describes the steps to be taken for obtaining a new supplier, and concludes with reference to the approval needed for the initiation of the project. With proper management and communication, all foreseen risks and problems should be minimized.

Introduction

Kingsgrove depot finds itself in a privileged market position, in that it was the first to adopt alternative fuel for a fleet of their buses. The use of this gas does not only serve the practical purpose of environmentally friendly operation, but also to set apart Kingsgrove's services in the public mind. Currently, 104 of Kingsgrove's buses are powered by Compressed Natural Gas (CNG). As with any transport facility, safety standards are of optimal importance for passenger security and peace of mind. Therefore, the fuel tanks containing CNG are required to be tested and certified on a regular basis in order to maintain safety standards. The State Transit Authority of New South Wales own the tanks, and require such safety measures as part of an ongoing maintenance routine.

In the past, only one supplier performed safety and certification services for Kingsgrove. The problem is however that this supplier has increased its prices to such a degree that it has become necessary to explore more economic means of safety testing and certification. In order to accomplish this, Kingsgrove will have to take steps in order to ensure that the new supplier is not only adequate in terms of cost, but also in terms of service quality. Several steps need to be taken to ensure this.

Firstly, an invitation is issued for tenders to provide this service to Kingsgrove. When the invitation deadline has expired, the tenders are examined thoroughly to identify the most promising ones in terms of both cost effectiveness and service quality. When two or three selections are made, a final choice is made by means of a meeting between the various stakeholders.

In order to successfully choose a new supplier, it is essential to manage and monitor the process very thoroughly. As maintenance manager, it is my role to assure that the process is carried out in an efficient and effective manner.

To accomplish this, I will need to have regular contact with my subordinates, and appoint a competent manager for each component of the project. I will also need to determine all the possible risks associated with this process.

2. Project: Aims and Objectives

Safety is of utmost importance to any transport service entity. Kingsgrove is however also concerned with the ability to keep their marketing edge in terms of pricing. While the current supplier provided excellent service for a number of years, their substantial price increase has necessitated a change in supplier. With this, Kingsgrove's objective is to provide a continuing excellent level of safety standard while also providing its customers with competitive transport prices.

Specifically, this project has three primary objectives:

To locate a new supplier that is more cost effective than the current supplier.

To assure that the new supplier meets all licensing requirements and safety standards to maintain operations.

To assure that the new supplier will be able to provide services for the required initial contract period.

2.1 Stakeholders

Several stakeholders have an interest in the outcome of this project. These entities should all be considered in terms of their various interest levels as the project is carried out. The table below delineates each stakeholder and the specific interest of the entity.

Stakeholder

Role and Risk Level

Regional General Manager

The risk level of the Regional General Manger is high. His responsibility is ultimately focused in any possible legal liability regarding both the old and new supplier.

Kingsgrove Maintenance Manager

The risk level of this individual is also high. The Maintenance Manager is responsible for the execution of all terms in the contract, as well as aspects of legal liability as a result.

Officials of the selected company

RFD Technologies Australia

Walkers Ausgas

The risk incurred by this entity is considerably high. This company is now responsible for the testing and safety certification process, instead of the previous supplier. The risk involved here is that it is a new company. It will be liable in terms of carrying out the contract in a timely, efficient and cost-effective manner. As such, they have the highest degree of legal liability.

City of Sydney and State Transit Authority

The risk level for this entity is medium. The risk relates to the Authority's reputation, as well as moderate legal liability. Risks are incurred if contract services are not performed properly, or the occurrence of an accident.

Customers

The customers have the lowest risk level, but are also in a position of very little control. Customers are dependent upon the company's level of disclosure regarding the new contract. Furthermore, while all measures will be taken to ensure the quality of service, the fact remains that the testing company is new. This means that customers may run the risk of possible accidents as a result. The cost of service may also rise slightly, to offset the cost of using the new service.

3.1 Safety

Safety is one of the most important issues at Kingsgrove. Ensuring that proper testing and certification measures are in place minimizes the risk of accident and injury to customers. In turn, this provides Kingsgrove with a sound reputation as not only an environmentally conscious, but also a safety conscious company. Contracting a new company to test and certify CNG tanks incurs considerable risks regarding safety, as not relationship of trust has thus far been built with the new company.

There is a high risk to Kingsgrove, as its reputation and legal liability issues are at stake. The supplier also faces high risks of reputation and legal liability. In terms of safety, the customers face a low to medium risk, as they have little power relating to safety measure implementation.

The risk here is fairly low, as both companies will obviously make every attempt to ensure that all safety measures are in place. This will be accomplished by proper management and delegation.

3.2 Cost

When contracting a new company, Kingsgrove faces a minimal risk of cost increase. The new company is chosen in terms of its cost-effective service. In terms of cost then, remaining with Walkers Ausgas presents a higher risk than contracting a new, less costly company. In these terms, the risk to the customer is also minimal. In terms of public relations, targeted documentation can be made available to customers to explain any minor price increases.

4. Solution

In order to reach to optimal solution for both the pricing and safety risks, a number of steps need to be implemented. Furthermore, to minimize the risks, it is necessary to implement management techniques that will ensure the optimal performance of all involved. Of course, as Maintenance Manager, I cannot handle all the components of the project myself, and will need to delegate several of the tasks. My specific role as manager is then to make sure that all tasks are carried out in a satisfactory manner. My delegation practices will be implemented by creating a number of teams to handle the responsibilities as follows:

4.1 Information Gathering research team will be appointed to handle this task. To make the best possible choice with regard to the cost-benefit balance, thorough research is necessary, which will be the responsibility of the research team. The team will be required to find as many companies as possible who provide the type of services that Kingsgrove is looking for. They will also be required to find potential sources with such information, such as the Internet, public records, and other sources. Other companies in the transport safety industry can also be contacted for potential sources of contractors.

The research team will then contact representatives from each company and gather information relating to costs, safety standards, and other relevant issues. This can be done by means of a short questionnaire, personal interview, or telephone interview. The team will then present the manager with a comparative report, listing all the potential companies with their pricing and service practices. The report will not include those companies whose prices are in the range of the new Walkers Ausgas price structure, as this is the primary problem to eliminate. The manager will then review the list and meet with an assessment team in order to select potential service providers.

4.2 Proposal Invitation

When the list has been reviewed, the manager makes a selection of the most likely companies to provide the required service. The list is reissued to the research team, whose next task is to contact each company with an invitation to tender their services. Interested companies are presented with a tender form to be submitted by a predetermined deadline. The final task of the research team is to collect these proposals and organize them according to reference checks. The final proposals are then submitted to the Tender Evaluation Committee.

4.3 Assessment Criteria and Selection Process

Tender Evaluation Committee (TEC) is brought into being for the decision process. This committee is responsible for evaluating the received proposals in terms of certain selection criteria. Reports are submitted regarding the level of compliance of each proposal, and to make recommendations regarding the final decision. The final decision rests with the Maintenance Manager. A variety of evaluation criteria are implemented for the selection of final service providers. These include the commercial evaluation, technical evaluation and pricing analysis. The table below delineates the evaluation components:

Commercial evaluation

Weighting of 10% of overall criteria.

Financial strength

Level of compliance

Technical evaluation

Weighting of 30% of overall criteria.

Details of Services

Previous Experience

Tenderer's Personnel

Tenderer's Capacity

Referees

Pricing analysis

Weighting of 60% of overall criteria

Financial model by Steve Bacci

Credit check - Peter Bannon

It should be clear from the above that, although weighted significantly in terms of the other criteria, the financial benefit is not the only important component of the evaluation. With the safety of customers and staff in mind, it is essential that criteria for proper service provision be met along with financial criteria. The above-mentioned risks of future liability and the possibility of bodily injury as a result of poor services play a major part in the evaluation. Hence it is important to make a detailed assessment of each service provider's existing infrastructure, experience and track record in terms of services to other entities. It is also important to ensure that the chosen service provider has sufficient resources in terms of time and personnel in order to ensure that high quality accompanies acceptable cost.

After further meetings to discuss the assessment of each candidate, the TEC submits its reports, findings and recommendations to the Maintenance manager for final approval and implementation. The management strategy in the selection process will be democratic, providing Committee members with the opportunity to voice any concerns regarding the final selection. The manager gives these concerns due consideration when making the final selection.

5. Implementation

Implementation is a vital step in the process of this project in terms of management. This step will prove whether the management process occurred in a sufficiently organized way. It is vitally important that all concerns be given full attention before the final selection is made. There should therefore be open communication channels between committee leaders, their subordinates, and the manager. If these channels are obstructed, the project runs the risk of failure due to a lack of full information reaching top management. When managed adequately, however, the implementation of the project should proceed without difficulty.

The following timetable has been drawn up in order to implement the project:

Milestone

Estimated Completion Date

1. Identification of potential candidates

2. Send out RFP

3. Deadline for Submission of Proposals by potential candidates

4. Review of Proposals, reference checks, interviews, submission of proof of compliance

5.Selection of successful candidate

6.Notification and award of Contract

September 8. 2006

7. Contract outline and legal review

8. Sign Contract and begin Service schedule

5.1 Resources and Risks

Required resources for the project are minimal in terms of finding the proper contract. Costs will basically be incurred by office expenses and time required from personnel serving on teams and committees.

Risks have been fully delineated and tabled above in this document. The most important element is proper management and communication. All parties involved should be in continual communication with each other and management. Furthermore, information should be documented thoroughly and clearly to ensure that all aspects of the project have been covered.

6. Recommendations

It is recommended that each step of the project be thoroughly planned, researched, and presented to the Maintenance Manager. Risks should be thoroughly delineated and discussed, with strategies to minimize and deal with any foreseen problems. Means and channels of communication should be established between the manager, committee members, leaders and subordinates before the start of the project. For optimal success, every team member needs to be absolutely certain of his or her position and role in the project.

Before beginning the project, executive approval is needed. For this purpose, a meeting with all interested parties is called. Once again, the proper management procedure and communication strategy are necessary to successfully plan and begin the process. The purpose of the meeting will be to finalize the parameters of the project and projected schedule.

When the necessary approval is obtained, the first step, namely research and obtaining a list of potential contractors, can be started. The tables and time schedules provided in this report will be used to keep track of progress. These will also help to ensure that all teams working on the project understand their tasks.

Sources

Australian Institute of Petroleum. Petroleum Topic Fact Sheet. Retrieved June 18, 2006 at http://www.aip.com.au/industry/fact_alt_fuels.htm.

Beer, T., Grant, T., Brown, R., Edwards, J., Nelson, P., Watson, H., and Williams, S. (2000). Life-cycle Emissions Analysis of Alternative Fuels for Heavy Vehicles - Stage 1 CSIRO Atmospheric Research Report C/0411/1.1/F2 to the Australian Greenhouse Office, March 2000.