Alain LeBlanc, BEng, MSc, MEng

Manager, PW800 Engine Production Readiness

CSVA 2008 Annual Conference

Creating Sustainable Value with Value andRisk Management

October 27th, 2008

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Our vision is to provide innovative

power solutions that spark the

imagination and move the world!

MISSION

We, at Pratt & Whitney Canada, are committed to providing innovative power

solutions and global support services that delight our customers. We will grow

and achieve breakthroughs by teaming with our customers, partners and

suppliers, and by leveraging our knowledge and technology. We will ensure a

safe, healthy and challenging environment where our people can realize their

full potential. And we will cultivate a high-performance organization where

quality, speed and innovation are valued and rewarded. Pratt & Whitney

Canada will passionately lead the way by providing the best solutions and

value and anticipating the power needs of future generations.

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OUTLINE

Introduction

Value Methodologies Overview

Value Methodologies Integration

Concept Phase

Pre-detail and Detail Design

Conclusions

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CREATING SUSTAINABLE VALUE …

… is about working on the right product andworking on the product right.

Working on theright product or

project

Working on theproduct or

project right

VE, Design for X, Risk Assessment,Operation Process Optimization

Methodologies

Market methodogies, ParametricPaired Comparison, Quality

Function Deployment, FunctionAnalysis, VE, Risk Assessment

Supporting Value Methodologies

Market Analysis and Concept Design Design and Operation Execution

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VALUE METHODOLOGY OVERVIEWLast 15 Years Journey at P&WC

ACE Operations Transformation - ‘033P, VSM, etc

ACE Launch - ‘98-’99

First Cells Achieve SilverSupply Chain Excellence - ‘00ACE Tool Box, Master Methods,VSM

First Cell Achieves Gold - ‘02

KAIZEN - ‘93-’96

Q + ‘86-’90

Manufactu

ring

Value Engineering - ‘96

Quality Function Deployment - ‘98

Risk Assessment - ‘01

Direct Value Measurement - ‘99

Product Function Specification - ‘98

Parametric Paired Comparison - ‘97Enginee

ring

Parametric Cost Estimation - ‘00

Lean Engineering - ‘03Project Mngt, EVM, etc.

Should cost analysis - ‘07

DFX - ‘97

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VALUE ENGINEERING

VE was initiated in 1996 to tackle thepressing need to preserve the costmargin on legacy and new products

• Over 160 workshops and 300 peopletrained

• A strong methodology for defining theproduct right

Key Applications :

Cost Reduction

Target Costing

New Product Introduction

Technology Game Changers

Total CostStakeholders

• Factory Standard Cost(FSC)

• Capital cost

• Service cost

• Operating cost

• Non-recurring cost

• Customer, OEM

• Operator

• Certifying Authority

• P&WC

• Vendors & Partners

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DESIGN for X

DfX (… for Manufacturing or Assembly)was introduced in 1997 as a means tochallenge manufacturing and assemblyconsiderations during design.

• This methodology focuses on productsimplification or part elimination.

Key Applications :

Product Cost Reduction

New Product Introduction

Supplier Bidding process

Manufacturing Process andMaterial Selection

Assembly Time reduction

Consider each part and its mating part with respect to these criteria:

1.Does the part move to the mating part?

2.Must the part be a different material or be isolated from the mating part?

3.Must the part be separate because otherwise later disassembly for service wouldbe impossible?

If the answers to all three questions are NO, the subject part and its mating partmight be combined

All threaded fasteners are automatically candidates for elimination

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FUNCTION PERFORMANCE SPECIFICATION(FPS)

Function analysis applied to thedevelopment of a function performancespecification

• Similar to the technical FAST diagram

• Rigorous definition of stakeholders'needs

• Competitive suppliers involved in theprocess

• Used to challenge the relationships andthe trade-offs between the enginecontrol function and the major productfunctions

• A most performing tool to innovate anddefine the right product

ManagePowerPT6REngineConcept

Name Criteria Level

Trade-Off

Range Interactors Comments

2.0.0RespondtoLoads/ControlEngineOperationPilotWorkload LowtoHigh Customer,Marketing ex:Fullauto,manual,#ofinputs

Thrust-to-DemandRelationship·Slope Positive F1 ex:Flatspot(region,size,etc.)·NumberofDiscontinuities None F1 ex:"Bumps"(region,size,etc.)

·Aspect Linear F2

·RangeMatching Concordance F2Demandmovementmatchestheengine

operatingenvelope(min/maxthrust)

·SelectionAccuracy±XX%ofdemanded

controllingparameterF2

EngineConfiguration,Customer,

Marketing

ConsistantThrust/Demandrelationship,

regardlessofenginecondition

·Repeatability±XX%of

controlling

parameterF2

Forgivenambientconditionsandagiven

demand, theoutputpoweristhesame. ex:

Demandhysterisis

·Selections'Scatter

±XX%of

controlling

parameterbetween

engines

F2Coordinationofleversinmultipleengine

applications.

TransientResponse

·StabilityatEndofTransient %error, time F1ex:Overshoot,undershoot, timefor

stabilization·RateofPowerIncrease XXSHP/t F1 EngineConfiguration,Customer, ex:Surge·RateofPowerDecrease XXSHP/t F1 Marketing,Rules ex:Flameout

·DelayofResponse XXsec F1/F2 Timebetweennewdemandandreaction

EmergencyPowerManagement

·AbilitytoAchieveMaxPowerNumberoftimes=

f(duration,

amplitude)F1

·AbilitytoRecoverFromthe

IncursioninMaxPowerRangeYes F0/F1

Customer,EngineConfiguration

·MaxPower XXSHP F2

TheLEVELSnotedXXand*areapplication-

dependantandaredeterminedbythe

CustomerRequirements

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QUALITY FUNCTION DEPLOYMENT (QFD)

A series of matrices which focus ongathering, understanding and deployingthe “voice of the customer” throughoutan organisation

QFD was introduced in ‘98 and used for

• product portfolio and technologypriorization

• contractual scope validation

• strategic sourcing and corecompetency analysis

• market needs link to productspecification

RELATIONSHIP BETWEENWHAT'S AND HOW'S

8 - Does it matter?

CU

ST

OM

ER

NE

ED

S(W

HA

T)

1-

Wh

at

do

es

the

cu

sto

mer

wa

nt?

SPECIFICATION (HOW)4 - How do we do what the

customer wants?

CUSTOMER RATING

3 - Is the customerhappy with us orthe competition?

TARGET6 - What are the numbers we must meet?

ENGINEERING COMPETITIVE ASSESSMENT

7 - How well do we meetour specifications?

How well does the competition meetthe specifications?

RANKING9 - What is important in what we do?

ROOF

5 - What are the contradictions?

2-

Wh

at

isth

ere

lati

ve

imp

ort

an

ce

betw

ee

nc

us

tom

er

ne

ed

s?

WHATsWHATs

HO

Ws

HO

Ws

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PARAMETRIC PAIRED COMPARISON (PPC)

A systematic tool used to provideweighted priorities by comparingmultiple attributes against each other(in pairs).

• A complementary tool to QFD and VE.

• A very performing consensus anddecision making tool

LifeReliability

?Attribute

Description A B C D E F G H

ABCDEFGH

Reliability (MTBUE)

Life

Installation time

Development time

Direct Operating Cost

Acquisition cost

Maintenance time

Maintenance frequency

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DIRECT VALUE MEASUREMENT (DVM)

The quantification of (product) marketvalues through interventions at keycustomer gatherings:

• DVM defines an intrinsic value for aproduct independent of its cost (HarryCook, ‘99)

• Market survey data allow Marketingand Advanced Design to validate theirperceived customers’ values

• Key to QFD and Target Costing

• A strong methodology to quantifymarket values

Price Price

$100

$100

$100

$100

SELECTONE

$110

$120

$130

$140

10 speed 12 speed

SELECTONE

SELECTONE

SELECTONE

x

x

x

x

Looking for the price switching points

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RISK ASSESSMENT

Risk assessment identifies andquantifies the risk associated with avalue proposition where RISK is ameasure of the possibility of deviationfrom the expected

Key Impacts:

• more reliable product cost target riskexposure

• product cost expectation (evolution)curve as a function of the productdevelopment cycle : recurring and non-recurring cost

• increased management confidencelevel and consistency across programs

Lik

elih

oo

d

Very Likely

Impact

1

4

2

3

5

6

78

9

Unlikely

Remote

Likely

Certain

No Impact Negligible Marginal Significant Critical

10

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• Mitigation Plans

• Contingency Plans

• Risk Waterfalls

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OUTLINE

Introduction

Value Methodologies Overview

Value Methodologies Integration

Concept Phase

Pre-detail and Detail Design

Conclusions

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THE DESIGN PROCESS

Conceptdesign

Gate 1 -Offer Concept Design

•Small specialist team

•Market definition

•Competitive analysis

•Product specification

•Technology readiness

•Architecture study

•Business case study

Gate 0 -Study

Working onthe right

product orproject

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Conceptdesign

Gate 1 -Offer Concept Design

VALUE METHODOLOGIESIntegration into the design process

• Direct Value Measurement

• Parametric Paired Comparison

• Quality Function Deployment

• Function Analysis

• Value Engineering

• Risk Assessment

Working onthe right

product orproject

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Market requirements analysis of:

• values (thrust, weight, emissions,noise, ….)

• competitive position

• timing and technology impacts

• customer perspective

Translate customer requirements

into engineering requirements

Market Feedback Analysis

enhanced by Direct Value

Measurement or other marketing

tools

QFD APPLICATION

Short Runway Capability

Range

Working onthe right

product orproject

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DIRECT VALUE MEASUREMENT (DVM)

Light Jet 1 $2M

FOCUS:NBAA

Value for:• TO distance• range• seats• payload• speed• time to climb• engine OEMs

Working onthe right

product orproject

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VALUE CURVE

is the % of the time attribute is used

Air

craft

Pri

ce

$ $

nm

nm

Tank - Full Range (nautical mile)

Business JetGeneral Aviation

Working onthe right

product orproject

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Life Reliability

Installation time

Acquisition $

Operation $

Reliability

Attribute

Description A B C D E F G H

ABCDEFGH

Reliability (MTBUE)

Life

Installation time

Development time

Direct Operating Cost

Acquisition cost

Maintenance time

Maintenance frequency

COMPARATIVE JUDGEMENT

LifeReliability

?

Working onthe right

product orproject

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PPC MATRIXEstablishing Priorities

Attribute Description

Minimum

acceptable A B C D E F G H

Significant

Improvement

Maximum

differentiator

Absolute

score

Relative

score

Reliability (MTBF) 25 000 h a1 a2 a1 e1 f1 g1 a3 50 000 h 100 000 h 7 6

Life 10 years b2 d3 e2 f1 g2 b2 15 years 25 years 4 3

Installation time 5 days d3 e3 f2 g2 c1 48 h 12 h 1 1

Development time 12 months e1 d1 g1 d2 8 months 6 months 9 8

Direct Operating Cost 150 $/h e1 e1 e3 100 $/h 0 12 10

Acquisition Cost 200 000$ f1 f3 175 000$ 100 000$ 8 7

Maintenance time 24 h g3 12 h 0 9 8Maintenance frequency every month 2 months 6 months 1 1

Meet these first

Then meet these

Never exceedthese

Order

Working onthe right

product orproject

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OUTLINE

Introduction

Value Methodologies Overview

Value Methodologies Integration

Concept Phase

Pre-detail and Detail Design

Conclusions

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Gate 1 -Offer

Pre-detaildesign

Pre-detail &

Detail Design

• Customer committed

• Component & System specs

• Partnership specs

• Supplier selection

• Budget validation

• Technology mitigation

Detail design

Gate 2 - Launch

Design specificationdefined

THE DESIGN PROCESS Working onthe productor project

right

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Detail Design

Bill of Materials Definition

Bill of Materials Characterisation

Product Certification

Production Plan

Entry-into-Service

Gate 2 - Launch

Design specificationdefined

THE DESIGN PROCESS

DetailDesign

Gate 3 - Produce

Working onthe productor project

right

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Gate 1 -Offer

Pre-detaildesign

Pre-detail &

Detail Design

• Risk Assessment

• Value Engineering

• Design for X

• Operation Process

Optimization methodologies

VALUE METHODOLOGIESIntegration into the design process

Detail design

Gate 2 - Launch

Working onthe productor project

right

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RISK ASSESSMENT

INPUTS• Key Product Indicators (Weight, Perfo., …)• Key Project Indicators (Schedule, Cost…)• Design Cross-Section• Engineering Cost Estimate• Technology Assessment• Risk Historical Data• Contractual Penalties• etc.

OUTPUT• Risk Summary• Top Risks with Value Impact

• on Project• on Product

• Risk Exposure into Target Costing

Working onthe productor project

right

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INPUTS• Risk Assessment• Risk Exposure• Risk Cube• Past Risk Mitigation Experience• Alternative Plan Possibilities

OUTPUTS• Risk Mitigation Plan• Waterfall Chart• Risk Reduction Monitoring

(%)

RISK RESPONSE Working onthe productor project

right

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VALUE ENGINEERING

Fu

ncti

on

Nu

mb

er

Function Name

Tu

be

Bu

nd

le

Ho

usin

g

Slid

er

Th

erm

al

Actu

ato

r

Co

ver

Co

st

per

fun

cti

on

Co

st

Dis

trib

uti

on

Co

st

per

fun

cti

on

Co

st

Dis

trib

uti

on

1 Transfer Heat 313 X X X X 313 30% 256 31%2 Contain Fluid 110 100 X X 0 210 20% 188 23%3 Modulate Fuel Temperature X X 82 83 X 165 16% 165 20%4 Locate / Position 33 69 56 7 0 165 16% 110 13%5 Respect Envelope 17 33 X X X 50 5% 17 2%6 Resist Environment 0 33 X 10 X 43 4% 33 4%7 Permit Maintainabillity 0 0 15 X 28 43 4% 18 2%8 Mix hot and cold fuel X X X 18 X 18 2% 13 2%9 Interface 0 18 X X X 18 2% 11 1%10 Prevent leaks / Seal 10 5 X X 0 15 1% 15 2%11 Achieve service life 0 0 0 0 X 0 0% 0 0%

Total Cost per Component---> 483 258 153 118 28 1040 826Before VE (%) 46% 25% 15% 11% 3%After VE (%) 52% 19% 19% 10% 0.4%

Component Name Before VE After VE

What

1. Planning

2. Info Gathering

3. Function / CostAnalysis

4. Idea Generation

5. Idea Evaluation

6. Recommendations

7. Implementation

Who

MGT, Facilitator

Key Players, Facilitator

Reduced VE Team

Full VE Team

Full VE Team

Full VE Team

PMT, IPDT, etc.

Working onthe productor project

right

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OUTLINE

Introduction

Value Methodologies Overview

Value Methodologies Integration

Concept Phase

Pre-detail and Detail Design

Conclusions

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CONCLUSIONS

Creating SUSTAINABLE value is based on two fundamental elements:

1. Working on the RIGHT product or project

2. Working on the product and project RIGHT

Value methodologies have been instrumental in achieving success in the pastat P&WC. Its success was influenced by the following enablers:

1. the accountability of the process owner,

2. the buy-in of the process users, and

3. the support from Management

Working onthe productor project

right

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THANK YOU

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