Introduction to Project

Management
Rohit Kapoor

Case Boeing 767

What are the risks?

Case Boeing 767

How financial risk is mitigated?

Case Boeing 767

How market risk is mitigated

Case Boeing 767

How technological risk is mitigated?

Central Issue
Inline vs. Offline conversion?

Learning Curve
Rohit Kapoor

Learning Curve
Concept
Each time the number of units in
production is doubled, the average
direct labour per unit is reduced by a
specific and constant percentage

Learning Curve
Can we model it?

Illustration 1
The first plane in the category of Boeing 767
takes 1 million hours of direct labour input for
its manufacturing. If 95% learning curve
applies, compute
The average direct labour hours per plane needed,
if

3 units are produced

5 units are produced
7 units are produced
31 units are produced

The actual direct labour hours needed to

manufacture the 3rd, 5th, 7th and 31st plane.

Illustration 2 (Price
Negotiation)
Rafalle has agreed to supply Indian Air Force its 10 latest designed
planes. The Rafalles cost break-up for a plane is:

Items

Cost (in
Billion INR)

Material
Labour
Overheads

0.55
0.2
0.25

Rafalle has a policy of 15% mark-up on its cost. Indian Air Force has
already paid for the first 5 planes. It was discovered by Indian Air
Force that there is a learning effect concept. Can you advise Indian
Air Force on the future payment for next 5 planes?