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mts3-Proposal-9911

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mts3-Proposal-9911

    Merloni TermoSanitari

    Business

    Consulting

Merloni TermoSanitari (China) Co., Ltd.

    BPCS System Implementation Project

    Phase III

    Proposal for Providing Professional Services

    November 1, 1999

Merloni TermoSanitari

    Table of Contents I. PROJECT BACKGROUND 3

    II. PROJECT OBJECTIVES AND SCOPES 3

    III. PROJECT APPROACH 4

    IV. PROJECT TEAM ORGANIZATION 6

    V. TIME SCHEDULE 7

    VI. PROFESSIONAL FEES AND EXPENSES 9

    Appendix A Standard Terms and Conditions

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    Merloni TermoSanitari

    I. Project Background

Merloni TermoSanitari (China) Co., Ltd. (“MTS (China)”) is a wholly foreign owned

    investment entity of Merloni TermoSanitari Group (MTS) in which MTS (China) is

    engaged in the manufacture and sale of high quality electric water heaters.

MTS(China) has engaged Arthur Andersen (“AA”) to support the implementation

    of BPCS system in Phases I and II. Phase I Distribution Module went live in

    November 1999, Phase II Financial Module went live in July 1, 1999. For phase III

    Manufacturing and Costing Modules (V6.04). MTS (China) expected to go live by

    December, 1999. In this regard, MTS (China) intends to still retain AA to support

    Phase III implementation.

    II. Project Objectives and Scope

In Phase III, BPCS implementation will cover the following modules:

    ? Manufacturing Data Management (MDM)

    ? Master Production Scheduling (MPS)

    ? Material Requirements Planning (MRP)

    ? Shop Floor Control (SFC)

    ? Costing Module (CST)

The major objectives of implementing BPCS MDM, MPS, MRP, SFC and CST

    modules is to:

    ? Link up sales forecast, master production schedule, material requirement

    planning, production control and costing data and information

    ? Speed up material requisition procedures and processing time

    ? Integrate with Financial and Distribution modules

    ? Minimize duplication work in source data input especially in costing,

    material requisition and production control areas

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    Merloni TermoSanitari

    III. Project Approach

    Based on the methodology of BASIS, MTS (China)’s business requirements and implementation schedule. below is the summary of key tasks to be performed:

    Steps Detail Objectives Key Tasks Perform Est. AA

     By Working

    Mandays

    1. Implementation Understand current business AA 5 ? Familiarize certain basic Preparation process and future business function of MPS/MRP requirements modules ? Identify required changes to Prepare business process AA 2 software and business requirements report processes ? Obtain agreement on all Prepare preliminary AA/ 5 required changes prototyping for MRP/MPS MTS ? Design all changes modules (China)

    Perform basic system testing AA 10

    Prepare MRP/MPS AA 1

    conceptual training materials

    and prepare Training Plan

    Conduct MRP/MPS MTS 2

    conceptual training for end (China)

    users

    Prepare the prototyping data AA 1

    Supervise the input of

    prototyping data

    Benchmark against Global AA 1

    Best Practices Database and

    prior engagement

    experience

     Deliverables ? Business Process

    Requirements Report

    ? Training Materials

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    Merloni TermoSanitari

    Steps Detail Objectives Key Tasks Perform Est. AA

     By Working

    Mandays 2. Development Conduct Prototyping AA/ 10 ? Make all required changes And according to the business MTS to business processes Confirmation process requirements (China) ? Make all required changes to BPCS software Explain to the end users on AA/ 2 ? Approve all changes the new business processes MTS (China) Prepare New Business System AA 3 Map Conduct Conference Room AA/ 5 Pilot MTS (China)

    Prepare Requirement AA/ 2

    Definition Report MTS

     (China)

     Deliverable

    ? Business System Map

    ? Requirement Definition Report

    ? Approved New System

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    Merloni TermoSanitari

    Steps Detail Objectives Key Tasks Perform Working

    Day By 3. Implementation ? Ensure the readiness of Conduct End User Training AA 5 procedures, personnel and Workshop

    data

    ? Convert static and variable Prepare data and System AA 1.5

    data to the new system Conversion Plan

    ? Cut-over to the new

    system Resolve data conversion AA 4

    issues and test converted

    data

    Prepare Cut-Over Readiness AA 0.5

    Checklist

    Monitor cut-over and AA 10

    resolve cut-over issues

     Deliverables:

     ? System Conversion Plan

    ? Cut-over Readiness

    Checklist

    ? New System Operating

    4. New ? Evaluate the Effectiveness Review the implementation AA 4 System of the New System progress of new system Operation

     Identify possible major AA 2

    implementation problems

    Recommend further AA 2

    improvement

    Arrange New System AA 2

    Evaluation Meeting

     Deliverables:

    ? New System Evaluation

    Meeting

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    Merloni TermoSanitari

    IV. Project Team Organization

Project Organization

As the success of this implementation project requires significant commitment of

    MTS management and employees, we propose the following project team

    organization.

     Project Steering Committee

    MTS Senior Management AA Project Director Norman Sze

     Internal Project Manager Project Management MTS Designated Personnel AA Project Manager

     User Representative and Functional and System

    System Support Consultants MTS Key Users AA Consultants

? The Project Team will consist of personnel from both Arthur Andersen and MTS

    (China)

? The Steering Committee will take responsibilities of authorization, direction,

    resource assurance, and quality control.

? The project director from MTS (China), project manager and consultants from

    Arthur Andersen will work together to manage project activities, resources

    allocation, and resolving project issues.

? The project team will also include at least one user representative from each

    business function within the project scope.

? The key users must be familiar with business processes of their responsible

    business function(s), and have authorities to authorize changes in business

    processes as a result of this project. The key users will also be responsible, with

    the assistance from Arthur Andersen consultants, for training end users of their

    responsible business function(s).

? Software vendor will provide technical services on solving system bug and data

    conversion.

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Merloni TermoSanitari

V. Time Schedule

Based on our understanding of your needs and our initial work plan, we estimate that the

    project duration will be approximately 4 months to complete the tasks described above. A

    high-level work plan by is presented below. Detailed project plan will be prepared

    separately.

    99,6 99, 12 99,7 99,8 99,9 99,10 99,11

    1. Implementation

    Preparation

2. Development &

    Confirmation

3. Implementation

4. New System

    Operation

     Cut over to New System

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Merloni TermoSanitari

Key Assumptions:

? MTS (China)’s senior management is committed to support our implementation and

    solve any issues during the project in a timely manner;

    ? MTS (China) will assign a full-time project manager, and he will be fully delegated to

    the project;

    ? The key users and end users will be available when the training is conducted;

    ? With the supervision from Arthur Andersen, MTS (China) will be responsible for the

    preparation and input of data;

    ? MTS (China) will be required timely sign-off the deliverables developed during the

    implementation on critical milestones;

    ? We understand that MTS (China) do not require modification/customization on

    BPCS Manufacturing modules. The time and fee estimated in this proposal do not

    include any work related to system modification/customization. If

    modification/customization is needed, we will discuss with MTS (China) and prepare

    a separate fee arrangement.

    ? For prototyping, we understand that AA will mainly train the MTS(China) project

    team member how to perform the prototyping and propose solutions to resolve

    issues during prototyping. MTS(China) will take the lead in prototyping. Should there

    be any additional work arisen from prototyping, AA will discuss with MTS (China) on

    a separate fee arrangement.

    ? We understand that MTS(China)’s manufacturing operation is newly set up. There

    does not require significant business process improvement and MTS(China) will be

    responsible for the implementation of such improvements.

    ? Since the license agreement is signed between SSA and MTS (China), SSA will

    undertake to indemnify MTS (China) in all matters concerning licensing rights and

    third party liability regarding the use of the package. In addition, SSA will provide

    assurance that BPCS V6.04 is year 2000 compliance

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Merloni TermoSanitari

VI. Professional Fees and Expenses

    We provide the following best-estimated AA mandays for BPCS V6.04

    Implementation of Manufacturing and Costing modules:

     AA

    Phase Manday

    1. Implementation Preparation 27

    2. Development and Confirmation 22

    3. Implementation 21

    4. New System Operating 10

    Total 80

    Our fee estimates do not include costs associated with customization. However,

    should the need arises, we are pleased to assist on specific work areas under

    separate fee arrangement.

     Our charges of the work described above will be based on the time required for

     completion and the experience level of the personnel involved, plus actual out-of-

     pocket expenses(OPEs). OPEs will include charges for transportation,

     accommodation, communications, photocopying, staff allowances, business

    tax (5%) and other expenses actually incurred for the project. In view of the sound

    relationship between MTS (China) and AA, AAs estimated mandays will be 80 days

    and will not charge OPEs for this project.

    Based on the above mentioned implementation scope and approach, the estimated

    professional fee for BPCS Manufacturing and Costing Modules implementation will

    be USD 64,000, equal to RMB 529,280 at current exchange rate ( 1 USD = 8.27RMB).

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