Albion Sugar Company

Introduction: The Albion Sugar Company, situated in the Caribbean, has been in operation
since 1948 and supplies both the domestic and export markets. The company is among the larger
manufacturers of sugar in the CARICOM region and also operates a distillery that supplies local
companies and foreign markets. In 1976, the Government acquired majority shares in the
company and made it a subsidiary of the National Sugar Company. A simplified process flow
diagram summarizing the companys operations is shown in Ex. 1.
Although the company enjoys the advantage of a virtual monopoly over the domestic market for
refined sugar, Government control on the selling price and increasing operating costs have
combined to erode its profit margins. In the overseas markets, the company enjoys protection by
virtue of the quota allocated to the Government through the Lome Convention. In recent years,
however, the negotiated prices have not been very attractive and depressed open market prices
have limited the companys options on the marketing side.
In an effort to arrest declining profitability, the companys management has embarked on a critical
examination of all aspects of its operations in the hope of identifying areas for realizing increased
sales revenues or achieving cost savings.
Current operations: The Company employs some 900 management and non-management
workers. Sugar processing is seasonal as the raw material (sugar cane) is available only during
the six month reaping season, January-June. During the remaining months, the factory equipment
undergoes extensive maintenance to ensure its reliability during the grinding season.
At present, the distillery also has to be shut down between July and December as it is dependent
on low pressure process steam being supplied from the boilers in the main sugar factory. Because
of the prevailing high prices for alcohol, the continuous operation of the distillery throughout the
year seemed to offer potential for increasing the companys profitability.
The Proposal: Following an engineering economic analysis, the company decided to purchase
a 15 TPH, 1 bar, and saturated steam boiler to supply the distillery with process steam from July
to December when the main factory would be out of operation. Molasses, the raw material needed
to manufacture alcohol, would be imported during that period.
After a review of quotations received from boiler equipment manufacturers, the company awarded
the contract to a USA based firm with a well-proven reputation. Its equipment was moderately
priced, met the required technical specifications and had the shortest delivery time.

The package boiler was due to arrive in mid-July and the companys management recognized the
need to install the unit as quickly as possible to minimize the disruption to alcohol production. The
following decisions were made:
1. The chief engineer would be responsible for the satisfactory installation and
commissioning of the boiler.
2. The installation would be done by company personnel. This was possible since the sugar
crop would be finished and work crews could be made available as required from the
factorys maintenance personnel.
3. The boiler installation should be phased in with the factorys scheduled out-of-crop
maintenance programme. Department managers should be notified in advance when the
subordinate maintenance staff would have to be diverted to installation project.
4. The project should be completed by mid-October, that is, three months after the arrival of
the boiler. Sales commitments would be based on this expected date of completion.
5. Unnecessary costs should be avoided. The company was in an unhealthy financial
position and could not afford cost slippages in the project budget.
Initial Project Planning: The project manager assigned responsibility for the boiler installation
decided to use Microsoft Project to assist in planning and controlling the project. After reviewing
the technical information available on the boiler and discussing the project with the maintenance
foremen, he prepared a list of all the jobs required for the project and their immediate
predecessors. This included an estimated time for completion of each job (Ex.2). From this
information, a project network could be created to show the order in which the jobs could be done
and identify the critical path, which indicates the shortest time in which the project could be
completed and any near-critical activities that should also be closely monitored.
Resource-constrained project planning: The project engineer was well aware that the
installation would have to proceed within the following resource constraints (Ex. 3).
a. Only two welders would be allowed at any time
b. Only three pipe fitters would be released at any time
c. Only three electricians would be available to work on the project
d. Only one crane would be available and hence only one crane operator would be needed.
e. Only three mechanics could be released by the maintenance department
f.

There would be no limitations on laborers as substitutes would be readily available.

Project crashing: The normal time estimated to complete certain jobs could be reduced to a
minimum or crash time by allocating additional resources at the same hourly rate and incurring
extra direct cost. Ex. 4 lists these jobs and summarizes their normal and crash times. Decisions
would have to be made on whether the extra costs of crashing specific jobs would be justified by
the additional benefits associated with early project completion. It is also possible that some
workers may be prepared to work overtime at evenings or weekends (double time rate).
Assignment to aid understanding and discussion:
You have been appointed project manager for the boiler installation project and have been asked
by the operations director to give a PowerPoint presentation of the feasibility of this project at the
next management board meeting. The presentation must provide data, charts, analysis and
interpretations of the following
1. Network diagram , Gantt chart to identify the Critical path using normal duration
2. Resource smoothing and full resource levelling options (save as new file)
3.

Project crashing options - Using crashing (minimum duration) - Save as new file.

Exhibit 1: Process flow diagram

Cane preparation

Milling

Clarification

Sugar clarification

Centrifuging

Refining

Drying

Packaging

Bulk storage

Domestic market

Export market

Exhibit 2: Job list for boiler installation

Task ID

Task Name

Predecessor

Duration

Excavation of foundations (boiler, feed water tank, oil tank)

--

Excavation of chimney foundation

--

Laying out-steam line to process

--

21

Laying out of main power cable from substation

--

21

Construction of electrical panels and distribution gear

21

Make electrical connections on boiler

15

Prepare steel matting for boiler foundation

Prepare steel matting for tank foundation

10

Prepare steel matting for chimney foundation

15

10

Cast all foundations after matting is completed

7,8,9

11

Allow concrete to set for 28 days

10

28

12

Construct chimney

11

21

13

Install feed and fuel tanks

11

14

Remove and reinstall existing fuel tank

15

15

11

16

Place Boiler on foundation, level and grout

Attach gauges, oil and steam valves, sight glasses, high &
low level alarms and relief valves

15

17

Place flue gas ducting, forced-draught fan, induced draught

fan into position

15

18

Connect flue gas duct to chimney

12,17

19

Install feed and chemical closing pumps

13,14

21

20

Connect pipes and dosing lines

16

14

21

Test boiler

6,18,19,20

Exhibit 3: Normal Resource requirement

Task ID

Duration

Electricians

Pipe fitters

Welders

Crane
Operators

Mechanics

Laborers

21

21

21

15

10

15

10

11

28

12

21

13

14

15

16

17

15

18

19

21

20

14

21
2
Max. resource
availability

No
constraint

Exhibit 4: Normal and Crash activity durations*

Activity

Normal duration

If Crashing used Minimum duration

Activity

Normal duration

If Crashing used Minimum duration

10

Activity

Normal duration

If Crashing used Minimum duration

15

10

* Save as separate files after crashing.