PM Group

1. New Product Development for Wall Tile 2540CM LIM SHIEH CHERN LOW SIEW MOI NG YEE JIE 1

2. Team Members Low Siew Moi 2821945 Lim Shieh Chern 2821959 Ng Yee Jie 2821942 2

3. The Company Amazon Ceramics Industries AboutUs A local ceramic tiles manufacturers, manufacturing floor tiles, wall tiles, homogenous tiles etc. Origin Founded in 1985. Headquarter in Senawang, Negeri Sembilan, Malaysian Mission To be a reputable manufacturer and supplier of innovative and quality products at affordable price in the building material industry 3

4. The Products 20cm x 25cm Wall Tiles MARVE 25cm x 33cm Wall Tiles ASTON 4

5. New Product 25cm x 40cm Wall Tiles EleganceAmaze series Sphere Blossom Wave 5

6. Project Plan Project Objectives Project Outline Business need to be met Constraints Directives Deliverables Acceptance Criteria Key Risk Staffing Equipment & Facility RequirementsBudget Performance Measurements & Evaluation Resources Allocation 6 Assumptions

7. Organization Cultural Dimension ACI is a more result oriented with relative well motivated organization. However management with strong autonomy power to control the financial and moderate risk taker. External10. Open-System focusInternal Ends9. Means-ends orientationMeans High8. Conflict toleranceLow Other7. Reward criteriaPerformance High6. Risk toleranceLow Tight5. ControlLoose Interdependent4. Unity IntegrationIndependent People3. People focusTask Group2. Team emphasisIndividual Organization1. Member IdentityJob External10. Open-System focusInternal Ends9. Means-ends orientationMeans High8. Conflict toleranceLow Other7. Reward criteriaPerformance High6. Risk toleranceLow Tight5. ControlLoose Interdependent4. Unity IntegrationIndependent People3. People focusTask Group2. Team emphasisIndividual Organization1. Member IdentityJob Source: Cultural Dimensions of an Organization Supportive of Project Management (Gary & Larson. p. 73). 7

8. Project Outline Proposing a new size of ceramic wall tiles (WT) for FY09/01 25x40cm Increase Profit Attractive Selling Price New Product Strategy Gross Profit deteriorated from 20% in FY04/05 to only 14% presently Can improve average gross profit from 14% in FY08/09 to 20% in FY09/01, 26% in FY12/13 25x40cm sells range from RM25.00 to RM35.00 compared to common sizes at around RM11.00 square meters To penetrate into urban and middle- income market, mid range housing project markets and export markets Increase the product mix since phasing out WT20x20 cm size in FY07/08 8

9. Increase Profit Financial forecasting A potential grow of demand for WT 25x40 in market from 2% in FY09/10 to 80% in FY12/13 A margin grow for ACI from 20% in FY09/10 to 26% in FY12/13 F INANC IAL ANAL Y S IS Actual FY07/08 Actual FY08/09 Budget FY09/10 Forecast FY10/11 Forecast FY11/12 Forecast FY12/13 Des cription Wall Tiles Sizes (cm) Sales Vol (%) a. 20x20 % 2% 0% 0% 0% 0% 0% b. 20x25 % 88% 88% 77% 58% 38% 28% c. 25x33 % 10% 12% 22% 32% 41% 41% d. 25x40 % 0% 0% 2% 11% 22% 30% Total % 100% 100% 100% 100% 100% 100% Sales Vol (M2) a. 20x20 M2 57,057 - - - - - b. 20x25 M2 2,393,677 2,424,905 2,142,000 1,610,000 1,031,250 781,000 c. 25x33 M2 266,266 340,095 613,200 893,200 1,122,000 1,138,500 d. 25x40 M2 - - 44,800 296,800 596,750 830,500 Total M2 2,717,000 2,765,000 2,800,000 2,800,000 2,750,000 2,750,000 Production C apacity M2 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 B alance C apacity M2 283,000 235,000 200,000 200,000 250,000 250,000 G ros s Profit Margin Unit Selling Price (a, b, c & d) RM/M2 11.74 11.33 12.57 13.36 14.18 15.23 Unit Cost of Sales (a, b, c & d) RM/M2 9.83 9.79 10.02 10.42 10.91 11.34 Unit Gross Profit (GP) (a, b, c & d) RM/M2 1.91 1.54 2.55 2.94 3.27 3.89 Wall Tiles GP Margin (a, b, c & d) RM/M2 16% 14% 20% 22% 23% 26% 9 Please refer to Appendix A for further details

10. Attractive Selling Price Market Survey Pippo is the only local manufacturer producing 25x40cm wall tiles with one imported brand, UCI, from Thailand Size (cm) Importer/ Manufacturer/ Trader Country Type of Material Brand Retailer Price/M2 20x30 KimHin Malaysia Ceramic Matt & Glossy Kimgress RM22.00 - RM28.00 20x40 Venus Malaysia Ceramic Matt & Glossy Venus RM18.00 - RM30.00 25x40 Pippo & Imported Malaysia, Ceramic Matt & Glossy PP & UCI RM25.00 - RM35.00 Thailand 25x45 Guocera Malaysia Ceramic High Glossy Guocera RM40.00 - RM45.00 25x50 Roman Indonesia Ceramic Red Body Roman RM28.00 - RM32.00 30x40 KimHin, Johan, WH & Sixny Malaysia, Ceramic Various RM35.00 - RM38.00 China 30x45 Huawei China Ceramic Rectified UNO RM28.00 - RM32.00 30x50 Roman Indonesia Ceramic Red Body Roman RM30.00 - RM35.00 30x60 MML, Guocera, WH, Niro, Alpha, Malaysia, China, Porcelain (Soluble Salt) & Full Body Various RM25.00 - RM35.00 Venue, Seacera, Imported Veitnam 10

11. WBS Work Breakdown Structure in Outline Form 1 Marketing Survey 2 Confirm Tiles Designs 3 Factory Product Developmet 4 Confirm Product Costing 5 New Product Marketing Plan 6 Equipments & Machinery - Ready 7 SIRIM Certification & Product Specifiaction 8 Sales & Administration System 9 Warehouse Control System 10 Liaise With Event Management Co 11 A&P Agency Management 12 Puchasing Raw Materials & Equipments 13 Actual Product Production 14 HQ Showroom Decoration 15 Waiting for Exhibition & Rectification 16 New Product Launching Ready Summary Tasks 11 Please refer to Appendix B for further details

12. Project Network Diagram The project network diagram is presented separately. Please refer to Appendix C for further details 12

13. PERT Scheduled Project Duration TS 105 days Critical Path Duration TE 101 days Standard Deviation 5.35 Probability Z 0.75 Probability % Z% 77% Milestone (Critical Path) Weighted Average Optimistic Expected Pessimistic [(b-a)/6]2 Marketing Survey 13.17 7 14 16 2.25 Factory Product Development 33 22 33 44 13.44 Liaise With Event Management Co 25.17 13 27 30 8.03 Actual Product Production 25.83 17 27 30 4.69 New Product Launching - Ready 3.83 2 4 5 0.25 101 61 105 125 13Please refer to Appendix D for further details

14. Project Stakeholders Internal Customers Suppliers Customers Regulatory 1. Top Management 1. Raw Material - Glaze & Surface 1. Houseowners 1. SIRIM 2. Account 2. Raw Material - Clay & Body 2. Dealers / Retailers 2. DOE 3. Engineering 3. Raw Material - Additive 3. Distributors 3. Bomba 4. Warehouse 4. Packaging - Carton Boxes 4. Interior Designers 5. Purchasing 5. Packaging - Pallet & Others 5. Architects 6. Human Resource 6. Event Management Co. 6. Developers 7. Production 7. A&P Agency 7. Contractors 8. Lab 8. Machineries and Equipments 8. Sub-Contractors 9. Design 9. Utility Co. - Energy 9. Importers 10. QA 10. Bankers 10. Commission Agents 11. Customer Service 12. Marketing 14

16. Business Need to be Met Contribute more than 40% gross profit margin for FY09/10 so that can achieve overall budgeted gross profit margin of 20% Production volume at 2% of total product portfolio for FY09/10 Produce 90% of 1st grade quality output and maintain 3% of reject in order to market effectively 16

17. Define the Project Project Priority Matrix 17

18. Define the Project Communication Plan What information Target audience When? Method of Communication Provider Bi-weekly meeting Status Report (include Decision Action List) Directors, General Manager, Project Manager Bi-weekly Email Innovation Manager Marketing Survey Analysis Report All project team member Bi-weekly Presentation & Email Marketing Manager Tiles Design Proposal All project team member Bi-weekly Presentation & Email Designer NPD Marketing Plan Directors, General Manager, Project Manager 2 weeks after project commenced Presentation & Email Marketing Manager Production feasibility report All project team member Bi-weekly Presentation & Email Production Manager Marketing Communication Status All project team member B-weekly after Marketing Plan approved Email Marketing Manager & Customer Service Manager Launch event Status All project team member Bi-weekly after Marketing Plan approved Presentation & Email Marketing Manager & Innovation Manager Top 6 High Risk Events - Severity & Risk Value All project team member Weekly Meeting New Product Committee Deliverables Tracking Plan All project team member Weekly Meeting New Product Committee 18

20. Project Objectives To launch 4 series of WT25x40cm concept tiles officially to the market for coming MALBEX 2010 (Malaysia building materials exhibition) scheduled on 20 to 24 January 2010 20

22. Budget Total budget allocated based on the past historical data of new product launch. No additional human resource cost incur where UCI utilized existing employees WT25x40 RM493K Mould Press Punches Conveyor Belt System Packing Machine Corrugate Carton Box Brou- chures Display Rack Exhibition Booth & Event RM20K 4% RM32K 6% RM150K 30% RM65K 13% RM6K 1% RM40K 8% RM80K 16% RM100K 20% Supports - RM226K (56%)Input - RM267K (54%) WT25x40 RM493K Mould Press Punches Conveyor Belt System Packing Machine Corrugate Carton Box Brou- chures Display Rack Exhibition Booth & Event RM20K 4% RM32K 6% RM150K 30% RM65K 13% RM6K 1% RM40K 8% RM80K 16% RM100K 20% Supports - RM226K (56%)Input - RM267K (54%) 22

24. Directives Examine production capability of existing machineriesEngineering Confirm the feasibility and characteristics of new size based on the tiles dimension, strength and manufacturing efficiency aspects Production Forecast for product cost at below RM11.00 per square meter is possibleAccount Do marketing survey to find out more about the size especially contemporary seek-after designs, color scheme, trends, popular installation layout, etc Marketing Getting the product certified by SIRIM QAS Sdn Bhd for the Product Certification LicenseQA 24

26. Assumptions NPC assumes that the current scenario will not change until post launching period Product life cycle of this size will continue for another 5 years No resignation of any key personnel from respective departments Existing export customers and domestic stockiest especially those situated in urban areas will accept and buy this new product 26

28. Constraints Not able to produce higher definition of printout due to its outdated printing machine Only one showroom in head office and has difficulties entertaining architects, IDs, developers, and contractors in the other 2 urban areas Very limited warehouse space to keep stocks and longer stocks holding is expected from this size. 28

30. Deliverables All the four series of tiles produced must pass the internal quality standard with QA and NPC accepted The tiles must be properly installed on a few mock up showrooms to examine the finishes before official launching For each series, a minimum one batch of 5,000 square meters stocks must be available for sales 5,000 copies of brochures must be ready and company web site must be updated on 20 Jan 2010 The SIRIM certification must be obtained Invitation cards must be sent out one month before MALBEX 2010 to all domestic dealers, oversea customers, and project customers Sales plans and promotional offer packages must be ready Decorated exhibition booth ready with routine marketing personnel on duty, LCD multimedia presentation, mini showroom, souvenirs, and light refreshment must be ready 30

32. Acceptance Criteria The utmost acceptance criteria is Product Quality Finishes Textures Fine printout Straight dimension Minimum shade variation 32

34. Key Risk NPC is concerned with the grading of product quality Outputs that are less than 90% of 1st grade salvaged from production are not tolerable Risk in encountering prolonged inventory turnover ACI may not have strong cash flow position to hold on to the slow moving stocks as well as limited warehouse space available 34

35. Risk Identification Project WT25x40 Marketin g Research Account Testing Producti on Logistic Design Budgetin g Product costing - P & L Inventory Raw material Utility - Gas/ Elec Machiner ary Event Set-up Engineeri ng Deliverab les Purchasi ng QA Post Launche d 35

36. Risk Assessment Risk Event Likelihood A Impact B Detection Difficulty C Severity A x B = Risk Value A x B x C = Purchasing Department Raw Material Price Increase 4 2 1 8 8 Missed Material Supply Deliveries 2 4 1 8 8 Production Department Missed 90% 1st Grade Quality 2 5 1 10 10 Energy Costs - Electricity & Natural Gas 5 4 1 20 20 Resign of Key Production Personnel 3 3 4 9 36 Marketing Department Poor Pricing & Design Survey Accuracy Result 2 4 5 8 40 Engineering Department Equipments Breakdown - Minor 2 3 4 6 24 Equipments Not Function to Productivity Target 2 5 2 10 20 36 Key Assessment Level: 1 Very Low, 2 Low, 3 Moderate, 4 High, 5 Very High Please refer to Appendix E for further details

37. Risk Assessment (cont.) Risk Event Likelihood A Impact B Detection Difficulty C Severity A x B = Risk Value A x B x C = Warehouse Department Poor Stocks Management due to Loose Pallets Orders 4 3 3 12 36 Account Department Not Able to Achieve Minimum Product Costing Target 2 5 2 10 20 Design Department Tile Designs Not Suitable for Mass Production 3 4 4 12 48 QA Department Miss Deadline to Receive SIRIM Certification 3 3 2 9 18 Deliverables All Four Series of Tiles Fail Internal Quality Standard 2 5 1 10 10 Sirim Certificate Not Ready before Exhibition 3 3 4 9 36 Post Launched Performance Slow Sales & Low Inventory Turnover 3 4 3 12 36 Unanticipated After Sales Quality Complaint 2 4 4 8 32 37

38. Risk Response Matrix and Contingency Plan Risk Event Response Contigency Plan Trigger Who Is Responsible Production Department Missed 90% 1st Grade Quality Reduce Improve the product specification Not solve during trial run production 4/11/09 Plant Mgr Resign of Key Production Personnel Reduce Draw out successor planning Immediately after appoint process engineer Plant Mgr Marketing Department Poor Pricing & Design Survey Accuracy Result Reduce Outsource professional research co. Market survey results not align with key accounts feedbacks Marketing Mgr Design Department Tile Designs Not Suitable for Mass Production Reduce Spare two extra designs series Failed requirement on trail run production Design Mgr QA Department Miss Deadline to Receive SIRIM Certification Reduce / Retain Apply temporary certificate or pending approval When appointment with SIRIM auditors can't be made between 17/12/09 to 5/1/10 QA Mgr Post Launched Performance Slow Sales & Low Inventory Turnover Reduce To introduce 30x40cm & 20x40cm Poor pass 1 year sales performance Marketing Mgr 38 Please refer to Appendix F for further details

39. Top Risks Energy Costs - Electricity & Natural Gas 20 20 Retain Adjust Product Price List Price Increase before production date - Poor Workers' Working Attitudes 16 48 Reduce Incentive Scheme for the two group experience operators When supervisor can't produce the desired quality & quantity targets Plant Mgr Poor Pricing & Design Survey Accuracy Result 8 40 Reduce Outsource professional research co. Market survey results not align with key accounts feedbacks Marketing Mgr Outdated Machinery Technology 12 12 Avoid Focus on designs that existing machineries are capable When machinery performance not consistent Engineering Mgr Poor Stocks Management due to Loose Pallets Orders 12 36 Reduce Standby plan for loose pallet warehouse space When loose stocks discrepency more than 3% from quaterly stocks checking Warehouse Mgr Tile Designs Not Suitable for Mass Production 12 48 Reduce Spare two extra designs series Failed requirement on trail run production Design Mgr Sirim Certificate Not Ready before Exhibition 9 36 Reduce / Retain Apply temporary certificate or pending approval When appointment with SIRIM auditors can't be made between 17/12/09 to 5/1/10 QA Mgr Slow Sales & Low Inventory Turnover 12 36 Reduce To introduce 30x40cm & 20x40cm Poor pass 1 year sales performance Marketing Mgr Who Is Responsible Severity Risk ValueRisk Event Response Contigency Plan Trigger 39

40. Change Request Log Date Rec'd Date Submit 58 Change brochure to leaflet & improved color A&P Agency No. 1112/14/2009 12/30/2009 Same Submit Better printout & glossy Comments NPC Requested Change Status Report - Open Items Date RC# Description Reference Document Amount Status 40

42. Equipment & Facility Requirements New mould and punches for the size of 25x40 cm tiles Internally modify the conveyor belt system to hold heavier tiles Mechanically modify the selection and packing machine. 42

43. Machinery Requirements Study Size (cm) Press Cavity Press Speed No of Press / Minute No of Tiles / Minute Conveyo r System Upgrade Print Machine Upgrade Kiln Capacity New Selection & Packing Machine Capex Economi c of scale 20x30 5 Fast 20 100 No Change No No No No 20x40 3 Medium 15 45 Modified Option No Modified Small 25x40 3 Medium 15 45 Modified Option No Modified Small 25x45 3 Medium 15 45 Modified Option No Modified Small 25x50 2 Medium 15 30 Modified Option No Modified Small 30x40 2 Medium 15 30 Modified Option No Modified Small 30x45 2 Slow 12 24 Modified Option No, but slow Modified Medium No 30x50 2 Very Slow 10 20 New Yes Yes Modified High No 30x60 2 Very Slow 10 20 New Yes Yes Yes High No Yes, but not Fair, but not Yes, but mkt unpopula Yes, but not Yes, most Yes, but mkt 43

45. New Product Committee Department Designation Name Report To Marketing / Team LeaderBusiness Dev Manager Mr. Lim Shieh ChernMarketing Manager Account Asst Account Manager Ms. Choo PP Financial Controller Engineering M&E Engineer Mr. Khor LH General Manager Warehouse Warehouse Supervisor Mr. Ng Yee Jie Warehouse Manager Purchasing Purchasing Executive Mr. Peter Low Puchasing Manager Human Resource HR Manager Pn. Salmiah General Manager Production Production Manager Mr. Lee KG Plant Manager Production Process Engineer Mr. Hew AP Production Manager Lab Lab Manager Pn. Zubaidah Plant Manager Design Design Manager En. Iskandar Marketing Manager QA QA Manager En. Shafiz General Manager Customer Service Administration Manager Ms. Julie Siow Marketing Manager Marketing Marketing Executive Ms. Low Siew Moi Business Dev Manager Knowledge Attitude Others - Necessary experience and knowledge/technical skills critical for project completion - Problem-solving ability - Ambition, initiative and energy - Credibility - Availability to commit this project - Political connections 45

46. Project Reward Reward system to motivate project team members to deliver distinctive result (source: Raymond J. Stone. P436 ) Reward Financial (Monetary) Non-Financial (Non-Monetary) Direct - Base pay - Incentive - Allowance Indirect - Insurance - Company car - Holiday Job - Advacement - Increase job responsibility Environment - Career security - Opportunity for learning and 46

48. Staffing Responsible Matrix 1st 2nd 3rd Duration Res-ponsible Mar- keting Design Account Engi- neering Pro- duction QA Customer Service Ware- house Pur- chasing Cost (RM'00) Date Incur Marketing Survey 14 Marketing 0 Check current Market Pricing 14 R S Check Popular Designs 14 R S Check Current Market Scenario 14 R S S Confirm Tiles Designs 7 Design 0 Select designs from suppliers 3 R S Select designs from oversea files 2 R S Meeting among NPC for Decision 2 S R S S S S S S Confirm Product Costing 3 Account 0 Raw material costing from Lab Dept 2 R S Packing, Transport & Admin costing from mgt account 1 R S S S S New Product Marketing Plan 11 Marketing 0 Discuss Marketing Plan & Strategy 8 R S S Formulate R, P & E Pricing Scheme 3 R S S 48Please refer to Appendix G for further details

50. Project Measurements and Control Scenario: 50 When 30th October 2009 What Happen The project team evaluates and notices that raw material costing worth RM50,000 in total has not been included The unplanned of RM11,000 will be incurred in the month end of November 2009 (above) and the remaining RM39,000 in the month end of December 2009 Result NPC required to work out the new budget baselines in order to seek for approval from management.

51. Project Measurements and Control Earned Value Management (EVM) (RM) Accumulated Planned Value (PV) Accumulated Actual Cost (AC) Accumulated Earned Value (EV) Cost Variance (CV) = EV-AC Schedule Value (SV) = EV-PV Cost Performance Index (CPI) = EV/AC Schedule Performance Index (SPI) = EV/PV PV AC EV CV SV CPI SPI 1-Sep 0 0 0 0 0 7-Sep 0 0 0 0 0 14-Sep 0 0 0 0 0 21-Sep 0 215000 0 -215000 0 0 28-Sep 267000 215000 267000 52000 0 124 100 5-Oct 267000 267000 267000 0 0 100 100 12-Oct 267000 267000 267000 0 0 100 100 19-Oct 267000 267000 267000 0 0 100 100 26-Oct 267000 267000 267000 0 0 100 100 2-Nov 267000 267000 267000 0 0 100 100 9-Nov 267000 267000 267000 0 0 100 100 16-Nov 267000 267000 267000 0 0 100 100 23-Nov 267000 267000 267000 0 0 100 100 30-Nov 267000 278000 267000 -11000 0 96 100 Comments Date: 30th Oct - Spend RM11K extra against budget - Amount of RM215K been spend earlier as planned CPI at 4%, under performanced with extra 11% spend Work completion as planned Proposed rectification if required Date: 30th Oct Rework the budget in more details to avoid unplanned cost incur Required to monitor the unplanned cost, if necessary required to replan or request Management budget required to avoid over spent from budget allocated 51

52. Project Measurements and Control Earned Value Management (EVM) New Budget Allocation 52 WT25x40 RM543K Mould Press Punches Conveyor Belt System Packing Machine Corrugate Carton Box Brou- chures Display Rack Exhibition Booth & Event RM20K 4% RM32K 6% RM150K 28% RM65K 12% RM6K 1% RM40K 7% RM80K 15% RM100K 18% Supports - RM226K (42%)Input - RM267K (49%) Raw Materials RM50K 9% Unplanned RM50K (9%)

53. Project Measurements and Control Cost/Schedule Graph 53

54. Project Measurements and Control Baselines and scope change 54

55. Monthly Status Report 55 Project Name: ACI New 25x40cm Wall Tiles Project Manager: Lim Shieh Chern Status as of: 30th October 2009 Status Summary: The project is on schedule. Seeking approval from management to approve unplanned raw material costs worth RM50,000. RM11,000 will be incurred in next month. Explanations: The project team had not taken into consideration some other factors during the initial planning of raw materials. A detailed calculation indicates that an additional allocation of RM 50,000 is needed. The allocation will be staggered over 2 months: RM 11,000 in November and RM 39,000 in December. The approval of this additional budget is crucial in order for the project to be carried out on schedule. Slight delay in the arrival of raw material will cause great impact to the manufacturing process and impede the entire workflow and allocation of the companys resource. Total cost of approved changes: RM50,000. The amount is attributed to purchasing raw materials Projected cost at completion: EAC is estimated to be RM543,000. This represents an overrun of RM50,000, given a CPI of 0.91

56. Conclusion ACI Will allocate 2% of its existing production capacity for production The capital expenditure is small at RM493,000 with anticipated extra reserve of RM50,000 For FY09/10 unit selling price is budgeted at 25% lower or $18.75 Square Meters compare to current market price The key risks are identified and scrutinized the severity. Contingency plans are in place to handle the unforeseen circumstances NPC strongly recommends the new ceramic wall tiles 25x40 cm to be approved 56

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