ACKNOWLEDGMENT

I would like to express my profound gratitude to all those who have been instrumental in the preparation of my project report. To start with, I would like to thank the organization GMM PFOLDER for providing me the chance to undertake this internship study and allowing me to explore the area of marketing which will prove out to be very beneficial to me in my future assignments, my studies and my career ahead. I wish to place on records, my deep sense of gratitude and sincere appreciation to my company guide and mentor, Mr. Chirag Mehta (HR
Manager and Admin) GMM pfaudler Ltd, who suggested and prepared

the frame work of the project. I would also like to thank him for his continuous support, advice and encouragement, without which this report could never have been completed. A thank-you is also deserved for the staff of the GMM Pfaudler. - Rajal R. Brahmbhatt

Introduction to the Company

Introduction Industry Overview Gmm Pfaudler is a manufacturing company in the market. It is today among the leading suppliers of engineered equipment and systems for critical applications in the global chemical and pharmaceutical markets. To drive our growth, we continue to attract, develop and retain the most talented people. There is going to offer exciting and challenging careers within a stimulating knowledge-driven work environment where ideas and skills are valued; where people can realize their full potential through dedicated different types of programs; and where individual contribution respected and recognize. Products:The company is a manufacturer and dealer of various types of structural steel works, industrial machinery and glass lined chemical vessels. GMM also manufactures wiped film evaporators, agitated nutche filters, mixing systems and polytetrafluoroethylene (PTFE)-lined equipment. It has supplied more than 9,000 reactors for different corrosive processes to suit clients specific needs, glass-lined stainless steel reactors and lab reactors. GMM manufactures storage tanks in both horizontal and vertical designs. Its fluoro polymer division manufactures various PTFE products, such as Teflon envelope gaskets, nozzle liners and bushes, and control system pipes internally lined by is statically molded PTFE liners. Its filters and filter-dryers are utilized in the inorganic and organic chemical, fine chemical and pharmaceutical industries.

GMM fully acquired Switzerlands Mavag AG, a leading supplier of highly engineered critical equipment for the pharmaceutical, bio engineering and fine chemical industries through its wholly owned subsidiary GMM Mavag AG.

Achievements:GMM Pfaudler is a world-class organization with ISO9001 certified processes and is also accredited by ASME and TUV for U Stamp and ADM HP 0 respectively.

Company Overview
HISTORY AND DEVELOPNMENT:-

GMM PFAUDLER LIMITED formerly Gujarat Machinery Manufacture Limited was incorporated in India by Late Shri Jethabhai V Patel on November 17, 1962. The company manufacturing unit is located at karamsad because Late Shri Jethabhai was interested in social and economical development of the people of his native place karamsad. The companys principal activity is the manufacturing of corrosion resistant glass lined equipment used primarily in the chemical, pharmaceutical and allied industries. In the beginning year 1962 only fabrication work was started but in the year 1968 they started manufacturing of glass lined equipment. At the primarily stage it was private firm later on it turned into public company. GMM PFAULDER LTD is the leading supplier of highly engineered, application critical equipment and systems for the chemical process industry. The success of the company is based on close and continuous interaction with its customers, innovative products, application

engineering customer support and a competitive manufacturing cost structure. The Indian pharmaceutical and fine chemical segment has been witnessing a strong growth for the past few years. The steady stream of drugs that are getting off patent protection will provide Indian generic manufacture for several years to come. Capital expenditure in this segment will continue in the medium to long term. With never capacities being added by established companies and new companies being formed to manufacture generic active pharmaceutical ingredients and to offer contract manufacturing for both domestic and overseas companies. Infrastructure GMM Pfaudler has a state of the art plant spread over 20 acres at Karamsad, Gujarat,. The plant has a covered area of over 21,000 sq. Meters. It is equipped with the latest equipment required for quality fabrication. In addition we have 5 furnaces - 3 electric and 2 natural gas. GMM Pfaudler has a sales and service presence across India with regional offices in Ahmedabad, Bengaluru, Chennai, New Delhi, Hyderabad, Mumbai and Vadodara. Strength Of the company (in terms of Human Resource) A company is its people. GMM Pfaudler's 130 trained and motivated workers are supported by 60 engineers and 110 staff and officers to ensure that the plant delivers quality equipment on time. Mission: To achieve international standard of excellence in all aspect of diversified business with on customer delight through value of produces and cost reduction. To maximize create on a wealth value and satisfaction for the stockholders. To attain leadership in development and assimilating state of the wet technology for competitive advantages.

To fast culture of participation and innovation for employee growth contribution. To cultivate high standard of business either and total quality management a strong corporate identity and brand quality. To help enrich the quality of the community and preserver ecological balance and heritage through a strong environment conscience.

VISION:For the last 46 years GMM pfaudler ltd has contributed to nation building activity through infrastructure developed and both material handling solution there by positive importing. The like hood of millions of promise to do so in future keeping the interest of our customer foremost in our minds and needs. Courageously ahead in the company shall continues strive to to improve and adopted changes and be a market leader by always remaining a step technology and quality and wide our horizons globalization. They shall create a joyful and happy GMM pfaudler ltd. of family of smiling focus through love and honesty.

OBJECTIVES:GMM PFAUDLER LTD believes in themselves and thus has set a few objectives for them which they thrive on:To delight our customers by supplying the required product in time. To attempt continuous improvement in efficiencies and environmental protection. To constantly carry out improvements in our product processes and method. To built relationship with our sub-contractor business associates.

COLLABORATION OF THE UNIT:In 1963, GMM entered into collaboration with a Hungarian company namely m/s Repartment emamil industry works and started making glass lined chemicals vessels with the help of latest and advanced technology. This collaboration was up to 1973. In 1988, Gmm had collaboration with Pfaudler Inc a U.S.A. Company. Pfaudler inc is the world level company in glass lined equipments. Gmm became subsidiary company of Pfaudler inc as it owned 51% of the total issued share capital of Gmm in 1999.

KEY PEOPLE:
BOARD OF DIRECTORS:P. KRISHNAMURTHY ASHOK J PATEL PETER C WALLACE KEVIN J BROWN DR S SIVARAM DARIUS C SHROFF TARAK A PATEL CHIEF OPERATION OFFICER : FINANCIAL CONTROLLER : COMPANY SECRETARY : STATUTORY AUDITORS INTERNAL AUDITOR SOLICITOR BANKERS REGISTERED OFFICE VITHAL UDYOGNAGAR, ANAND-SOJITRA ROAD, KARAMSAD-388325, GUJARAT PHONE: (02692)-230516, 230416, 236562. SUBSIDIARY COMPANIES:CHAIRMAN MANAGING DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR EXECUTIVE DIRECTOR ASHOK C PILLAI AMAR NATH MOHANTY Ms. Mittal Mehta KALYANIWALLA & MISTRY, CHARTERER A/C, MUMBAI. DELOItTE HASKINS & SHELLS, CA VIGIL JURIS STATE BANK OF INDIA

GMM MAVAG AG. MAGAV AG. KARAMSAD INVESTMENT LIMITED. KARAMSAD HOLDING LIMITED.

TURN OVER:- Rs 42 CR. MAIN COMPETITOR:- NYLE LTD AT HYDERBAD. MANUFACTURING PROCESS:GMM Pfaudler manufactures the equipments, according to the need of the customers. Their main raw-material is carbon steel, stainless steel, alloy steel, haste alloy. They buy raw material from SAIL(Steel Authority India Limited) and from local market. Steel plate is the basic raw material. The thickness of the plate depends on the capacity of the equipment. When GMM gets an order, first the design of the equipment is prepared so that the raw material is effectively used. Cutting of plates is done with the help of CNC machine. It is then bended with help of rolling bending machines. Welding is done on the two ends are covered by top and lower dish. After that a coat is applied inside to make the vessel last longer and to avoid the leakage of chemical and physical properties. Glass lined vessel is corrosive. Then after remaining nuts and bolts are fitted. Lastly the paint is applied and finally glass lined equipment gets ready

CONTRIBUTION:In the growth and development, the pharmaceutical and oil industries has occupied important position in the Indian economy. There are few industries, which are competent among them GMM Pfaudler is playing a leading role in the reactor systems and in manufacturing

of glass lined equipment in India. The production and sales turnover of the company is very impressive and bond a good market. Looking all the angles and aspects of the company, it can be said that the company has a better prospects in the coming years

PROJECT MANAGEMENT AT SIEMENS

4.1 Introduction to Project Management
Project management is the discipline of planning, organizing, motivating, and controlling resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables), [1] undertaken to meet unique goals and objectives, [2] typically to bring about beneficial change or added value. The temporary nature of projects stands in contrast with business as usual (or operations),[3] which are repetitive, permanent, or semi-permanent functional activities to produce products or services. In practice, the management of these two systems is often quite different, and as such requires the development of distinct technical skills and management strategies. The primary challenge of project management is to achieve all of the project goals [4] and objectives while honoring the preconceived constraints.[5] The primary constraints are scope, time, quality and budget. [6] The secondary and more ambitious - challenge is to optimize the allocation of necessary inputs and integrate them to meet pre-defined objectives. The Project Management has different Knowledge Areas describes project management knowledge and practice in terms of the various component processes. These processes have been organized into nine knowledge areas, as described in the below Project Integration Management describes the processes required to ensure that the various elements of the project are properly coordinated. It consists of

project plan development, project plan execution, and integrated change control. Project Scope Management describes the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully. It consists of initiation, scope planning, scope definition, scope verification, and scope change control. Project Time Management describes the processes required to ensure timely completion of the project. It consists of activity definition, activity sequencing, activity duration estimating, schedule development, and schedule control. Project Cost Management describes the processes required to ensure that the project is completed within the approved budget. It consists of resource planning, cost estimating, cost budgeting, and cost control. Project Quality Management describes the processes required to ensure that the project will satisfy the needs for which it was undertaken. It consists of quality planning, quality assurance, and quality control. Project Human Resource Management describes the processes required to make the most effective use of the people involved with the project. It consists of organizational planning, staff acquisition, and team development. Project Communications Management describes the processes required to ensure timely and appropriate generation, collection, dissemination, storage, and ultimate disposition of project information. It consists of communications planning, information distribution, performance reporting, and administrative closure. Project Risk Management describes the processes concerned with identifying, analyzing, and responding to project risk. It consists of risk management planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning, and risk monitoring and control. Project Procurement Management describes the processes required to acquire goods and services from outside the performing organization. It

consists of procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract closeout.

4.2 Work Breakdown Structure

The work breakdown structure (WBS) is a tree structure that shows a subdivision of effort required to achieve an objective for example a program, project, and contract. The WBS may be hardware-, product-, service-, or process-oriented. A WBS can be developed by starting with the end objective and successively subdividing it into manageable components in terms of size, duration, and responsibility (e.g., systems, subsystems, components, tasks, subtasks, and work packages), which include all steps necessary to achieve the objective. The work breakdown structure provides a common framework for the natural development of the overall planning and control of a contract and is the basis for dividing work into definable increments from which the statement of work can be developed and technical, schedule, cost, and labour hour reporting can be established.

4.3 Project Management at Siemens

A. Sales Department PM 010 Go/ No-Go decision Process Document lead Evaluate and select lead Identify responsible Internal business Check lead for cross division Execute and document the decision

Phase Lead Management

PM 020 Bid Decision Process Initiate opportunity development Evaluate expected business Evaluate customers business situation & competitive environment Analyze and structure customers requirement Define bid strategy Check commercial feasibility Check technical feasibility Check delivery feasibility Analyze resource implications Determine bid scope and plan bid Perform LoA Risk Assessment Execute and document bidding decision

Phase Opportunity development

PM 040 Bid Approval Process Handover to Sales Expert/ Bid Manager Set up bid preparation Create technical bid part Create commercial and contractual bid part Create delivery bid part Perform LoA Risk Assessment Compose bid

Phase Bid preparation

PM 070 Project won/ lost Process Handover bid to customer Obtain and process customer feedback Repeat bid preparation for changes Determine negotiation strategy and roles Nominate project manager for execution Conduct contract negotiation Obtain contract approval Conclude contract with customer Analyze and document win/ loss

Phase Contract negotiation

B. Project Execution Department PM 080 Start of Project Process Determine Liability Update, complete and verify relevant data and documents Handover to execution Closes sales phase

Phase Project Handover

PM 100 Order receipt clarified Process Structure & create Project in IT application Set up project organization Analyze contract technically & clarify open points Analyze contract commercially/ legally & clarify open points Enter order entry calculation in IT application Appoint project manager/ conclude target agreement Planning & teaming workshop Perform project management assessment

Phase Project opening & clarification

PM 200 Approval of detailed planning Process Create/ release technical realization plan Confirm & evaluate reference selection Update product requirements specification Create project execution plans Finalize quality plan & hazard analysis Compose/ release realization plan Create/ release detailed planning Realize product integration Prepare & release to supply chain

Phase Detailed

PM 300 Dispatch Approval Process Place purchasing, manufacturing & service orders Ensure fulfilment of orders Prepare & release products for dispatch

Phase Purchasing & Manufacturing

PM 400 Material and Resource at site Process Prepare dispatch/ stage products Conduct & monitor transportation Prepare infrastructure/ schedule & request resources Receive & verify products at site

Phase Dispatch

PM 550 Construction/ Installation completed Process Prepare site Installation of plant/ system Preparation of the commissioning phase

Phase Construction/ Installation

PM 600 Release for customer acceptance Process Start up plant/ system Conduct internal plant & system tests Conduct customer training Release acceptance

Phase Commissioning

PM 650 Customer acceptance Process Prepare & conduct acceptance test Update customer documentation Conduct customer debriefing meeting Request preliminary acceptance certificate

Phase Acceptance

PM 670 Project Closure Process Work off open points Clarify open claims with contract partners Create closing invoice/ execute receivables management Create final customer documentation Handover service-relevant documents to after sales Archive project documentation Write final project report Close project

Phase Project Closure

PM 700 End of Warranty Process Perform warranty activities Request final acceptance certificate

Phase Warranty

Close warranty Archive project

4.4 Project Management Process at Siemens

1. Pre offer & Offer Preparation Stage: Scrutinize & Comment on Commercial Terms & Conditions of Tender / Bid Enquiry Implication of Taxes & Duties Organize necessary documents to be submitted along with the offer viz. EMD, Solvency Certificates etc Verifies correctness of Offer Calculation & calculation of Financing costs Ensures valid Quotations are available for Bought outs

2. Negotiation & Order Confirmation Stage: Gets involved during Order Negotiation with Customer / Vendors from the commercial aspects Ensuring Purchase Order is in Line with final Quotation i.e. scrutiny of Terms Comparing Order Cost Sheet with Quotation Calculation Organize Bank Guarantee, Insurance, Hedging Booking of Order Value in the System i.e. Spiridon

3. Order Execution Stage: Booking Turnover in Spiridon system, Preparation of invoices / Performa invoices with relevant documents & its submission to customers as per PO terms Periodic review of Unbilled Cost & its Adjustments Updating of Order Value / Estimated Cost

Creation & Regular review of Provisions Understanding Document flow at Customers end to enable quick collection of payments /TDS Forms & Sales Tax Forms

Interaction with Engineering and Field service dept in case of site related activities primarily for Project type of business

Involvement in Negotiations with Sub-suppliers & finalising Terms & Conditions

Discussions with Works on Debits / Excise formalities Discussions / Finalisation of Forward Covers, Bank Guarantees & Tax matters with Corporate Finance & Accounts / IDTs

Coordination with Banks, Insurance Companies, Clearing Agents, Customs, Consulates & Chamber of Commerce primarily for export orders

Interaction with Legal & Company Secretariat Department for Power of Attorneys & related issues

4. Order Closure Stage: Make final payment reconciliation Get all sales tax forms Issue all sales tax forms to vendors Get bank guarantees back Clear all open provisions Ask for completion certificate Close SAP order after closing costs, UOV, release of provisions etc Return sub - suppliers guarantees

Regularize retention of sub - suppliers. ( pay or adjust ) Settle all internal claims Make separate file for retention

4.5 Project Management Models at Siemens

The project phase model describes the standardized process steps of Project management at Siemens. Each project has to follow this model. The project process description shall incorporate all necessary elements to ensure the quality of the execution as well as compliance with internal rules and regulations. At the same time, the defined process needs to provide an appropriate framework for the project manager to act and decide as an entrepreneur for this project. At Siemens, often the same Sales people acquire Product, System, Project and Service business. Therefore, the Sales processes were harmonized to the same phases and milestones. The project execution and preparation phase model as well as the project warranty phase model is divided into three categories according to the type of project (Plant and Solution Project, Service Project and Small Project). The completion of every milestone defined in the project phase model has to be documented. The process documentation needs to define how the authorization to declare a milestone completed is achieved and how it is documented. Particular care should be taken on milestones that have to be executed according to the Quality Gate system. The Quality Gate principle ensures that at critical points during a project all issues (technical, resources, schedule, commercial, compliance, etc.) that may endanger project success are systematically analyzed and early decisions can be made by the responsible project managers.

A. PROJECT SALES PHASE MODEL

B. PROJECT EXECUTION PHASE MODEL

C. PROJECT WARRANTY PHASE MODEL

4.6 Contract Management

Contract Management starts with the generation of the bid (PM020). Contract Management is important for all customer projects, independent of the project category or allocation of the project to a group or region. An integrated approach and

the necessary contract management competencies are required to ensure overall project success. Contract Management represents the sum of all actions that are designed to: Create sound contractual agreements for the project Provide a strategy for how to manage change orders and claims Support the systematic enforcement of legitimate claims against contracting parties, mainly customers, consortium partners and suppliers or third parties Fend off unjustified claims and Manage changes to the respective contract.

Unclear scope of services, unclear rules of cooperation and escalation with customers and suppliers, as well as terms and conditions in the contract are the main reason for non-conformance costs (NCC). Professional contract management helps to identify the risk of NCC, to prevent the occurrence of these costs or to minimize the impact. This requires strong involvement of appropriate management levels early in the sales process as well as during the project execution if changes occur. The various definitions in the projects are with regards to: 1. Scope of Work 2. Price 3. Terms of Payment 4. Warranty 5. Delivery 6. Liquidated Damrages 7. Performance 8. Insurance 9. Title Transfer Deed 10. Limitation of Liability 11. Export Control 12. Inspection 13. Termination Clause 14. Jurisdiction

4.7 Payment Terms

Payment terms are timelines and commitments that depends on the completion of the work and receiving the amount associated with it. A payments term varies from contract to contract, depending upon the nature and type of risk the project carries and relationship with the customer. A typical payment contract terms are shown in the table below. Percentage of contract value Commitment to the level of work

5% - 10% 5% 10% 10% - 15% 70% - 80% 10%

Advance payment signing of the contract against Pro-forma invoice Advance bank guarantee for the same Against after submission of GA drawing Against pro forma invoice on release of purchase order for equipments to be procured from vendors outside Siemens Against Pro-forma invoice on dispatch of materials Against Performance Bank Guarantee

The Modes of Payment are 1. Cash in advance With Cash in advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Wire transfers and credit cards are the most commonly used cash in advance options available to exporters. 2. Letter of Credit A letter of credit is a document issued by a financial institution, or a similar party, assuring payment to a seller of goods and/or services. The seller then seeks reimbursement from the buyer or from the buyer's bank. The document serves essentially as a guarantee to the seller that it will be paid regardless of whether the buyer ultimately fails to pay. In this way, the risk that the buyer will fail to pay is transferred from the seller to the letter of credit's issuer. The letter of credit also insures that all the agreed upon standards and quality of goods are met by the supplier.

4.8 Limits of Authority (LoA)

The Limits of Authority (LoA) process is the internal approval procedure for all division external projects of Siemens AG, its subsidiaries and affiliates. The LoA process limits the authority to approve the acquisition of projects and the submission of bids to specific management levels. A total project risk class will be determined on the basis of certain risk assessments such as a project classification, an AntiCorruption Risk Assessment, and a Business-specific LoA risk classification. The LoA process improves the quality of the decision at the bid / no bid stage for a project because it systematically incorporates major: technical commercial / contractual

pricing- and costing-relevant, and ethical / legal

criteria into the decision. To make this possible, it governs the interaction of the main persons participating in the process, their roles and their responsibilities. The main goals of the LoA process are: To ensure an acceptable result for the project and keep non conformance costs to a minimum. To ensure conformity with all internal guidelines and regulations, particularly the Siemens Business Conduct. Guidelines and the internal rules on preventing corruption. To ensure that all applicable laws are obeyed. To ensure that all necessary resources are available to prepare bids with a sufficient probability of securing an order. To ensure that the project is in accordance with the business strategy (e.g. warranty terms, creditworthiness, payment plan, portfolio, etc.). To ensure that risks deriving from the possible complexity of the project structure are identified and manageable. To ensure that the solution offered is feasible and available To ensure that the costing is realistic. To ensure that the bid is prepared in accordance with the applicable Siemens AG processes, and is fully documented. Integration into the Project Management at Siemens Process The LoA process is a part of the Project Management at Siemens process in the project sales phase, with its defined phases, milestones and quality gates. The key milestone is approval of the bid by the responsible business managers at PM040 (LoA meeting). At milestone PM070 the documents are finally reviewed and updated. Execution of the LoA process The LoA process comprises at least the steps shown in the figure:

1. LoA preparation starts at PM010 or PM020 at the latest. It includes arranging the standardized LoA documents in preparation for the decisionmaking process, including the timely involvement of any relevant experts. 2. LoA meeting is held at PM040. Additionally, LoA Meetings can be held any time before PM040. E.g. at PM010 / PM020. At the LoA meeting, a decision is made as to whether or under what conditions the project will be bid on. 3. LoA update takes place, if needed, After the first bid has been submitted (PM040 is completed) and before the contract has been signed (PM070). At milestone PM070 the project data are finally reviewed and updated, and released by the project manager and the Compliance officer if necessary by his/her sign-off.

Anti-Corruption Risk Assessment (ACRA) The Project Management at Siemens LoA Tool supports the mandatory review and assessment of issues relevant to corruption in accordance with the Siemens Business Conduct Guideline and the relevant Compliance circulars. The project manager

confirms that these requirements have been met with his/ her electronic signature. The more detailed Anti-Corruption Risk Assessment has to be completed mandatorily, with project category is A or B and/or involving business partners and/or involving export credit agencies and/or multilateral development banks / financial institutions and/or Where the customer country or any of the project execution countries (i.e. at least one of these) is a high-risk country, which is different from the country of the Siemens ARE. When completing the Anti-Corruption Risk Assessment the project is assigned to Anti-Corruption (AC) Risk Class 0, 1, 2, or 3. Depending on the Risk Class, the Risk Mitigation Level will additionally be determined. To include a Sector or Division specific Risk Assessment in the project evaluation, a Business Risk Classification is included in the LoA process. The Business Risk Class is a further factor in deciding the escalation level. Escalation within a Group or a Region Based on the results of the three risk analysis methods, the management level whose LoA meeting will decide on submitting the bid will be determined according to standardized rules. This assignment is called escalation. The criteria for escalation are the three elements in the LoA Tool risk report: Siemens uniform project categorization (categories A-F) Anti-Corruption Risk Assessment (AC Risk Class 0-3) Business-specific risks (Business Risk Class 0-3)

Based on the determined escalation level, a corresponding escalation path has to be followed. Normally all projects are escalated upward through the hierarchy. For projects that the Region itself executes under the above principles, the rules for interaction with the Sector and Division must also be taken into account.

4.9 Risk and Opportunity Management in a Project

With enhanced Enterprise Risk Management (ERM), Siemens seeks to take risk and opportunity management to the next level as a holistic, integrated management tool. The Siemens ERM methodology is designed based on principles rather than on rules, which ensures consistency across Siemens while allowing the individual units to embed the approach in their specific environment. Moreover, Siemens ERM is an interactive and management-oriented approach, facilitated by workshops and ensuring appropriate management attention. It should be emphasized that the ultimate purpose of ERM is not to avoid or eliminate all types of business risks, but rather to support entrepreneurial spirit by finding the right balance between managing risks and seizing opportunities. These general principles also apply in the individual project. The focus of the Siemens Risk and Opportunity Management policies is not on avoiding risks by all means. The focus lies in: Early detection and identification of risks and opportunities Detailed analysis and evaluation with a clear strategy for how to

manage them. Project and Line Management should at all times have full understanding and knowledge of risk and opportunities in all projects. Decisions should be made on the basis of such knowledge and Siemens should at all times have room to manoeuvre. The Risk and Opportunity management systematic consists of two major elements: Risk and Opportunity Categories Risk and Opportunity Management Process.

The Risk and Opportunity Management Process consists of four process steps that are repeated project core selected needed in consistently. team members The and

experts participate as this process

1. Identify and assess Risks and Opportunities: The prerequisite of an effective identification process is a good knowledge of the customer, the tender / contract situation, the technical implications and the geographical conditions. In any case, a discussion among (sales) project members using one or more of the above methods is more successful than the analysis and opinion of a single person. The identified risks and opportunities need to be assessed in accordance with the Siemens risk and opportunity categories. This helps to get a good overview of the actual risk and opportunity portfolio of a project. Finally, for efficiency purposes the risks and opportunities need to be prioritized according to their impact and likelihood. The focus is on financial impacts, but non-financial risks and opportunities shall also be integrated. Starting with the highest priority of risks and opportunities, the project members and experts need to find out more information about the risks, such as their sources and reasons, special triggers and multipliers or interdependencies.

The analysis leads to the calculation of the impact (most realistic case) and the estimation of the likelihood, both before any actions are taken. The multiplication of these factors is called expected value of risk / opportunity.

2. Respond to and monitor Risks and Opportunities The project members and experts now focus on mitigation actions to reduce or avoid the individual risks and on enhancement actions for the identified opportunities. The costs of the actions need to be calculated and will become costs of sale of the project. After the initial Risk and Opportunity Analysis that consists of steps 13, the controlling of the implementation of the defined actions and the analysis of the actual status of the already identified risks and opportunities marks the start of the new Risk and Opportunity Management process loop. The identification of new risks and opportunities shall take place at any time they occur. At a minimum, during the regular Risk and Opportunity Management process existing and new risks and opportunities are analyzed. 3. Report and escalate Risks and Opportunities Depending on the nature and impact of a risk or opportunity, the appropriate management levels need to be involved. Clearly defined escalation procedures including ad-hoc reporting lines allow for timely reaction and reduction of negative impacts. 4. Sustain and continuously improve Risk and Opportunity Management Ultimately, from an analysis of all risks and opportunities and their mitigation or use, the organization shall learn and improve their capability for risk prevention, early

detection of risks and opportunities as well as creating the best possible effect from them. This requires a culture of risk and opportunity management throughout the organization and thus also all projects. Risk and Opportunity Management during the different project phases In the preparation of PM010 and PM020, Risk and Opportunity Management has a more strategic and less detailed character. Depending on the knowledge of the future project, detailed analyses may not be possible or advisable in all cases. Nevertheless, the results of the analysis together with other strategic inputs like PM project portfolio analysis and customer relationship shall build the basis for a Go / No-Go and Bid / No-Bid decision respectively. At PM040 all inputs for a concise binding offer from Siemens shall exist. Thus, in this phase Risk and Opportunity Management becomes vital for future project success. A lack of risk analysis and respective actions, which often influence the contract or calculation, deprives the project of almost all possibilities to transfer risks to other contractual partners. As of PM070 till the end of the project (PM700 / PM(S)1000) the newly initialized list of risks and opportunities (often named Risk and Opportunity Log) shall be updated in the respective regular process loops with the focus on early detection of new topics and consequent action implementation and controlling of effectiveness of such actions. How to create a Risk and Opportunity Management Plan in a project The Risk and Opportunity Management Plan serves as clarification for the whole project team with regard to the following topics and is part of the PM Siemens Project Management Plan. Aim and goals of Risk and Opportunity Management Roles and responsibilities Tools to be used

Cycle and frequency of the Risk and Opportunity Management Process Content and frequency of risk and opportunity reporting Addressees of risk and opportunity reports.

A Risk and Opportunity Management Plan shall be drafted at latest prior to PM040 and established at latest prior to PM100, e.g. during a PM planning and teaming workshop for the project, and be documented in the Risk and Opportunity Log in writing respectively. The Risk and Opportunity Log is maintained throughout the project life cycle.

4.10 Check list of various Risks encountered in a Project

Sr.No Risk Type (A) Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Category (B) Have the Price, Mode of invoicing and Mode of payment is arranged? Are there enough costing approaches available during packaging? Dito for Transportation Dito for Commission Dito for Travel costs, including field allowances Dito for delegated customer personnel Is cost sharing to be expected when tolerance limits are exceeded? Are there special documentation guidelines and have their effects been taken into costing? Are tax payments that result from legal uncertainties possible? Risk Definition ( C)

1 2 3 4 5 6 7 8 9

Risk 10 11 12 13 Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Financial Are there deviations between the costing of the offer, the contract and the levied costing with respect to the performance? Dito for cost objectives Dito for technical and commercial houses Dito for delivery date and time, terms of delivery and Incoterms? Are modifications to components / materials to be expected during 14 processing and their effects on time and cost and their further consequences unclear? Have various insurance policies been taken? Have financial arrangements been made? Are potential rivals interested in the same project? Is a price war expected?

15 16 17 18 19 20 21

Are costs from penalties for delayed deliveries to interim and finish dates expected? Are the claims for the payment covered by the insurance / guarantees? Has insurance for export credit been taken? Will financing costs result from reduced liquidity, conditions of

22

payment, nonpayment, late invoicing and contractor's condition for payment? Are there any discrepancies between customers, price formula and suppliers price formula? Is there a possibility of additional cost from escalation? Are special risks covered by insurance? Will the customer make advance payment or deposit? Is financing of the project guaranteed?

23 24 25 26

27 28 29 30 31 32

Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk

How can claims of deliveries and performance be accepted by the customer? Have inquiries been made about the credit - worthiness of the customer? Are their experiences with the financial morale of the customer? Are the negotiated dates of payments clearly fixed in the contract? Does the customer come from a risky country? (War prone, political instability, etc) What is the procedure for outstanding customer payments? Are there regulations in the contract containing arrears for payment? Does an efficient claim management system exist? Do the chosen partners like suppliers have necessary financial power? Are guarantees of the sub - suppliers been deposited?

33 34 35 36

4.11 Project Monitoring: Calculation of Excess Costs / Excess Billings

For each PoC-project, either excess costs or excess billings are calculated, to indicate if either the customer or Siemens is financing the project by advance payments or advance performance.

Value > 0: Costs and estimated earnings in excess of billings on uncompleted contracts (WIP). Value < 0: Billings in excess of costs and estimated earnings on uncompleted contracts (WIP). 1. Excess Costs: Siemens contract performance exceeds the progress billings to the customer.

The following table will help us to clarify the same: PARTICULARS Project Cash Inflows Project Costs Excess Costs AMOUNT (RS /- IN LAKHS) 10 15 (5)

2. Excess Billing: Progressive billing to the customer exceeds the Siemenss contract performance

The following table will help us to clarify the same: PARTICULARS Project Cash Inflows Project Costs Excess Billing AMOUNT (RS /- IN LAKHS) 15 10 5

1) CONTRACT MANAGMENT The contract is the basis for the project scope, project deliverables and customer expectations. An unclear scope or unclear terms and conditions create additional costs and effort during execution. Thus, unclear contracts present a significant risk to achieving the project targets as well as customer satisfaction. Contract Management provides expert support to draft, comment on and negotiate contractual and / or cooperation agreements. When the contract is signed, Contract Management contributes to the contract execution by enforcing legitimate claims against our partners as well as fending off unjustified claims and managing change orders. Contracts with clearly defined scope, terms and conditions provide the foundations for project success Contract Management helps make that happen. Contract Management starts with the generation of the bid Contract Management is important for all customer projects, independent of the project

category or allocation of the project to a group or region. An integrated approach and the necessary contract management competencies are required to ensure overall project success. Contract Management represents the sum of all actions that are designed to: _ Create sound contractual agreements for the project _ Provide a strategy for how to manage change orders and claims _ Support the systematic enforcement of legitimate claims against contracting parties, mainly customers, consortium partners and suppliers or third parties _ Fend off unjustifi ed claims and _ Manage changes to the respective contract. 2) Quality management:Quality Management in Projects is an integral part of the GMM Pfaudler process. It enables and contributes to a process-oriented and transparent project management across all project phases. It is one of the fundamental responsibilities of the whole project team and the business organization up to the top management. Its principles are applicable to projects of all categories. The objective of Quality Management in Projects is to fullfill our contractual obligations and thereby obtain the appropriate level of customer satisfaction. This must be based on systematic, clear and proactive approaches toward fulfilling contractually agreedupon commitments and performances based on terms and conditions. Quality Management in Projects covers those activities which assist the project manager and the project team to meet the project requirements in terms of functionality, costs and deadline. In doing so, this will minimize non-conformance costs in the project. Quality Management creates project transparency and anticipated success. Quality Management in Projects includes the planning and safeguarding of product and process requirements over entire project lifecycle. Deficits occurring in the early phases can strain the entire project substantially

and can rarely be corrected with all the consequences for the customer and our company. The application of sound Quality Management in Projects has its foundation in the Siemens Quality Management System (QM System) and its mandatory elements. This module describes what kinds of quality-ensuring activities are required to fulfi ll Siemens standards throughout the project phases and highlights in particular the practices of: _ Implementation of Quality Management in Projects _ Implementation of PM Quality Gates _ Systematic handling of requirements based on PM Requirements Definition and Management _ Role of PM Quality Managers in Projects _ Quality planning as part of the PROJECT PROCURMENT Stringent customer-specifi c requirements and an ever-increasing share of external value added are characteristic for procurement when involved in project business. With externally purchased materials and services normally accounting for 4060% of project costs, Procurement plays a major role in achieving positive project results and a long-term increase in cost productivity. For improveing project profit they focused on getting Procurement on the job As a result of consistent integration of Procurement, projects benefi t from better knowledge of the market and of the supplier situation, which in turn means that quality is improved, innovation is secured and any risks are minimized. Besides reducing material costs, this process also has an effect on higher hit rates in the bidding process through lower costs and risk reserves calculated for relevant supplier contributions. Procurement must be continuously involved over the entire project duration, from lead management right up to the end of the warranty period, if effective project control is to be achieved. Before getting under way, projects are rigorously examined in terms of their suitability for supplier integration with a view to exploiting potential for innovation and cost reduction. A decision must be

made at PM.The individual process steps for successful supplier integration in projects are laid out in the Guideline Professional Supplier integration. COLLOBRATION IN PROJECT:Projects are highly interactive and executed across the usual line structures of an organization. Clear PM roles and responsibilities are an important basis for the successful execution. As important as clarifying who is responsible for what is to establish and maintain a sound basis within the team and supporting organization for the ongoing efficient collaboration of all employees involved in the successful project acquisition and execution. Collaboration is the secret of efficient and effective team performance. Every team member of the Siemens organization and the customer organization has his or her own background, competencies and experience to draw from and contribute to the project success. Accessing this knowledge and creating the willingness to support the targets defi ned for the project, as well as creating a common understanding of what those targets are and how to achieve them as a team, is individual to each project team. Nevertheless, there are methods and tools for achieving and maintaining this important personal basis for project success. IMPLICATIONS:GMM has sucessfully done projects for more than 50 years. Nevertheless, the overall slippage of profits during project execution compared to the order entry in project sales was and is significant. Therefore, Siemens created and maintained a virtual organization by the name of PM@GMM to exchange best practices as a basis for the joint definition of minimum standards for project business since 2000. Based on the positive results, the existing core team was established in 2008 as a corporate function to drive PM@GMM further. The main objective is to achieve the targets of each project, contributing as planned to the organizational units overall results. The purpose is to create an organization able to adapt quickly to changes in the market, personnel and innovations, reducing dependence on the quality of the individuals in the process. The successful principles of the virtual PM@GMM organization were used to define the cooperation of the central function (PM Core Team) with the representatives of the Sectors / Divisions and Clusters / Regions with project business:

_ Steering Comittee Innovation decides on general direction and objectives _ Every CEO / CFO or business manager is responsible for the successful implementation of these standards in his / her organization _ PM@Siemens Global Coordinator Board steers all operative activities _ Work Teams are staffed by all interested parties to jointly develop and mandate minimum standards _ Minimum standards reflect existing rules and regulations and help organizations and individual project managers ensure compliance with them _ PM Core Team facilitates all involved parties and supports them with knowledge and consultancy on successful implementation _ PM Core Team creates transparency for STC Innovation and other top management about the PM@GMM implementation status and suggests actions to improve the implementation. This module defines the global organization to implement PM@GMM and create value for each organization with significant project business, as well as create the basis for efficient cooperation in projects across Sector / Division or regional borders. This will strengthen the competitiveness of GMM projects, contribute to the ongoing financial success of GMM project business and make it easier for the organizations to ensure compliance with all rules and regulations for project business. INTERNAL PROJECTS.. To ensure the operational ability and increase the profitability of the GMM businesses, different investments and ongoing efforts need to be undertaken in all Siemens organizational units. The targets are: 1. to ensure current and future ability to deliver in all businesses 2. to improve performance and quality of the internal processes by continuously increasing the productivity of operations. These investments and process improvement efforts are usually executed as internal projects, which require substantial financial means. Therefore, they initially have a negative impact on the bottom line of a business before their results become effective and help to

achieve the defined targets of the investment. To limit these investments to the necessary budget and to avoid the internal burning of profi t, all internal projects must be managed with the same professionalism as customer projects. To support this, the PM@GMM minimum standards as described in Modules 111 shall be applied to internal projects wherever possible and adapted or supplemented when needed. There are different types of company internal projects: Process Improvement / IT Projects: Internal process improvement projects and related internal projects for the development of necessary IT support In scope of this PM Real Estate Projects: infrastructure projects to provide a building or other Guide facilities Infrastructure projects: infrastructure projects such as the construction and commissioning of a plant for the manufacturing of a new product line Not yet in scope of PM@GMM set up community to analyze good practices and develop standards M&A Projects: Merger & Acquisition projects to enhance the business portfolio as well as disinvestment / carve-out projects R&D Projects: product development projects to define and realize new products i A project is defined as a Company Internal Project if the end customer is a business consolidated within Siemens and the delivering unit is a cost center. Company internal projects enable Siemens to act successfully in its ever changing and challenging business environment. Their professional management ensures that this ability is achieved in time and budget.