Fundamentals of Project Management

Shriram M. Oka

Agenda

What is a project? Project Life Cycle Stakeholders in Project Key facets:

Project Scope & Contract Terms Project Schedule Project Cost Project Quality Project Safety Working Capital & Generation of Free Cash Managing People / Client Managing Risk

What is a Project?

A collaborative endeavor to develop and deliver a Unique end-product in given time, managing available resources, executing work within set safety regulations & ensuring Internal /External customer satisfaction. Keywords:

Time, Cost, Safety, Quality (PDCA) Plan, Do, Check, Act

Project Lifecycle

Client floats Tender

Bidders submit offers

Bid Evaluation / Award

Detailed Design, Procurement & Execution

Project Close-out

Stakeholders

End user / Client PM Consultant / Design Consultant Contractor Vendors Subcontractors Govt. Bodies / Statutory Authorities Others

Project Management

The Key facets of a project that need to be managed are:

Project Scope & Contract Terms Time / Schedule Cost Quality of work & Quality of end product Safety of staff / labor Working Capital & Generation of Free Cash People / Client Risk

Project Scope

Understanding Contract Scope & Terms

Types of Contracts Time Duration Technical Spec Commercial Conditions

Payment Terms Advances & Retention Monies Bank Guarantees (ABG , PBG, EMD) Eg Maintenance of facility post commissioning

Special Terms & Conditions , if any

Types of Contract

Based on Pricing & Payment Terms

Lump-sum Unit Rate (Priced BOQ) Cost Plus Margin BOOT Turnkey EPC (Total scope with 1 party) Design & Build (3rd party F.E.E.D and/or PMC) Supply Contract / Erection Contract

Based on work scope

Managing Time

Project execution is characterized by:

Multiple inter-dependant activities Parallel work fronts Limited available Time Limited Resources

Hence, activity planning is of utmost importance to finish the total scope of work, as per contract, within the given time duration.

Activity Scheduling (Case Study)

ACTIVITY TASK-1 TASK-2 DURATION DEPENDENCY 3 WEEKS 4 WEEKS _ TASK-1 RESOURCE (labor) 3 4

TASK-3
TASK-4 TASK-5

5 WEEKS
4 WEEKS 6 WEEKS

TASK-2
_ TASK-4

6
4 6

TASK-6
TASK-7

4 WEEKS
3 WEEKS

TASK-4
TASK-3,5,6

3
3

Gantt Chart

Critical Path

Typical Problems faced by the project manager

A project is lagging behind schedule. Manager has two options:

Work with existing Resources & deliver the project with Time delays Increase Resources, use expensive High-end P&M or highly skilled sub-contractors & crash Activity durations. Deliver on time, but at significantly higher cost!

What does he do?

Cost Control A project needs to be executed NOT AT ANY COST, but within a defined BUDGETED COST

Budgeted Cost (ACE) Periodic Monitoring of Cost against ACE (JCR) Variation Analysis

Software used at site to Transact W.Os / P.Os, Record & Monitor Cost incurred - CeMa. Software used at RO /HQ to Transact W.Os / P.Os, Record & Monitor Cost incurred - EIP

Allocating Resources - L,M,P, Sc

Each activity consumes resources pertaining to: L Labor M Supply Materials P Plant & Machinery Sc Sub Contractor & Specialized Agency While preparing ACE, the planning eng allocates a Cost Budget to each activity, that combines all the 4 resource elements L,M,P,Sc.

Monitoring performance

Periodic reports to monitor performance:Job Cost Report (JCR)

Monitor Cost to date & ETC periodically Analyze variation in Unit Rates

Invoicing Report Collection & Outstanding Statement

Quality

The lowest project Cost is achieved when every activity is executed at the optimum level of Quality!

Zero Defects Do it right the first time, every time! How to achieve Exceptional Quality? Plan Do Check Act

Excellence of Detail Engg (Team Review of Dwgs) Selection of Vendor (PQ) Selection of Subcontractor (PQ) Stringent Material Inspection & Material Storage Norms Well-defined Work / Erection Procedures Qualitative & Regular Audit of Erection Activity Sharpen the Axe : Regular Training to Staff / Workmen

Safety

Safety encompasses:

Health of workmen / staff Safety of workmen / staff (PPE, scaffolding etc.) Environmental Protection

Why is Safety critical to a project?

Prevention of Fatal Injuries Prevention of Loss of Work-time Limit damage to environment

Cash Flows

Working Capital Management

Net WC = Current Assets Current Liabilities
Assets Net O/s Retention Valued Stock Cost > Invoice Cash & bank OCA Liabilities Vendor Credit Unadjusted Adv OCL

Financial Health Check ?

Financials Sales GM Overheads Deferred Debts PBIT NO-PAT AWC ANFA ANFE ANFE (% of Sales) CC (13.25% of ANFE) EVA ROCE Case 1 100 15 -3 0 12 8.0004 25 1 26 26% 3.445 4.5554 31% Case 2 100 15 -3 0 12 8.0004 45 2 47 47% 6.2275 1.7729 17%

Site Organization Structure -- Overview

PM PE CM MM ACC HSE QAQC

Key People

Critical Project Management Skills

In the Order of Decreasing difficulty
1. 2. 3.

People Skills and Goodwill Crisis Management skills Planning skills

S .No 3 is easiest to achieve, failure to implement this skill leads to uncontrollable situations

Managing Risk
Risk Management is The identification, assessment, and prioritization of risks Minimizing the occurrence and monitoring & controlling the impact of unfortunate events

Risk Assessment
Sr. No. 1 Identified Risk Probability (a) Most Likely Impact (b) Major Risk Rating (a) * (b) Critical
1)

Risk Mitigation Plan

95% will be paid after commissioning of entire SS Incomer is a 220kV UG Cable(Not in L&T Scope) In such a situation, the payment may be held up till UG Cable is laid and charged

2)

3)

Request for amendment in payment terms (Milestone based) Monitor Cost over Invoice Plan Supply such that project cash flow is positive

Delay in Delivery of Transformer may affect the completion of substation works

Possible

Moderate

High

To negotiate with vendor and make specific delivery arrangements Put stringent LD terms on vendor

Risk Assessment Matrix

1

Most Likely Likely Possible 2

Probability

Unlikely

Rare Insignificant
Medium

Minor

Moderate

Major

Extreme

Impact / Consequence
Low High Critical Risk Rating

Thank You
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