gmm pfaudler project management

7/30/2019 Gmm Pfaudler Project Management

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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


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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.


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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


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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.


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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 materialhandling 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 the company shall continues to improve and

adopted changes and be a market leader by always remaining a step

ahead in technology and quality and strive to 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.


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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 CHAIRMANASHOK J PATEL MANAGING DIRECTORPETER C WALLACE DIRECTORKEVIN J BROWN DIRECTORDR S SIVARAM DIRECTORDARIUS C SHROFF DIRECTORTARAK A PATEL EXECUTIVE DIRECTOR

CHIEF OPERATION OFFICER : ASHOK C PILLAIFINANCIAL CONTROLLER : AMAR NATH MOHANTYCOMPANY SECRETARY : Ms. Mittal MehtaSTATUTORY AUDITORS KALYANIWALLA & MISTRY,

CHARTERER A/C, MUMBAI.

INTERNAL AUDITOR DELOItTE HASKINS & SHELLS, CA

SOLICITOR VIGIL JURISBANKERS STATE BANK OF INDIA

REGISTERED OFFICE

VITHAL UDYOGNAGAR,

ANAND-SOJITRA ROAD,

KARAMSAD-388325,

GUJARAT

PHONE: (02692)-230516, 230416, 236562.

SUBSIDIARY COMPANIES:-


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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


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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 ManagementProject 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 orservices. 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


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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


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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.


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4.3 Project Management at Siemens

A. Sales Department

PM 010 Go/ No-Go decision

Phase Process

Lead Management Document lead

Evaluate and select lead

Identify responsible Internal business

Check lead for cross division

Execute and document the decision

PM 020 Bid Decision

Phase Process

Opportunity

development

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


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PM 040 Bid Approval

Phase ProcessBid preparation 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

PM 070 Project won/ lost

Phase Process

Contract negotiation 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

B. Project Execution Department

PM 080 Start of Project

Phase Process

Project Handover Determine Liability

Update, complete and verify relevant data and documents

Handover to execution

Closes sales phase


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PM 100 Order receipt clarified

Phase Process

Project opening &

clarification

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

PM 200 Approval of detailed planning

Phase Process

Detailed 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 integrationPrepare & release to supply chain

PM 300 Dispatch Approval

Phase Process

Purchasing &

Manufacturing

Place purchasing, manufacturing & service orders

Ensure fulfilment of orders

Prepare & release products for dispatch

PM 400 Material and Resource at site

Phase Process

Dispatch Prepare dispatch/ stage products

Conduct & monitor transportation

Prepare infrastructure/ schedule & request resources

Receive & verify products at site


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PM 550 Construction/ Installation completed

Phase Process

Construction/

Installation

Prepare site

Installation of plant/ system

Preparation of the commissioning phase

PM 600 Release for customer acceptance

Phase Process

Commissioning Start up plant/ system

Conduct internal plant & system testsConduct customer training

Release acceptance

PM 650 Customer acceptance

Phase Process

Acceptance Prepare & conduct acceptance test

Update customer documentation

Conduct customer debriefing meetingRequest preliminary acceptance certificate

PM 670 Project Closure

Phase Process

Project Closure Work off open points

Clarify open claims with contract partners

Create closing invoice/ execute receivables management

Create final customer documentationHandover service-relevant documents to after sales

Archive project documentation

Write final project report

Close project

PM 700 End of Warranty

Phase Process

Warranty Perform warranty activitiesRequest final acceptance certificate


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Close warranty

Archive project

4.4 Project Management Process at Siemens


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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


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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


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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.


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A. PROJECT SALES PHASE MODEL

B. PROJECT EXECUTION PHASE MODEL


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C. PROJECT WARRANTY PHASE MODEL


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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


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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 Damrages7. Performance

8. Insurance

9. Title Transfer Deed

10. Limitation of Liability

11. Export Control

12. Inspection

13. Termination Clause

14. Jurisdiction


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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 ofcontract value Commitment to the level of work


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5% - 10% Advance payment signing of the contract against Pro-forma invoice

Advance bank guarantee for the same

5% 10% Against after submission of GA drawing

10% - 15% Against pro forma invoice on release of purchase order for equipments to be

procured from vendors outside Siemens

70% - 80% Against Pro-forma invoice on dispatch of materials10% 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 Anti-

Corruption 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


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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 bidby the responsible business managers at PM040 (LoA

meeting). At milestone PM070 the documents are finallyreviewed and updated.

Execution of the LoA process

The LoA process comprises at least the steps shown in the figure:


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1. LoA preparation starts at PM010 or PM020 at the latest. It includes

arranging the standardized LoA documents in preparation for the decision-

making 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


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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.


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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 consistently. The

project core team members and

selected experts participate as

needed in this process


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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.


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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


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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


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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)

Risk

Category(B)

Risk Definition ( C)

1Commercial

Risk

Have the Price, Mode of invoicing and Mode of payment is

arranged?

2Commercial

RiskAre there enough costing approaches available during packaging?

3Commercial

RiskDito for Transportation

4

Commercial

Risk Dito for Commission

5Commercial

RiskDito for Travel costs, including field allowances

6Commercial

RiskDito for delegated customer personnel

7Commercial

RiskIs cost sharing to be expected when tolerance limits are exceeded?

8Commercial

Risk

Are there special documentation guidelines and have their effects

been taken into costing?9 Commercial Are tax payments that result from legal uncertainties possible?


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Risk

10Commercial

Risk

Are there deviations between the costing of the offer, the contract

and the levied costing with respect to the performance?

11 CommercialRisk

Dito for cost objectives

12Commercial

RiskDito for technical and commercial houses

13Commercial

RiskDito for delivery date and time, terms of delivery and Incoterms?

14Commercial

Risk

Are modifications to components / materials to be expected during

processing and their effects on time and cost and their further

consequences unclear?

15Commercial

RiskHave various insurance policies been taken?

16Commercial

RiskHave financial arrangements been made?

17Commercial

RiskAre potential rivals interested in the same project?

18Commercial

RiskIs a price war expected?

19Commercial

Risk

Are costs from penalties for delayed deliveries to interim and finish

dates expected?

20Commercial

Risk

Are the claims for the payment covered by the insurance /

guarantees?

21Commercial

RiskHas insurance for export credit been taken?

22

Commercial

Risk

Will financing costs result from reduced liquidity, conditions of

payment, nonpayment, late invoicing and contractor's condition for

payment?

23Commercial

Risk

Are there any discrepancies between customers, price formula and

suppliers price formula?

Is there a possibility of additional cost from escalation?

24Commercial

RiskAre special risks covered by insurance?

25Commercial

RiskWill the customer make advance payment or deposit?

26 Commercial Financial Is financing of the project guaranteed?


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Risk Risk

27Commercial

Risk

Financial

Risk

How can claims of deliveries and performance be accepted by the

customer?

28Commercial

Risk

Financial

Risk

Have inquiries been made about the credit - worthiness of the

customer?

29Commercial

Risk

Financial

RiskAre their experiences with the financial morale of the customer?

30Commercial

Risk

Financial

RiskAre the negotiated dates of payments clearly fixed in the contract?

31Commercial

Risk

Financial

Risk

Does the customer come from a risky country? (War prone,

political instability, etc)

32Commercial

Risk

Financial

Risk

What is the procedure for outstanding customer payments?

33

Commercial

Risk

Financial

Risk

Are there regulations in the contract containing arrears for

payment?

34Commercial

Risk

Financial

RiskDoes an efficient claim management system exist?

35Commercial

Risk

Financial

Risk

Do the chosen partners like suppliers have necessary financial

power?

36Commercial

Risk

Financial

RiskAre guarantees of the sub - suppliers been deposited?

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.


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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.


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The following table will help us to clarify the same:

PARTICULARS AMOUNT (RS /- IN LAKHS)

Project Cash Inflows 10

Project Costs 15

Excess Costs (5)

2. Excess Billing: Progressive billing to the customer exceeds the

Siemenss contract performance


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The following table will help us to clarify the same:

PARTICULARS AMOUNT (RS /- IN LAKHS)

Project Cash Inflows 15

Project Costs 10

Excess Billing 5

1) CONTRACT MANAGMENT

The contract is the basis for the project scope, project deliverablesand customer expectations. An unclear scope or unclear terms andconditions create additional costs and effort during execution.

Thus, unclear contracts present a significant risk to achieving theproject targets as well as customer satisfaction.Contract Management provides expert support to draft, comment onandnegotiate contractual and / or cooperation agreements. When thecontract is signed, Contract Management contributesto the contract execution by enforcing legitimate claims against ourpartners as well as fending off unjustified claims and managingchange orders. Contracts with clearly defined scope, terms andconditions 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 ofthe project


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category or allocation of the project to a group or region. Anintegrated approach and the necessary contract managementcompetencies are required to ensure overall project success.Contract Management represents the sum of all actions that aredesigned 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 againstcontracting

parties, mainly customers, consortium partners and suppliers orthird parties

_Fend off unjustifi ed claims and

_Manage changes to the respectivecontract.

2) Quality management:-

Quality Management in Projects isan integral part of the GMM Pfaudler process. It enables andcontributes to a process-oriented and transparent projectmanagement across all project phases. It is one of the fundamentalresponsibilitiesof the whole project team and the business organization up to thetop management. Its principles are applicable to projects of allcategories.

The objective of Quality Management in Projects is to fullfill ourcontractual obligations and thereby obtain the appropriatelevel of customer satisfaction. This must be based on systematic,clearand proactive approaches toward fulfilling contractually agreed-upon commitments and performances based on terms andconditions. Quality Management in Projects covers those activities

which assistthe project manager and the project team to meet the projectrequirements in terms of functionality, costs and deadline. In doingso, this will minimize non-conformance costs in the project.Quality Management creates project transparencyand anticipated success.

Quality Management in Projects includes the planning andsafeguarding of product and process requirements over entireproject lifecycle. Deficits occurring in the early phases can strain theentire project substantially


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and can rarely be corrected with all the consequences for thecustomer and our company. The application of sound QualityManagement in Projects has its foundation in theSiemens Quality Management System (QMSystem) and its mandatory elements.

This module describes what kinds ofquality-ensuring activities are required tofulfi ll Siemens standards throughout theproject phases and highlights in particularthe practices of:

_Implementation of Quality Managementin Projects

_Implementation ofPM Quality Gates

_Systematic handling of requirements based on PM RequirementsDefinitionand Management

_Role ofPM 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 procurementwhen involved in project business. With externally purchasedmaterials andservices normally accounting for 4060% of project costs,Procurement plays a major role in achieving positive project resultsand a long-term increase in cost productivity.

For improveing project profit they focused on getting Procurementon the jobAs a result of consistent integration of Procurement, projects benefit from better knowledge of the market and of the supplier situation,

which in turn means that quality is improved, innovation is securedand any risks are minimized. Besides reducing material costs, thisprocess also has an effect on higher hit rates in the bidding processthrough lower costs and risk reserves calculated for relevantsupplier contributions. Procurement must be continuously involvedover the entire project duration, from lead management right up tothe end of the warranty period, if effective project control is to beachieved.Before getting under way, projects are rigorously examined in termsof their suitability for supplier integration with a view to exploiting

potential for innovation and cost reduction. A decision must be


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made at PM.The individual process steps for successful supplierintegration in projects are laid outin the Guideline Professional Supplier integration.

COLLOBRATION IN PROJECT:-

Projects are highly interactive and executed across the usual linestructures of an organization. Clear PM roles and responsibilitiesare an important basis for the successful execution. As importantas clarifying who is responsible for what is to establish and maintaina sound basis within the team and supporting organization for theongoing efficient collaboration of all employees involved in thesuccessful project acquisition and execution.Collaboration is the secret of efficient and effective teamperformance.

Every team member of the Siemens organization and the customerorganization has his or her own background, competencies andexperience to draw from and contribute to the project success.Accessing this knowledge and creating the willingness to supportthe targets defi ned for the project,as well as creating a common understanding of what those targetsare and how to achieve them as a team, is individual to each projectteam. Nevertheless, there are methods and tools for achieving andmaintaining 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 executioncompared to the order entry in project sales was and is significant.

Therefore, Siemens created and maintained a virtual organizationby thename of PM@GMM to exchange best practices as a basis for the

joint definition of minimum standards for project business since2000. Based on the positive results, the existing core team wasestablished 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 tochanges in the market, personnel and innovations, reducingdependence on the quality of the individuals in the process.

The successful principles of the virtual PM@GMM organization wereused to define the cooperation of the central function (PM Core

Team) with the representatives of the Sectors / Divisions andClusters / Regions with project business:


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_Steering Comittee Innovation decides on general direction andobjectives

_Every CEO / CFO or business manager is responsible for thesuccessful implementation of these standards in his / her

organization

_PM@Siemens Global Coordinator Board steers all operativeactivities

_Work Teams are staffed by all interested parties to jointly developand mandate minimum standards

_Minimum standards reflect existing rules and regulations and helporganizations and individual project managers ensure compliancewith them

_PM Core Team facilitates all involved parties and supports themwith knowledge and consultancy on successful implementation

_PM Core Team creates transparency for STC Innovation and othertop management about the PM@GMM implementation status andsuggests actions to improve the implementation.

This module defines the global organization to implement PM@GMMand create value for each organization with significant project

business, as well as create the basis for efficient cooperation inprojects across Sector / Division or regional borders. This willstrengthen the competitiveness of GMM projects, contribute to theongoing financial success of GMM project businessand make it easier for the organizations to ensure compliance withall rulesand 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 tobe 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 bycontinuously increasing the productivity of operations. Theseinvestments and process improvement efforts are usually executedas 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


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achieve the defined targets of the investment. To limit theseinvestments to the necessarybudget and to avoid the internal burning of profi t, all internalprojectsmust be managed with the same professionalism as customer

projects.To support this, the PM@GMM minimum standards as described inModules 111 shall be applied to internal projects wherever possibleand adapted or supplemented when needed.

There are different types of company internal projects:Process Improvement / IT Projects: Internal process improvementprojectsand related internal projects for the development of necessary ITsupport In scope of this PM Real Estate Projects: infrastructureprojects to provide a building or other Guide facilities Infrastructureprojects:infrastructure projects such as the construction and commissioningof a plant for the manufacturing of a new product line Not yet inscope of PM@GMM set up community to analyze good practices anddevelop 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 productsiA project is defined as a Company Internal Project if the endcustomer isa business consolidated within Siemens and the delivering unit is acost center.

Company internal projects enable Siemens to act successfully in itsever changing and challenging business environment. Theirprofessional management ensures that this ability is achieved in

time and budget.

gmm pfaudler project management

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