First yearProject Handling

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Kawinder jit Rakesh Kumar

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Contents• Unit I –Concepts of Project Handling Assign: Visit a project management company. Understand from their perspective

what a project is, and how a project manager contributes to completion of the project. Ask the representative of the company what the owner of a project to do to meet the project objectives

• Unit II-.Establishing the Project: Scope, Time, Cost and Performance Goals Assign.-Visit a business owner who has not undertaken a project yet. Ask how he

raised capital in past, for what purpose, and how much capital he raised. Ask how he estimated the funds he would need. Also ask how he evaluated the profitability of the venture he was planning.

Assign.- Which types of estimates were used throughout the lifecycle of the project, and what methods were used to estimate them?

• Unit III-Organizing human resource systems and procedures for project implementation

Assign.-You are a project manager, and the project that you have to complete is to have a successful career. Create a work breakdown structure for your project keeping in mind the guidelines and cautions mentioned in lesson.

• Unit IV- Project direction, Coordination and control Assign.- Do a value engineering review for any product you are familiar with. If it is

a sari, make note of how you will review it for value to bring the cost of a Rs. 50,000- designer sari down to Rs. 5,000- without losing the ‘look’ of the sari .

• Unit V- Project handling performance Assign.-Find a project manager who has recently completed a turn-key project.

What was his experience ? Speak also to the owner of the project, and ask what his experience was. Compare and contrast the two experiences , and reach your own conclusions about whom the turnkey project has benefited more: owner, or the project manager.

Unit I

Visit a project management company. Understand from their perspective what a

project is, and how a project manager contributes to completion of the project. Ask the representative of the company what the owner of a project to do to meet the project

objectives.

Project management

Generally, project management is distinguished from the general management of corporations by the mission-oriented nature of a

project. A project organization will generally be terminated when the

mission is accomplished. According to the Project Management Institute, the discipline of project

management can be defined as follows: Project management is the art of directing and coordinating human and material resources throughout

the life of a project by using modern management techniques to achieve predetermined objectives of scope, cost, time, quality and

participation satisfaction .

The basic ingredients for a project management framework may be represented schematically in Figure1. A working knowledge of general management and familiarity with the special knowledge domain related

to the project are indispensable.

Figure 1

To understand PM we take a tour of PMC named:Planning & Development India Ltd (PDIL) Noida.

Major Landmarks in the History of PDIL:

In 1951, PDIL was established as a Technology wing of Fertilizer Corporation of India Limited, with an objective to obtain Technological Self

reliance. In 1961, PDIL's activities were enlarged and it became P&D, Planning & Development Division of FCI Ltd In 1978, FCI &

NFL group of companies were reorganized and P&D Division of FCI Ltd. became Independent Public Sector Undertaking called Fertilizer (Planning &

Development) India Limited (FPDIL) .In 1981, FPDIL became Projects & Development India Limited. (PDIL) with an objective to

diversify in the areas beyond fertilizer & chemicals.

Since, its formation, PDIL has been involved in the design, engineering and construction of almost all the major grass-root fertilizer projects in India. At

present, India is ranked fourth in the world in terms of installed capacity and consumption of nitrogenous fertilizers, a vital economical input for the agricultural sector. Over two-third of the installed capacity of nitrogenous fertilizers in India is

produced in plants, engineered and constructed by PDIL

Pre Project Activities:

• Market research• Techno-Economic Feasibility Reports• Detailed Project Report • Site Selection• Geo Technical Investigation/Studies• Pre-Engineering Activities• Assistance in Statutory Clearances • Environmental Impact Assessment• Risk Analysis

Project Management Consultancy

Services: • Technology Evaluation• Selection of Process Licensor• Check & review of Vendor Drawings• Inspection/ Expediting• Scheduling , Monitoring & Cost Control• Supervision of construction & Erection• Pre-commissioning & Commissioning• Witness & evaluate Guarantee Tests• Statutory Clearances / Approvals• Selection of Engineering/ Turnkey Contractor• Review of Basic Design Package• Review / Approval of Detailed Engineering Document• Ensuring Conformity of Equipment Supplied to Approved

specifications

Engineering Services: • Process design• Engineering• Mechanical Engineering        = Piping         = Pressure Vessel & Heat Exchange         = Machinery/Rotating Equipment         = Materials Handling •    - Electrical •   - Instrumentation•    - Civil & Structural • Project Management• Procurement• Construction Management• Commissioning• Scheduling and Monitoring• Process evaluation• Pipeline survey

Quality Assurance Services: • Third Party Inspection of Equipment & Machinery including static

equipment, site fabricated equipment, Rotary equipment (Pumps, Compressors, Blowers), Structural, refractory Materials, Material handling equipment, Pipes & pipe - fittings etc.

• Third Party Inspection of Electrical equipments including Alternators, power transformers, Current Transformers, HT Switchgear, Motor Control Centers, HT & LT Motors, Diesel Generators, Cables, AC/ DC Distribution boards Lighting Fixtures, Flameproof / Increased Safety Electrical Equipment etc.

• .Third Party Inspection of Instruments including Distributed Digital Control System Pneumatic & Electronic Transmitter/ Transducers, Receiver Instruments, control & Safety Valves, Programmable/ Solid State Logic system, Gas and Liquid Analyzer Including Chromatograph, Primary Instruments, Instrument Fittings & Accessories.

• Work Assessment & Evaluation of Vendors

• Non Destructive Testing

• Health Study

Other Specialized Services: • Cathodic Protection• Environmental Engineering• Troubleshooting• Safety Audit• Energy Audit• Revamp / Retrofit• Fire Protection System• ODC Transportation (over-dimensional consignment)

Backed by a competent taskforce with decades of experience, PDIL is a leading agency in the area of transportation management for movement of over-dimensional and heavy consignments. In addition to providing expert services on studies for selection of transportation mode and route surveys, PDIL also offers services for the transportation of lengthy consignments in its own 224/209 Te BG special wagon on turnkey or hire basis.

Secondly a successful Project manager must manage the four basic elements of a project to be a success and being successful in completion of the project. These four basic elements are as;

• Resources – People, Equipment , Material• Time – Task duration, Dependencies, Critical path (work / executing wizard ) • Money – Cost , Contingencies, profit• Scope – Project size, Goals, Requirements These four elements are interrelated; as if the scope of the project change

its imperative that their matching change in budget, time and resource . A project manager cannot effectively manage the resources, time and money unless he actively manage the project scope.

As the part of the owner of the project to meet the project objectives; he has a good coordination & communication with PMC . For that he may recruit a Project Coordinator or must get IPO ( Independent Project Oversight) from neutral project consultant or a person who have some past experience in the project .

Unit II

Visit a business owner who has not undertaken a project yet. Ask how he raised capital in past, for what purpose, and how much capital he raised. Ask how he estimated the funds he would need. Also ask how he

evaluated the profitability of the venture he was planning.

Project /Venture funds further classified over the lifecycle as :Capital cost- acquiring assets, purchasing software, licensor’s fee

Working capital – raw material purchase, operating supplies, work-in-progress expenses, finished product.

Operating cost – recurring expenditure on production, marketing and maintenance (labor, utilities ,repairs , selling expenses, material)

Brief :Funds are vital for the project. That ‘s why their (capital/funds/cost) estimation and raising one of the most important step in project management. They required to meet the objectives, target and actualization of the project. Whether you run organized business or unorganized business funds remain important. Another pivotal point is profitability of the venture you are work on or planning to do.

To clarified we give example of XYZ business.

• Owners perspective – Market condition (deliverables) , resources , activities, unexpected change in scope, to get a decision( consult if inability any), staffing issue and team work.

• Capital raising – What business need and context?

How much to raise ? Look at historical

perspective for the purpose( labor, material and

equipment utilization).

Setting resources priorities allocation.• Sources - Internal [ key stakeholders, business culture( word

of mouth commitment , payment on bimonthly

or monthly)].

External [ bank overdraft , mortgage, credit market

(bank loan) money market].

Evaluation of profitability

• Productive labor yield – labor productivity compared with

their wages paid.• Cost / time ratio – cost incurred with time schedule

( execution in accordance to money

value)• Rate of return - annual cash inflow after taxes with in

time frame

From the example we get that the XYZ business owner without knowingly uses the four major phases to undertaking a project funds and their profitability.

• Initiating phase –understanding key stakeholders, business needs

• Planning - resources, schedule ,risks , budget .• Executing /controlling – monitoring the actualization .• Closing - achievable profits.

Assignment to discuss:Which types of estimates were used throughout the

lifecycle of the project, and what methods were used to estimate them?

What’s the lifecycle of project?A project lifecycle simply includes the necessary steps, from beginning to end, needed to complete a project.

Now the question arises which type of estimates were used throughout the lifecycle of the project.

Estimates are required for assessing fund requirement and the economic viability of the project. In the PLC

cost estimate plays very vital role, on it’s accuracy the project life and also their economic viability depends.

As per text ; the life–cycle of a project take five type of estimates:

• Order of Magnitude estimate – this estimate is made at the time of Initiation phase for getting the idea of productivity of the investment. For that estimates mostly ratio methods used - turnover/capital ratio, inflation index etc. accuracy around 60%

• Study estimate – in PLC after taking above measures in initiation phase this estimate studies economic viability against historical project process( equipments cost by past data or budgetary quotes from vendors.) accuracy around 30%

• Preliminary estimate – this estimate made as in planning phase (budget allocated , resources sorted) say as at the zero date or an effective start date. accuracy around 20%

• Definitive cost estimate – this estimate is prepare after zero date when is in advanced stage (controlling/executing phase)-accuracy around 10%

• Detailed estimate – this estimate may be made on completion of the project-accuracy around 5%

To demystified above we take excerpts from a commercial/service project life-cycle estimates

Prepare background information :The project approach is based on heavy

investment , that’s the some background information( scope of work requirement costs-labor, equipment ,deliverables ,

architectural views and other important information that would impact cost)

research take which will ensure the estimator has all information for comprehensive and

accurate cost analysis.

System /service descriptionAssumptions Constraints

Rules &policiesAcquisition plan &strategy

Operation conceptsLife cycle concepts

Cost analysis's requirements description

Select methods/ modelsCollect ,validate and adjust data

Estimate costAsses risk and sensitivity

Document &present results

Comm.&

Cord.

Prepare background informationDevelop a standard

Prepare cost estimate

Prepare cost estimate

• Parametric -Cost estimation relationship (CER) – for example simple ratio [estimated cost with independent variables (est. invest. Rs. 10,00,000 with in three months ,amt. of return @25%)]

• Analogue – Cost based on historical data and account for current cost difference.

• Engineering estimate – Pivotal estimates( direct labor hours/direct material/alternative or discrete material used) simple arithmetic formula .

• Actual costs – actual costs experiences or trends from prototype, engineering development models are used for project estimate associated with profitable venture in similar experience.

In many instance even used a cross-check your preferred method.

Collect validate and adjust data

Regardless the source, the validation of data is essentially important because actual cost experience

in past and current acquisition programs often form the basis of estimate of future system- Cost report from previous project incurred costs to date, to estimated

incurred cost by completion, nonrecurring costs, recurring costs, direct labor, direct material and

overheads.

At last we consolidate with

Assessing risk and sensitivity – Trade-off ,delay landings ,Govt. policies, inflation index.

Unit III

You are a project manager, and the project that you have to complete is to have a

successful career. Create a work breakdown structure for your project keeping in mind the guidelines and cautions mentioned in lesson.

Work breakdown structure(WBS)

WBS is an exhaustive, hierarchical tree structure (general graphic/flow chart of activities) of deliverables and tasks that need to be performed to complete a project. In other way we describe

WBS as a critical tool for organizing work, building realistic schedules and cost estimates and reporting/tracking/controlling.

Project management body of knowledge (PMBOK ) guide defined WBS as:

A deliverable-oriented hierarchical decomposition of the work to be executed by project team to accomplish

the project objectives and create the required deliverables.

Not going deep into what actual WBS is. We understand more about it by looking its purpose.

Purpose :

Accurately define the scope of the project.

Breaks the project deliverables or objectives down to more specific and measurable chunk.

WBS helps to assigning responsibilities, delegating authorities , resource allocation ,monitoring and

controlling the project.

Lastly check all the deliverables specific with the stakeholders and make sure any missing link or

overlapping.

Flow chart of a small projectWBS

The project

Project services ComponentsDeliverables

ComponentsActivities

Manager (control/finance)

Engineer/designer

Contractor/laborClerical

Material suppliersCost components Quality

Executing Time element

Finally the steps of making WBS for a successful completing the

commercial/service project mantra as:

• Develop a list of all components and tasks, organized by subsystem that constitute the work to complete the project.

• Estimate the cost of the components and activities which comprises the lowest level of the WBS.

• Graphical representation on WBS elements and activities.

Unit IV Query

Do a value engineering review for any product you are familiar with. If it is a sari, make note of how you will review it for value to bring the cost of a Rs. 50,000- designer sari down to Rs. 5,000- without losing the ‘look’ of the sari.

Introduction

Cost control is mere accounting of cost to report expenditure through budget, it objective is to monitor all cost components and ensure completion of project at an optimal cost. It is budgeting without lowering performance.

Cost of the sari can be controlled if multiple pieces are made of one design, it can only be possible through bulk production.

*At initial stage• Good cash flow planning

*At production stage• Good sourcing• Use of cost effective products• Computerization• Office automation• New technology

*During procurement stage• no vendor association • avoid detailed specifications • purchase procedure • supply chain management

*Construction stage • avoid extra items •Staff management • equipment maintenance

Unit v

Find a project manager who has recently completed a turn-key project. What was his experience ? Speak also to the owner of the project, and ask what his experience was.

Compare and contrast the two experiences , and reach your own conclusions about whom

the turnkey project has benefited more: owner, or the project manager.

First a number of different contract routes exit for procurement of the project. The principle routes are as:

• General contract – traditional method ; where the contractor agrees to build the design as per employer needs and inputs provided on certain contract price similar to labor and every aspect of the works.

• Design & build – where the contractor takes both design and construction responsibility. For example Turn-key contract – innovated idea of general

contracting or in simple words hands over the keys.

To give a bird eye view of turn-key contract in the perspective of both client & employer ; we take the example of a renowned book cafe’s interior project.

• Client – Book’s retreat [ B.R]

• Contractor / project manager – Design Matrix [ D.M]

In the perspective of project manager [D.M]

• Easing your burden of responsibilities – owners is being eased

• High quality standards – project carried out according to strict quality criteria.

• Budget and Schedule compliance – tried and tested procedure

• Synergies of services – we are central contact of wide array of services

Implementation time

Earlier available

Revenue sooner

Cost control

capital

resources

Client’s / owner’s perspective

• Executed under the contractual framework• Transact with a single supplier / body• Warranty & reliability of the work• Benefits from the varied skills & experience• Get definite price of procurement• Fewer dispute to occur and if occur ,will be

easier to resolve

Constraints on the both parts

Owner’s • The loss of design control • If some unprecedented

difficulty , contractor skimp on some elements that affects longevity, reliability or care of maintenance of the work

• Several bidders proposes different concepts , it may prove difficult to compare prices and to choose

• Bidder assumes more risks, he may increase his bid price

Contractor • Needs not precisely defined• Reimbursement terms - partly

fulfilled • Owner’s inquisitive about

bidder’s sincerity & earnings

From both part they said , Sweet and Sour experience; as the human nature of not contented .

On looking both the perspective our opinion represent as ;

Turnkey contracts – commercial turnkey residential turnkey

In commercial set-up turnkey contracts are beneficial to both of the parties (owner/P.M).

They are two parallel beneficiary of the contract where owner done investment for gaining or

scaling up the establishment. Though application time / capital cost return is most important. On

the other P.M being recognized along with monetary benefits. He is more talk about and

noticeable in market.

In residential turn-key , more leverage and other aspect of benefits towards contractor/P.M because owner’s perspective is different. The loss of design

control factor affect the part of owners . Any change in design plan and process causes

surcharges and schedule change reimbursement. Their perspective may intersect/collide which causes loss to one of the party to contract.