project management 220611
TRANSCRIPT
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)
Special Terms & Conditions , if any Eg – Maintenance of facility post commissioning
Types of Contract
Based on Pricing & Payment Terms Lump-sum Unit Rate (Priced BOQ) Cost Plus Margin BOOT
Based on work scope Turnkey EPC (Total scope with 1 party) Design & Build (3rd party F.E.E.D and/or PMC) Supply Contract / Erection Contract
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 DURATION DEPENDENCYRESOURCE
(labor)
TASK-1 3 WEEKS _ 3
TASK-2 4 WEEKS TASK-1 4
TASK-3 5 WEEKS TASK-2 6
TASK-4 4 WEEKS _ 4
TASK-5 6 WEEKS TASK-4 6
TASK-6 4 WEEKS TASK-4 3
TASK-7 3 WEEKS TASK-3,5,6 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 LiabilitiesNet O/s Vendor Credit
Retention Unadjusted AdvValued Stock OCLCost > Invoice Cash & bank
OCA
Financial Health Check ?
Financials Case 1 Case 2Sales 100 100GM 15 15
Overheads -3 -3Deferred Debts 0 0
PBIT 12 12NO-PAT 8.0004 8.0004
AWC 25 45ANFA 1 2ANFE 26 47
ANFE (% of Sales) 26% 47%CC (13.25% of ANFE) 3.445 6.2275
EVA 4.5554 1.7729ROCE 31% 17%
Site Organization Structure -- Overview
Key People
Critical Project Management Skills
In the Order of Decreasing difficulty
1. People Skills and Goodwill
2. Crisis Management skills
3. 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 risksMinimizing the occurrence and monitoring & controlling the impact of unfortunate events
Risk Assessment Sr. No.
Identified Risk Probability
(a)
Impact
(b)
Risk Rating
(a) * (b)
Risk Mitigation Plan
1 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
Most Likely Major Critical 1) Request for amendment in payment terms (Milestone based)
2) Monitor Cost over Invoice
3) Plan Supply such that project cash flow is positive
2 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
Impact / Consequence
Pro
bab
ility
Most Likely
Likely
Possible
Unlikely
Rare
ExtremeMajorMinor
1
Insignificant Moderate
Low Medium High Critical Risk Rating
2
25
Thank You