rtp mod 2.4

Module 2.4: Project Management

Contents 1.0 Introduction ......................................................................................1

1.1 Project Life Cycle...............................................................................1

1.1.1 The Project Initiation Phase ..........................................................1

1.1.2 The Project Planning Phase ...........................................................2

1.1.3 Execution and Controlling .............................................................3

1.1.4 Closure ......................................................................................3

1.2 Project Planning and Scheduling ..........................................................4

1.3 Bar Chart –Gantt Schedule .................................................................5

1.4 Work Breakdown Structure .................................................................7

2.0 Network Analysis .............................................................................10

2.1 Network Techniques ........................................................................ 10

2.2 Evolution of Network Techniques ....................................................... 10

2.3 Types of Network ............................................................................ 10

2.3.1 AOA Network ............................................................................ 11

2.3.2 Rules for AOA Network............................................................... 11

2.3.3 Calculating project time from AOA Network................................... 12

2.3.4 Calculating Floats in AOA Network ............................................... 12

2.4 Network Analysis............................................................................. 14

3.0 PDM Network ...................................................................................19

3.1 Type of Dependancies ...................................................................... 19

3.2 Precedence Network Calculations....................................................... 20

3.3 PDM Example ................................................................................. 21

4.0 Resource Management .....................................................................22

4.1 Resource Loading ............................................................................ 22

4.2 Resource Levelling........................................................................... 22

4.3 Resource Leveling Example............................................................... 23

5.0 Project Time Management................................................................26

5.1 Reducing Project Duration ................................................................ 26

5.1.1 Adding resources....................................................................... 27

5.1.2 Outsourcing project Work ........................................................... 27

5.2 Scheduling overtime ........................................................................ 27

5.3 Crashing Project.............................................................................. 28

6.0 Earned Values ..................................................................................31

6.1 Earned Value reporting .................................................................... 31

6.2 Earned Value Analysis ...................................................................... 31

6.3 Earned Value Example ..................................................................... 32

i

6.4 Practice Examples ........................................................................... 32

7.0 Project Scheduling through Software...............................................34

7.1 Live Example of Scheduling of Project Activities ................................... 45

8.0 Bid Process Management .................................................................51

8.1 Objectives of Bid process Management ............................................... 51

8.2 Invitation of Bids............................................................................. 51

8.3 Type of Bidding Process.................................................................... 52

8.3.1 Two-Stage Bidding process ......................................................... 52

8.4 Procurement Criteria of International ................................................. 53

8.4.1 Technical proposal Evaluation Sample .......................................... 54

8.4.2 Financial .................................................................................. 54

8.4.3 Final Ranking............................................................................ 55

8.4.4 Time Line for Bid Process Management......................................... 55

8.5 Swiss Challenge System in Bidding Process ......................................... 56

8.5.1 Approach ................................................................................. 56

8.5.2 Indian Experience in Bidding process............................................ 56

8.6 Bid Structure and Evaluation............................................................. 57

8.7 Bid Design...................................................................................... 57

8.8 Prequalification and Short listing-Introduction ..................................... 57

8.9 Choosing the method of Award.......................................................... 58

8.10 Competitive Bidding....................................................................... 58

8.11 Competitive Negotiations ................................................................ 59

8.11.1 Advantages of Competitive Bidding ............................................ 60

8.11.2 Limitations of Competitive Bidding ............................................. 60

8.12 Contracts won by Negotiation.......................................................... 61

8.13 Direct Negotiations and Unsolicited Proposals .................................... 61

List of Annexures

Annexure I: Sample Format for MOU

Annexure II: Selection of Consultants

ii

1.0 Introduction Project management is an activity to ensure smooth implementation of any as per

its specification. The following sections detail out the key concept project

management.

1.1 Project Life Cycle The Project Life Cycle refers to a logical sequence of activities to accomplish the

project’s goals or objectives. Regardless of scope or complexity, any project goes

through a series of stages during its life. There is first an Initiation or Birth phase,

in which the outputs and critical success factors are defined, followed by a

Planning phase, characterized by breaking down the project into smaller

parts/tasks, an Execution phase, in which the project plan is executed, and lastly

a Closure or Exit phase, that marks the completion of the project.

Project activities must be grouped into phases because by doing so, the project

manager and the core team can efficiently plan and organize resources for each

activity, and also objectively measure achievement of goals and justify their

decisions to move ahead, correct, or terminate. It is of great importance to

organize project phases into industry-specific project cycles. Why? Not only

because each industry sector involves specific requirements, tasks, and

procedures when it comes to projects, but also because different have industry

sectors had different needs for life cycle management methodology. And paying

close attention to such details is the difference between doing things well and

excelling as project managers.

Diverse project management tools and methodologies prevail in the different

project cycle phases. Let’s take a closer look at what’s important in each one of

these stages:

1.1.1 The Project Initiation Phase The project imitation phase is the first Project Phase and is usually represented

by the conceptualization of the project. The purpose of this phase is to specify

what the project should accomplish.

The basic processes of the Project Initiation Phase are: Creation of a Product

/Project Description Document. This is an informal, high-level statement

describing the characteristics of the product / project / process to be created.

1


A Project Feasibility Document

This identifies project constraints, alternatives and related assumptions applied to

the end product to be developed. Project feasibility is characterized by four basic

components:

• Business Problem Description.

• Approach Overview to be used to develop.

• Potential Solutions of the problem.

• Preliminary Recommendations.

B Development of Project Concept Document

It determines what is to be done? How will it be done? & why is it to be done?

Thus determining the business value achieved after project completion.

C Creation of Project Charter

Project Charter formally communicates the initiation of the project. It consists of

Project Scope, Project Authority and Critical Success Factors.

1.1.2 The Project Planning Phase The Project Planning Phase follows the Project Initiation Phase and is the most

important phase in project management. The effort spent in planning can save

countless hours of confusion and rework in the subsequent phases.

A purpose of the Project Planning Phase

• Establish Business Requirements.

• Establish Cost, Schedule, List of Deliverables and Delivery Dates.

• Establish Resource Plan.

• Get Management Approval and proceed to next phases.

B The basic processes of the Project Planning Phase are:

Scope Planning: This specifies the in-scope requirements for the project.

Preparing the Work Breakdown Structure: This specifies the breakdown of

the project into tasks and sub-tasks.

Organizational Breakdown Structure: This specifies who all in the

organization need to be involved and referred for Project Completion.

Resource Planning: This specifies who will do what work at which time of the

project.

Project Schedule Development: This specifies the entire schedule of the

activities detailing their sequence of execution.

Budget Planning: This specifies the budgeted cost to be incurred in the

completion of the Project.

JnNURM - Rapid Training ProgrammePreparation of DPRs

CEPT, Ahmedabad 2


Project Initiation Phase defines a few facilitating processes as well that are

required for successful Project Completion. These can be:

• Procurement Planning: Planning for procurement of all resources (staff

and non-staff).

• Communication Planning: Planning on the communication strategy with

all project stakeholders.

• Quality Planning: Planning for Quality Assurance to be applied to the

Project.

• Risk Management Planning: Charting the risks, contingency plan and

mitigation strategies.

• Configuration Management Planning: Defines how the various project

artifacts will get stored.

Both the basic processes and facilitating processes produces a Project Plan.

1.1.3 Execution and Controlling The most important issue in this phase is to ensure project activities are properly

executed and controlled. During the execution phase, the planned solution is

implemented to solve the problem specified in the project's requirements. In

product and system development, a design resulting in a specific set of product

requirements is created. This convergence is measured by prototypes, testing,

and reviews. As the execution phase progresses, groups across the organization

become more deeply involved in planning for the final testing, production, and

support. The most common tools or methodologies used in the execution phase

are an update of Risk Analysis and Score Cards, in addition to Business Plan and

Milestones Reviews.

1.1.4 Closure In this last stage, the project manager must ensure that the project is brought to

its proper completion. The closure phase is characterized by a written formal

project review report containing the following components: a formal acceptance

of the final product by the client, Weighted Critical Measurements (matching the

initial requirements specified by the client with the final delivered product),

rewarding the team, a list of lessons learned, releasing project resources, and a

formal project closure notification to higher management. No special tool or

methodology is needed during the closure phase.


CEPT, Ahmedabad 3


1.2 Project Planning and Scheduling Scheduling is a process which tries to organize activities in logical sequence.

While it is not possible to know with certainty how long a project will take, there

are techniques that can increase your likelihood of being close. If you are close in

your planning and estimating, you can manage the project to achieve the

schedule by accelerating some efforts or modifying approaches to meet required

deadlines.

One key ingredient in the scheduling process is experience in the project area;

another is experience with scheduling in general. In every government

organization area there will be a body of knowledge that associates the

accomplishment of known work efforts with time duration. In some industries,

there are books recording industry standards for use by cost and schedule

estimators. Interviewing those who have had experience with similar projects is

the best way to determine how long things will really take.

When preparing a schedule estimate, consider that transition between activities

often takes time. Organizations or resources outside your direct control may not

share your sense of schedule urgency, and their work may take longer to

complete. Beware of all external dependency relationships. Uncertain resources of

talent, equipment, or data will likely result in extending the project schedule.

Following activities shows the lifecycle of the project development

Activities involved in the DPR

1. Project idea / kickoff meeting

2. Pre feasibility study of the project

3. Administrative approval of the project

4. Preparation of the DPR

5. Technical Sectioning the DPR

6. Implementation of the project

7. Overview of the project progress

8. Sending the Completion report of the project

The above rates are shown in a cyclic format in the following page.


CEPT, Ahmedabad 4


Pre-feasibility study of the

project

Project Idea

Administrative approval

Completion Report

/Evaluation

Project Life Cycle

Preparation of DPR

Review of the Progress

Implementation of project

Technical Sanctioning

1.3 Bar Chart –Gantt Schedule Taking its name from early project management innovator Henry L. Gantt, the

basic Gantt chart or now one know it as Bar Chart is an easy way to document

schedules. It is a horizontal-bar schedule showing activity start, duration, and

completion. It shows the connection between events and the calendar, and

provides a graphical analogy of the activity duration.

The Gantt schedule can illustrate the relationship between work activities having

duration, events without duration that indicate a significant completion, and

milestones that represent major achievements or decision points. Various

comments can be used to communicate the progress of the project effort

compared to the baseline plan, as well to depict in a graphical way areas where

there are modified expectations from the baseline plan.

Once a Gantt schedule has been established for a project, progress should be

periodically plotted against the baseline schedule. If different functional areas are

involved in a project, each area may need its own detailed schedules to support

the project master schedule. In such cases it is important that working schedules

be linked to a common master schedule in a way that they can be easily updated.


CEPT, Ahmedabad 5


Each activity or event on the schedule should have a responsible individual

assigned, so there is clear ownership and so schedule status can be updated

without a lot of argument. Here one should know meaning for two words

“activity” and “event”.

“Activity”- An activity is a part of the project denoted by an arrow on the

network. The tail of the arrow indicates the start of the activity whereas the head

indicates the end of the activity.

“Event” – Event is the stage or point where all previous jobs merging in it, are

completed and jobs bursting out, are still to be completed.

e.g. 2

B

A

D

C 1

Here 1 and 2 denotes the event form where the activities A, B, C, D can merge of

burst out Scheduling process needs duration of the activity. Table 1.1: Activities for a project with duration

No. Activity Duration (day) 1 Project idea / kickoff meeting 07 2 Pre feasibility study of the project 30 3 Administrative approval of the project 15 4 Preparation of the DPR 35 5 Sanctioning the DPR 15 6 Implementation of the project 180 7 Overview of the project progress 25 8 Sending the completion report of the project 07

But for scheduling these tasks each should have start date and completion date.

So, all the duration of above activities should be specified by start date and end

date presented in table 1.2.

Table 1.2: Activities for a project with time schedule

No Activity Duration

(Day) Start Date

Completion Date

1 Project idea / kickoff meeting 07 1-1-07 7-1-07 2 Pre feasibility study of the project 30 8-1-07 6-2-07 3 Administrative approval of the

project 15 7-2-07 22-2-07

4 Preparation of the DPR 35 23-2-07 30-3-07 5 Sanctioning the DPR 15 31-3-07 14-4-07 6 Implementation of the project 180 15-4-07 14-10-07 7 Review of the project progress 35 22-4-07

22-5-07 22-6-07 22-7-07 22-8-07 22-9-07

26-10-07 26-5-07 26-6-07 26-7-07 26-8-07 26-9-07

8 Sending the completion report of the project

07 15-10-07 20-10-07


CEPT, Ahmedabad 6


CEPT, Ahmedabad 7


These activities can be explained by bar chart also and presented in table 1.3. Table 1.3: Bar Chart of a project progress

Jan 07 Feb 07 March 07 April 07 Oct. 07 N

o

Activity

1 7 8 5 6 7 2

1

2

2

2

3

2

9

3

0

3

1

1

3

1

4

1

5

1

3

1

4

1

5

1

9

2

0

1 Project idea /

2 Pre feasibility

3 Administrative

4 Preparation of

5 Sanctioning

6 Implementation

7 Review of the

8 Sending the

In planning a project, it is normal to find oneself momentarily overwhelmed and

confused, when one begins to grasp the details and scope of even a modest size

project. This results from one person trying to understand the details of work

that will be performed by a number of people over a period of time. The way to

get beyond being overwhelmed and confused is to break the project into pieces,

organize the pieces in a logical way using a WBS, and then get help from the rest

of your project team.

Large, complex projects are organized and comprehended by breaking them into

progressively smaller pieces until they are a collection of defined "work packages"

that may include a number of tasks. The Work Breakdown Structure (WBS) is

used to provide the framework for organizing and managing the work.

As a very simple example, above project activities can be done as Work

Breakdown Structure (WBS).

A Work Breakdown Structure is a results-oriented family tree that captures all the

work of a project in an organized way. It is often portrayed graphically as a

hierarchical tree; however, it can also be a tabular list of "element" categories

and tasks or the indented task list that appears in your Gantt chart schedule.

1.4 Work Breakdown Structure

In any government organization the progress of the project is being explained be

the bar chart. Above shown bar chart has been drawn manually. One can use

software like “Microsoft Project” to draw the bar chart which is very easy to use.

JnNURM - Rapid Training ProgPreparation

CEPT, Ahmedabad 8


Level-1

Level-2

Level -3

Project Idea

Feasibility study


Preparation of DPR

Sanctioning DPR

Implementation of DPR

Review

Completion

Kickoff meeting

Reconnaissance and traffic Estimate

Collection of feasibility report and other data

Detailed topographical survey

Study &Scrutiny

Bidding procedure

Quality control by third party

Physical checking of completed work

Circulate minutes of meeting

Preliminary design

Forwarding the file

Detailed Soil Investigation

Discussiowith Institute

valuation of ender

Progress report preparation

Cooperation stipulated time limit against actual completion time

Discussion meet

Approximate Cost Estimation

Discussion Socioeconomic survey

Complian warding the ork to uccessor

Review Meeting

Arbitrations

Decision Feasibility Report

Decision Primary Survey Decision obilizations Completions Report

Evaluation If Yes Secondary Survey Land acquisitio

xecution of work

If Yes Detailed Engineering design

If Yes

Cost-estimation Compilation of

Report

Project Idea

Feasibility study


Preparation of DPR

Sanctioning DPR

Implementation of DPR

Review

Completion

Project

Chart 1: Samp

n the

Et

ce AwSM

n E

rammeof DPRs

le WBS Structure


Taking a case of Rajkot DPR, individual component of the WBS can be explained

as in table 1.4 below. Table 1.4: Detailed Activity Schedule of Water Supply Project

Sr.

No. Name of Project

Sanction Date &

Tentative Completion

Time

Sanctioned Cost

(Rs. in Crore)

1 ESR & GSR at ward No.6 27 /03/2006 &

Dec. 2006 6.75

2 ESR & GSR at ward No.7 27 /03/2006 &

Dec. 2006 4.31

3 ESR & GSR at ward No.17 27 /03/2006 &

Dec. 2006 8.44

4 New Head works at Raiyadhar 27 /03/2006 &

Dec. 2008 31.20

5 Water supply scheme based on Nyari reservoir 27 /03/2006 &

Sep. 2006 7.41

6 Water supply scheme based on Bhadar reservoir 27 /03/2006 &

July 2007 24.70

7 GSR at Sojitra ward -12 27 /03/2006 &

April 2006 0.16

8 GSR & Pumping machinery at Bajarangwadi at ward

no.14

27 /03/2006 &

Sept. 2006 0.90

9 GSR & Rising main at Dudhsagar 27 /03/2006 &

June 2006 1.64

Scheduling for all these projects can be explained by bar chart also which is

shown below in table 1.5.

Table 1.5: Scheduling for Water Supply Project

CompletedGSR & Rising main at Dudhsagar

Complete GSR & Pumping machinery at Bajarangwadi at ward No.14

CompletedGSR at Sojitra ward -12

Water supply scheme based on Bhadar

CompletedWater supply scheme based on Nyari reservoir

New Head works at Raiyadhar

CompletedESR & GSR at ward No.17

ESR & GSR at ward No.7

CompletedESR & GSR at ward No.6

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q3

Q2

Q1

2008 200720062005 Details Q4


CEPT, Ahmedabad 9


2.0 Network Analysis

2.1 Network Techniques To achieve the objectives of project management network techniques is widely

used. It is commonly known as PERT (Programmed Evaluation and Review

Technique), CPM (Critical Path Method).

PERT is used in Research type of projects whereas CPM is used in all of non-

research type projects.

2.2 Evolution of Network Techniques By the end of 18th century, the decision-making process was mainly depended on

the managerial capabilities, experiences and academic background of managers.

In the early stage of 19th century, the pioneers of scientific management started

developing the scientific management techniques. During World War I, Henry L.

Gantt developed Gantt Chart for production scheduling which was later on

modified to bar chart for the purpose of project and production scheduling.

The network techniques of PERT and CPM were concurrently developed in 1957.

In the beginning, CPM was used for planning and scheduling of constructional

projects. It was also used for scheduling the maintenance shutdown. The

construction industry in general and the petro-chemical industry in particular

were the major areas of CPM applications.

PERT was developed by US Navy for scheduling the research and development

work for the Polaris Fleet Ballistic Missiles Programmed whose activities were

subject to a considerable degree of uncertainty. Initially, this technique was

named as “Programmed Evaluation and Review Technique” after 1958, this

technique was used by Russian Scientists for the utilization and management of

their huge ammunition. But after 1960, this technique came up as a revolutionary

technique for the purpose of decision-making.

With the passage of time, PERT and CPM applications started over-lapping and

now they are used almost as single technique and the difference between the two

is only of the historical and academic interest.

2.3 Types of Network

1. AOA Network: Activity on Arrow Network

2. PDM/AON Network: Precedence Diagram Method / Activity on Node

Network


CEPT, Ahmedabad 10


2.3.1 AOA Network

a)

A 1 4 3 2

C B

• Above diagram represents a project with three activities A, B, C

• Activity B can start after activity A is completed

• Activity C can start after activity B is completed

b)

1 4 5 6 A D F

2 3 B

C E

Finish Node

Starting Node

2.3.2 Rules for AOA Network 1. There should be only one start node and only one finish node

2. At the starting node no activity enters but many can start

3. At the finish node many activities can merge but no activity start

4. At intermediate node many activities can merge and many activities can

start

5. Two nodes should not be connected with two different activities

1) In above case an extra activity (known as Dummy Activity) is added to

correct the network

B

A 1 2

THIS IS WRONG

C

A

B Dummy Activity (It has zero duration)

3

2

1


CEPT, Ahmedabad 11


2) An Event is said to be completed when all activities ending at that event

are completed

2.3.3 Calculating project time from AOA Network Example 1:

A 0

1

2 B

20 D

10

3 4

8 10

4 C

6

• Total project time is 20

• Event (2) will be completed after 6 days, event (3) will be completed after

10 days (Refer rule no 6 of network) & event no (4) will be completed

after 20 days.

2.3.4 Calculating Floats in AOA Network

• Total float of Activity i, j = Lj – Ei - Di,j

• Free Float of Activity i, j = Ej - Ei – Di,j

• Interfering Float of i, j = Total Float – Free Float = Lj – Ej

• Ei = Early Start Time from Event i

• Li = Late Finish Time of Event i

• Ej = Early Start Time from Event j

• Lj = Late Finish Time of Event j

• Di,j = Duration of Activity i, j

i

Li Ei

j

Lj Ej

Di,j


CEPT, Ahmedabad 12


6

D

C

2

6 6

4

20 20 10

1

0 0

3

10 10

A

8

4

B

Note: At event (3) activities A & C will end.

Activity A will be completed after 8 days & activity C will be completed after 10

days & hence as per rule 6 of network 10 is entered as finish time of event (3)

Project time is 20 days.

Above process is called forward pass of AOA network

Now we will take 20 as the latest finish time of event 4, and calculate latest finish

time of other events

For example latest finish of event (3)

= 20 {Lj of Event (4)} – 10 {Duration of Activity D}

= 10

Float Calculations (Refer Formula)

Total Float of A = 10-8-0 = 2

Free Float of A = 10-8-0 = 2

Other Floats are tabulated below:

Activity Total Float Free Float Interfering Float A 2 2 0 B 0 0 0 C 0 0 0 D 0 0 0

Critical Activity: When total Float of activity is zero, the activity is critical.

Non- Critical Activity: When the total float of an activity is greater than zero,

the activity is non-critical.

• Path joining Critical activities is called Critical Path

• There can be more than one Critical Path in a project

• Delay in Critical activities will delay the project

• Floats when utilized, do not delay the project


CEPT, Ahmedabad 13


2.4 Network Analysis

23 15

7

11 3

6

12

J

F 5 3 2

4 4

D

7 11 11 20 20

B 4 E 5 H 6

C 3

9

G

10

A

8

1

0 0

4

16 16

8

26 26

0 16

26

3 K

Table 2.1: Float Example

ID Name Duration Total Float Free Float Intefering Float

1 A 8 8 8 0

2 B 4 0 0 0

3 C 3 8 0 8

4 D 7 0 0 0

5 E 5 0 0 0

6 F 9 0 0 0

7 G 10 0 0 0

8 H 6 0 0 0

9 J 12 8 0 8

10 K 3 8 8 0


CEPT, Ahmedabad 14



CEPT, Ahmedabad 15



CEPT, Ahmedabad 16

CEPT, Ahmedabad 17


Cumulative cost for Early Start schedule and Late Start schedule. Cost per day is

assumed to be 10 units of currency.

Activity /Day Cumulative Cost Days

Early Late Early Start Late Start 1 3 1 30 10 2 3 1 60 20 3 3 1 90 30 4 3 1 120 40 5 3 1 150 50 6 3 1 180 60 7 3 1 210 70 8 3 1 240 80 9 2 3 260 110 10 2 3 280 140 11 2 3 300 170 12 3 4 330 210 13 3 4 360 250 14 3 4 390 290 15 3 4 420 330 16 3 4 450 370 17 3 3 480 400 18 3 3 510 430 19 2 3 530 460 20 2 3 550 490 21 2 3 570 520 22 2 3 590 55 23 2 3 610 580 24 2 3 630 610 25 2 3 650 640 26 2 3 670 670



CEPT, Ahmedabad 18



3.0 PDM Network

AOA network has limitations in planning. It assumes that all preceeding activites

must be 100 percentage complete to start the new activity. This results in

inefficient project planning. PDM network overcomes above limitation.

3.1 Type of Dependancies (1) Finish to Start

B A n

Lag

Activity B can start after n days (units) from finish of activity A. “n” is called the

lage after finish of “A” (2) Start to Start

n

A B

Activity “B” starts n days (units) after start of activity “A”

(3) Finish to Finish

n

B A

Activity “B” must finish n days ( units ) after the finish of activity “A” (4) Start to Finish

n

A B

Activity b must finish n days (units) after the start of the activity “A”


CEPT, Ahmedabad 19


3.2 Precedence Network Calculations

ES Dur. EF

Activity ID

LS TF LF

ES: Earliest Start

EF: Earliest Finish

LS: Latest Start

LF: Latest Finish

Finish to Start:

‘’’

Late Finish A

= 45-13

= 32

EST B

= 15 + 13

= 28

13 10 5 15

A

27 32

28 5 33

B

45 50

Start to Start:

10 5 15

A

35 40

20 5 25

B

45 50

10 EST B

= 10 + 10

= 20

LS of A

= 45-10

=35

Finish to Finish:

10 5 15

A

37 42

18 5 23

B

45 50

8 EFT of B

= 15 + 8

= 23

Late Finish A

= 50-8

=42

Start to Finish:

10 5 15

A

34 39

21 5 26

B

45 50

16

LST of A

= 50-16

=34

EFT of B

= 10 + 16

= 26


CEPT, Ahmedabad 20


3.3 PDM Example

PDM NETwork


CEPT, Ahmedabad 21


4.0 Resource Management

4.1 Resource Loading One of the problems o dangers inherent in scheduling of the project is that they

often do not address the issues of resource utilization and availability .schedules

tends to focus primarily on time rather than on both time and resources, which

includes people. An important measure of a project managers success is how well

he or she balances the trade offs among performance, time and cost. During a

period of crisis, it is occasionally possible to add additional resources – such as

additional staff-to a project at little or no cost. Most of the time, however

resolving performance, time, and cost trade off entails additional costs to the

organization. The project manager’s goal must be to achieve project success

without increasing the cost or time required to complete the project .the key to

accomplishing this goal is effectively managing human resources on the project.

Once people are assigned to projects, there are two techniques available to the

project managers that help them to use project staff most effectively: resource

loading and resource levelling .Resource loading refers to the amount of

individual resources an existing schedule requires during specific time periods.

Resource loading helps project managers develop a general understanding of the

demand of a project will make on the organizations resources ,as well as on

individual people’s schedule .project manager often use histograms, to depict

period –by-period variations in resource loading .A histogram can be very helpful

in determining staffing needs or in identifying staffing problems.

A Resource histogram can also show when work is being over allocated to a

certain person or group. Over allocation means more resources than area

available are assigned to perform work at given time.

4.2 Resource Levelling Resource levelling is a technique for resolving resource conflicts by delaying tasks

.it is a form of network analysis in which resource management concerns drive

scheduling decisions ( start and finish dates) .The main purpose of resource

levelling is smoother distribution of resource usage .Project managers examine

the network diagrams fro areas of slack or float ,and to identify resource conflicts

.For example ,you can sometimes remove over allocations by delaying non-critical

tasks, which does not result in an overall schedule delay. Other times you will

need to delay the project completion date to reduce or remove over allocation.


CEPT, Ahmedabad 22

CEPT, Ahmedabad 23


Over allocation is one type of resource conflict. If certain resource is over

allocated, the project manager can change the schedule to remove resource over

allocation. If a certain resource is under allocated the project manager can

change the schedule to try to improve the use of the resources. Resource

levelling, therefore, aims to minimize period by period variations in resource

loading by shifting tasks within their slack allowances.

4.3 Resource Leveling Example

Activity ID Name Duration Predecessor Resource per

Day

1 A 4 - 9

2 B 2 - 3

3 C 2 - 6

4 D 2 - 4

5 E 3 B 8

6 F 2 C 7

7 G 3 D, F 2

8 H 4 E, G 1

`

Before Levelling



After Levelling

Bar chart generated by MS Project


CEPT, Ahmedabad 24


Resource Histogram before levelling

Bar Chart generated after levelling


CEPT, Ahmedabad 25


Resource histogram after levelling

5.0 Project Time Management

5.1 Reducing Project Duration In recent years emphasis on time –to- market has taken on new importance

because of intense global competition and rapid technological advances. The

market imposes a project duration date. For example, a rule of thumb for

moderater – to high- technology ferms is that a 6 month delay in bringing a

product to market can result in a gross profit, loss or market share of about

30%.in these cases, high-technology firms typically assume that the time

ssavings and avoidance of lost profits are worth any additional cost to reduce

time without any formal analysis. It is interesting to observe how more serious

analysis occurs in reception periods when cash flows are tight.

Incentive contracts in partnering arrangements can make reduction of project

time regarding –usually for both the project contractor and owner. For example, a

contractor finished a bridge across a lake eighteen months early and received

more than $6 million for the early completion. The availability of the bridge to the

surrounding community eighteen months early to reduce traffic gridlock make the


CEPT, Ahmedabad 26


incentive cost to the community seen small to users.In another example, in a

partnering continuous improvement arrangement, the joint effort of the owner

and contractor resulted in early completion of a river lock and a 50/50 split of the

savings to the owner and contractor.

Another reason for reducing project time occurs when unforeseen delays –for

example, adverse wheather design flaws and equipment breakdown a cause

substantial delays midway in the project. Getting back on schedule usually

requires compressing the time on some of the remaining critical activities the

additional costs of getting back on schedule need to be complied with the cost of

being late.

Sometimes very high overhead or good will costs are recognized before the

project begins. In these cases it is prudent to examine direct costs of shortening

the critical path versus the overhead end /or goodwill cost savings.usually there

area opportunities to shorten a few critical activites at less than the daily

overhead rate or perceived goodwill cost.under specific conditions (which are not

rare) , huge saving are possible with little risk.

Managers have several effective methods for crashing specific projects activities

when resources are not constrained. Several of these are summarized below :

5.1.1 Adding resources The most common method for shortening project time is toa assign addition staff

and equipment to activities.there are limits , however , as to how much speed

can be gained by adding staff. Doubeling the size of the work force will not

necessarily reduce completion time by half.

5.1.2 Outsourcing project Work A common method for shortening the project time is to subcontract an

activity.The subcontract may have access to superior technology or expertise that

will accelerate the completion of the activity.

5.2 Scheduling overtime The easiest way to add more labor to a project is not to add more people, but to

schedule overtime. If a team works 50 hours a week instead of 40, it might

accomplish 25 percent more .By scheduling over time you avoid the additional

costs of coordination and communication encountered when new people are

added. If people involved are salaried workers. There may be no real additional

cost for the extra work. Another advantage is that there are fewer distraction

when people work outside normal hours.


CEPT, Ahmedabad 27


Overtime has disadvantages. First, hourly workers are typically paid time and a

half for overtime and double time for weekends and holidays. Sustained overtime

work by salaried employees may incur intangible costs such as divorce,and

turnover.

5.3 Crashing Project • In order to reduce the project time, the duration of critical activities have

to be reduced (by increasing resources etc.)

• The reduction in duration will generally increase the cost of the project

Terminology: NT = Normal Time (duration) of Activity

NC = Crash Time (duration) of Activity

CT = Cost of Activity at NT

CC = Cost of activity at Nc

Cost Slope = Tan θ = CC- NC/ NT-CT

• In order to curtail the duration of the activity, cost slope values have to be

viewed carefully.

• Least cost slope activity must be curtailed first and so on

• If more than one critical path is generated after Crashing then duration of

activities on all paths have to be curtailed. The following example will explain

the technique of Crashing.

Activity Normal

Duration

Crash

Duration Predecessor Cost Slope

A 3 1 - 500

B 7 3 A 100

C 4 2 A 400

D 5 2 c 200


CEPT, Ahmedabad 28


Normal cost of project = Rs. 10,000

Cost of overheads per day = Rs. 200/day

OH Cost = 12 X 200 = Rs. 2400/-

Total cost = Normal cost + OH Cost

= Rs. 10,000 + Rs. 2,400

= Rs. 12,400 (Before crashing)

Normal Time:

Step (1) • Since D has lease cost slope, it will be crashed by 2 days

• Cost of crashing = 2 X 200 = 400

• Reduction of OH = 2 X 200 = 400

• Hence there will be no extra cost if the project time is reduced to 10 days

Step (2)

• Now there are two critical paths viz: A B & A – C- D

• To curtail one day the options are

Crash - A - 500

Crash - B+C - 500

Crash - B+D - 300

• Last option is least expensive so B & D will be curtailed by one day each

• Extra cost of crashing = 100 (B) + 200 (D) = 300

Saving in O.H. = 1 X 200 = 200

• Hence the project cost will increase by Rs. 100/-


CEPT, Ahmedabad 29


Step (3)

• Option for crashing are:

A - 500

B+C - 500

B+D - 300

• Since D is fully crashed last option can’t be used. Hence A is the least

expensive option.

• Crash A by 2 days

Extra cost of crashing = 2 X 500 = 1000

Saving in O.H. = 2 X 200 = 400

Therefore, Net extra Cost = Rs. 600/-

Step (4)

• At this stage:

A is fully crashed

D is fully crashed

B is crashed by 1 day (can be crashed by 3 days)

C not crashed (can be crashed by 2 days)

• The only option left for crashing is B + C

• Activities B & C will be curtailed by 2 days

Extra cost of crashing = 2 X 500 = 1000

Saving in O.H. = 2 X 200 = 400

Net Extra Cost = Rs. 600/-

• Project duration is now 5 days


CEPT, Ahmedabad 30


Duration Step Saving

OH

Extra Cost

of Crashing

Net Extra

Cost Total cost

(12) - - - - 12400

(10) Step (1) 400 400 - 12400

(9) Step (2) 200 300 100 12500

(7) Step (3) 400 800 600 13100

(5) Step (4) 400 1000 600 13700

6.0 Earned Values

6.1 Earned Value reporting In the mid stream project evaluation, the conventional method of variance

analysis does not indicate the clear picture about project completion time or cost.

• To avoid this shortfall, Earned value analysis isdone . It helps in

forecasting the time and cost in respect of the remaining part of the

execution of the project.

• Given a cost performance baseline, project managers and their teams can

determine how well the project is meeting scope, time and cost goals by

entering actual information and then comparing it with the baseline.

• A baseline is the original project plan plus approved changes.

• Actual information includes actual dates of start/end of each activities and

the actual costs pertaining to these activities.

6.2 Earned Value Analysis

1. BCWS: Budgeted cost of work scheduled

2. BCWP: Budged cost of work performed

3. ACWP: Actual cost of work performed

4. CPI: Cost performance index = BCWP/ACWP

5. SPI: Scheduled Performance Indx = BCWP/BCWS

6. ECC: Estimated cost at Completion = Planned cost (BAC)/CPI

7. ETC: Estimated to to complete= Planned duration/SPI

8. SV: Scheduled Variance = BCWP – BCWS

9. CV: Cost Variance = BCWP – ACWP


CEPT, Ahmedabad 31


6.3 Earned Value Example Packing meters to be installed = 1000

Estimated cost of project = 200,000

Planned duration = 40 Days

Budgeted cost/day = 200,000/40 = 5,000

Planned work = 1,000/40 = 25 meter/day

Budgeted cost per unit = 200,000/1,000 = 200

At the end of 18th day 400 meter are installed.

Actual cost at the end of 18th day = 100,000 (ACWP)

BCWS = 18 X 5,000 = 90,000

BCWP = 400 X 200 = 80,000

Scheduled Variance = BCWP – BCWS = 80,000-90,000 = -10,000

Cost Variance = BCWP – ACWP = 80,000-100,000 = -20,000

CPI = BCWP/ACWP = 80,000/100,000 = 0.8 (approx.)

SPI = BCWP/BCWS = 80,000/90,000 = 0.9 (approx.)

ECC = Estimated cost at completion= 200,000/CPI = 200,000/0.8=250,000

Estimated Time to Complete = 40/0.90 = 44.4 say 45 days

6.4 Practice Examples

Draw network diagram and precedence diagram for the following projects:

Calculate all floats and tabulate results

Draw bar char for both projects

Example 1:

Activity ID Activity

Description Predecessors Duration

1 A - 3

11 B A 5

21 C - 4

31 D C 2

41 E B, D 4

51 F E 3

61 G B 4

71 H F,G 2


CEPT, Ahmedabad 32


Example 2:

Activity ID Activity

Description Predecessors Duration

1 A - 1 2 B - 2 3 C B 3 4 D A 5 5 E B 2 6 F A 4 7 G A 3 8 H D 2 9 J C 6 10 K J 3 11 L K 2 12 M F 5

Example 3:

Activity Duration Successor D 3 E,G,J E 8 F F 10 M G 2 H H 6 I I 3 M J 3 K K 4 L L 6 M M 2 -

a) Find the project duration

b) Draw revised network if activities H & K require equipment X and only one

equipment is available. Also calculate project duration for alternate

networks.

Example 4: In the given project only three resources are available. Reschedule

the project by resource leveling.

Activity Duration Predecessor Resources

A 1 - 2

B 2 - 1

C 2 - 1

D 1 A 1

E 3 B 1

F 2 C 1

G 1 D 1


CEPT, Ahmedabad 33


7.0 Project Scheduling through Software The following action provides a step-by-step approach while scheduling project

activities to software such as MS project.

Blank Project Sheet jj

Inserting the Values

• Task Name

• Duration Start Time

• Finish Time

• Predecessor


CEPT, Ahmedabad 34


Inserting the Values

Gantt Chart Automatically prepared by MSP

• Task Name • Duration Start Time • Finish Time • Predecessor


CEPT, Ahmedabad 35


To insert new columns of:

• Free clack • Total slack • Right Click on Predecessor Column • Insert Column


CEPT, Ahmedabad 36


Specify the Column Fields

Specifying the column fieldsSpecifying the column fields

Final Values with Total Slack & Free Slack

Final Values with Total slack & Free Slack


CEPT, Ahmedabad 37


Formatting the Bar Chart • Viewing name of activity on the bar • Viewing Total Slack in the Bar Chart • Steps • Format – Bar • Format Bar Window appears • Insert the Field to be displayed from the drop down of Resource name

ggn the barn the barBar ChartBar Chart

Formatted Bar Chart


CEPT, Ahmedabad 38


Checking the Project Statistics & Other Information

Steps:• Project Project Information

• Statistics

Viewing the Detailed

Grantt Charts

Steps

• View- More Views Select • Detail

•

Gantt Chart Apply


CEPT, Ahmedabad 39


Detailed Gantt Chart

This chart shows the critical paths of the project and the floats available in the

activities

To View only the Critical Path

yy

Steps:• Project Filter

for:Critical

Critical


CEPT, Ahmedabad 40


Customizing the Calendar

Steps:

• Tools – Change Working Time

• This gives default calendar

• For a new calendar – new

• Supply the name

• Select create a new base calendar


CEPT, Ahmedabad 41


Giving working & Non-working days

Steps: Select the dates – select default working or non-working time respective

to what is required

Inserting Column fields not in

the default list

• Insert Column

• Field Name –Text

• Right click on column –

Customize Fields

• Rename the Column

• Supply the value list of the

column


CEPT, Ahmedabad 42


Sheet after inserting values

• Insert the respective values from the value drop down list

To Filter on Phase wi

• se

Project – Filet for • more filters –new • supply values in

the field name, test and values


CEPT, Ahmedabad 43


The Filtered activities for Phase 1

Grouping the Activities

• Project – Group By – More Groups • New • Supply the respective values


CEPT, Ahmedabad 44


Agency wise grouped activities

7.1 Live Example of Scheduling of Project Activities


CEPT, Ahmedabad 45


ACTIVITY ENTRY

RESOURCE ENTRY: RESOURCE SHEET


CEPT, Ahmedabad 46


RESOURCE GRAPH

BAR CHART

‘


CEPT, Ahmedabad 47


BAR FORMATING

REPORT GENERATION


CEPT, Ahmedabad 48


PROJECT SUMMARY REPORT


CEPT, Ahmedabad 49


NETWORK DIAGRAM GENERATION


CEPT, Ahmedabad 50


8.0 Bid Process Management The main purpose of bid process management is to identify and select a suitable

delivery partner for any activity or a project. This is one of the most important

aspects of any project lifecycle as the quality of outputs is grossly dependent on

it.

Over the years the process of bid management has undergone many refinements

as the natures of services as well as the requirements of delivery partners have

become more and more complex. Thus, it is important to have adequate clarity

on nature; scale and quality of services are being sought from a delivery partner.

Often, it is assumed that the bid process management is an end of project

activity and time line for the same do not reflect adequately in the project

schedule.

8.1 Objectives of Bid process Management The main objectives of the Bid process management are:

• Choose suitable partner on best possible terms

• Choose partner with skills, experience and resources

• Secure desired service improvement & efficiency

In today’s world, the bid process management has emerged as one of the main

activities of project management and adequate importance is attached while

scheduling of the project itself. Due to rapid increase in the project complexities,

a delivery partner can be sought right at the beginning or at any stages of

project. Based on the involvement a project partner may be classified as under:

Owner’s Consultants

Programme / Process / Project Management

Activity Consultants

Piece-meal Constructions

EPC/Turnkey

BOT/BOOT/BOO etc

8.2 Invitation of Bids

NITs (Notice Inviting Tenders)

LCB – Local Competitive Bids (Procurement at the local level)

NCB – National ( Invitation to National Players)

GCB/ICB- Global / International ( Invitation to International Market)


CEPT, Ahmedabad 51


8.3 Type of Bidding Process Single Sealed Tender Type (fill the blanks)

Sealed Single Bid,

Two Stage System (RFQ & RFP),

EOI+ RFQ+RFP

PQ +Two Bids / EOI + Two Bids

Swiss Challenge (Unsolicited)

8.3.1 Two-Stage Bidding process The first stage of bidding involve Request for Qualification (RFQ) containing

qualifying criteria for selection of bidders to participate in the second stage.

The second stage of bidding invite Request for Proposals (RFP) from the

qualified bidders which will further be evaluated.

A. Request for Quotation (RFQ)

i) Request for quotation can be divided in following sections.

Section 1 - Letter of Invitation

Section 2 - Instructions to Consultants (including Data Sheet)

Section 3 - Technical Proposal - Standard Forms

Section 4 - Financial Proposal - Standard Forms

Section 5 - Terms of Reference

Section 6 - Standard Forms of Contract

ii) RFQ should include following

Overview of the Bidder’s Business

Details of Manpower, Infrastructure, Equipments etc

Audited Balance Sheets (3 to 5yrs)

Solvency Certificate

Other Registration details

Documentary Proof of Similar Services along with the completion

certificates

A. Request for Proposals

1. Technical Proposals

1. Many governments adopted a two-stage process (either in the place of or

in addition to a prequalification round) whereby bidders present separate

technical proposals containing business and investment plans.

2. These proposals are evaluated before proceeding to the financial offers.

3. Often the evaluation is conducted on a pass/no pass basis - that is, only


CEPT, Ahmedabad 52


those bidders that pass the technical evaluation proceed to the financial

evaluation.

4. The winning bidder is then selected on the basis of the best financial

proposal from among those who passed the technical evaluation

Technical proposal should include

1. Technical Proposal Submission Form

2. Consultant’s Organization and Experience

a. Consultant’s Organization

b. Consultant’s Experience

3. Comments or Suggestions on the Terms of Reference

4. On the Terms of Reference

5. Description of the Approach, Methodology and Work Plan for Performing

the Assignment

6. Team Composition and Task Assignments

7. Curriculum Vitae (CV) for Proposed Professional Staff

8. Staffing Schedule

9. Work Schedule

2. Financial Proposals

There are many different options for structuring financial proposals. Some of the

more common options include bidding on:

a) The highest price or highest concession fee (one-time or annual) paid to

the government

b) The lowest cost to the government for constructing or operating facilities

or services

c) The largest amount of new investment to be undertaken by the operator

d) The lowest tariff to be charged to consumers

e) The lowest net present value of the future revenue stream to the

developer from the service or project

f) The lowest subsidy that the government must provide to the winning

bidder to operate a loss-making service

g) Others: maximum extent of new service coverage promised or the

minimum length of the concession period.

8.4 Procurement Criteria of International The Bid process management in India, over the years has enrioned due to

implementation of projects, funded by the intermediate agencies. It is, therefore

important to take note of their procurement lines. A sample criteria is elaborated

in the following sections.


CEPT, Ahmedabad 53


8.4.1 Technical proposal Evaluation Sample

Points

(i) Specific experience of the Consultants relevant to the assignment: [10]

(ii) Adequacy of the proposed methodology and work plan in responding

to the Terms of Reference:

a) Technical approach and methodology [20]

b) Work plan [05]

c) Organization and staffing [05]

Total points for criterion (ii): [30]

(iii) Key professional staff qualifications and competence for the

assignment:

a) Team Leader (15)

b) Environmental Specialist (10)

c) Social Development Specialist (10)

d) Infrastructure Specialist (05)

e) Contract Management Specialist (05)

f) Consultation Specialist (05)

iv Local Participation (10)

Total points for criterion (iii, iv): (60)

The evaluation committee shall evaluate the Technical Proposals on the basis of

their responsiveness to the Terms of Reference, applying the evaluation criteria,

sub criteria, and point system specified in the Data Sheet. Each responsive

Proposal will be given a technical score (St) Minimum Technical Score 75%

A Proposal shall be rejected at this stage if it does not respond to important

aspects of the RFP, and particularly the Terms of Reference or if it fails to achieve

the minimum technical score indicated in the Data Sheet.

8.4.2 Financial

Table 8.1: Breakdown of Remuneration

Remuneration Sl. No.

Name Position Input Currency Rate

Amount

Foreign Staff (in case of foreign firms)

Local Staff

Consultants

Grand Total


CEPT, Ahmedabad 54


Table 8.2: Criteria of Technical Proposal

No Description1 Unit Unit

Cost2 Quantity

[Indicate

Foreign

Currency #

1]3

[Indicate

Local

Currency]3

a Per diem allowances Day

b Air Travel From to 4 Trip

c Miscellaneous travel

expenses Trip

d

Communication costs

between [Insert place]

and [Insert place]

e Drafting, reproduction of

reports

f Equipment, instruments,

materials, supplies, etc.

g Use of computers,

software

h Local transportation costs

i Office rent

Total Costs

8.4.3 Final Ranking h) The formula for determining the financial scores is the following:

i) [Sf = 100 x Fm / F, in which Sf is the financial score, Fm is the lowest

price and F the price of the proposal under consideration.]

j) The weights given to the Technical and Financial Proposals are:

k) T = 0.8, and

l) F = 0.2

8.4.4 Time Line for Bid Process Management It is important to built-in adequate time line or Bid Process Management in over

all project schedules. The following table indicates the time frame for a medium

Scale Project (table 9).


CEPT, Ahmedabad 55


Table 8.3: Time line –An Example

Activity Date

Notice for EoI for Sasan/ Mundra 31-1-06/ 1-2-06

Submission of EoI for Sasan/ Mundra 28-Feb-2006

Issue of RFQ Documents for Sasan/ Mundra 31-Mar-2006

Submission of Bids (RFQ) 01-June-2006

Issue of RFP Documents 15-June-2006

Submission of Bids (RFP) 15-Nov-2006

Selection of Developer/ Transfer of SPV 31-Dec-2006

8.5 Swiss Challenge System in Bidding Process Swiss Challenge System is a new bidding process to help private sector initiative

in core sector projects.

It's an offer made by the original proponent to the government ensuring

his process to be best (in terms of effectiveness including both the factors

cost and time) by his initiative as a result of his own innovative approach

or on the demand of the government to perform certain task.

The Swiss challenge system, like the bonus system, further allows third

parties to make better offers (challenges) for a project during a designated

period with simple objective to discourage frivolous project, or to avoid

exaggerated project development costs.

Then accordingly, the original proponent gets the right to counter-match

any superior offers given by the third party.

Countries like Philippines, South Korea, Chillie have strong experience of

this mode

8.5.1 Approach 1. The government can either purchase the intellectual property rights for a

project concept from the proponent or then award the project through a

competitive bidding process in which no bidder has a predefined advantage.

2. The government can offer the original proponent an advantage in a

competitive bidding process. In this case the government should create rewards

that satisfy the original proponent while still allowing a truly competitive process.

8.5.2 Indian Experience in Bidding process Madhya Pradesh & Chattishgarh governments have decided to adopt the "Swiss

challenge system" in infrastructure creation. Under which initially only the

projects relating to the state Public Works Department (PWD) will be within the


CEPT, Ahmedabad 56


ambit of the system.

The Andhra Pradesh government is also going to adopt the Swiss Challenge

method for selection of a developer for the Outer Ring Road (ORR) project of

Hyderabad. Wherein, the criteria being kept as whichever company or consortium

pitches for less land will emerge as the successful bidder.

The Uttaranchal government has also decided to develop the Sitarganj industrial

estate in the state with private sector participation on a Swiss Challenge

Approach basis.

Major Controversy in Karnataka for Bangalore-Mysore Infrastructure Corridor

Project

8.6 Bid Structure and Evaluation It is often difficult to evaluate and compare proposals from different bidders. In

designing the bid evaluation process, the following must be considered:

1. Whether to have a two-stage process involving the sequential evaluation

of technical and financial proposals

2. How to assess whether a technical proposal is fully responsive to the

specified requirements

3. How offers should be evaluated and compared

8.7 Bid Design Apart from the structure of the bid, bidding rules and procedures should also be

designed to ensure transparency and economically efficient outcomes.

These include:

Whether to use a reserve price and whether to announce it

Whether and when to use sealed bids rather than open bids

Whether to have a single round or multiple rounds of bidding

Whether to have simultaneous or sequential bidding (in cases where

several concessions with interdependent values are being awarded)

Whether to require bid bonds and activity rules

Whether bidders should be remunerated for a portion of their bid costs

8.8 Prequalification and Short listing-Introduction When awarding concessions for the provision of a monopolistic infrastructure

service, the government usually wants to ensure that the winning consortium has

the technical and financial capacity to operate the concession successfully

The government does not want to award it to an operator that offers the best


CEPT, Ahmedabad 57


deal on paper but later fails to deliver what was promised. One way to reduce this

problem is to design the concession contract so that it is attractive only to

operators who are confident that they can operate the business successfully. This

can be done by writing a contract that imposes stiff penalties for poor future

performance and requiring firms to post a bond sufficient to pay the penalties

The success of a concession depends not only on getting the provisions of the

contract right, but also on designing an appropriate method for awarding the

concession. These include:

1. Whether to use competitive bidding (or some other method) to award the

concession

2. Whether to have a prequalification process for interested bidders

3. How to structure and evaluate bids

4. Whether to have sealed or voice bids

5. Whether to have single or multiple bidding rounds

The design of the bidding and award procedures can have a significant impact on the economic efficiency and transparency of the concession.

8.9 Choosing the method of Award

The Method of Award can be broadly grouped into three categories:

1. Competitive bidding

2. Direct negotiations and unsolicited bids

3. Competitive negotiations

These methods constitute a continuum, and any award process is likely to

incorporate elements of competition and negotiation at various stages.

8.10 Competitive Bidding Public notification of the government's intent to award a concession for a private

infrastructure project or service, generally including a request for expressions of

interest

Distribution of information memoranda, bidding documents, and related draft

contracts to potential bidders

A formal process for pre-qualifying potential bidders

A formal public process for presenting proposals, evaluating proposals, and

selecting the winner.

Competitive bidding is favoured because:

a) It ensures transparency in the contract award

b) It provides a market mechanism for selecting the best proposal and


CEPT, Ahmedabad 58


typically results in lower costs, and it stimulates interest among a broader

range of potential investors

Competitive bidding is easiest to design and implement when:

• The product or service required is fairly standard

• The technical parameters can be defined with reasonable certainty in the

bidding documents

• There is limited scope for innovation and creativity on the part of an

operator

8.11 Competitive Negotiations It may also be possible to combine elements of competitive bidding with direct

negotiation to promote transparency, while preserving the innovative or

proprietary aspects of developers' proposals. A competitive process solicits

proposals in response to broad output specifications

Their negotiations are undertaken directly with one or more developers.

Competition would be used to narrow the number of potential developers, and

negotiations would be used to work out detailed terms and conditions of the

contract. The government would have fallback bidders if negotiations with the preferred

bidder failed. Alternatively, simultaneously negotiations with several developers to further

enhance the competitive aspects of negotiated transactions can be undertaken.

Under this method the government specifies its objectives and solicits proposals

from private operators through a Request for Proposals (RFP).The government

then reviews the proposals, selects those that are deemed technically responsive

to the RFP, and negotiates the contract terms with the selected bidders

The process may involve simultaneous negotiations with several bidders with the

objective of awarding the contract

This competitive negotiation approach is well suited to projects in which:

a) There is scope for innovation and different approaches by developers,

and authorities hope to elicit imaginative proposals for projects

b) It would be difficult to secure financing on the basis of standardized

contract documents

In these circumstances simultaneous negotiations with several pre qualified

bidders may be the preferred approach for awarding one or several projects.


CEPT, Ahmedabad 59


8.11.1 Advantages of Competitive Bidding • Transparency. Transparent competitive bidding can withstand public

scrutiny, avoiding accusations of corruption.

• Lower tariffs. Competitive bidding can attract several qualified bidders.

The competitive process obtains the lowest tariff a private company can

charge while achieving its objectives.

• Better information. Competitive bidders can produce up-to-date

information on the condition and value of the assets.

• Curbing monopolies. In many infrastructure projects, a monopoly is

unavoidable-for example, water distribution. If contracts are awarded on

the basis of the lowest tariff, a company cannot exploit its monopoly to

impose high prices.

8.11.2 Limitations of Competitive Bidding Urgency: When the need for infrastructure facilities is urgent, governments often

resort to direct negotiation of contracts with the private sector.

Lack of legal and institutional support: For competitive bidding to work, there

should be a strong commitment from the host government, and an established

legal structure for private sector participation. Competitive bidding is not a

realistic option for countries without a track record.

High cost of bid preparation: The high cost of preparing a competitive bid (2-10

percent of total project costs) could deter some good firms from participating.

The usual solutions don't suit all developing countries. Some developing countries

cannot afford to absorb any of the bidding costs.

Not suitable for small contracts: Competitive bidding for small concessions

might not justify the transaction costs.

May restrict innovation: Proposals must be very specific, or they cannot be

compared. However, excessive standardization can eliminate new technology that

could produce better quality or lower tariffs.

Lowest bidder may default: Sometimes the lowest bidder under estimates

costs and cannot meet obligations. This can lead to substantial renegotiations of

terms.

When are Negotiated Contracts Acceptable: When more information is required. Sometimes governments cannot specify

the terms for competitive bidding, because they lack certain knowledge. Then it's

best to negotiate with developers that are willing to risk developing a proposed

project.

For unique and innovative proposals. Negotiated contracts are appropriate for

developers with unique, unsolicited proposals that present a new solution


CEPT, Ahmedabad 60


to a problem. Competitive tendering would discourage private firms from

developing their ideas.

8.12 Contracts won by Negotiation Whenever a private sector infrastructure project that has not been awarded

through competitive bidding, following precautions may be taken during Project

funding.

Goods and services required by the project must be competitively bid:

When a concession-type contract has been won through negotiation, it must be

insisted that competitive bidding is used for goods and services required by the

project.

Scrutinize the project: The project sponsor must agree to a rigorous technical

and economic review of the project by the lender. Compare the project with

similar, competitively bid projects elsewhere, to make sure the project cost is

competitive.

Review the negotiated tariff: Submit the negotiated tariff to a rigorous,

independent review to determine its market competitiveness. The review by a

credible third party such as ADB creates transparency and promotes lender

confidence.

8.13 Direct Negotiations and Unsolicited Proposals Under direct negotiations, the project idea generally originates with a private

sector sponsor, rather than with the government. A developer or operator seeks

to negotiate directly with a government on terms and conditions for an

infrastructure project. There may be circumstances in which a full-blown

competitive bidding process may not yield the best result for consumers:

a) Projects in smaller municipalities, where it may be too costly to

arrange a competitive bidding process or where it may be difficult

to attract developers and operators

b) Emergencies and natural disasters, in which major projects or

repairs must be completed rapidly

c) Projects involving proprietary or innovative technology

In countries without a track record or a proven legal and regulatory framework

for private concessions, governments may choose to enter direct negotiations for

some initial projects on a pilot basis in order to gain experience and build a record

with investors.

In general, in cases where competitive bidding is not used, some degree of

competition should be introduced into the process or otherwise replicate

competitive forces, in order to ensure both transparency and economically


CEPT, Ahmedabad 61


efficient outcomes. These could include:

Using external advisers and consultants to assist the government in

assessing proposals

Benchmarking against the cost of similar projects

Announcing the proposed project terms and conditions

Allowing other developers an opportunity to better the terms within a

specified period

Establishing an independent advisory panel to review the proposed

transaction

Periodic rebidding of the concession would also help ensure longer-term

economic efficiency in cases where the initial concession was directly

negotiated


CEPT, Ahmedabad 62


Annex I:

Sample Format for MOU

A G R E E M E N T

The Client and the Infrastructure Consultant are hereinafter collectively referred to as “Parties” and individually as “Party”. WHEREAS: A. The Client is a company inter alia engaged in the business of Real Estate Development

and is in the process of establishing an integrated township at Batanagar, West Bengal with special structures for public utilities, schools, hospitals, residential premises, community services and commercial buildings.

B. The Client is desirous of appointing a firm of repute and of international standards

engaged in the business of providing engineering services for the proposed integrated township at Batanagar, West Bengal and has approached the Infrastructure Consultant.

C. The Infrastructure Consultant has agreed to provide the engineering services in relation

to the proposed integrated township at batanagar, West Bengal, upon the terms and conditions set out herein below.

NOW IT IS AGREED BETWEEN THE PARTIES AS UNDER: 1. SCOPE OF WORK Site, hereby, shall mean the plan area of the proposed buildings and the immediate site context on all its peripheral edges. For the allocated site parcel, the Infrastructure Consultant shall provide the following services (hereinafter referred to as “Services”), strictly in accordance with the terms and conditions of this Agreement and instructions received from the Client form time to time: INFRASTRUCTURE RELATED SERVICES 1.1 Taking Client's instructions and preparation of design brief.

1.2 Site evaluation, analysis and impact of existing and/ or proposed development on its immediate environs.

1.3 Study the existing services like Electric Network, Water Distribution Network, Sewage Network, Storm Water Network, Ponds, STP, and prepare scheme to use these networks during construction stage.

1.4 Identifying the water source, pump house, WTP, Water Supply and distribution Network.

1.5 Storm water disposal and rain water collection. 1.6 Rain water harvesting

1.7 Sewage collection and disposal. 1.8 Waste water treatment and recycling.

1.9 Identifying the source of Electric supply, Switch yard location and design, Electric power distribution network.

1.10 Fire protection and detection system and Tele communication network etc.


CEPT, Ahmedabad 63


2. SCHEDULE OF SERVICES

The Infrastructure Consultant shall after taking instructions from the Client, render the following services: CONCEPT DESIGN [STAGE 1]:

Description of Work

1.1 Ascertain Client's requirements, examine site constraints & potential; and prepare a design brief for Client's approval.

1.2 Prepare report on site evaluation, state of existing services, if any; and analysis and impact of existing and/ or proposed development on its immediate environs.

1.3 Prepare drawings and documents to enable the Client to get done the detailed necessary surveys at the site of the project.

1.4 Prepare conceptual service design layout with reference to given program brief and discussions with the Client.

1.5 Prepare rough estimate of cost based on area calculation sheet for the approval by the Client.

Deliverables

• Site Evaluation Report Analysis of existing services indicative of its utility and operation during the construction stage. Analysis of existing Sewerage treatment plants and the proposal for its augmentation. Identification of source for electric supply and water supply indicative of cost comparisons for chosen alternatives.

• Conceptual Design/ Layout Plan Schematic service layout diagrams on the master plan indicative of the source, distribution network and outlet points (Auto CAD).

• Services corridor sections in integration with the transportation network (Auto CAD).

• Cost Comparisons wherever options proposed. • Block Estimates. Note: The Infrastructure Consultant shall be liable to deliver to the Client 3 hard copy sets and soft copy (Drawings in AUTO CAD only, wherever prescribed) for all the above-mentioned items.

PRELIMINARY DESIGN AND DRAWINGS [STAGE 2]:

Description of Work

2.1 Prepare preliminary infrastructure utility and operation plan report based on site evaluation and status of existing services and analysis and impact of existing and/ or proposed development on its immediate environs.

2.2 Modify the conceptual service drawings incorporating required changes and prepare the preliminary drawings, sketches, sections, etc., for the Client's approval along with preliminary estimate of cost on area basis.

2.3 Prepare preliminary services layout with area statement for installing services like Pump House, WTP, STP, and Electric Switch Yard.


CEPT, Ahmedabad 64


2.4 Prepare a preliminary storm water management in response to the site gradation, site development plan and site drainage.

2.5 Modify the services corridor sections in consultation with the Landscape Architect and the Transportation Consultant appointed by the Client.

2.6 Prepare detailed cost estimate for the approval by the Client.

2.7 Prepare preliminary street lighting and landscape lighting plans.

Deliverables

• Site Evaluation Report Finalized infrastructure utility and operation scheme using existing site services during the construction stage (Auto CAD). Schematic design drawing for storm water collection, diversion and disposal integrated with pond water management mechanism during the construction stage (Auto CAD).

• Conceptual Design/ Layout Plan Conceptual service layout drawings with detailed design calculations (Auto CAD).

• Co-ordinated Service Drawings Primary road network and landscape drawings co-ordinated with the preliminary service corridor drawings (Auto CAD). Preliminary service layout drawings for delivering services like electric, water supply, collection of sewage, storm water, telecommunication and fire protection system integrated with the land parcel drawings provided by the Architects appointed by the Client. (Auto CAD).

• Rough Cost estimation statement inclusive of tentative, material specifications.

Note: The Infrastructure Consultant shall be liable to deliver to the Client 3 hard copy sets and soft copy (in AUTO CAD only wherever prescribed) for all the above-mentioned items.

DRAWINGS FOR CLIENT'S/ STATUTORY APPROVALS [STAGE 3]

Description of Work

3.1 Prepare drawings necessary for Client's/ statutory approvals and ensure compliance with codes, standards and legislation, as applicable and assist the Client in obtaining the statutory approvals thereof, if required.

3.2 Prepare a schematic plan for services like electrical system, water supply, sewage, storm water, fire, telecommunication duct bank system and street lighting in integration with the transportation network.

3.3 Prepare a schematic design drawing for pump house and water distribution network.

3.4 Prepare schematic drawings and specifications of sewage collection network and STP.

3.5 Prepare a schematic design drawing for storm water collection, disposal and pond water management.

3.6 Prepare schematic drawings for recycling waste water network.

3.7 Prepare schematic design and drawing for electric switchyard and distribution network.

3.8 Prepare schematic design and drawings for external street lighting.


CEPT, Ahmedabad 65


Deliverables

• Statutory Drawings : Drawings necessary for Statutory approvals (Auto CAD).

• Engineering Drawings : Engineering service drawings for all services with detailed design calculations (Auto CAD).

• Co-ordinated Service Drawings : Primary road network and landscape drawings co-ordinated with the modified service corridor drawings (Auto CAD). Modified service layout drawings for delivering services like electric, water supply, collection of sewage, storm water, telecommunication and fire protection system integrated with the land parcel drawings provided by the Architects appointed by the Client. (Auto CAD).

• Cost estimation statement inclusive of tentative material specifications, structural and services cost.

Note: The Infrastructure Consultant shall be liable to deliver to the Client 8 hard copy sets and soft copy (in AUTO CAD only wherever prescribed) for all the above-mentioned items.

WORKING DRAWINGS AND TENDER DOCUMENTS [STAGE 4]

Description of Work

4.1 Prepare service working drawings sufficient for execution of works, including preparation of full-scale prototypes during or prior to Execution of Works, if necessary at the Client’s expense.

4.2 Prepare working drawings for services like electrical, water supply, sewage, storm water, telecommunication and fire.

4.3 Prepare working drawings sufficient for installation of special lighting/ special design features in consultation with the Landscape Consultant appointed by the Client.

4.4 Prepare schematic design sufficient to prepare tender drawings.

4.5 Tender Documents

a. Preparation of tender documents and special conditions of contract, if required.

b. Organising and conducting bidding process – pre-qualification of contractors, invitation of bids, providing clarifications for bidders.

c. Analysis of bids for review by the Client.

d. Preparation/ finalisation of contract documents.

4.6 Selection of Contractors/ Suppliers

a. Review and appoint suppliers and execution agency in consultation with the Client.

b. Finalise rates with suppliers and execution agency.

4.7 Prepare a detailed project schedule and phasing of each services to ensure timely completion of the project in consultation with the Client.


CEPT, Ahmedabad 66


Deliverables

• Tender Drawings Drawings for civil work for different services (Auto CAD). Bill of Quantities and specifications for all service drawings.

• Working Drawings and other Detail Drawings Detail storm water management plan with respect to site grading and contour plan (Auto CAD). Detail plan at all scales demarcating sensitive areas to be protected during construction: water bodies, nallah, embankment etc. Detail service drawings: plans, site sections, part sections, elevations and edge profiles (Auto CAD).

• Co-ordinated Service Drawings : Detail service corridor drawings co-ordinated with the road network and landscape drawings (Auto CAD). Detail service layout drawings for delivering services like electric, water supply, collection of sewage, storm water, telecommunication and fire protection system co-ordinated with the land parcel drawings provided by the Architects appointed by the Client. (Auto CAD).

• Cost estimation statement inclusive of finalized material specifications, structural and services cost.

• Detailed project schedule with Detail phasing plan Note: The Infrastructure Consultant shall be liable to deliver to the Client 8 hard copy sets and soft copy (in AUTO CAD only wherever prescribed) for all the above-mentioned items.

CONSTRUCTION [STAGE 5]

Description of Work

5.1 Prepare and issue working drawings and details for proper execution of all service works during construction.

5.2 Selection/ Design of electrical, water supply and plumbing fittings.

5.3 Approve samples of various elements and components.

5.4 Check and approve shop drawings submitted by the contractor/ vendors.

5.5 Visit the site of work, at intervals mutually agreed upon, to inspect and evaluate the Construction Works and wherever necessary clarify any decision, offer interpretation of the drawings/specifications, attend conferences and meetings to ensure that the project proceeds generally in accordance with the conditions of contract and keep the Client informed and render advice on actions, if required.

5.6

In order to ensure that the work at site proceeds in accordance with the contract documents/ drawings and to exercise time and quality controls, the day-to-day supervision will be carried out by a Construction Manager (Clerk of Works/ Site Supervisor or Construction Management Agency in case of a large and complex project), who shall work under the guidance and direction of the Infrastructure Consultant and shall be appointed and paid by the Client.

5.7 Issue Certificate of Virtual Completion of works.


CEPT, Ahmedabad 67


Deliverables

• Working Drawings and other Detail Drawings Detail service drawings: plans, sections, elevations and edge profiles (Auto CAD).

• Co-ordinated Service Drawings : Detail service corridor drawings co-ordinated with the road network and landscape drawings (Auto CAD). Detail service layout drawings for delivering services like electric, water supply, collection of sewage, storm water, telecommunication and fire protection system co-ordinated with the land parcel drawings provided by the Architects appointed by the Client. (Auto CAD).

• Cost estimation statement inclusive of finalized material specifications, structural and services cost.

• Detailed project schedule with Detail phasing plan. Note: The Infrastructure Consultant shall be liable to deliver to the Client 8 hard copy sets and soft copy (in AUTO CAD only wherever prescribed) for all the above-mentioned items.

COMPLETION [STAGE 6]

6.1 Prepare and submit completion reports and drawings for the project as required and assist the Client in obtaining "Completion/ Occupancy Certificate" from statutory authorities, wherever required.

6.2 Issue two sets of as built drawings including services and structures in strict compliance with the instructions received from the Client.

6.3 Assistance after Virtual Completion: The Infrastructure Consultant shall provide periodic assistance for a period of 12 months post completion of the Services in accordance with the terms and conditions of this Agreement, as may be deemed necessary by the Client.

Deliverables Completion reports and drawings left out in stage 5 (incl. soft copies) Two sets of as-built service drawings (incl. soft copies)

3. PROFESSIONAL FEE 3.1 The client shall pay to the infrastructure consultant for rendering the above mentioned

services a lump sum fee of 3.2 As per the directive of Ministry of Finance, service tax will levied on the above fees

or any other tax as imposed by the State of Central Government, as applicable at the time of billing. At present the service tax is @ 10.2%.

4. SCHEDULE OF PAYMENT The Infrastructure Consultant shall be paid professional fee in the following stages consistent with the work done

Stages Amount In Lacs (Inr) On Appointment Stage:1 Concept Design Stage Stage:2 Preliminary Design & Drawing Stage:3 Drawings for Client’s/ Statutory Approval Stage:4 Working Drawing and Tender Stage Stage:5 Construction Stage (Paid every month in 60 equal

installments)

Stage:6 Completion of Project


CEPT, Ahmedabad 68


5. REIMBURSABLE EXPENSES The Client will reimburse the Infrastructure Consultant the following expenses incurred by him for discharge of his obligations: 5.01. Actual cost of travel (to & fro), boarding & lodging and local transport for any visit

made by his staff to the site or such other place as may be necessary in connection with the execution of work and in connection with the performance of duties referred to in this agreement.

6. CLIENT'S ROLE AND RESPONSIBILITIES The Client shall discharge all his obligations connected with the project and engagement of the Infrastructure Consultant as follows: 6.01 To provide detailed requirements of the project. 6.02 To provide a site plan, to a suitable scale, showing boundaries, contours at suitable

intervals, existing physical features including any existing roads, paths, trees, existing structures, existing service and utility lines and such lines to which the proposed services can be connected. In case such information is not readily available, the Client shall arrange for the survey/ collection of necessary information and pay for the same.

6.03 To furnish reports on soil conditions and tests as required by the Infrastructure Consultant or pay for the preparation of the same.

6.04 To furnish specific conditions/ statutory stipulations/ Codes of Practice/ Schedule of rates, etc., desired to be followed.

6.05 To pay all the fees, levies, security deposits and expenses in respect of statutory sanction.

6.06 To appoint a structural consultant to design all the civil, structural work related to infrastructure services. 6.07 To give effect to the professional advice of the Infrastructure Consultant and cause no

changes in the drawings and documents without the consent of the Infrastructure Consultant.

6.08 To honor Infrastructure Consultant's bills within one month of its submission. 6.09 To appoint a Construction Manager. 7. EXECUTION OF THE ASSIGNMENT 7.01 The Infrastructure Consultant shall keep the Client informed about the progress of

work in his office. 7.02 The Infrastructure Consultant shall co-ordinate and liaison with the necessary

government authority for obtaining statutory approvals. 7.03 The Infrastructure Consultant shall appoint specialised consultants in consultation

with the Client, if necessary. 7.04 The Infrastructure Consultant will advise the Client on the Time Schedule (Bar

Chart/ PERT/ CPM Network) prepared by the contractors for the completion of work, if required.

7.05 The Infrastructure Consultant shall supply to the Client, free of cost, the above-mentioned sets of drawings as part of deliverables for the different design development stages.

7.06 The Infrastructure Consultant shall not make any deviations, alterations or omissions from the approved drawings, involving financial implications without prior consent of the Client.

7.07 Any professional services to be rendered by the Infrastructure Consultant at the instance of the Client after the agreed project completion period shall be compensated for on mutually agreed terms.

7.08 The Infrastructure Consultant shall exercise all reasonable skill, care and diligence in the discharge of his duties and shall exercise such general superintendence and inspection as may be necessary to ensure that works are being executed in


CEPT, Ahmedabad 69


accordance with the Conditions of Contract. 7.09 No change shall be made in the approved drawings and specifications at site without

the consent of the Infrastructure Consultant. 7.10 The Infrastructure Consultant’s scope is limited to design all the services like

electrical, water supply, sewage, recycled water, storm water, street lighting for external infrastructure work only, excluding the services within each land parcel but to deliver the required services to the hook up point of each land parcel.

8. TIME SCHEDULE The Infrastructure Consultant shall, in consultation with the Client, prepare a Time Schedule in respect of various services to be rendered and discharge of Client's obligations. 9. INDEMNIFICATION In the event that a claim or suit is brought against the Infrastructure Consultant or the Consultants by any third party for damages arising from personal injury or property damage caused wholly by the Client, or anyone employed by the Client, or anyone for whose acts the Client may be held responsible, then the Client shall indemnify the Infrastructure Consultant and fully reimburse any loss, damage or expenses, including the attorney's fees, which the Infrastructure Consultant may incur in connection therewith. 10. FORCE MAJEURE If the either Party is prevented from performing its obligation under this Agreement from causes which are beyond its reasonable control, such as, but not limited to, strikes, labour controversies, fires, Acts of God or elements, embargoes or governmental orders or restrictions, such affected Party shall be excused for non-performance of its obligation during the period such cause continues to exist, but if such cause continues to exist and prevents performance by such affected Party of its obligation for more than six months, the other unaffected Party shall have the right to forthwith terminate this Agreement effective upon delivery to the affected Party of written notice of such termination. 11. CONFIDENTIALITY

The Infrastructure Consultant shall not disclose to any third part whatsoever, any matters in relation to the Services / project under this Agreement or any matter, which may become disadvantageous to the Client’s business or in relation to its directors, employees, agents, consultants, representatives and other matters which must be handled in a confidential manner. 12. EMPLOYEES

(i) The Infrastructure Consultant shall be solely responsible for the employment of

individuals for the provisions of the Services in accordance with the terms and conditions of this Agreement and for discharging all obligations to or in connection with such employees. The Infrastructure Consultant shall have absolute freedom to regulate its man-power requirements, their working hours, working days, discipline, control and supervision, rate and payment of wages, terms of employment, providing amenities and benefits that may be required under the law for the time being and from time to time in force.

(ii) It is expressly agreed that all workers, contractors and employees providing the Services in accordance with the terms and conditions of this Agreement shall always be the employees of the Infrastructure Consultant and nothing herein shall be deemed to constitute said workmen and staff as employees of the Client.

(iii) As and when this Agreement expires or is terminated, the employment of all such workers, contractors and employees as engaged by the Infrastructure Consultant, their wages, dues and all claims shall be the sole responsibility of the Infrastructure Consultant. The Infrastructure Consultant shall at all times, hold the Client


CEPT, Ahmedabad 70


indemnified against any claim whatsoever that may be raised against the Client by the workers, contractors and employees of the Infrastructure Consultant including on account of accidents suffered by such workers, contractors and employees in providing the Services in accordance with the terms and conditions of this Agreement.

13. OWNERSHIP OF COPYRIGHT The Infrastructure design is an intellectual property of the Infrastructure Consultant. The drawings, specifications, documents and models as, instruments of service are the property of the Infrastructure Consultant whether the project, for which they are made, is executed or not. The Client shall retain copies of the Infrastructure Consultant's models, drawings, specifications and other documents for his information and use in connection with the project. These shall not be used for any other project by the Client or the Infrastructure Consultant or any other person. 14. TERMINATION OF AGREEMENT 14.1 The Parties hereby agree that the term of this Agreement may be terminated:

(i) Mutually by the Parties, by serving a written notice of 60 days on the other Party concerned.

(ii) By the Client, if the Infrastructure Consultant is in breach of any of its obligations contained in this Agreement and the Infrastructure Consultant fails to remedy such breach within a period of not less than 30 days after receipt of notification from the Client in this respect, then the Client shall have the right to forthwith terminate this Agreement.

(iii) By the Infrastructure Consultant by serving a written notice of 30 days on the Client, only in the event the Client fails to make payment of the fees in accordance with the terms of this Agreement for a continuous period of three months.

14.2 In the event of termination of this Agreement in accordance with Clause 14.1, the Client shall have the right to employ another Infrastructure Consultant to complete the work, after making payment of the legitimate dues to the Infrastructure Consultant.

15. REPRESENTATIONS AND WARRANTIES 15.1 The Infrastructure Consultant hereby represents and warrants to the Client as follows: (i) It is duly organised and validly existing under the laws of India, and has full power

and authority to enter into this Agreement and to perform its obligations under this Agreement; and

(ii) The execution and delivery of this Agreement and the performance by it of its obligations under this Agreement have been duly and validly authorised by all necessary corporate actions on the part of it. This Agreement constitutes a legal, valid and binding obligation of the Infrastructure Consultant enforceable against it in accordance with its terms.

(iii) The execution, delivery and performance by the Infrastructure Consultant of this Agreement and the acts and transactions contemplated hereby do not and will not, with or without the giving of notice or lapse of time or both, violate, conflict with, require any consent under or result in a breach of or default under: (a) Applicable law; or (b) Any order, judgment or decree applicable to it; or (c) Any term, condition, covenant, undertaking, agreement or other instrument to

which it is a party or by which it is bound; (iv) there are no legal, quasi-legal, administrative, arbitration, mediation, conciliation or

other proceedings, claims, actions, governmental investigations, orders, judgments or decrees of any nature made, existing, or pending or, to its best knowledge, threatened or anticipated, which may prejudicially affect the due performance or enforceability of this Agreement or any obligation, act, omission or transactions contemplated hereunder; and

(v) that it will comply with all applicable laws, regulatory requirements, standards,


CEPT, Ahmedabad 71


guidelines, codes of practice and specifications and instructions issued by the Client, in connection with the performance of its obligations under this Agreement, and will not do or permit anything to be done which might cause or otherwise result in a breach of this Agreement or cause any detriment to the transactions herein envisaged.

15.2 The Client hereby represents and warrants to the Infrastructure Consultant as follows: (i) it is duly organised and validly existing under the laws of India, and has full power and

authority to enter into this Agreement and to perform its obligations under this Agreement; and

(ii) the execution and delivery of this Agreement and the performance by it of its obligations under this Agreement have been duly and validly authorised by all necessary corporate actions on the part of it. This Agreement constitutes a legal, valid and binding obligation of the Client enforceable against it in accordance with its terms.

16. NOTICES (i) Any notice pursuant to this Agreement shall be in writing signed by (or by some

person duly authorised by) the person giving it and may be served by leaving it or sending it by facsimile, prepaid recorded delivery or registered post addressed as follows (or to such other address as shall have been duly notified in accordance with this Clause):

If to the Infrastructure Consultant:

The Director If to the Client:

(ii) All notices given in accordance with Sub-Clause (i) shall be deemed to have been

served as follows: (A) if delivered by hand, at the time of delivery; (B) if posted, at the expiration of 3 (three) days after the envelope containing the same was delivered into the custody of the postal authorities; and (C)if communicated by facsimile, on receipt of confirmation of successful transmission. 17. ARBITRATION (i) In the event any dispute arises between the Parties out of or in connection with this

Agreement, including the validity thereof, the Parties hereto shall endeavour to settle such dispute amicably in the first instance. The attempt to bring about an amicable settlement shall be treated as having failed as soon as one of the Parties hereto, after reasonable attempts, which shall continue for not less than 15 days, gives a notice to this effect, to the other party in writing.

(ii) In case of such failure, the dispute shall be referred to a sole Arbitrator, who shall be mutually appointed by the Parties. The Arbitration proceedings shall be governed by the Arbitration and Conciliation Act, 1996 and shall be held in Kolkata.

(iii) The Parties submit to the jurisdiction of the courts at Kolkata. 18. MISCELLANEOUS (i) This Agreement constitutes the entire agreement between the Parties and

supersedes any previous agreements between the Parties whether oral or in writing regarding the subject matter hereof.

(ii) Nothing in this Agreement shall be deemed to constitute a partnership between the Parties or constitute any party the agent of any other party for any purpose or entitle

any party to commit or bind any other party in any manner or give rise to fiduciary


CEPT, Ahmedabad 72


duties by one party in favour of any other. (iii) This Agreement may be amended only by an instrument in writing signed by each

party to this Agreement. (iv) If any provision embodied in this Agreement appears to be legally invalid or null, the

Parties will replace such provision, considering the nature and contents of this Agreement, the way consensus is reached, the mutually known interests of both Parties as well as the other relevant circumstances, by a provision which is not unreasonably onerous to any party and approximates the meaning of the legally invalid provision as closely as possible.

(v) The failure on the part of one party to exercise or enforce any rights resulting from this Agreement shall not be a waiver of any such rights, nor shall any single or partial exercise thereof operate so as to bar the later exercise or enforcement thereof.

(vi) This Agreement may be entered into in two or more counterparts each of which, when executed and delivered, shall be an original, but all the counterparts shall together constitute one and the same instrument.


CEPT, Ahmedabad 73


Annex II: Selection of Consultants

During selecting process for selecting consultants the local authorities should keep following things in mind:

• Importance of the project for the local authority • Scale of the project • Quantum of work • Time available for the process to select consultants

Based on the above criteria following are the methods available for the selection process: • Single-source selection • Selection from a list of pre-qualified consultants • Selection by Request for Qualification (RFQ) • Selection by Request for proposals (RFP) • Selection by combination of RFQ and RFP

Single-source selection

In this process the local authority selects a single consultant directly without any process. Normally all local governments do not have the flexibility to use this method of selection process. For a legal and political safety reasons, the local authority using this method should document its reasons for doing so. Where a local government has the flexibility to use such a selection process, it is appropriate to do so under the following circumstances:

When a consultant, have a significant credentials and experience of working with the same local authority in a similar nature of the project and successfully completed work in short period of time or on a very limited budget • If a situation demands to have a local consultant, and there is only one who is qualified • If the community requires the services of a consultant with a unique specialty • If there is not sufficient time to go through a formal selection process

There is an option in this method, if the consultant is awarded a project after a competitive process a similar kind of work can be allotted to the same consultant using an amendment to the earlier contract to retain the consultant’s services for later stages of the project or a related project.

Selection from a List of Pre-qualified Candidates

This process is mainly suitable for selecting consultants for the small projects and projects normally have standard methodology and processes. This process usually involves the following steps:

• Identification of consultant: The client should identify a small group of qualified consultants (three to five) working in the similar field with similar kind of


CEPT, Ahmedabad 74


experience. This step needs enough research and knowledge about the project and consultants working in the similar projects.

• Invitation to the consultants: The selected consultants should be invited to ascertain their availability and interest in the proposed project. Also consultants should be called for an interview and submission of qualifications, approach and methodology for the proposed project.

• Selection of the consultant: The local authority should select one consultant based on the selection criteria like overall experience, time available, understanding of project objectives, relevance of education and experience of probable staff, creativity exhibited by the consultant for the proposed project, clarity and usefulness of the proposed methods and techniques, appropriateness of this proposed project management structure, and the consultant’s familiarity with the community.

• Work plan/Costing: After selecting a consultant, the local authority should ask for detailed work plan and cost information from the consultant.

• Negotiations: Based on the work plan and cost information a contract between the planning agency and the consultant should be negotiated.

Expression of interest (pre qualification)

A notice with detailed description of tasks to be performed, technical skill and infrastructure desired and approximate area and location for which the Town Planning scheme is to be prepared should be published in the local newspaper to invite consultants for pre qualification stage.

Short listing consultants

Based on the pre-decided selection criteria the consultants should be ranked and consultants getting marks more than the minimum marks desired by ULB should be called for the next stage. The criteria like professional experience, experience in the field of town planning scheme, no. of T. P. Schemes done, professional expertise (e.g. urban planners, architects, engineers, survey staff available with the firm), office infrastructure (e.g. computers, plotters, printers, software, total station machines with the firm) should be considered while evaluation.

Terms of References for the selected consultants

A detailed Terms of Reference should be given to all pre-qualified consultants to submit the financial and technical proposal for the next stage. A detailed Term of reference should contain:

Brief description about the task

Scope of work - Stages like survey (survey specifications), mean levels, DILR certification, CTP consultation, preparation of conceptual plan, preparation of draft town planning scheme up to owners meeting, publication of the scheme, submission to the state government and demarcation of roads and final plots

Time duration, schedule of payment — time duration to perform each stage and schedule of payment corresponding to each stage and deliverables


CEPT, Ahmedabad 75


Deliverables at each stage — all documents and drawings to be delivered by the consultant at each stage should be clearly given with the formats. Proposal submission process (two envelop - technical and financial) The method and criteria for evaluation should be clearly defined in the TOR and weightage for the technical and financial proposals (e.g. 70%-30% or 60%-40% or 50%-50% for technical - financial proposal) should be clearly mentioned based on the minimum quality desired and financial status and funds available with the local body for the project.

Evaluation of the technical bids

The evaluation committee should be appointed by the Client and each of its members should individually evaluate all proposals on the basis of consultant’s responsiveness to the Terms of Reference, applying the evaluation criteria, sub criteria [(e.g. experience in preparing town planning scheme, no. of town planning schemes done (up to publication stage), professional expertise (e.g. urban planners, architects, engineers and survey staff), infrastructure (e.g. computers, software, office space, plotters, total station machines), adequacy of the proposed work plan and methodology in responding to the TOR (proposed work plan and over all professional time)]. Marks should be given to the main and sub criteria. Each responsive proposal should be given a technical score (St). A proposal should be rejected at this stage if it does not respond to important aspects of the Terms of Reference or if it fails to achieve the minimum technical score set by the Urban Local Body to qualify for the next stage.

Short listing technically qualified consultants

All the consultants getting scores more than the minimum cutoff scores set by the ULB should be selected for the next stage of financial evaluation.

Evaluation of financial bids

After evaluation of quality is completed, the Client should notify those consultants whose proposals did not meet the minimum qualifying mark or considered non-responsive to the Request for Proposal and Terms of Reference, their Financial Proposals should be returned unopened after completing the selection process. The Client should simultaneously notify the consultants that have secured the minimum qualifying mark, indicating the date and time set for opening the Financial Proposals. Financial bids should be opened in the presence of the authorized representatives of all short listed consultants. The name of the consultant, the quality scores, and the proposed prices should be read aloud and recorded when the Financial Proposals are opened. The client should prepare minutes of the public opening. The evaluation committee should determine whether the Financial Proposals are complete, (i.e., whether they have cost all items of the corresponding Technical Proposals, if not, the Client should cost them and add to the initial price), any computational errors, and convert prices in various currencies to the single currency specified.

Final selection of the consultant

The lowest Financial Proposal (Fm) should be given a financial score (SO of 100 points. The financial scores (Sf) of the other Financial Proposals should be computed. Proposals should be ranked according to their combined technical (St)

and financial (Sf) scores using the weights (T = the weight given to the


CEPT, Ahmedabad 76


Technical Proposal; P = the weight given to the Financial Proposal; T + P = 1) 5 = St x T% + Sf x P%. The firm achieving the highest combined technical / financial score should be invited for negotiations.

Negotiations

Negotiations aims at reaching an agreement on all points and signing of contracts. The contract should be awarded following the negotiations. After negotiations are completed, the Client should promptly notify other consultants on the shortlist that they were unsuccessful and return the Financial Proposals of those consultants who did not pass the technical evaluation.

Agreement with the consultant

After negotiations with the consultants the urban local body and the consultant should be enter in to formal agreement containing all the terms of reference and terms, schedule of payments, penalty clauses, deliverables, time frame and other important issues essential for the success of the project.

Issuing guidelines to the consultants

After making agreement with the consultant the client should give detailed guidelines to the consultant. The detailed guidelines should contain:

Objectives, strategies and policies for particular scheme

Objectives for preparing particular scheme (e.g. for new development, heritage and conservation, redevelopment or densification of the area, infrastructure provision)

Deduction policy

Based on the requirement of land for provision of social and physical infrastructure, policy for deducting land from private owned land should be decided. Factors influencing the deduction policy are, existing and proposed roads in the development plan (master plan), percentage developed (built) area, size of the private plots within the scheme area, available Government land in the scheme area and objectives of the scheme.

Graded deduction policy also can be suggested based on size of original plot (e.g. for plot area 0-lOOm2 deduction @10%, for plot area 101-500 m2deduction @20% and so on)

Minimum size of plots

Minimum size of final plot to be given should be decided by the urban local body and clearly mentioned in the guideline.


CEPT, Ahmedabad 77


Roads

Road network and road hierarchy considering Development Plan roads and growth envisaged should be given to the consultant.

Location of plots for public utility

Location of plots for public utility and for sale by the Urban Local Body so that it can generate maximum revenue to the ULB for the provision of infrastructure in the scheme area.

Other urban design guidelines

FSI Ground coverage Margins Building height

Activity and Time schedule

A detailed activity and time frame for each activity should be clearly mentioned in the guidelines for proper monitoring and timely completion of the project.

Monitoring mechanism

A clear stage wise monitoring schedule and roles and responsibilities of the monitoring agency should be mentioned in the guidelines to avoid conflicts and duplication of work.

Quality norms

Quality norms for all the activities and deliverables for all the stages should be clearly mentioned in the guidelines.

Communication Systems

Means and time schedule for communication e.g. progress report for every 15 days or meeting /discussion on specific day every month to discuss progress and problems should be mentioned in the guidelines to avoid communication gaps between client, consultant and other departments.

Submission schedule

Submission and deliverable schedule, keeping in mind all the legal stages of the Town Planning Scheme as per the Act should be given in the guidelines.


CEPT, Ahmedabad 78


References

• Construction Scheduling with Primavera Project Planner by Leslie Feignbaum

Publisher: Prentice Hall

• Managing with Microsoft Project by Lisa A. Bucki, Gary Chefetz Publisher:

Premier Press

• Microsoft Project Bible by Elaine Marmel Publisher: Wiley Publishing, Inc

• Microsoft Project for Dummies by Nancy Stevenson Publisher: Hungry Minds,

Inc

• Step by Step Microsoft Project version 2002 by Carl Chatfield, Tomothy

Johnson Publisher: Microsoft Press

• Construction scheduling with Primavera enterprise 1.2 by David A. Marchman

• Trouble Shooting Microsoft Project by Bonnie Biatore

• Microsoft Project inside Out by Teresa S. Stover

• Special edition using Microsoft Project by Tim Pyron

• Construction Scheduling with Primavera Project Planner by David A.

Marchman / Delmar Leaviy

• Project Management Handbook by Uddesh Kohli & K K Chitkara Publisher:

Tata McGraw-Hill

• Project Management by Jack R. Meredith & Samuel J. Mantel,Jr. Publisher:

Wiley India

• Project Management by Clifford F.Gray & Erik W. Larson Publisher: Tata

McGraw-Hill

• Project Management for Business & Technology by John M. Nicholas Publisher:

Eastern Economy Edition

• PROJECTS by Prasanna Chandra Publisher: Tata McGraw-Hill

• Project Planning And Control by Prof. N.P. Agarwal / Dr. B.K. Mishra Publisher:

Indus Valley Publications

• A Management Guide To PERT/CPM by Jerome D. Wiest / Ferdinand K. Levy

Publisher: Eastern Economy Edition

• Information Technology Project Management by KATHY SCHWALBE Publisher:

Thomson Course Technology

• Information Technology Project Management by S,A,Kelkar Publisher: Eastern

Economy Edition

• Microsoft project 2003 – software


CEPT, Ahmedabad 79

rtp mod 2.4

Education