Fundamentals of Project Management
Shriram M. Oka
Agenda
What is a project? Project Life Cycle Stakeholders in Project Key facets:
Project Scope & Contract Terms Project Schedule Project Cost Project Quality Project Safety Working Capital & Generation of Free Cash Managing People / Client Managing Risk
What is a Project?
A collaborative endeavor to develop and deliver a Unique end-product in given time, managing available resources, executing work within set safety regulations & ensuring Internal /External customer satisfaction. Keywords:
Time, Cost, Safety, Quality (PDCA) Plan, Do, Check, Act
Project Lifecycle
Client floats Tender
Bidders submit offers
Bid Evaluation / Award
Detailed Design, Procurement & Execution
Project Close-out
Stakeholders
End user / Client PM Consultant / Design Consultant Contractor Vendors Subcontractors Govt. Bodies / Statutory Authorities Others
Project Management
The Key facets of a project that need to be managed are:
Project Scope & Contract Terms Time / Schedule Cost Quality of work & Quality of end product Safety of staff / labor Working Capital & Generation of Free Cash People / Client Risk
Project Scope
Understanding Contract Scope & Terms
Types of Contracts Time Duration Technical Spec Commercial Conditions
Payment Terms Advances & Retention Monies Bank Guarantees (ABG , PBG, EMD) Eg Maintenance of facility post commissioning
Special Terms & Conditions , if any
Types of Contract
Based on Pricing & Payment Terms
Lump-sum Unit Rate (Priced BOQ) Cost Plus Margin BOOT Turnkey EPC (Total scope with 1 party) Design & Build (3rd party F.E.E.D and/or PMC) Supply Contract / Erection Contract
Based on work scope
Managing Time
Project execution is characterized by:
Multiple inter-dependant activities Parallel work fronts Limited available Time Limited Resources
Hence, activity planning is of utmost importance to finish the total scope of work, as per contract, within the given time duration.
Activity Scheduling (Case Study)
ACTIVITY TASK-1 TASK-2 DURATION DEPENDENCY 3 WEEKS 4 WEEKS _ TASK-1 RESOURCE (labor) 3 4
TASK-3
TASK-4 TASK-5
5 WEEKS
4 WEEKS 6 WEEKS
TASK-2
_ TASK-4
6
4 6
TASK-6
TASK-7
4 WEEKS
3 WEEKS
TASK-4
TASK-3,5,6
3
3
Gantt Chart
Critical Path
Typical Problems faced by the project manager
A project is lagging behind schedule. Manager has two options:
Work with existing Resources & deliver the project with Time delays Increase Resources, use expensive High-end P&M or highly skilled sub-contractors & crash Activity durations. Deliver on time, but at significantly higher cost!
What does he do?
Cost Control A project needs to be executed NOT AT ANY COST, but within a defined BUDGETED COST
Budgeted Cost (ACE) Periodic Monitoring of Cost against ACE (JCR) Variation Analysis
Software used at site to Transact [Link] / [Link], Record & Monitor Cost incurred - CeMa. Software used at RO /HQ to Transact [Link] / [Link], Record & Monitor Cost incurred - EIP
Allocating Resources - L,M,P, Sc
Each activity consumes resources pertaining to: L Labor M Supply Materials P Plant & Machinery Sc Sub Contractor & Specialized Agency While preparing ACE, the planning eng allocates a Cost Budget to each activity, that combines all the 4 resource elements L,M,P,Sc.
Monitoring performance
Periodic reports to monitor performance:Job Cost Report (JCR)
Monitor Cost to date & ETC periodically Analyze variation in Unit Rates
Invoicing Report Collection & Outstanding Statement
Quality
The lowest project Cost is achieved when every activity is executed at the optimum level of Quality!
Zero Defects Do it right the first time, every time! How to achieve Exceptional Quality? Plan Do Check Act
Excellence of Detail Engg (Team Review of Dwgs) Selection of Vendor (PQ) Selection of Subcontractor (PQ) Stringent Material Inspection & Material Storage Norms Well-defined Work / Erection Procedures Qualitative & Regular Audit of Erection Activity Sharpen the Axe : Regular Training to Staff / Workmen
Safety
Safety encompasses:
Health of workmen / staff Safety of workmen / staff (PPE, scaffolding etc.) Environmental Protection
Why is Safety critical to a project?
Prevention of Fatal Injuries Prevention of Loss of Work-time Limit damage to environment
Cash Flows
Working Capital Management
Net WC = Current Assets Current Liabilities
Assets Net O/s Retention Valued Stock Cost > Invoice Cash & bank OCA Liabilities Vendor Credit Unadjusted Adv OCL
Financial Health Check ?
Financials Sales GM Overheads Deferred Debts PBIT NO-PAT AWC ANFA ANFE ANFE (% of Sales) CC (13.25% of ANFE) EVA ROCE Case 1 100 15 -3 0 12 8.0004 25 1 26 26% 3.445 4.5554 31% Case 2 100 15 -3 0 12 8.0004 45 2 47 47% 6.2275 1.7729 17%
Site Organization Structure -- Overview
PM PE CM MM ACC HSE QAQC
Key People
Critical Project Management Skills
In the Order of Decreasing difficulty
1. 2. 3.
People Skills and Goodwill Crisis Management skills Planning skills
S .No 3 is easiest to achieve, failure to implement this skill leads to uncontrollable situations
Managing Risk
Risk Management is The identification, assessment, and prioritization of risks Minimizing the occurrence and monitoring & controlling the impact of unfortunate events
Risk Assessment
Sr. No. 1 Identified Risk Probability (a) Most Likely Impact (b) Major Risk Rating (a) * (b) Critical
1)
Risk Mitigation Plan
95% will be paid after commissioning of entire SS Incomer is a 220kV UG Cable(Not in L&T Scope) In such a situation, the payment may be held up till UG Cable is laid and charged
2)
3)
Request for amendment in payment terms (Milestone based) Monitor Cost over Invoice Plan Supply such that project cash flow is positive
Delay in Delivery of Transformer may affect the completion of substation works
Possible
Moderate
High
To negotiate with vendor and make specific delivery arrangements Put stringent LD terms on vendor
Risk Assessment Matrix
1
Most Likely Likely Possible 2
Probability
Unlikely
Rare Insignificant
Medium
Minor
Moderate
Major
Extreme
Impact / Consequence
Low High Critical Risk Rating
Thank You
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