UNIT 13 PROJECT MANAGEMENT

Structure .13.1 Introduction

Objectives

13.2 Project Planning and Organising

13.2.1 13.2.2 13.2.3 13.2.4 13.3.1 13.3.2 13.3.3 13.3.4 13.3.5 Development of Project Plan Objectives Programming and Scheduling Pmjec? Budget and Fund Flow Stztus Project Organisation Origin of Bar Chart and CPMPER-T Detailed Study of CPM Precedence Network CPM Line of Balance @OB)

13.3 CPM and Other Project Planning Techniques

13.4 Procurement and Materials Management 13.5 Contracting and Construction Management
13.5.1 13.5.2 13.5.3 13.5.4 13.5.5 13.5.6 13.6.1 13.6.2 13.6.3 13.6.4 13.6.5 Contracting Approach Contractors' Role Types of Contract Contracting Procedure Objective of Construction Management Definition of CM's Scope Time and Cost Control Tools and Techniques Decision Making as a Control Frnction Time crashingkonomy Analysis Information Reporting System Risk Management as a Control Functioy

13.6 Project Control

13.7 Summary 13.8 Answers to SAQs

INTRODUCTION

Management is a process concerned with achievement of goals or objectives. Project Management involves the coordination of group activity wherein the manager plans, organizes staff, directs, and controls to achieve an objective with constraints on time, cost and performance of the end product. It is appropriate at this point to elaborate on the term project. A projectis a set of tasks or activities related to the achievement of some lanned objective, normally where the 9 Thus, a project is usually distinguished from objective is unique or non-repetitive in nature. repetitive or continuous production process by the characteristic of uniqueness or the 'one shot' nature of the objective. Projects may involve routineprocedures where project planning techniques are useful for detailed analysis and optimization of the operating plan. Planning is the process of preparing for the commitment of resources in the most effective fashion. Controlling is the process of malung events conform to schedules by coordinating the action of all functions of the organisation according to the plan established for attaining the objective. It can also be said that project management is a blend of art and science : the art of getting,things done through and with people in formally organised groups; and the science of handling laqe volume of data to plan and control so that project duration and cost are balanced and excessive and disruptive demands on scare resources are avoided. In order to accomplish the project goal or objective, the manager must plan and schedule largely on the basis of his experience with similar projects, applying his judgment to the particular conditions of the project at hand. During the course of the project, he must continually replan and reschedule because of unexpected progress, delays or technical conditions. Until the advent of critical plan methods there was no generally accepted formal procedure to aid in the management of project. Each manager had his own scheme, which

Introduction to Project. Management

often involved linlited use of bar charts - a useful tool in production mlagement but inadequate for the complex interrelationships associated with contemporary project management. The development of network based planning methods in the late fifties provided the basis for a more formal and general approach toward a discipline of project management. Critical path methods involve both a graphical portrayal of the interrelationships among the elements of a project, and an arithmetic procedure which identifies the relative importance of each element in the overall schedule. Since their . development, critical path methods have been applied with notable success to research and development programs, all types of construction work, equipment and plant maintenance and installation, introduction of new products or service or changeovers to new models, developments of major transportation and energy related systems, strategic long term planning, management information systems developments production planning, emergency planning and even the production of motion pictures, conduct of political campaigns and complex surgery. All of these activities are classed as projects. and workable In all of these projects, management is concerned with developing a optimu~li plan of the activities that make up the project including a specification of the~r interrelationships. Also management is interested in scheduling these activities in an acceptable time scale, considering the manpower and other resources required to cany out the program as it progresses in time. Management is also concerned with monitoring the expenditure of time and money in carrying out the scheduled program, as well as the resulting output, quality or performance, for cases where achievement of the project objective(s) can be measured on a con,tinuous or ordinal scale(s). The ultimate objective of planning is timely and economical implementation of project. A well managed project should have a proper integration in both planning and implementation efforts, co~nnlitment on the part of people engaged on implementation and involvement by the top management in the monitoring of projects and trouble-shooting. Engineering contract, conmissioning and start-up services which translate a project concept into a goods producing or service generating facility should be very well planned, organised, implemented and controlled for the success of the project. The owner of the project must closely monitor all the functions and ensure that its various activities are on schedule and they are enabling other project activities like procurement, contracting, construction and commissioning to proceed as per schedule, without hold-up. A well designed performance reporting system and a good data management system are vital requirement for an efficient Project Management Function.

Objectives
After studying this unit, you should be able to understand the various aspects of project management, discuss various techniques of project planning implementation,
'

enumerate various project procurement and materials management functions, describe various controlling tools and techniques to combat project overruns, develop a computer system for preparing computerised network based project planning, identify the critical path of a project, and define risk management as a control function.

PROJECT PLANNING AND ORGANISING

Planning is the formation of a detailed scheme for proper arrangement of the necessary actions, steps and means for achieving the project objectives. The planning exercise should be guided initially by the overall time schedule and cost estimate given in the Detailed Project Report. In the planning stage, the project is broken down into many manageable elements fixes into a time frame within the averall time schedule, with an allot~nent of resources within the overall project cost, and released for execution. An achievable. realistic plan, fitting in which the overall project time and project cost is the essential requirement for a project's success. Performance guidelines and a controlling system to evaluate ,and modify the performance as required, shall form part of the plan. Between the formulation of preliminary plan in the Detailed Project Report stage and the finalisation of plan for implementation, the planning has to be subjecteuto iteration for a possible refomlation of the preliminary plan.

13.2.1 Development of Project Plan Objectives

It is a universal practice to define the scope of the plan before drawing of a detailed plan. A clear understanding of the plan objectives is a requirement for the plan's success. Ensure that the objectives are achievable, measurable, simple to understand and consistent with the resources levels fixed (and assumptions made) in the Detailed Project Report estimates. Apart from estimates, the planner will require all key information about the project. While Detailed Project Report contains such information, efforts must be made to refine them before using them for planning, thus reducing the level of inaccuracy to the minimum. Planning aims at achieving the projects completion making the most effective use of time and resources. This is normally done by preparing a questionnaire and fill it up before sitting down to do the planning, so that once the planning activity is started there is no hold up for want of right kind of resources.

Project
Management

13.2.2 Programming and Scheduling

Programme is the forerunner of schedule. It is form, a progralnrpe of action, that the schedule is prepared. In the section we are dealing with the definition of tasks and the strategy to accomplish them. ' Various steps of progranlming are briefly illustrated below :
Listing of Work

List the tasks and the activities under each tasks, showing main work elements of the total projects by functionsf deciplinef skillsf crafts. These lists will form the foundation of the subsequent steps of a more detailed definition of work. This list can be simple, tabular statement with columns for task code, task description, task duration, etc.
Definition of Work Here define the listed work elements in greater detailed for clear understanding. These definition should remove uncertainties, if any, contained in detailed project reports. Work Breakdown Structure and Codification of Tasks

Simultaneous efforts and specialists attention in several fronts are necessary for the efficient implementation of a project. Besides, the volume of work allotted to a team should be of a controllable size only. It is for these reasons that work breakdown structure (WBS) is made. WBS is a function of programming. Break down the total project work into manageable self contained and independently executable work packages and the down-the-line activities, area wise or function wise, or crafts wise, or process stage wise. C~dification of tasks and related projects accounts facilitate effective management aid control. It is a useful practice in large projects to use structured codes for identification, reference, accounting, integration and computerisationof drawings and technical documents, WBS contains, costs, purchase orders, budget commitments, equipment and materials, schedules, off-sites and infrastructural facilities, manpower and other inputs, contracts, bills, progress reports, performance evaluation, income and expenditure, acsets and liabilities etc. Coding can be done either numerically or alphabetically and combined alpha-numerically. The structure of codification would depend on the size, type and accounting needs of the project and the enterprise.
Modeling the Wark

Make graphic models of the main segments and important elements of the work. These models will help you to understand the variables you have to handle in translating the plans into a reality. The models shall indicate the various angles of the type and magnitude o f the work to be put in, and the technical, functional and logical relationship of the various activities involved in the work. Addition of time duration to every model with a beginning and an end is done here. As calendar dating may be impossible at this stage, the time is fixed in time of project months or project days, starting from the zero date which is the first milestone of the project.
Fixation of Sequence and Priarity

A project is an integrated whole unit into whic;h hundreds of tasks and thousands o f work elements are integrated. So, work programming has to be done if the

Iatroducticrn to Project Management

interrelationship of work in nlind. Interfacing of the models will establish the, interrelationship. It must be possible to carry out niruiy work elen~ents intlcpendently upto their assembly stage, but in a project with a few hundred thousands ide~~tifiable work elements, one cannot a f i r d to leilve half of them executed out-of-sequence nnd wait for mass finishing assembly, conncctions and testing towards tlie etitl ot tllt3 project. That would cause a lot of confusion, wastage, lock up of money ;rnd in most cases remobilisation and even some re-works. Moreover, in a large project, tliffcre~~t work packages may liave different phased-out comnlissioning dates for technical iuld financial results, necessitating a corresponding phased-out col~lpletion of work. Besides, for economic or technical reasons, some segments may have to he accomplished on priority over otl~ers. For these reasons, sequence anti priori~y have to be given due consideration while programmning.
Fixation of Activity Duration

Every acti\:ity shall be allotted a realistically estimated time duration so tlint tlie sum total of all such durations rninus the net overlapping would be cclu;d,L otti~ proiecl duration. In actual-practice t l ~ e time duration is fixed on the basis of the previous on-the-job experience of the plmiers and the line managers. It is usual to fix a shorter than permitted duration, keeping a few days up - one,'\ sleeve as a "But'fer Time" for any possible slippage. This provision is contui,gency time. Scheduled completion time plus contingency trine is the target ti~iie.
Identification of Critical A$tivities

In total prc>.ject mc,del placing individual scgments models end-to-user or clrawing a time phased master bar chart, plotbing all the important seglnents wit11 thc mtlicalioti of their interrelationships, it can be found some items have fairly long I'loats or slack time between starting and finishing, as their finishing does not hold up other activities, but at the same time some other items are so critical that the prccedii~g items tie in arid start of succeeding items are dependent on their finishi~ig. Tliese latter items have to be separately identified and listed for special nianascnient attention towards their completion, in the interest of timely coniplction ol' tl~csproject. Scheduling is a substantial improvement on programming. Schedulin,y is pri~~cipally the exercise of laying out and integrating time, resources, and the main work elements of engineering, procurement a i d construction in the most efl'icient manner to achieve the project objectives. Resources availability and their econon~ic levels of distribution, time duration for individual activities and for the total pro.jcct. Llie estimated ccists are interrelated through the scheduling exercise. Various steps of sqlleduling are enumerated below
Forward and ~ a c k w a r d Scheduling

orw ward and backward scheduling is a scheduling strategy used for keepin'g rrlown the level of resources deployment ,uld the making the optimum use of tliem h), taking advantage of their tloats. Forward schedule starts as soon as working lion1 cle;uance is available for an activity aid it often finishes before the required due dat(,. Thc philosophy here is "finish every activity as early as possible". Backward scl~cdule starts backw,uds from the required due date of finishing the activity and arrives at a dak. required starting datc. The starting date so arrived at will be the latest sli~rtil~g The guiding philosophy liere is ''finish economically when required".
Resources Assessment and Matching

Every project owner's resources liave some lirmtations for reasons of ecotiolny previous commitments. So, what 1s u~ually done in scheduling is as tollo\v\ (a) (b) (c)

iuitl

Take stock of the total Available Resources (AR) that can be niohiliaed during if any. the activity time, after previous co~nmitments
(KK) I'or Assess the most economic quantity ot Resources Reilu~re~i~e~its finishing the activity within the time duration.

If the RR is more th'm AR, try to revise the activity duration using 111e Forward and Backwarcl scheduling technique and adjust the volu~nc of activities to suit the available resources. taking advantage of tloars. but with due consideration to dependencies of activities aid overall projcct co~iipletion target, and then calculate the Reassessed Recluirkments of Resources (KKR).

(d) (e)

Make provision for procurement of the difference between RRR and AR. Make a Inaster bar chart schedule of the activities with startii~g and finishing dates and corresponding tabular schedule of time phased allocation of all resources. It must be remembered that the contractors who are awarded jobs will also bring in their resources as per contract stipulation for use in the project.

Project Ma~lagei~~ t en

Master Schedule and Master Budget

A corresponding master schedule of resources should list the requirements of major resources of men, equipment and materials for the same work packages in a matching tiille phase with considerations for procurement time and mobilisation time, to enable t~iiiely work execution. A corresponding master budget shall ellsure financial urces schedule and master fund allocation and the project fund flow. The master flow statement shall be based on the pnject cost e, inate and project investment cost distribution schedule and their subseyuent refinement based on firmed up project data and ei~gii~eerii~g details.

.as

Construction Schedule

As the cc>nstnrctionschedule has a definite impact on other schedules, and as construction activities consume most of the man power employed in the project, ii~cludii~g the entire field labour, the construction schedule should be finalised first, among all individual schedules, and parlicularly before manpower scheduling is taken up. Important points to be borne in mind while scheduling construction work are availability of construction drawings and materials and the possibility of mobilising economically the reyuired workforce. What is particularly important in constructicm scheduling is the integration of mnstructio~~ schedule into other schedules for overall success.
Manpower Schedules

Master manpower planning is reyuired for : (a) (b) (c) (d) Project management, for the project duration, Construction, till the completion of construction, Operation and maintenance, permanent, and Management and control, permanent.

I 1 1 the interest of timely planning and implementation of the project, you must ensure availability of the reyuired numb& of ths: right type of staff and workmen for the project management and construction, suiting the overall project schedule. For assbiing and fixing the manpower requirement with reference to programmed q&u>tityof work, usually the same nornls are used as were used for Detailed Project Report or historical figures of the enterprise andor the industry average, checked and confirmed by experienced executives. One shbuld always keep in mind following points while preparing the Manpower Schedule :
-

Uileconomical peaks and valleys in the employment levels. Levels of supervisory and administrative staff in proportion to the levels of workforce.

--

, - Usage of rare skills.

Once the manpower schedule is finalised, action shall be initiated for time phased recruitment and training so that according to the demand of the work, the required number of men of the right type are available.
Construction Equipment Usage Schedule

Normally, a large project will need a large number of construction equipment of different types and capacities for material handling and construction. So a schedule for their proper usage with reference to the schedule of the project work bifurcating it between "to be provided by the owner" and "to be provided by contractors" and then initiate steps for their deployment.

Ordering and Delivery Schedule for Incol-porated Equipment and R/lateri:~ls For all equipment and materials including bulk ~naterials that go into t11c olccl. separate exllaustive lists should be prepared first. for guidance i l l s c h c ~ ( l u l u 111cir ~~ ordering and receipt at site. The total "procurement ti~iie"plus 2u1y poss~l~lc~ \lippa~tl time sllould be kept in nlind while ordering Ulc equipment a ~ l d ~liatcnalh 10srlir 1111' construction schedule. Based on the construction schedule. ;uid ;~llowi~ls I'or llle procurement time, time-phased schedules ol' indcnting and ordering. rolling/ma~ufacturii~g/fabrication, delivery 'and shipment, and sequellll;ll recc~pt a1 sitc of equipment and materials should hc prepared. Integration of Schedules All supporting schedules must be dovetailed appropriately into the ~ii;~s~'r cc'hedulc. Simil~ly the owner's lnaster schedule, the contractors' and their s u b ~ o ~ l l r ; ~ c ~ o r s ' lnaster schedules 'md the vendors' and their subvendors' Inaster schc(1ule~ 111uhl l~ integrated perfectly for overall smooth implementation. Such integr;rtion shorlltl I,e there even in short term schedules, right down to daily targets.

13.2.3 Project Budget and Fund Flow Status

In the study phase, budget and fund flow statement were made. Now they have lo he rechecked, revised where necessary, atid time-phased to suit the schcdult.. M;lslc~Rudyct and master fund flow statenlent must support the n~aster schedule, and the t1el;lilc~tl irctionnl budget and fund flow statements should support the time-phased work brcak clo\\111 itructurc and detailed schedule. While the budget is prepared on financial conmitn~i.~lt I,;r\is. 1untl flow statenle~lt is made on receipt and disbursement basis like a cash flow st;lteliicxllr.You nlust ensure that the funding agency or financial institution agrees with the bu(lycl ; r 1 ~ 1 11111(1 flow st;ltement and gives an assurance of fund flow before the plan is releahcd I'( 11 implementation.

I
!

13.2.4 Project Organisation

A good project organisation in which all individuals concerned constaitly intc.~-;rcl I or achieving project ob,jectives is vital for the success of your project. A project lean1 lakes over the project responsibility fro111 the study team as soon as the statutory clc~;~r;~~lcc.s ;ire obtained and funding arrangements made. In the scheduling stage what is gener.:~lly is to check and redesign the organisatio~~which was defined at the beginniny of tlic proiect when the study team was disbanded. In this stage, the organisation is given ;I more l'onii;11 character and strengthen with clearly defined responsibilities and conl~ne~lsuralc ;lutliorities. After defi~Iing the work and making the WBS, the exact size of the project tcam ; r ~ v lthe fornl of the organisation necessary to manage the project successfully can be dt.ter~lli~~c~tl. The size of the organisation shall depend on the work load, the specialisation i~ivolrcd ;rnd the conlplexity of the project. There are three different forms of pro-jectorganisation. They are as follows :

~unctional organisation, Divisional orgcanisation,and Matrix orgalisation.

*
*

Functional Organisation It is the traditionally centralised type of org,ullsation with line and stnfl \truelure. in which the heads of various functional departments report to the CEO for tlie~r respective speclalised functions in the management of the project as well (he enterprise as a whole. The Project Manager supported by a few 'area prolcct engllleer\ and clerical staff would function as a coordinator and report dally to the CE( ). Ttlerc nay he several Project M'magers for different work segments. This form of organisation would suit pure project enterprises whose CEO c;ul aftord to l'u~~ction virtually as the chief project manager, without other Inore ~mport:u~t business. Divisional Organisation D~v~s~o project ~ i a l organisation erlvisages well knit decentralised project nranagc~lient d~vi$~ons, each headed by a Prolect Manager or someone of eyulvalt.iit t~tle, uld dlvlded Into several sections. each under the charge of a senlor per\on ;rut1 ~nanlled by a yuahfied and experle~icedstaft of the appropriate levels. solely alltx,lted to the

I 4

I
i

!
!

prolecl. 'lhe Projcct Manager concentrates lotally on his pro-ject, withoul worrying resources about the general tnanilgement of the enterprise. Pro.jcct schedules a~ld butlgel are mostly enlrusted to the Project Manager with proper roles :11111 guidcli~~cs ivlnich require regular subnussion of reporls ti) the top managenlent. This form of propxl or~;~nis;ition would suit an enterprise which hiw only one projccl ant1 wherc idling resources have no profilable use elsewhere. Matrix Orgi~nisi~tion and Project Team
111 (his torm o f organisatio~l there are two distinct calcgories of pcrso~ulcl one. iLt lower levels. recruited solely for the particular prolect iund Unt: olhzr, depuled by ollner functional tlepart~~nent~ lo serve the project. Tlnc first category ~lormillly faces ter~ninntion o f enlploylllent at the end of the project, unless sonne of them can be absorhetl in the production and managemenl. The second category may serve more thiu~ o~lc pro.ject a t il lime according to the needs and practicilbility of U n e situation iu~d when thcir services are not needed in the pro.jects, they go back to their functional parent departments. When poster1 on the project department or at Ule site, to the Project Miluilger, but professionally and for they will report ad~ninisuatively specialist'irdvisc coutinue to report to thcir funclionill heads. O n the project they reprcsenr Lhe interest of their fulnctional departments and nught even disagree with the Project Manager in matters of schedules, budgets. ~jui~lity, etc.. 111i~ lnntrix organisatio~~ the pro-ject manager is, in effecl, a coordinator of various functions 1e;rdiug to the project inlplenlentalion.

SAQ 1
(11)

.discuss briefly the sleps of prcgecl management Wlnat

! '

(1))
(t.)

What iuc t11c various steps of progranuning functions ? the various steps of scheduling function ?
'?

(d)

W11;ct irre the dilYerenl forms of project org;ulisation

13.3 CPM AND OTHER PROJECT PLANNING TECHNIQUES

Planrnillg teclllniclues are scales and graphs by which time cost and performance are scheduled interrelated, measured and control. They play an important nlle in project management. The maln planning techniques used in engineering projects are :
-

Bar Chart. Network 'ulalysis consisting of three different closely resemhling methods. nalnely :
-

Precedence diagram method (PDM) Critical Path Metliod (CPM) Project evaluation and review technique (PERT)

Lune of Balance (LOB)

To understand the ciiscussioln in this chapter ru~d also to be able io read the network schedules of ;my project. One should learn the following terminologies and the symbols given below :
I

Starting or preceding event Finishing or succeeding Early start Early finish

. I

'ES EF

Introduction to Project ' Management

LS LF ST FT EET LET
FF
TF

Late start Late finish Stat time Finish time Early event time Late event time Free Float Total Float Scheduled Finish

SF AS Actual Start ,Actual Finish AF T Duration Critical path is the most important sequence of activities which have no 'floats' and which together determine the project completion period. The critical path is the longest path but at the same time, the shortest duration within which the project can be completed. Therefore, any delay in the critical path will correspondingly delay project completion. These are three conditions which make an activity, critical they are, (a) The early and late start time of the activity must be the same without il float. (b) The early and late finish time of the activity must be the same. The difference between the early start time and late finish time must he equal to the activity duration. Event is the point in time where one activity ends and another starts. It is geilerally a milestone. 1 1 arrow and ending at the head-end Activity is a cantinuing action starting at the tail-end of a that is between two events. Dunmy activity is the arrow used for showing dependency Forward Pass is the method of calculating earliest event time be inoving from the left to the night or from stxt to finish. Backward Pass is the method of calculating the latest event times by moving from tlie right +q the left or from end to the start. Float is the time available for delaying any activity without an adverse impact on the project completion period. Free float is the time of flexibility available which if used will not delay the early start of the succeeding activity. (c) T o w float is the total flexbility available in scheduling on a shareable basis. I Earliest time and latest time are the times for (i) (ii) the earliest possible startipg and finishing, and and finishing &any activity which is not on critical latest possible st-g path.
1

13.3.1 Origin of Bar Chart and CPM/PERT

Bar Chart, the oldest and still the most widely used 'timely scale' as a planning technique was developed during World War - I by Henry Gantt, an associate of F.W. Taylor, the father of sciendfic management. It is based on the principle of pre-determination and correlation of the quantity and duration of an activity, plotting them visually on straight bars, proportionate to calendar time or schedule time, with the planned quantity of achievement distributed as periodic targets and scheduled resources distributed as periodic budgets on either sides of the bars. CPM planning technique was separately and simultaneously developed but jointly perfected by Morgan Walker of DuPont Company and James E. Kelley Jr. of Remington Rand Corporation for use in their engineering functions. PERT was developed by the US Navy's Special Project office for-use in its defense projects. Both q e techniques were developed in
1958-60.

As the fundamentals and the uses of both the techniques are almost the same, the two have come to be referred together as CPMPERT. Both aim at time-quantity-cost trade off in performance; through planning, scheduling and.controlling. The one difference between the two is that while CPM attaches importance to activity duration, PERT considers events as deterministic.

Project Management

13.3.2 Detailed Study of CPM

You are by now convinced that as we are primarily concerned with the Indian context and her to the bar chart. But, within practice-oriented techniques, we have to give in~portance the permissible length of this chapter we will also take an overview of the CPM, precedence method, LOB and the computer based plmung methods. For detailed study you have to tum to some full - length books listed in the bibliography. One of the few good books I have studied during my research is O'Brien's CPM in Construction Management.

13.3.3 Precedence Network

Although network is generally synonymous with CPM, on a closer look you will find that the precedence diagram method (PDM) has distinct identity. This planning technique is comparatively simple. It is not confusing ui appearance like the CPM based on "activity on arrow" and is easily adjustable. It is a simple flow chart showing the sequence of individual tasks and integration of various tasks leading to the project completion on schedule. Figure is a simple precedence network of project study and clearances. Activity numbers and activity durations are kept out for showing it3 most simple fomi for easy understanding. But the arrows and the method of arrangement show the flow, the precedence, the sequence and the simultaneous activities. The whole diagram can be just fitted into a time frlune after estimating reasonable durations for accomplishing the activities. To understand the precedence Network one needs to h o w the precedence logic. The precedence relation would indicate the stage of the first activity at which the second activity can start.

Land Acquisitiou

Clearances

Figure 13.1 :Precedence Network Diagram for Principal

re-~m~lementatiokal Project Activities

In the figure, we have assumed that the activities in the right side row are starting at the end of the activities in the preceding left ride row. Tllis relationship is finish to start (FS) type. The nomenclature and assumption to be used are as follow : SSij - denotes a start-to-start constrai~lt, which means the preceding activity (i) must be complete prior to the start of succeeding activity 0). FFij - denotes a finish-to-iinish constraint, and is equal to the minimum number of time units that must remain to be completed on the succeeding activity (j) after the completion of preceding activity (I). FSij -'Denotes a finish-to-start constraint, and is equal to the minimum number of time units that must transpire from the completion of the preceding activity (i) prior to the start of succeeding activity (j). SFij - denotes a start-to-finish constraint. a i d is equal to the minimum number of Linie units that mu$tianspire from the start of the preceding activity (i) to the colnpletiofi-of the succeeding activity (j).

Introduction to Project
Management

13.3.4 CPM
CPM networking can be done manually in small projects with a few hundred activities. and computer based ir~ large projects with thousands of activities to be planned individually and with total integration.
A detailed network by CPM can he developed only after three things are dolie as the first step. They are as follows :

* *
*

Definition of the project scope in full Prepkation of WB S Listing of activities, down to the bottom level elements which have t o be handled separately and have an influence on the completion of the prolect.

The subsequent steps are as follows : * Arrange the actiyities in logical sequence and number them in liilo wit11 lhe codification scheme developed. * Link h e activiti s in a network form with reference to logical relat~onarid dependency, us$ lines and circles.

* Identify key actiQitiesand milestone events and mark them prominently

Placc: the sequential numbers of events and milestones in the circles. Ensure that either the activity descriptions are written on the liiiec o r there is a list of them whose code numbers are written on the lines. Estimate time durations, start-finish times and floats for all activities :uld milestones and enter them in the network. Mark the critical path. ~ h r o u the ~ h above,steps you have made a draft summary network or a illaster network plan readv. Check the draft to ensure perfect logical relation, accuracy in time estimates a ~ selection d of milestones, and technical and logical correctness in the determination of critical path. Redraw the networu's b i r copy in a calendar frame or a project time franle. From the finally drawn summary network, make detailed subsets for different work segments or packages and fragments for lower level activitlrs a n d short-term targets. Make out detailed schedule of resources in a b ; chart ~ or tabular chart tallying with the CPM network.

*
* * *

Figure 13.1 is CPiM master netwo* for aThermal Power Station. The network is set in calendar time frame with activity durations indicated by the calendar time scale. CPM diagrams are used in project w a g e m e n t for the following applications in particular Overall Planning. Scheduling and milestone network. Tracking project progress by regular monitoring and periodic updating.

13.3.5 Line of Balance (LOB)

Line of balance (LOB) is a graphical technique used in project planning to depict time-quantity relations. Like PERT, LOB also was developed by the US Navy for its own use, in the first half of the 1950s. In India, LOB is not very popular. But it is a very simple technique and can be used for scheduling and progress tracking in the following types of projects : (a)
(b) A project with several independent identical units using many identical components. A big project with a large volume of identical materials used in several work segments.

(c)

A project consisting of several units with repetitive sequential operations like marking, cutting, rolling, welding, assembly testing and erection.

LOB enables the optimum utilisation of resources, improvement of work efficiency and interference-free scheduling of wide range of activities.

SAQ 2
(a)
(b) What 'are the main planning techniques used in engineering projects
! '

Define activity. How the logical sequencing of activities is achieved in iletwork ? What are the main application of CPM network analysis ?

13.4 PROCUREMENT AND MATERIALS MANAGEMENT

Project overruns attributable to delay in the supply of critical equipment and materials are defects, incorrect specifications, belated very common. Delayed delivery, mat~ufacturing replacements, pilferage, shortage, etc., are common problems in almost all projects. A vigilant project management can ward off much of these problems by proper planning and control of procurement and efficient post-procurement materials management. Project procuremcnt :uld materials management (MM) cover the following functions :
Procurement

(A)

Material scheduling, covering :

(1)

critical equipment and bulk materials, divided into : (a) mechanical, (c) instruments. (e) construction equipment, and (b) electrical, (d) refractories,

(0 civil engineering materials and other bulk materials.

(2)
(3)

project consumable raw materials and feedstock lubricants, spares and manufacturing consumable indenting Buy or make decision bid documents preparation asking for bidstquotations bids evaluation acceptance and approval order~ng vendors' confirmation inspection, testing, and quality assurance risk-purchase contingency plans

. (4)
(B)
( 1)

Procurement planning, covering : (2)

(3)

(4)

(5)
(6)

(7)

(8)
(9)
.
( 11)
'

(10) expediting

(12) expediting (13) ex-factory delivery

( 14)

packing and dispatching

( 15) insurance ( 16) transport and clearances

(17) receipt, checking and tallying

( 18)

transit damagetshortage reports

(19) replacement

lntrotlurtbo to Project Malragenle~~t

(C)

Logistics planning Procuren~ent budgeting Imnplemnentation of the plans' Observance of legal requirenlel~ts and documenlation
a

(D)
(E)

(F)

ater rials Management (MM)

MM covers storage x1.d control of the tlow of materials troni UIC 011-site dclivery point to the sites of consumption, or use, or incorpor;~li(.)n. Procure~nttl~l ;rlitl V M are tlle interface between the demand and supply of nia~t.l-i:fis. LO ensure suuc.~~ss o f thc project.
Q

Efticient procurement and materials managemell1 are central to project \ucct3sv. Timely on-site delivery of materials to suit the construction schedulc w ~ l pr~~atly l avoid lilne overrun. clost. c.onl~ol 011 Appoximately 60 percent of the project cost is s p n t on ~naterials. procuremellt cost is necessnry for controlling the overall prolect cosl.

13.5 CONTRACTING AND CONSTRUCTION MANAGEMENT

While all project activities are directed towards a successtul coi~structlon imd (IF). tlic three major tasks in project implelnentation are : engineering, procureinenl ant1 L( ~ I I \ I USiIol]. I Construction is the process through which the engineering. matcr~als ;uid lIlillll,(l\\lcl ,rrc converted into the physical inqtallatio~~, capable of producmg the goods OI ~ ~ I I, IC I I III ' - ~ rlle services envisaged in the project report. Contracting is the prcxess of establishing a relation between the owner alid tlil* corlt~ ;~clor . ; to execute the project work, mainly construction. It has Inally legal and colnnit.lcl;rl I;lcet\. and therefore, its handling calls for specialised knowledge and pract~cal expel ~ c ~ i c ~

13.5.1 Contracting Approach

There are several approaches in contracting. Some of theill are given helow
\

* *

Entnlst the total respcmsibility for engineering, procureineut ;rucl c . o ~ i \ l i u c t ~ o ~ ~ to a consortium of contractors with an integrated total respo~lsihrl~l) . w~lll the consortiurn dividing the supplies and work among its n~enibers Divide the prolect broadly into (i) engineering and supervision. ( i i su]j,lics. and (iii) construction, and then entrust engineering ~ I Csupervisio~~ ! 10 all engineering consultmt, supplies to one or more vendors and C O I I S ~ I - U L ~ I Oto II one or more contractors. Break down the total prc!ject into severill work packages witli or ~tllout engineering and design, and give each package to a competent conll;rc.ror or a consortium of contractors.

: V c c o n l p l i s h a portion i ) t the work yoursclt with your own ciepi1rt11ici1t~11 organisatloll and colitract out the balance to one or Incxe agellcle\

13.5.2 Contractors' Role

Contraclors are of various categories. S o n ~ are e specialised project designers. luirrluyers. suppliers ; u ~ d erectors with vast resources at their conunx~d: some are only supl)lic5r s auil erectors o f equipment: s o ~ n e others arc Illere constructors who provide ilieir o u ! c~luipnletlt. ~~ labour force and supervisors; yet some others are Inere labour contractors. Ruyr.;u-cilchs 01' the type, once lie is elltrusted with a work, cvery contractor becomes a providcl- 0 1 ' \kill ;~~ktl/or resources and undert;rkes the responsibility for the accon~plishment of the wol.k c.~i~r-a\lc~tl LO him.

13.5.3 Types of Contract

The popular lypes of contracts are

*
*
,

Turnkey contract Product-in-hand contract Remeasurement contract

--

*
* * * * * *

Lump-sum works contract Item rate contract Cost-plus contract Piece rate wdrk Labour supply contract Hybrid contract Fixed price and variable price contract

Project Management

13.5.4 Contracting Procedure

The usual steps in contracting are as follow * WorkPackaging. * Preparation of tender document. * Determination of the contractor's capability to undertake the work package.

* * * * * *

Pre-qualification of the contractors. Incitation of the Tender. Tender submission. Tender opening. Evaluation and recommendation. Approval. Signing of agreement with detailed contract conditions.

'

* * Award of Contract.

Construction management (CM) is the practice of the critical functions necessary to accomplish successfully the physical building of the project. Construction is the largest pmject phase and it encompasses all management practices which should be studied and planned in &tail before you launch the work.

13.5.5 Objective of Construction Management

CM's sole objective is the translation of drawings and specifications into their material form, capable of producing or generating the product or service that is the end-result of the project. such translation has to be within the scheduled time frame and estimated cost, observing the specified quality standards.

13.5.6 Definition of CM's Scope

Depending on the organisational structure and responsibility distribution of the enterprise, there can be some amount of overlapping of the scope of work between Project Management and Construction Management, the former functioning principally from the corporate office and the latter from the project site. Generally, the ownet's scope of CM would cover the management of the following aspects of implementation :

* Construction planning and site mobilisation * .Constructionscheduling

/

'

* * * *

Site prep&ation and setting up of temporary facilities to enable contractors' smooth working Building of site offices~and store sheds fot the owner Employees' township Transport Communication Canteens Statutory registrations Provision of fabrication and construction drawings and documents

* *
:

Introduction to Project Management

Sequencing of work Consuucticm budget control Control of construction schedules and milestone achievements Staffing and organisation Procedure manuals ~abo:r force planning Productivity Spot planning or micro planning at the site Materials planning Constructl,.- ..,ik including heavy rigging studies Site fabrication Construction management Local purchases Repairs and rectification's Risk m'magement and insurance Safety and security Environmental care Industrial relations Law and order of site Contractors' working facilities Owner - contractor relations Foro: account (departinental work) General office and site accounts Work supervision and field control Progress monitoring and reporting Accounting for materials Contracts administration Extra work and change orders Claims and disputes

* *

*
*

*
*

*
*

*
*

*
*

*
* *
*
*

In most cases, project construction is entrusted to contractors who have the required skill, experience and resources. An owner might execute the project construction hinlself, but even then he may engage labour contractors. Contract documents must be drawn up nleticulously avoiding ambiguities and h~ilt-in disputes which may embitter the owner-contractor relationship. Good rapport between the two is necessary for getting the best performance from the contractor which is iinportant for project success. Construction is the process of translating the plans, specifications, materials and Inanpower into the physical facility, capable of producing or generating the project's end-product, service. Construction is the longest project phase ,md the largest group of activities 11s macro plan or master construction schedule is prepared at headquarters. Micro plans or detailed short-term plans are prepared at the site.

13.6 PROJECT CONTROL

Here an effort has made to apply to the total project performance through proper controlling and information system with the necessary ch'mges during the course of execution. The of : Estrrhlishing basic control process in any industrial activity is a three-step functio~ performance standards - Measuring the performance against the standards - Correchng Deviations, if any, from the standards. Controlling the factors of time, cost and quality leading to project success, calls for a great deal of seriousness on the part of the

management. It also requires the involvement of people at all organisational levels of the enterprise.

Project LMilal~agen~ent

13.6.1 Time and Cost Control Tools and Techniques

,

The first major task in Time and Cost control is to plan and break down the project into sinall and manageable segments and develop from them the master scl~edule and milestone network on the one side, and the master budget on the other. These two are the major tools to control the time and cost factors of the pro.ject performance. Various schedules used for Time and Cost control shall include the following :

*
*

Master time schedule Engineering time schedule Procurelnent time scliedule Coilstruction time schedule Commissioning time schedule Schedule of e~igineering man-hours Schedule of procurement man days Schedule of project team man days Schedule of construction supervision man days Schedulc of direct field labour dgys Integrated schedule of critical equipment with time phased budgeted cost Integrated scbsdule of bulk inaterials with time phased budgeted cost lntegrated schedules of other equipment and materials with time phased budgeted cost Integrated schedulc of engineering by disciplines, with man-hours and time phased budgeted cost
'

*
* *

* * *
*

*
*

*
*

*
*

Labour, equipment and other resources schedules with i~ldividual budgeted costs Time phased budgets for corporate office expenditure, technology acquisition and other sundry costs

Besides the above mentioned schedules of time and cost several other tools of assumptions, basic data, and output information are used in time and cost control at various control prints. At different operating levels, important data are collected and suitably converted into +managementinformation and sent up for use in decision making. Some of these are enumerated below :

*
*

.Progress reports Repeatedly-reviewed and update completion forecast Targets of percentage coinple~ion per project day/week/month, aimed at achieving the overall schedule Total project cost per project man-hour Total project cost per project day/ hour Total project cost per engineering man-hour Total project cost till the achievement of every important milestoile Progress build up curves for :
-

*
*

* * * *

total project implementation engineering, design and drafting purchase ordering on-site deliveries of equipment and materials construction

111trucluctir111 to Project Manage~ile~lt

Cost build up curves for

-

the total project engineering, design, and drafting procurement, by commitment construction

- procurement, by expenditure
-

* *

Fund flow curve Contingency run down curve or chart

The extent of control exercised and the type of control tools and data used for the purpose will depend on the size, complexity and the category of the project, and also on the ~nanagement's philosophy on controlling. In all cases, however, a monthly'tabular report on progress is a usual exercise. It niay or niay not he accompanied by : (a) (b) (c) (d) (e) cost status report, cysttrendreport, changes/contingency by rundown report, manpower histogram, completion,forecast report, iuid bottleneck report.

(0

13.6.2 Decision Making as a Control Function

The members of t'ae project organisatioqlmustknow the process of decision making and the impact of such decisions. They should make individuallteam decision in time. not letting the project suffer because of delayedldefective decision. funds and In spite of the best possible control system and the timely availability ot sulfic~ent resources, a project can fail because of wrong and/or delayed decisions. Whilc wrony decisions mostly emanate from Ignorance, or lack of correct information. or mexpcl lrnce. indecision's and delayed decisions are generally attributable to lack o f comnn~ltrneut on the part of the executive responsible for decis~on ~ruking. Lack of clarity on the extent ot authority and power also can contribute to the malady of indecision's. The process is graphically explained in the Figure 13.2.
4

FEEDBACK

-+

Identification with Reference to Objectives

Decision and Evaluation of Their 1nlpact.s

Eliminatiori Process

Approval anti
Adoption

REVIEW

Figure 13.2 :Decision Making Process

13.6.3 Time Crashing Economy Analysis

Time crashing is one of the common decisions to put delayed projects hack on lr,ich. Generally, in making quick decisions on crashing, the overall economy 1s not al~illysecl. as a result of which the owner or contractor pays considerable amount of crashlng coqt t o r n o corresponding benefit. I~nportarlt points to be considered in the time crashlny drcislons are -as tollows :

Wether the toial project scbedule can be inlproved by crashing the schedule of one or two lnd~vidual tasks o r segments.

* * *
:

Whether by shortening the schedule of olle or Inore individual tasks, there will be any otller kind of benefit like resources withdrawal possibility 'md clearing the depelldeilcies of other fast progressing tasks. Wllether the product profit generated by the saving in project time would pay back the crashing cost. Considering the comparative economy of cost and benefit, is it worth resorting LO a time crashing exercise on the total project schedule ? .%partfrom the financial benefits. will there be any other econonlic or social benefit accruing from the crashing efforts ?

13.6.4 Information Reporting System

Infor~natioo is the first requirement of all good decisions on pl'miing, organlsing, directing and controlling. Information is made available through reports. So an effective system to give illfornlation on all vital aspects in a structi~red ~naruler at daily/weekly/monthly frequency is ;I nlust for the success of the project. Progress of work and adherence to schedule by all agencies resources utilisation, inspection, quality, bottlenecks, milestone achievement.\. human aspects, social aspects and all other issues which are considered to have 'm impact on the project nlust be covered by the reporting systenl designed for the project. Some essential requi~enient of Project M;ulagemeut Information System is given below : - ,a report on achievement arid deviations sliould be quick hitting.
-

IL should

contain tile appropriate infornlation with required level of accuracy.

it shouldStrive to pinpoint niot causes with accuracy ancl even suggest tllc possible preventive/ corrective actions for lnanagemeiits consideration.
11

should elicit people's involvement at all levels.

13.6.5 Risk Management as a Control Function

A project is exposed to several risks which include risks arising f r o ~ n market changes, operational aspects, social and envirollmental issues, legal and regulatory controls, and Lhe like which ;ue more external to the enterprise than internal. Tllose apart, there are several internal and exterllal risks of technical and legi,l types, botli predictable and unpredictable in character. Thcy include political and environlllental risks, design-related risks, supply-related risks. construction-related risks and acts of Gtxl, running through the entirc life cycle of the proeject.

An enterprise does not always insure against all types of losses and damage nor are all classes of risks insurable. What is usually done is to identity the total risks, analyse them nnd classify \hen] on the basis of their significance then take risk avoidance ru~d mitigation measures, ant1 out of tlle remaining insurable risks retain the insignificant onesto self as self-insurance or-include in contractors scope and filially transfer the serious ones to iilsurers under various classes of insurance policies. Risk shall be analysed with reference to their potential impact on the project and classified in the order of severity. Risk management strategies liavc to he forniulated for avoiding risk and reducing their impact. Insurable and uninsur;rhle risks liavc to be categorised and treated separately, and a.stmtegy formulated for managing every class or category of potential risk separately. Risk shall be analysed with reference to tlieir potential impact on the project and classified in the order of severity. Risk m;ulagement stategies have to be forniulated for avoiding risk and reducing their impact. Insurable and uninsurable risks have to be categorised'and treated separately, and a strategy forniulatetl for nlanaging every class or category of potential risk sep'arately.

13.7 SUMMARY
Thirlliillg ahead and Iooking ahead into the pro-ject implementation, based on experience and slalistics ;in overall plan is developed. identifying all key tasks to be accomplished and nlilcstones to he acliicved with start a i d finish dates. From this overall, taskwise a i d resourcewise consoliclated and detailed schedules are prepared. These schedules are need for procuring ccluipment and materials, organising the required resources and also to sequence and measure task perf(ir1uance. In measure of task performance contrt.~k,plays a vital role to cc!mbal the pro,iect overrun in terms nf time, cost and yuality standard as envisage during the -preparation -of Detailed Project Report or Master Schedule.

I
I

Introduction to Project Manngen~ent

13.8 ANSWERS TO SAQs

SAQ 1

(a)

Projsct Management is a concept and tool which converts the prc ) I ~ L ' I abstraction into project reality channeling its endeavour through t l ~ c llollow major steps : (1) (2) Planning Programming Scheduling Organising Budgeting Controlling

(3) (4) (5)

(6)

(b)

Programming is the succeeding activity of Planning which ii~vol\~r's ~IIC' following steps
(1)

Listing of main work elements Definition of the work element Breaking down the work element in structured manner Codification of various work element Modeling the work element Fixation of sequence 'and priority Fixation of activity duration

(2) (3) (4) (5) (6) (7)

(8) Identification of critical activities.

(c) Scheduling is the succeeding activity of Programming and involvcs thc following steps :

(1) Forward and backward scheduling

(2) (3) Resource Assessment and Matching Preparation of Master Schedule and Master Budget Preparation of Coi~struction Schedule Preparation of Manpower Schedule Preparation of Ordering and Delivery Schedule for Plant ;uld Equ~plnent

(4)
(5) (6) (d)

(7) Making integratioq of all the schedule. There are mainly three different forms of project organisatiotls. v i 7

(1) Functional Organisation

(2) (3) SAQ 2 (a) The main planning techniques used in Engineering Projects iirc : Divisional Organisation Matrix (-lrganisation.

(1)
(2) (3) (4)

Bar Chart Precedence Diagram Network Critical Path Method Project Evaluation and review technique Line of Balance

(5)
/

(b)

An activity is any portion of a project which consumes tiine or resouices and has :I definable beginning and ending. Activities may involve li~l>ou~. paper work, contractual negotiations, machinery operation etc. A network is a graphical representation of a project plan showing Ule interrelation ofthe various activities.

(c)

(d)

. The main application of CPM are

(I)

Project Ma~~agement

(.)verall Planning. Scheduling and milestone network. Monitoring of project progress and periodic updating.

(2)

(3)