Project Management Assignment

Enercon India: Project Planning

Submitted to: Vivek Raina

Prepared by: Nishant Jalu Lokesh Joshi Prashant Patil Sumeet Parmar

Q2:
Explain negotiation with possible outcome, describing in the form of the decision analysis form. What can Prithviraj do in the said scenario?

Problems:
Villagers in Jangpura obtained a stay order from the court Villagers were under impression that the wind turbine generators being constructed near their agricultural land would affect the growth of their crops Villagers were greedy and not fear of stunted crop growth. Delay beyond September 30 would imply that the client could claim only half of the 80 per cent depreciation benefits during 2003-04. Heavy rains disrupted the movement of trailers carrying WEC equipments from Daman to the project site. The 220 tonne crane was yet to be repaired. WECs would be erected and commissioned before September 30. Any failure in this delivery commitment would mean that EIL would have to make good the financial loss suffered by the client. Negotiation: The Nawapur site was on private land and EIL needed to negotiate with each landowner. The land acquisition part of a project generally takes about four to five months and comprises several rounds of negotiations. The speeding up of this process meant that the villagers could gauge the desperation of EIL in clinching the deal. Consequently, the land prices went up. EIL estimated that it had to finally settle for prices which were about 30-35 per cent more than the normal rates. The total land cost was about Rs 15 million for300 acres. There are two indirect negotiation which can be done. 1) Purchase a new 220 capacity of crane or wait for the repair.

2) Completion of work with in time limit

Q3:
Explain in detail the outcomes and learning in context the project management and management. What information system can be used in scenario like this? Is cost benefit analysis feasible in this type of conditions?

OUTCOME AND LEARNING IN CONTEXT WITH PROJECT MANAGEMENT

LOCATION / SITE SELECTION It is very important to select right place to build WECs for better operating and maintaining. Nawapur site is on private land thats why various legal implications arise. So it is necessary to collect all necessary permission from GEDA and district collector and villagers.

PROJECT TIME Project timing for nawapur project is e June end to 30th September. In this time, there is a monsoon season. So it is a difficult to work in heavy rain fall and high wind. If the project is not finished at sep. end, client will be losing half depreciation, tax benefit and wind power benefit.

PROJECT COST The cost of the nawapur project is 600 million Rs. If project is not finished within time period, client will

be investing more money for extra working day to finish. Due to this company suffer financial loss.

TOTAL QUALITY MANAGEMRNT OF PROJECT There is requirement for quality work in WECs project for better result. So it is necessary to complete work within limited time and resources for company growth. More importantly, it would not affect the customer confidence in EILs ability to handle wind energy project from concept to commissioning and beyond.

WORK BREAKDOWN STRUCTURE At the first level of WBS there is a 13 activity involved in a nawapur project. Such as Land identification and acquisition Micrositing and planning Approach road formation Foundation casting WEC delivery Tower delivery Blades delivery Machine eraction 11 KV overhead line Pre-commissioning of WEC VCB and metering yard construction VCB and 11kv line charging Commissioning.

At the second level of WBS, there are sub activities involved in a project.

 Make land sale deeds with owners. Apply to GEDA with copy of land deeds. Clearance by GEDA. Micrositing. Planning of power evacuation and approach roads.

ORGANISATION BEHAVIOUR TOWARDS PROJECT EIL believes in from concept to commissioning and beyond so it is necessary to company to finish project within time period and with quality work. SYSTAMATIC APPROACH / INTUITION APPROACH Company follow various system likes ERP and SAP and WBS system for planning of project. In Nawapur project there is 3 month time for project. So Prithviraj take some decision based on their intuition and his past experience in last 7 year.

RISK OF PROJECT There is a possibility that project will not be finished in prescribed time because of agitation of villagers for extra compensation for their land. The cost of the nawapur project is 600 million Rs. If project is not finished within time period, client will be investing more money for extra working day to finish. Due to this company suffer financial loss.

 PROJECT TEAM There are four project team and each work at different site. One project team has 26 member including deputy manager civil engineer, supervisor and trainee engineer. Storekeeper and commissioning team each team managed their project independently.

PROJECT CONTROL SYSTEM Company follow various system likes ERP and SAP and WBS system for planning of project. Company control their time, cost, quality, resources, employees and teams

OUTCOME AND LEARNING IN CONTEXT WITH MANAGEMENT

HUMAN RESOURCES HR management in projects is a systematic exercise involving HR estimation at the planning stage, hiring/deploying the project team during execution, and motivating and managing the team which is a monitoring and control process. HR planning appears to be inadequate at Enercon. The organization of the project team is not conducive for effective and efficient project management. Two glaring omissions are the absence of procurement coordinator reporting to the project manager and a crane specialist at site. HR planning should also be appropriately linked with other areas like time, risk, and procurement. In this regard, if proper planning had been carried out as outlined in earlier paragraphs, the necessity of two erection crews for using two cranes simultaneously would have appeared almost mandatory. HR planning for the site project team should have been carried out accordingly.

PROCUREMENT MANAGEMENT As seen under risk management, continuous availability of 220 tonne crane, during the erection period, is the key to maintaining the schedules. On the positive side, Enercon did try to take care of the potential risk by contracting most of the 220 tonnes capacity cranes (4 out of 7 in India) available in the market on lease/hire. But, this is clearly not enough and the procurement policy of the company is questionable considering the Own vs. Hire trade-off analysis carried out in Exhibit-6. The Exhibit shows that the payback on the capital

investment of Rs 32 million on the 220 tonne crane is 3.9 years and IRR is 20 per cent. This indicates that it makes business sense to own at least one 220 tonne crane. Considering that Enercon has successfully implemented projects and should have accumulated adequate cash surplus, a proactive decision to purchase 220 tonne crane before the start of the project would have been in order.

INVENTORY SYSTEM & STORAGE MANAGEMENT Various part of WEC like blades, towers, WEC foundation parts, are difficult to sore and managed at project site. So taking step for inventory management is necessary for company.

OPERATION MANAGEMENT Various operation happen in this company like land acquisition , land identification , maintenance of WECs site , commissioning of WEC , interfacing with regulatory authority for required permission, preparing approach roads, construction of WEC, erection of WEC. so company managed all these operation. MANUFACTURING DEPARTMENT Manufacturing department is manufactured and managed WECs blades, WECs tower, WECs .they also export this machine to Germany and all over the world. So it is difficult to manufacture all required WECs.

SUPPY CHAIN MANAGEMENT Manufactured department at Daman manufactured and managed WECs blades, WECs tower, WECs. Then they supplied this equipment to the various project sites in India. They used trucks for loading of their equipments.

So it is very difficult to manage all supplied materials at right time. FORCASTING There is necessity to forecast the period the monsoon or heavy rain at the project site. So company focused on weather condition. There is necessity to forecast the sales of WECs in India. FINANCIAL MANAGEMENT The cost of the Nawapur project is 600 million Rs. If project is not finished within time period, client will be investing more money for extra working day to finish. Due to this company suffer financial loss. Due to the less time, it is possible to less NPV obtain which affect on EILs valuation. There is one alternative to purchase 220 tonnes cranes for company which is helpful in future. All cost regarding new 220 tonnes crane purchase will be compensate in three years.

COST BENEFIT ANALYSIS OF PROJECT

Yes, it is feasible in this type of condition. Assume that if the project is not finish in a deadline of 30th sep.2003. On that condition client does not get benefit from 600million project. Depreciation benefit (2003-2004) =240 million Corporate tax benefit at 30% Wind power benefit =180 million =7 million

(1.4million *5 Rs. Per unit) Total =427 million

Client looses the 427 million Rs. Because of not finishing the project within the time period And other additional cost attached with the extra days to finish the project. Assume that if the project is finish in a deadline of 30th sep.2003. On that condition client does get benefit from 600million project.

Benefits Client gets depreciation and tax benefit Company get profit from the project Market believes in that companys ability to handle wind energy project from concept to Commissioning and beyond.