Professional Documents
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PROJECT
MANAGEMENT
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Unit 5 Project Control – Checking Project Progress with Bell and "S" Curves .... 81
Unit 7 Project Procurement – Evaluating Bids for Major Equipment .................. 119
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UNIT 1 Project FeasibilityEconometric Model 1
Unit 1 Activity 1A
Model
its cost. (In case you have not
dealt any project, select/
formulate a project which will be
called “your project” in future
activities.)
__________________
__________________
Objectives
__________________
After reading this unit, you will be able to:
__________________
y Understand the concept of
__________________
l capital costs
__________________
l working capital
l operating costs __________________
y Appreciate the concept of product revenues and the interplay of __________________
economic environmental factors impacting project feasibility
__________________
y Determine techno-economic feasibility of a project
__________________
Capital Costs
The capital cost of a new project can usually be determined
with reasonable accuracy (say within 15%). Capital cost is
an extremely important number for two reasons: first, it is
required "up-front". The money has to be found and spent
many years before there is a payout. Second, the overall
profitability of a project is usually measured in terms of
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UNIT 1 Project FeasibilityEconometric Model 3
Figure 1.2 is the checklist of items that make the capital Notes
cost of a new project. Major items that make up the capital __________________
cost are: (1) Land and site development costs, (2) Engineering, __________________
procurement and construction costs and (3) Start-up __________________
(commissioning) costs. The land or the site costs should be __________________
noted separately since they will have residual value after
__________________
the end of the project life. For all projects there should be a
__________________
substantial sum set aside for start-up (say 15 to 20%). This
__________________
sum may need to be higher for new unproven projects and
could be less for established projects. A suitable contingency __________________
Working Capital
Figure 1.3 is a typical checklist of items that are considered
working capital. Working capital is also needed "upfront".
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Operating Costs
Figure 1.4 lists the typical items that go into the make-up of
operational costs. These are costs which, in general, are
proportional to the plant throughput. They are necessary to
run the plant.
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UNIT 1 Project FeasibilityEconometric Model 5
SR. MAJOR Notes
DETAIL ITEMS
NO. CLASSIFICATION __________________
Feedstock materials, Processing chemicals &
1 MATERIALS catalysts, Utilities, Maintenance materials, __________________
Operating supplies & consumables
__________________
Plant labour & supervision, Maintenance
2 LABOUR __________________
labour & supervision, Payroll, Additives
Administration, Lab, Technical, Purchasing, __________________
Inspection, Shipping, Personnel, Safety,
3 PLANT OVERHEADS
Accounting, Clerical, Shops & repair facilities, __________________
Cafeteria, Communications, Taxes & duties
__________________
Salesmen's salaries & commissions, Publicity,
4 MARKETING Samples, Travel & entertainment, Market __________________
research
__________________
Containers & packages, Transportation &
5 DISTRIBUTION
shipping, Terminals & warehouses __________________
General management & central technical,
GENERAL, OVERHEADS
6 Marketing & other activities, Legal & patent,
& ADMINISTRATION
Research & development, Public relations
Depreciation, Debt management, Maintenance
7 FINANCIAL of working capital, Credit functions, Interest
payments.
Product Revenues
The key objective of the project is to earn revenue from the
sale of the products. For the project to be successful, there
must be a secure market. The main features that marketers
will attempt to establish are (1) Is there a demand for the
products and will this continue or preferentially increase
over the life of the project? and (2) Will the price of the
products remain stable or increase over the life of the project?
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Activity 1D project has failed because although there was a need for the
Establish profitability of ‘your product, the buyers did not have the capacity to pay. Most
project’. What could be reasons astute developers will attempt to negotiate long-term "base
for lower profitability? load" sales contracts at preferential prices. They will find a
__________________ financially sound buyer who will take a substantial portion
__________________ of the product at a rate that is attractive and guaranteed
__________________ over a period of five or more years. This establishes a base
operating level and a base income for the project.
__________________
__________________ The operating level is also a key to project success. Large
__________________ plants benefit from "economies of scale". A large throughput
achieves higher operating efficiencies and also allows many
__________________
fixed or semi-fixed costs to be distributed over higher volumes
__________________ of product resulting in a lower unit cost. The theory of
__________________ economy of scale is admirable if there is demand for the
__________________ volume of product produced. Large plants can be big money
losers if they are not run at full capacity. In any feasibility
study, the level of plant operation is a major contributor to
overall profitability.
Economic Factors
Economic factors, in general, cannot be predicted over a long
period. These include the rate of inflation, interest levels,
foreign currency exchange rates, and the general business
climate. Interest, inflation and foreign currency exchange
rates can be built up in the econometric model to see the
effect on profitability. Different high/low rates may be
selected over the life of the project to determine the best
and worst that could happen. From this, the profitability
risk can be established. In some cases it may be possible
to hedge against adverse conditions by buying forward or
by incorporating adjustments or escalation clauses in
contracts.
Government Influences
City, state and central governments can have a major impact
on a project. New taxes may be introduced or existing rates
may be changed. Regulations may be passed, particularly
with regard to environmental concerns, that may require
additional capital expenditure and add to the operating cost.
Tax incentives may be made to competitors in another
location.
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UNIT 1 Project FeasibilityEconometric Model 7
Nothing can be done about future government influences. Activity 1E
The best that can be done is to pick up an area where the List out economic factors that
government seems stable. Look carefully at the history and could affect profitability of ‘your
check out all pending legislation. Select backward areas project’. Establish their trend of
changes based on the analysis
offering tax concessions over the life of the project. of data of recent previous years.
General Factors
u Row 1: Average Inflation Rate, per cent. This row shows
the predicted rate of annual inflation for the entire
project life of 13 years.
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YEAR VALUE 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1013
3013 VALUE
__________________ GENERAL FACTORS
1 Avg. Inflation Rate % 6 6 7.5 8 8.5 9 9.5 10 10.5 11 10.5 10 9.5 9.5
__________________
2 Compounded Escalation 1 1.03 1.061 1.101 1.145 1.193 1.247 1.306 1.372 1.444 1.523 1.603 1.683 1.763 1.847
Factor
__________________ 3 Plant Operating Rate % 100 0 0 0 60 70 80 90 100 100 100 100 100 100
CAPITAL COST
__________________
4 Land Cost $M 20 20.6 35.24
6 Working Capital $M 186.15 0 0 0 125.42 23.25 25.31 27.5 30.1 14.6 12.75 13.1 13.61 14.04 299.93
__________________ 7 Total Capital Cost $M 456.15 72.1 79.57 110.07 154.04 23.25 25.31 27.5 30.1 14.6 12.75 13.1 13.61 14.04 379.17
OPERATING COSTS
__________________
8 Feed Unit Cost $/BBL 26 0 0 0 26 27.3 28.67 30.1 31.6 33.1 34.04 36.5 38.41 40.33 46.13
__________________ 9 Cost of Feed $M 455 0 0 0 455 477.75 501.44 526.72 553.06 580.71 609.74 640.23 672.24 705.05 706.86
10 Utilities Power $M 2.52 0 0 0 2.12 2.43 2.75 3.09 3.46 3.64 3.84 4.04 4.24 4.44 4.44
__________________ 11 Utilities Water $M 0.53 0 0 0 0.44 0.51 0.57 0.64 0.72 0.76 0.8 0.84 0.88 0.93 0.93
12 Maintenance $M 10 0 0 0 8.43 9.63 10.91 12.26 13.72 14.44 15.23 16.03 16.83 17.63 17.63
__________________
13 Misc. Materials $M 15 0 0 0 12.64 14.45 1`6.36 18.39 20.57 21.65 22.85 24.04 25.25 26.45 26.45
14 Plant Labour $M 3 0 0 0 2.28 2.69 3.13 3.6 4.11 4.33 4.57 4.81 5.05 5.29 5.29
15 Administration $M 8 0 0 0 9.16 9.55 9.98 10.45 10.97 11.55 12.16 12.82 13.47 14.1 14.1
16 Total Operating Cost $M 520.05 0 0 0 516.07 544.31 574 605.26 638.21 670.26 704.05 739.4 776.37 815.03 815.03
REVENUES
17 Product A Base Price $/BBL 33.5 0 0 0 33.5 35.18 36.93 38.78 40.72 42.76 44.89 47.14 49.49 51.97 51.97
18 Product A Extra Price $/BBL 30.15 0 0 0 30.15 31.43 32.85 34.41 36.13 38.02 40.11 42.22 44.33 46.44 46.44
19 Product A Revenue $M 345.89 0 0 0 207.53 250.67 297.37 348.1 403.44 440.65 463.02 486.34 510.4 6 536 536
20 Product B Price $/BBL 32 0 0 0 36.63 38.19 39.91 41.8 43.89 46.2 48.74 51.3 53.86 56.42 56.42
21 Product B Revenue $M 196 0 0 0 134.62 163.73 195.54 230.43 268.84 292.95 298.51 314.18 329.89 345.56 345.56
23 Total Revenue $M 637.54 0 0 0 606.23 648.19 692.89 740.93 793.01 850.57 895.27 941.18 988.24 1036.39 1036.39
FINANCIAL PICTURE
24 Cumulative Cash Flow $M -72.1 -151.67 -261.74 -325.61 -244.98 -151.4 -43.31 81.39 247.1 425.57 614.17 812.42 1019.74 1398.91
25 Discounted Cash Flow $M -70 -142.96 -237.79 -284.45 -205.29 -121.41 -33.16 59.34 171.17 279.43 383.14 482.69 578.39 757.47
26 Annual Depreciation $M 22.5 0 0 0 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 0
27 Depreciated Book Value $M 250 250 250 250 227.5 205 182.5 160 137.5 115 92.5 70 47.5 25 25
28 Actual Annual Profit $M 94.99 0 0 0 67.66 81.3 96.39 113.16 132.3 157.82 168.72 179.28 168.36 198.86 1384.93
29 Discounted Annual Profit $M 94.99 0 0 0 59.11 68.2 77.29 86.63 96.46 109.32 110.78 111.84 112.51 112.79 944.92
30 Discounted Annual ROI % 20.02 0 0 0 12.96 14.95 16.94 18.99 21.15 23.97 24.29 24.52 24.66 24.73 20.72
LOAN ALTERNATIVES $M
125 CAPITAL + 250 LOAN
32 Cumulative Cash Flow $M -257.9 -193.81 -79.89 -10.38 85.85 181.15 292.09 420.89 592.1 777.62 971.67 1172.87 1381.74 1760.91
33 Cash Retained $M 375 257.9 193.81 79.89 10.38 30 60 100 150 210 250 290 320 342.47 375
34 Interest on Cash in Hand $M 15.47 11.63 5.99 0.03 2.55 5.4 9.5 15 22.05 27.5 30.43 32 32.53 210.91
35 Declared Annual Profit $M 0 0 0 0 55.85 65.3 70.94 78.8 111.21 143.32 154.05 171.2 184.4 1039.27
36 Discounted Annual Profit $M 0 0 0 0 46.8 52.36 54.3 57.45 77.94 95.55 96.1 101.72 105.73 687.05
37 Discounted Annual ROI % 0 0 0 0 37.44 41.97 43.44 45.91 61.63 76.64 76.88 81.37 84.5 54.96
Capital Cost
u Row 4: Land Cost, $M. The land cost of $20M is
expended in year 1 and also available as final
recoverable sum. The initial and final values are both
multiplied by the Compounded Escalation Factor (CEF).
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UNIT 1 Project FeasibilityEconometric Model 9
2, 40% in year 3 and last 10% in year 4. Expenditure in Activity 1F
each year is multiplied by CEF. The equation for the Prepare an econometric model
expenditure in year 3 (for example) is 250x0.4xCEF. The of ‘your project’.
final cost is the residual scrap value assumed as 10%. __________________
The final value is also multiplied by CEF. __________________
__________________
u Row 6: Working Capital, $M. The working capital is
estimated at $20M plus 2 months of feedstock and __________________
Operating Costs
u Row 8: Feed Unit Cost, $BBL. This is the contractual
feed for the 10 year period. The initial cost is $26/bbl
subject to a 5% increase each year. The cost in year N is
$26x1.05^N.
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Revenues
u Row 17: Product A Base Price, $/BBL. This is the
contractual price to be agreed with ABC Co. (client). A
value of $33.5/bbl is selected for the base case. This price
will be subject to an increase of 5% per year by contract.
The price in year N is 33.5x1.05^N.
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UNIT 1 Project FeasibilityEconometric Model 11
over the years in line with the escalation rate. The price Notes
equation will therefore be 33.5x0.9xCEF. __________________
__________________
u Row 19: Product A Revenue, $M. This value is the total
__________________
product A multiplied with the above prices. For years 1
to 5 = 15000xABC price + (30,000xPOR-15000)x Extra __________________
price. For years 6 to 10 = 25,000xABC price + __________________
(30,000xPOR-25,000)x extra price. __________________
__________________
u Row 20: Product B Price, $/BBL. It is assumed that
product B can be sold on the open market. The initial __________________
Financial Picture
u Row 24: Cumulative Cash Flow, $M. This value is the
cumulative sum of the total revenues (row 23) minus
the total expenditures i.e. total capital costs (row 7) and
total operating costs (row 16). Initially the cash flow is
negative due to initial capital outlays.
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Activity 1H life. Since both land cost and working capital are
Modify econometric model of residual, this value equates to plant cost minus scrap
‘your project’ by assuming debt value divided by plant life. There are different methods
equity ratio of 1:1, i.e. project
financing through 50% loan and
of calculating depreciation. This is the straight line
50% equity. method.
__________________
u Row 27: Depreciated Book Value, $M. This is an
__________________ accounting Figure and is equal to the capital cost minus
__________________ the residual value minus the annual depreciation to date.
__________________
u Row 28: Actual Annual Profit, $M. This value is the
__________________
total annual revenues (Row 23) minus the total annual
__________________ operating costs (Row 16) and minus the annual
__________________ depreciation (Row 26).
__________________
u Row 29: Discounted Annual Profit, $M. This converts
__________________ the annual profit in row 28 to the present day value by
__________________ dividing the actual annual profit by the compounded
escalation factor (Row 2).
Loan Alternative
The econometric model up until now has assumed that all
the capital needed will be provided by the XYZ company.
An alternative to this is to raise a loan with fixed interest
rate over the project life including the construction period.
The loan repayment will be fixed and can be considered as
operating cost. The balance of any profit and the residual
cost are then available to the company and can be related to
a lower investment cost.
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UNIT 1 Project FeasibilityEconometric Model 13
u Row 32: Cumulative Cash Flow, $M. This is the same Activity 1I
as row 24 except the project starts with $375M in hand Calculate ROI for the following
and $45M in interest is paid out each year. two alternatives of ‘your project’
financing :
u Row 33: Cash Retained, $M. Available cash initially - 100% equity
exceeds requirements. Later excess cash is retained to
- 50% equity and 50% debt
build up capital to pay off the loan. To compare the loan (loan).
alternative with the base case, the final cash retained
__________________
equals the loan plus investment capital, leaving the
__________________
residual value the same as the base case.
__________________
u Row 34: Interest on Cash in Hand, $M. The excess cash __________________
in hand will earn interest. It is assumed that interest __________________
will be earned at the annual inflation rate in Row 1.
__________________
u Row 35: Declared Annual Profit, $M. In this case profit __________________
can be declared at any level supported by the cash flow __________________
less the cash retained. __________________
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UNIT 1 Project FeasibilityEconometric Model 15
Simplicity and Flexibility Notes
__________________
The personal computer with a spread sheet can be used to
__________________
create a tailor made econometric model that can be as
__________________
complex as you want it to be.
__________________
Summary __________________
__________________
This unit provides a simplified method of evaluating
__________________
economic feasibility of a project by preparing its
econometric model on a PC. It also offers insight into __________________
Review Questions
1. Define most commonly used finance term involved in
developing a project.
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 17
Unit 2 Activity 2A
Write down the risk factors in cost
estimates of ‘your project’.
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Notes Definitions
__________________
The following are generally accepted definitions:
__________________
__________________ u Contingency: A provision for an occurrence dependent
__________________ upon chance, accident or uncertain event.
__________________
u Risk: Exposure to mischance, danger, hazard, injury,
__________________ damage, bad consequence or loss.
__________________
u Sensitivity: The quality of being keenly susceptible and
__________________
responsive to external forces.
__________________
__________________ u Analysis: A separating or breaking up of any whole into
its parts so as to find out their nature, proportion,
function and relationship.
u Fixed capital
u Working capital
u Operating cost
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 19
Project Subdivisions Activity 2B
Subdivide your project into its
00 Process Plants units or areas. Apply the
common code of accounts to
01 Crude Unit each subdivision.
21 Tankage
22 Distribution Systems
30 Civil Works
40 Miscellaneous Accounts
41 Spare Parts
43 Maintenance Equipment
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__________________ A1 Heaters
__________________
A2 Tanks & Vessels
__________________
__________________ A3 Heat Transfer Equipment
__________________ A4 Rotating Equipment
__________________
B Bulk Materials
__________________
__________________ B1 Civil Works
B2 Buildings
B3 Piping
B4 Electricals
B5 Instrumentation
B6 Protective Coatings
C Services
C1 Home Office
C2 Construction
C3 Miscellaneous
When each unit has been estimated in this way, then the
estimate for the total project is the sum of the unit cost
estimates. This can be assembled in a matrix as shown in
Figure 2.4.
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 21
Acct Description Material Labour Sub-Contract Total Activity 2C
A Equipment Prepare cost estimate of each
A1 Heaters unit of ‘your project’ in line with
A2 Tanks & Vessels Fi.2.2. Prepare ‘your project’ total
A3 Heat Transfer Equipment cost estimates.
A4 Rotating Equipment
__________________
Sub-Total
B Bulk Materials __________________
B1 Civil Works __________________
B2 Buildings
__________________
B3 Piping
B4 Electricals __________________
B5 Instrumentation
__________________
B6 Protective Coatings
Sub-Total __________________
C Services __________________
C1 Home Office
__________________
C2 Construction
C3 Miscellaneous __________________
Sub-Total
Total
PLANT
SERVICES
STORAGE
UTILITIES
TOTAL
MISC.
WORKS
ACCT DESCRIPTION
&
CIVIL
&
01 02 03 04 11 12 13 14 21 22 23 24 31 32 33 41 42 43
ACCT DESCRIPTION
A EQUIPMENT
A1 HEATERS
A2 TANKS & VESSELS
A3 HEAT TRANSFER EQUIPMENT
A4 ROTATING EQUIPMENT
SUB-TOTAL
B BULK MATERIALS
B1 CIVIL WORKS
B2 BUILDINGS
B3 PIPING
B4 ELECTRICALS
B5 INSTRUMENTATION
B6 PROTECTIVE COATINGS
SUB-TOTAL
C SERVICES
C1 HOME OFFICE
C2 CONSTRUCTION
C3 MISCELLANEOUS
SUB-TOTAL
TOTAL
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50 Order of magnitude
0 Original concept
Probable accuracy of estimate
20
Definitive
Detailed
10
Final
0 1 2 3 4 5
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 23
At stage 0, when the project is still in the initial conceptual Notes
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 25
Method of Determining Contingency Notes
__________________
The method of arriving at a reasonable contingency requires
__________________
judgment. So, it is desirable that a consistent logical
__________________
procedure be used in its development. The procedure should
separate what may be termed "average contingency" and the __________________
"maximum risk contingency," which would be the contingency __________________
required to cover the worst case. __________________
The average accuracy ranges are taken from the chart shown
in Figure 2.5 for each stage of definition. The probable
accuracy selected for a specific project will be within the
ranges shown in Figure 2.5 for each stage. Whether the
Figure selected will be at the top or bottom end of the range
will be determined by the variables and unknowns for the
specific project.
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Forecast Value, $
using the contingency sheet
% of Total Cost
Contingency, $
Contingency
Account No.
% at stage 5
% at stage 0
% at stage 1
% at stage 2
% at stage 3
% at stage 4
Description
% Normal
prepared earlier.
Normal
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________ Figure 2.7: Contingency Worksheet Form
__________________
Columns 1 & 2 on the left hand side of the form list the
equipment and bulk materials by code of accounts. The form
may be subdivided under material, subcontracts and labour
in a similar manner to the way in which the unit estimate is
built up.
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 27
percentages will tend to move through from stage 0 through Activity 2G
to stage 5. List out risk areas of ‘your
project’ in the form of Fig.2.7.
Column 11, the average contingency percentage for the Using your judgment fill out the
other columns to establish the
account, is evaluated using Figure 2.6 which has established maximum risk contingency.
a probable accuracy and hence, an average contingency, for
__________________
each project definition stage. The percent average
__________________
contingency in column 11 for the account number is a simple
__________________
calculation of multiplying the percentage in each stage by
the average contingency for the stage. __________________
__________________
Per cent Stage 0 x 0.30
__________________
Plus per cent Stage 1 x 0.20 __________________
__________________
Plus per cent Stage 2 x 0.13
__________________
Plus per cent Stage 3 x 0.08 __________________
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__________________
Sensitivity
Having carried out the contingency and risk analysis, the
last step is to do a sensitivity analysis. The term may be
interpreted in many ways. But in general, the requirement
is to determine cost areas which could change significantly
and which, in turn, would have the greatest impact on the
overall project cost which will be more sensitive to changes
in some accounts than others. For example, if one account
represents 1% of the total cost, then a 100% overrun in this
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 29
account will only effect the total by a maximum of 1%. On Activity 2I
the other hand, if another account represents 20% of the total Using the analysis so far carried
out and your judgment,
cost, then a 10% overrun on this account could affect the
establish a suitable contingency
total cost by 2%. Thus the total cost has greater sensitivity for ‘your project’. Give reasons
to this account than the first. for selecting this contingency
amount.
As the project proceeds, so sensitivities will change as some __________________
of the accounts become firm and committed. Sensitive areas __________________
will be those accounts which still have the largest dollar
__________________
values yet uncommitted and which require the largest
__________________
contingency.
__________________
The analysis of average and maximum risk contingency __________________
provides an effective means of establishing sensitivity. A __________________
quick review of the required average contingency and
__________________
maximum risk contingency against each of the account codes
__________________
will indicate rapidly the potential areas with high sensitivity
__________________
i.e. the cost accounts which may have the maximum effect
on the total cost forecast both in the areas of overruns and
potential cost savings. It is, therefore, a valuable exercise to
identify the highly sensitive areas. Following on from this,
one may introduce some additional surveillance with checks
and balances in these areas to attempt to minimize the
potential overrun and maximize the potential for reducing
the overall project cost.
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UNIT 2 Project Cost Contingency, Risk and Sensitivity Analysis 31
Summary Notes
__________________
This unit provides an insight into various risk factors
__________________
affecting project cost estimates. Concepts of average and
__________________
maximum risk contingency as well as sensitivity
__________________
analysis have been elaborated thus providing scientific
basis for contingency in project cost estimates. __________________
__________________
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UNIT 3 Initiating a Project 33
Unit 3 Activity 3A
Make a list of the major initiation
steps for ‘your project’.
Manpower Build-up
In order to build a plant, an Engineering & Construction
(E&C) contractor must spend money at the proper rate to
meet the required completion schedule. Money translates
to man-hours–whether it is home office engineering hours,
manufacturing hours or field construction hours. To achieve
progress, man-hours must be spent. On a project where short
schedule is of prime importance, calendar time can be saved
by selecting designs already completed, standard equipment
already fabricated, or material in stock. Even when these
methods are used, there are still a large number of hours in
engineering, manufacturing and construction which must be
expended during the project execution.
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UNIT 3 Initiating a Project 35
Major Initiation Steps Activity 3B
Establish a procedure for
As soon as a project has been awarded, a project manager communication with client.
(PM) begins a race against time as the leader of a team, when __________________
the team, the rules and the course may yet have to be defined. __________________
The initiation of a project puts great pressure on him to get
__________________
the project moving. Table 3.1 lists the steps in the initiation
__________________
of a project. The list is not comprehensive but shows the more
__________________
important activities of a project manager.
__________________
These steps do not necessarily occur sequentially. Several __________________
may occur in parallel. The list in Table 3.1 can be assembled
__________________
into an activity network as shown in Figure 3.2. All of these
__________________
activities should be undertaken within the first few weeks
__________________
of project award. Each of the above steps is described in more
details below.
Establish client
communication Issue project
channels design data
Initiate process design
2 4 8 9
Analyze Issue
Review Hold client Hold project preliminary preliminary Review
kick-off Prepare project engineering
precontract kick-off project
meeting project plan schedule plan
documents meeting estimate
1 3 5 7 11 12 13
Prepare
Determine project
project coordination
organization procedure
6 10 14
Review
construction
plan
15
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UNIT 3 Initiating a Project 37
Establish Client Communication Channels Activity 3C
Prepare an agenda for kick-off
If a PM is to maintain control over the project, he must meeting with client.
establish with the client that he is the official communication __________________
channel between the E&C and the client for all major aspects
__________________
of the project. During the proposal stage, contacts with the
__________________
client may have been many and varied from commercial,
__________________
project and process engineering, legal, financial and others.
Client may have become used to dealing with multiple people __________________
and expect to continue to do so. __________________
__________________
PM has to take over the scene delicately but firmly both with
__________________
the client and within his own organization. This ensures that
all future communications are channeled through him so that __________________
u Engineering
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Notes u Procurement
__________________
u Construction
__________________
__________________ u Administration procedures (approvals, controls,
__________________ reports, documentation, distribution, commercial).
__________________
Establish Project Procedures
__________________
__________________ A comprehensive project procedure is necessary for effective
__________________
project management. This procedure makes it possible to
organize and control the project in a systematic manner using
__________________
the instructions to identify and refer technical, planning,
__________________
reporting, accounting and administrative documents
produced throughout engineering, procurement and
construction.
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UNIT 3 Initiating a Project 39
and reporting. Too great a degree of subdivision merely adds Activity 3D
to work and confusion. The best solution is to have the Make a list of the project
procedures required for the
minimum number of sub-project numbers which will give
effective control of the project.
reasonable control. On a major multi-unit project, the
__________________
following breakdown is recommended:
__________________
u Overall project number for summary cost reports and __________________
common/bulk requirements; __________________
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General
Client
Management
Project Project
Management manager
Project
Scheduling
scheduler
Project
Estimating
estimator
Project Project
The functional engineering engineering manager
departments are ........
Process Project
engineering manager
Analytical Analytical
engineering specialists
lSystems
lequipment Project design
linstruments supervisors
Financial Financial
department manager
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UNIT 3 Initiating a Project 41
Hold Project Kick-off Meeting Activity 3F
Make a list of the project design
At an appropriate time, when the project scope has been data for ‘your project’.
properly defined, the PM should call a kick-off meeting. This __________________
meeting should be attended by E&C management, the
__________________
commercial manager, the functional department managers,
__________________
and the key staff selected for the project team.
__________________
The commercial manager presents the events leading to the __________________
project award. He highlights the key points that were raised
__________________
in the pre-award discussions and contract negotiations and
__________________
identifies outstanding items requiring immediate attention.
__________________
PM then reviews the project plan, recapitulates the
objectives, priorities and philosophies and establishes the __________________
u Electrical systems
u Climatic conditions
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Activity 3G Table 3.2 lists the typical items which should be included in
Develop a process flow diagram the project design data.
(PFD) for ‘your project’.
__________________ Initiate Process Design
__________________
Before engineering, procurement and construction
__________________ commences, it is essential that process design is completed.
__________________ The overall schedule is very much dependent on the speed,
__________________ accuracy and completeness of the process design. Hence, this
__________________ activity must be started as soon as possible. Process design
__________________ is normally started at the time of the project award and
proceeds in parallel with the other project initiating
__________________
activities. The process design package consists of the
__________________
following:
__________________
u Process flow diagrams;
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UNIT 3 Initiating a Project 43
l Safety requirements Activity 3H
Prepare a project co-ordination
l Economics for evaluation of alternatives
procedure for your project.
l Energy conservation and cost criteria __________________
l Equipment design philosophy __________________
l Philosophy for isolation and decontamination __________________
u Contract data
u Scope of work
u Client's responsibilities
u Approvals
u Engineering
u Procurement
u Construction
u Accounting
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UNIT 3 Initiating a Project 45
Each estimate, on completion, must be formally reviewed, a Notes
contingency, risk and sensitivity analysis performed (see __________________
chapter 2) and an appropriate contingency included as an __________________
integral part of the estimate. Items to be considered are: __________________
escalation, import duties, taxes, freight, insurance, changes
__________________
in foreign currency exchange rates and other miscellaneous
__________________
costs.
__________________
Issue Preliminary Project Schedule __________________
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UNIT 3 Initiating a Project 47
by the client before issue. Following on from the procurement Activity 3K
plan, detailed procurement procedures are drawn up which Prepare an engineering plan for
specify the purchasing forms to be used, the approval levels, your project.
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Summary
This unit lists out and details the important actions to
be taken by PM at the time of initiation of a project. The
most important steps to be taken are aimed at:
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UNIT 3 Initiating a Project 49
Activity 3M
- Draw up project master schedule and identify critical
Prepare a preliminary
path activities. construction plan for your project.
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UNIT 4 Project Execution Developing a Project Schedule 51
Unit 4 Activity 4A
List out the information available
for ‘your project’ out of the list in
l Material of construction
Contd...
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Notes
l Maximum size and extent of piping
__________________
l Major structures required
__________________
l Plant location
__________________
l Site conditions - approximate area of plot
__________________
__________________ l Labour availability
A Sample Project
For illustration purposes, the following typical project is
assumed:
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UNIT 4 Project Execution Developing a Project Schedule 53
u Equipment types - exchangers, pressure vessels, Notes
compressors, furnaces, towers __________________
__________________
u Long delivery items - furnace tubes, compressors, and
__________________
alloy exchangers
__________________
u Material of construction - mainly carbon steel but some __________________
alloy
__________________
u Piping - large bore pipe and also alloy pipe __________________
__________________
u Structural steel - major plant structures required
__________________
u Plant location - to be built on the US Gulf coast __________________
u Schedule constraints
Major Elements
The major elements or activities in any schedule are
engineering, procurement and construction. The first step
is to develop independent sub-schedules for each of these
major activities.
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Procurement
Procurement starts with enquiry requisition and when
material is received at site. The logic is simple. There are a
large number of similar, independent parallel activities. For
each of these there are a fixed number of sequential activities.
Procurement Cycle
The first step in the development of the procurement
schedule is to establish a "procurement cycle". It lists the
sub-activities which must be performed from the inquiry
requisition to purchase order placement and receipt of
vendor drawings. All sub-activities must be included even
though each one may only take a few days. Cumulatively,
they can add to substantially to the procurement schedule.
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UNIT 4 Project Execution Developing a Project Schedule 55
Figure 4.2 illustrates a chart used to establish the Notes
procurement cycle. The left hand column lists the major __________________
sequential activities. The chart is completed by assessing __________________
the number of working days required for each of the sub- __________________
activities. Working days are used in place of weeks to allow __________________
for the effect of weekends. Overall calendar weeks are
__________________
determined by dividing the cumulative working days by five.
__________________
Since durations differ for major complex equipment items, __________________
standard equipment items and bulk materials, three columns __________________
are included in the chart for three separate procurement __________________
cycles (1) major complex equipment (2) standard equipment
__________________
and (3) bulk materials (such as piping, electrical,
instruments, structures and civil).
ACTIVITIES DURATIONS
Complex Standard Bulk
NOTE
REF Durations are working days Equipment Equipment Material
Item Item Item
() are cumulative working days
A B C
0 0 0
1 Requisition Ready for Inquiry
(0) (0) (0)
8 5 5
2 Client Approval Received
(8) (5) (5)
7 5 3
3 Issue Inquiry to Vendors
(15) (10) (8)
30 20 15
4 Receive Quotations
(45) (30) (23)
20 15 7
5 Complete Bid Evaluation
(65) (45) (30)
10 10 5
6 Client Approval Received
(75) (55) (35)
5 5 5
7 Place Purchase Order
(80) (60) (40)
20 15 00
8 Receive Preliminary Vendor Prints
(100) (75) (50)
20 15 10
9 Receive Final Vendor Prints
(90) (60)
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Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Equipment/Material List
The first step is to list the major equipment and material
categories required. Durations are then added from
experience or by telephone contact with lead vendors.
Vendor's telephone quoted deliveries are usually their best
and most optimistic. Frequently, a vendor's quoted delivery
starts from receipt of approved drawings released for
fabrication and not necessarily from purchase order. Also,
promised delivery may be the day it is completed in shop
without allowance for inspection, witnessed performance
test, or transportation arrangements.
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UNIT 4 Project Execution Developing a Project Schedule 57
delivery promise which may be purchase order or approved Notes
drawings. __________________
__________________
The chart also allows for transportation/shipment to site.
Assessment of this duration may be difficult if the source is __________________
Construction __________________
__________________
Before construction can start, drawings and materials must
arrive at the jobsite. Thereafter, construction proceeds in
sequence governed by work's physical nature. Excavation
precedes foundations, which are followed by steel and
equipment erection. Piping, electrical and instrumentation
then commence in sequence, finishing with insulation and
painting.
Sequences
In general, construction activities follow a predetermined
sequence. They must follow one another in a set order like
building blocks. The field has little opportunity to be flexible
or adaptable. Drawings and material must be delivered to
the jobsite in the right sequence, ahead of the time when
they will be installed.
Man-hours
Figure 4.4 shows a series of typical overall construction
curves for one million labour man-hours spread over a
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UNIT 4 Project Execution Developing a Project Schedule 59
For the project under consideration, the plot area is 400x400 Activity 4C
feet, which equals to 160,000 square feet. The economic peak Prepare a procurement
manpower therefore is 160,000/200 = 800 men. schedule for ‘your project’
__________________
Field Labour __________________
Figure 4.5 (top) shows a series of curves for a range of total __________________
Therefore, P = (TxC/100)/(Hx4.33xMx0.1)
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UNIT 4 Project Execution Developing a Project Schedule 61
Labour Peaks Activity 4D
Prepare a construction
The next step is to look at the individual peaks for each labour schedule for ‘your project’.
craft. Figure 4.6 shows typical craft timing and distribution. __________________
This chart shows the percentage of total hours for each craft,
__________________
the start, finish and duration time and the peak progress
__________________
achieved for 10% of the craft duration. The previous formula
__________________
can also be used to calculate the craft peak.
__________________
Taking the piping craft, Tp piping hours = Tx40% = 520,000
__________________
hours
__________________
Mp piping duration = Mx0.8 = 14.4 months __________________
__________________
Cp peak piping progress for 10% duration = 16%
__________________
Therefore, Pp = (520,000x16/100)/ (40x4.33x14.4x0.1) = 334
This gives the peak piping labour force required for the
project.
Material Deliveries
The final step is to determine the required material
deliveries. All materials are required ahead of the craft
schedule periods shown in Figure 4.6. Figure 4.7 plots the
typical percentage progress completion curves for each craft
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Engineering
Engineering has been last until left because it is the most
difficult to schedule. For many reasons, the sequence of
engineering activities may not follow typical logic. It comes
down to priorities, preferences and discipline. However,
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UNIT 4 Project Execution Developing a Project Schedule 63
some sequence is applicable as process engineering precedes Notes
detailed engineering, some engineering is dependent upon __________________
the receipt of vendor drawings etc. __________________
__________________
If minimum schedule is the priority, many engineering
shortcuts can be taken based on conservative, empirical __________________
Orderliness
Even though engineering activity sequences and durations
may be radically altered or re-arranged by priority dictate,
engineering development must proceed in an orderly
progression. Secondary engineering or detail design must
not be permitted to start until primary decisions have been
taken. Nothing is gained in the schedule by out of sequence
working, resource is wasted and time is lost due to recycle.
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UNIT 4 Project Execution Developing a Project Schedule 65
Quantity Notes
__________________
The next step is to come up with some quantitative estimates
__________________
of the work to be done by key disciplines, by statistical
__________________
methods.
__________________
Total home office man-hours = 300,000 __________________
Critical Durations
In production design, these are piping and instrument
drawings. A balancing of key piping manpower availability
against the work scope of the 16 piping areas/40 key plans
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Master Schedule
For a first pass, set up a master project schedule format
assuming a project duration of 25 months from release of
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UNIT 4 Project Execution Developing a Project Schedule 67
the process design package to mechanical completion. Notes
Starting from the front, lay in the engineering durations and __________________
requisition dates for equipment and bulk material based __________________
upon the engineering schedule. Add on to these the material __________________
delivery times from the procurement schedule to give the __________________
equipment and material delivery dates.
__________________
Starting from the back end, lay in the construction craft __________________
durations and the construction material required dates from __________________
the construction schedule. Now look for "float" or "overlap". __________________
Float will show up if material deliveries are ahead of the __________________
construction material required dates. Overlap will show up
__________________
if drawing or material deliveries are later than the
construction required dates. The overall schedule may be
compressed or elongated to eliminate float or accommodate
overlap. Usually, the second pass will achieve a reasonable
fit and produce a realistic balanced schedule.
Comparative Analysis
One final check is to look at the relationship between the
progress curves generated from the master project schedule
for engineering, material delivery and construction. The
relative positions and lead times between these curves must
always fall within certain limits for all projects. If the
progress curves for the project in question differ to a marked
degree from the typical curves, then something is seriously
wrong and we do not have a satisfactory preliminary project
master schedule. It will be necessary to take another look at
the points where the project progress curves deviate from
the typical progress curves. Figure 4.10 illustrates the shape
and relationship between the engineering, material delivery
and construction curves for a typical project.
Make Adjustments
Finally, the "realistic" schedule produced by this method
(Figure 4.9) is not necessarily the minimum schedule. If, after
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Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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UNIT 4 Project Execution Developing a Project Schedule 69
this exercise, the durations produced are unacceptable, then Activity 4F
compress the overall duration to the desired point. Look at Prepare an engineering
the overlap to determine what positive steps must be taken schedule for your project.
Realistic Milestones
A master project schedule developed by this "top-down"
method provides realistic milestones. These can
subsequently be used for the development of detailed
schedules and networks within each of the engineering,
procurement and construction disciplines.
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Formation of a Network
A major project is cut down into a number of activities. All
these activities are arranged in a logical sequence of
operation. There may be activities which can be taken up
simultaneously. All the activities are represented in a
graphical pattern which is called network. This network
consists of a number of arrows and each arrow represents
an activity. Each activity is assigned the time required to
complete the activity and also other parameters as quantity,
cost, manpower etc. required for it.
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UNIT 4 Project Execution Developing a Project Schedule 71
Network planning is used for: Notes
__________________
u Computing project completion time with definite
__________________
probability of completion for a given allocation of
__________________
resources. This was previously a matter of guess work
or "past experience". __________________
__________________
u Computing different project completion periods with
__________________
different stages of allocation of resources, and thereby
__________________
minimize the total project cost.
__________________
u Scheduling different activities. __________________
Benefits
Network planning is a unique tool for planning and control
of projects as it :
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UNIT 4 Project Execution Developing a Project Schedule 73
u Time flows from left to right of an arrow, therefore, an Notes
arrow joins a lowered numbered event to a higher __________________
number event. __________________
__________________
u Any two events may be directly connected by no more
than one activity. __________________
__________________
u Event numbers must not be duplicated in a network.
__________________
u In estimation of duration of an activity, a particular level __________________
of allocation of resources and method of carrying it out __________________
is assumed. The three time estimates are : __________________
Te = (O+4M+P)/6,
Where,
O - Optimistic time,
P - Pessimistic time
Critical Path
It is the path which takes the longest duration of time to
reach the objective event. If the program is to be shortened ,
one or more of the activities on this longest path must be
shortened or eliminated. The application of additional effort
any where else in the network will be useless.
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Activity 4G Float/Slack
Prepare a master schedule for
your project. Since the critical path is defined as the longest path in time
__________________ from the starting event to the objective event, then all other
activities in the network must lie on paths which are shorter.
__________________
That means along these non-critical paths there is a slack or
__________________
float i.e. time to spare. These paths are referred to as slack
__________________
paths and are the areas where surplus resources of man,
__________________ facilities, or time are to be found.
__________________
The difference between the earliest expected and the latest
__________________
allowable time is called slack or float.
__________________
__________________ Monitoring of Network
__________________
PERT/CPM or network analysis is a dynamic system. The
effectiveness of this system depends on continuous feedback
and updating of the reports so that all the reports are based
on the latest information. This becomes a highly laborious
and tedious task to do manually. With computerization of
the system, it can be used effectively. Further it may be noted
while the work progresses, actual time taken for the activities
completed (say "T") differs from expected time "te". By
replacing te with T, you may get entirely different critical
path as well as changed completion time of the project.
Network Crashing
Crashing of a network is to find out means to complete the
project at an earlier time schedule than planned or reworked
time while updating.
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UNIT 4 Project Execution Developing a Project Schedule 75
Example Notes
__________________
Let us try an example to illustrate the above technique. First,
__________________
we will list out the activities of the project and write
__________________
durations for these activities. Then we will write predecessor
and successor activities. __________________
__________________
The Table will look like the one in Fig.4.11. Now we know
__________________
the total time required for our project. If this is not as per
__________________
the requirements then we must find out ways to reduce
__________________
duration of some activities so as to achieve the target
completion. Now we write duration in reverse order for __________________
backward pass. The earliest start and latest start duration __________________
should be equal for start event or else our calculations are
wrong.
ACTIVITY LISTING
ACTIVITY DURATION PREDECESSOR SUCCESSOR
ACTIVITIES ACTIVITIES
A 7 - D ,E
B 5 - C
C 7 B F ,G
D 5 A H
E 5 A I ,J
F 6 C K
G 3 C L
H 4 D L
I 7 E M ,Q
J 6 E N
K 5 F P
L 6 H,G S
M 2 I S
N 4 J R
P 4 K S
Q 3 I T
R 4 N T
S 4 L ,M ,P -
T 1 Q ,R U
U 2 T -
Now we will mark the events having equal earliest & latest
start duration as critical events. The path of activities
connecting these critical events is the critical path. We are
ready with the network for monitoring now. Original
schedule PERT network is shown in Figure 4.12.
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Notes
__________________
K
18 18 23 23
F 5
__________________ 6
C
__________________
B
5 5
7
12 12
4 P
G
__________________ 5 3
__________________ A D H L S
0 0 Latest occurrence
7 9 of12 17 16 21 27 27 31 31
__________________ 7 5 4 6 4
the burst eventEis the M
__________________ 5 I 2
earliest start of the
12 14 19 25 U 2
__________________ 7
activities star ting Q
__________________ 3
6 J
__________________
from the event. N R T
18 20 22 24 26 28 27 29
4 4 1
F 6 5
C
5 5 12 12
4 P
B 7 G
5 3
A D H L S
0 0 7 9 12 17 16 21 27 27 31 31
7 5 4 6 4
E M
5 I 2
U
12 14 19 25
2
7 Q
J 3
6
N R T
18 20 22 24 26 28 27 29
4 4 1
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UNIT 4 Project Execution Developing a Project Schedule 77
Notes
__________________
AFTER 7 DAYS
__________________
K
18 18 23 23 __________________
F 5
6 __________________
C
5 5 12 12
4 P __________________
B 7 G
5 3 __________________
A D H L S __________________
0 0 7 9 12 17 16 21 27 27 31 31
7 5 4 6 4 __________________
E M
5 I 2 __________________
U
12 14 19 25
2 __________________
7 Q
J 3
6
N R T
18 20 22 24 26 28 27 29
4 4 1
AFTER 14 DAYS
Activity E K
18 18 23 23
is not complete 5
F
and C expected 6
5to take 3 more
B
5
7days
12 12
4 P
G
5 3
A D H L S
0 0 7 9 12 17 16 21 27 27 31 31
7 5 4 The forward6 path will 4 32
E This alsoMchanges the
5 give revised durations
2 PATH
I CRITICAL
8 12 14 19 25 U 2
15 7
J 3 Q
6 N R T
18 20 22 24 26 28 27 29
21
4 4 29
1 30
25
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Summary
This unit details the method for development of
schedule for important phase of the project viz.
engineering, procurement and construction. Important
aspects to be considered for the development of
schedules for the three phases of the project are
described at length. Development of a realistic project
schedule by integrating the three individual schedules
is also explained.
Review Questions
1. List basic information required for developing project
schedule for a new project.
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UNIT 4 Project Execution Developing a Project Schedule 79
6. List out the important factors governing the Notes
procurement schedule. What are the methods for __________________
reducing the procurement period? __________________
__________________
7. State important aspects of the construction schedule.
Draw and describe a typical construction manpower __________________
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UNIT 5 Project Control - Checking Project Progress .............. 81
Unit 5 Activity 5A
Draw the desirable “S” curve and
corresponding “Bell” curve for
S Curves
__________________
__________________
__________________
__________________
__________________
Objectives __________________
Introduction
In a project, many planning and scheduling problems are
quantitative. For example, 8000 isometrics must be produced
in 5 months or 50,000 tons of fabricated piping must be
erected over the same period. In these cases, it does not
really matter which isometrics are produced or which piping
is erected during a specific period. The important thing is to
know that the job is being handled quantitatively at a rate
appropriate for the time span in order to achieve overall
project schedule. This is where "S" and Bell curves can be
valuable tools to the more complex systems of evaluation.
They can be developed rapidly and have great flexibility in
their application.
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Notes bottom left hand corner and to be complete, must end at top
__________________ right hand corner at 100,100. The shape of the curve between
__________________ 0 and 100% can be an indicator of comparative performance
__________________ and efficiency.
__________________
The simplest "S" curve can be a straight line as shown in
__________________
Figure 5.1, curve A. An "S" curve shows cumulative values
__________________
from 0 to 100 and it's slope shows the rate of progress or
__________________
loading at each point of time. In reality, it is rarely feasible
__________________
to apply full loading instantly and to maintain a constant
__________________
load throughout the time span. Usually, there must be an
__________________ initial lead-in period for initial mobilization before peak
effort can be applied and a tail-off period towards the end.
Curve B in Figure 5.1 shows a typical, symmetrical "S" curve
which has an equal buildup and tail-off. "S" curves are not
usually symmetrical. They may be front end loaded or back
end loaded as illustrated in curves C and D in Figure 5.1.
An actual "S" curve might follow any shape within the
grid but will probably fall between the extremes of the two
curves shown. The closer the "S" curve is to the 45
degree straight line, the greater is the degree of resource
leveling that has been achieved and greater the theoretical
efficiency.
The Bell curve is derived from the "S" curve and shows the
amount of vertical movement of the "S" curve (the rate of
progress or loading) for a finite time. In the case of the straight
line "S" curve, the slope or loading is constant indicating a
constant effort throughout the total period. Thus the derived
Bell curve is also a straight line. This shape of the curve is
normally the most efficient and hence the most desirable
when related to manpower loading. It may not necessarily
be so for dollar expenditures where it may be more desirable
to defer expenditure to the latest possible date. The loading
curve developed from a symmetrical "S" curve shows the
conventional Bell shape with a symmetrical peak
considerably higher than the average. This indicates a lower
rate at the beginning and end with the maximum rate during
the central period.
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UNIT 5 Project Control - Checking Project Progress .............. 83
Activity 5B
Make a spreadsheet for the
engineering planned progress
and man hour expenditure
(discipline wise) on the basis of
the engineering schedule
prepared in Unit 4. Draw
corresponding “S” and “Bell”
curves.
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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UNIT 5 Project Control - Checking Project Progress .............. 85
Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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UNIT 5 Project Control - Checking Project Progress .............. 87
Unsuitable Curves Activity 5C
Prepare a weighted progress
Figure 5.3 also includes curve shapes that are unacceptable (planned) “S” curve for any one
for engineering disciplines. Curve A in Figure 5.3 is too steep engineering discipline of your
project.
and too early. It shows an unrealistic peak of 2.5 times the
__________________
average with a long slow tail-off. Curve B shows two steep
portions with a central flat area. The derived Bell curve shows __________________
two short term peaks with low progress achievement over __________________
the central portion of the project. These curve shapes show __________________
inefficient manpower loading. If they were produced, either __________________
planned or actual, there is something seriously wrong with __________________
project planning or performance.
__________________
Periodic Recording
At each reporting period, physical completion for each
activity is recorded. This physical per cent completion is
multiplied by the activity weighting. The sum of these
multiples gives the total physical percentage completion for
the over-all discipline. Physical completion and man-hour
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Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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UNIT 5 Project Control - Checking Project Progress .............. 89
expenditure are plotted on the same form with the planned Notes
progress curve. A comparison between the planned per cent __________________
completion, the physical per cent completion and the per __________________
cent man-hour expenditure will quickly show the __________________
productivity and performance trend. It is then possible to __________________
forecast overall completion and overall man-hour
__________________
expenditure. This method of developing planned progress
__________________
"S" curves is a basic method. Many variations can be done
__________________
manually or by computers with networks and/or bar-charts.
__________________
Manpower Forecasting __________________
__________________
Figure 5.5 shows how curves can be used to forecast
manpower requirements. Normally, the planned progress
curve is prepared after the manpower requirements have
been determined and leveled to even out peaks. However,
sometimes during the progress of a job, when the end date
has been fixed, and the progress and man-hour expenditure
have varied from the initial plan, it is necessary to re-
determine the manpower requirements to meet the original
schedule. The steps are as follows:
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UNIT 5 Project Control - Checking Project Progress .............. 91
major activities are expressed as a percentage of calendar Activity 5D
time to mechanical completion. Draw up Master project
schedule and “S’ curves for ‘your
Superimposed on the bar chart are "S" curves for project’.
procurement, engineering, material delivery and __________________
construction, which are normally considered the key progress __________________
measurement curves for an overall project. The relationship __________________
between the "S" curves matches the relationship between
__________________
the corresponding activities in the bar chart. Whereas the
__________________
bar chart shows the specific start and finish dates for the
__________________
activities, the "S" curves show required rate of progress and
cumulative completions at various stages of the project. __________________
__________________
__________________
__________________
A Narrow Band
The shape of the "S" curves, their relationship to each other
and their position with regard to overall project completion
fall within a fairly narrow band for all projects. For example,
procurement, engineering and material delivery all should
be complete at the 50%, 70% and 80% points, respectively.
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UNIT 5 Project Control - Checking Project Progress .............. 93
As the project proceeds, the actual number of starts and AFC Notes
issues can be entered and compared against the plan. This __________________
simple but effective method helps assure that overall drawing __________________
progress is maintained to meet the requirements of the __________________
project schedule. Figure 5.8 shows the drawing summary __________________
schedules (in heavy solid line) superimposed on the
__________________
engineering curves for the drafting disciplines (refer Figure
__________________
5.2). Note that the engineering discipline progress curves
__________________
fall right between the drawing start and drawing AFC "S"
curves. This is where these should be. __________________
__________________
__________________
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UNIT 5 Project Control - Checking Project Progress .............. 95
Nevertheless, the overall concept for their preparation and Notes
application is entirely similar. In a normal project, __________________
construction work flows through concrete, steel, equipment, __________________
piping and electrical as shown. __________________
This typical relationship between the "S" curves for various __________________
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UNIT 5 Project Control - Checking Project Progress .............. 97
Figure 5.10 illustrates a selection of only four of the many Notes
construction crafts and activities. But it is an exceptionally __________________
effective and easily followed method of tracking construction __________________
progress. A full set of these curves set out on one wall of a __________________
field planning office can be updated frequently. Any deviation
__________________
from plan immediately shows up the potential effect on the
subsequent activities. __________________
__________________
Simple but Useful __________________
The difficulties of plant construction today demand that the __________________
most appropriate of the available comprehensive specialized __________________
control systems be used. However, simple Bell and "S" curves __________________
can be applied in conjunction with such systems. These are
effective tools for top management to junior supervisors.
Summary
This unit highlights the use of “Bell” and “S’ curves in
project progress monitoring. Sufficient information is
given for the preparation, analysis and use of these
curves. Unacceptable shape of these curves with reasons
for their unacceptability has been discussed. Midstream
corrections for change in manpower deployment in order
to achieve the desired project schedule have also been
described.
Review Questions
1. What is 'S' curve and in which area of project this is
mostly used?
2. What are individual discipline 'S' & Bell curves?
3. How these curves help in monitoring & control of major
activities/area of work?
4. Describe various types of “Bell” and “S” curves and their
significance. How can these curves be used for project
progress monitoring?
5. Describe various types of “S’ curves as applicable to
engineering disciplines. What types of curves are
unacceptable and why?
6. Describe how manpower redeployment can be calculated
using the “S” curves when the actual progress does not
match the planned progress.
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UNIT 6 Project Costs Control 99
Unit 6 Activity 6A
For ‘your project’, calculate the
percentage cost (of the total) for
Introduction
The first step in cost control is to prepare a good cost
estimate. (Refer Topics 1 and 2). Cost cannot be controlled if
there is an inadequate, incomplete or unrealistic estimate.
Figure 6.1 illustrates the increasing probability of increased
accuracy as estimates are made at progressive stages of
project execution.
The Estimate
An order of magnitude estimate is derived from curves or
return costs from previous projects and is prepared in the
conceptual stage.
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u Preliminary control
u Definitive
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UNIT 6 Project Costs Control 101
Procedures Activity 6B
List out the methods of
An essential requirement for the production of quality controlling engineering cost.
estimates is the use of good estimating procedures. Detailed __________________
formalized procedures, consistency of method, feedback of
__________________
previous cost data and a standard code of accounts are the
__________________
prime requisites for project estimating. Project costs must
__________________
be reported under the same code of accounts to match the
estimate to ensure good feedback for comparison. __________________
__________________
Table 6.1 shows the major elements of capital cost in a project.
__________________
Although cost control procedures should be applied to all
__________________
areas of cost, a knowledge of cost elements will allow
__________________
additional vigilance to be applied to cost sensitive areas. No
matter how thorough the estimate, there may be errors, __________________
Cost in a Project________________
% of total
Home office 8 10 12
Equipment 20 30 40
Commodities 25 31 40
Direct labour 15 20 25
Construction
Indirects 6 9 12
Total 100
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UNIT 6 Project Costs Control 103
is to stop price additions after the purchase order has been Notes
placed. Changes, such as nozzle sizes, ratings, orientations, __________________
attachments, instrument and electrical connections etc. __________________
provide the vendor with an opportunity to increase his price __________________
unless fixed unit prices for additions have been established __________________
during the competitive bidding stage.
__________________
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UNIT 6 Project Costs Control 105
added to the estimate takeoff to cover final design, Activity 6C
construction and maintenance spares. Allowances must What means you would like to
adopt for controlling equipment
be identified. Unit prices used in the estimates must
cost of ‘your project’
also be recorded.
__________________
As design proceeds, final takeoff quantities by area or system __________________
should be compared against the takeoff quantities of the same __________________
area or system in the estimate.
__________________
Figure 6.2 illustrates a typical trend curve which should be __________________
maintained for each major commodity material category. __________________
__________________
__________________
__________________
__________________
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UNIT 6 Project Costs Control 107
the better the opportunity for comparing physical progress Notes
and man-hour spent against the original plan and budget. __________________
During project execution, there should be continuous __________________
monitoring of man-hour expenditure, relating this to the __________________
progress achieved and the budget. A particular problem is __________________
the "90% syndrome" where progress and expenditure reports
__________________
are favourable until 90% completion is reached, at which time
__________________
the last 10% creates a considerable overrun in man-hours
__________________
and schedule time.
__________________
__________________
__________________
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Reduce HO Man-hours
The following are some general guidelines for controlling or
reducing home office man-hours:
q Process design
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UNIT 6 Project Costs Control 109
q Basic engineering Activity 6D
For effective cost control,
q Engineering design model establish the stage of
engineering completion at
In each case, subsequent activities should not be started which the Bill of Quantities
(BOQ) should be available more
until the preceding activity has been finalized, approved
or less precisely for the following
and frozen. commodities:
1. Foundation tor steel/rebars
u Control review and approval procedures. Do not submit
the documents for approval until they are complete and 2. Structural steel
do not release them for further action until formal 3. Piping and piping
specialities
approval has been received. Do not accept comments or
second thoughts after formal approval has been given. 4. Instruments
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Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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UNIT 6 Project Costs Control 111
u Rental, purchase and maintenance of construction tools Notes
and equipment. __________________
__________________
u Provision of temporary construction facilities, buildings,
__________________
utilities, construction supplies and protection materials.
__________________
Of the above, major cost is the wages of the construction __________________
labour which can be controlled if labour hours can be
__________________
controlled.
__________________
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Construction Supervision
It should be scaled to the size of the project and the estimated
number of labour man-hours. A low labour productivity
requiring a larger labour force will require a greater number
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UNIT 6 Project Costs Control 113
of supervisors. The quality of supervision is important for Activity 6E
the control of labour productivity which, in turn, has major List the steps you will take to
control the construction cost of
influence on field costs. Review periodically that there is a
‘your project’.
proper level of supervision.
__________________
Adequate construction equipment, tools and supporting __________________
facilities will help improve labour productivity. However, __________________
excessive construction equipment, which is available but not
__________________
used, is merely an added expense to the job. When
__________________
construction work is approaching completion, it is
__________________
sometimes difficult to run down and reduce supervisory staff
and labour. A formal construction close out plan is required __________________
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Schedule
Optimum Project Schedule
There is an optimum project schedule which is the most
efficient and which will yield the lowest cost. Any period
below this optimum period may result in cost increase due
to the following:
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UNIT 6 Project Costs Control 115
Although a reduction in the project schedule below the Notes
optimum may increase the capital cost, it may not increase __________________
the total cost to the owner. The increase in cost to reduce __________________
the construction period may be more than recovered by the __________________
reduced interest on capital and the earlier earnings __________________
generated.
__________________
An increase in the project schedule over the optimum also __________________
adds to the project cost due to the following: __________________
__________________
u All costs related to calendar time are extended such as:
__________________
– Supervision in the home office and field. __________________
Optimize Schedule
The above re-establishes the importance of developing an
optimum schedule period at the start of the project execution
and thereafter making every effort to hold to this schedule.
Every member of the project team is jointly responsible for
keeping to schedule the activities within his control. This
responsibility is better appreciated if all members of the
project team have an awareness of the impact that schedule
delays have on project cost.
Project Changes
Project changes are the chief cause of late schedules and cost
overruns. There is an appropriate time in the project schedule
allocated for review and approval when minor comments and
changes can be accommodated. Changes introduced after
approval become extremely costly. Changes must be
controlled by a formalized procedure, which requires that
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Summary
This unit provides the basic concepts for project cost
control at Engineering, Procurement and Construction
stages. Cost control at engineering stage is carried out
by correct estimates of bulk materials (commodities) and
avoiding over design of equipment. Methods of cost
control during construction and cost control of sub-
contracts have been emphasized. The role of project
changes in cost over-runs has been described and a
control suggested.
Review Questions
1. ‘Project success depends upon accuracy of cost estimate'.
Substantiate this by suitable example.
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UNIT 6 Project Costs Control 117
2. How project cost control can be exercised through: Notes
__________________
u Engineering of project?
__________________
u Procurement of materials & equipment? __________________
__________________
u Planned optimized construction?
__________________
u Project monitoring & control? __________________
3. From your experience, list out the reasons of cost over- __________________
runs. What should have been done to avoid these cost __________________
over-runs? __________________
__________________
4. What innovative methods you would like to suggest for
Construction cost control? Give reasons.
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 119
Unit 7 Activity 7A
Select a major equipment of your
project and list out complete
Equipment
__________________
__________________
__________________
__________________
__________________
Objectives __________________
1. Pre-select vendors
2. Prepare enquiry
3. Receive bids
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Don't let anyone bid just because they ask. If the vendor is
persistent, let him give you a pre-qualification presentation.
If he does not meet your criteria, tell him why.
You may think it costs you nothing to let him bid if he wants
to, but it will waste your time to review bids which are not
acceptable.
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 121
to a vendor if you are not prepared to give him an order Notes
should his bid be technically and commercially acceptable. __________________
Apart from wasting your own time, it is unfair to ask a vendor __________________
to prepare a bid if you have no intention of placing an order. __________________
Whenever you ask anyone to bid, he must have a reasonable __________________
chance of getting an order.
__________________
Finally, don't send out too many inquiries. Four to five bidders __________________
are enough to get a competitive price. Six is normally the __________________
maximum number of bidders to whom inquiries should be __________________
sent so as not to use up too much of your time and also the __________________
time of a large number of vendors.
__________________
Normally, organizations maintain a list of approved vendors
for each type of equipment and the inquiry is sent to these
vendors only. This list must be periodically reviewed and
updated on the basis of experience with particular vendors.
Prepare Inquiry
Provide the vendor with all the information he needs to make
a specific bid. Tell him exactly what you want. To help the
vendor, give him a set of documents, with an index,
assembled in a logical order. Make it easy for him to find the
important requirements. It does not help you or the vendor
if critical points are hidden away in some obscure part of
the documentation. If the vendor fails to allow for these in
his quotation and you subsequently insist upon them being
supplied, it merely creates ill feeling and friction. There may
be claims for extras which could hurt the overall quality of
the job. In general, the inquiry document should be divided
into clear-cut sub-sections as follows:
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 123
requirements if you extract relevant parts of the Activity 7B
specifications and include these in the specific inquiry Make a list of probable vendors
for the selected major
documents.
equipment of ‘your project’.
An inquiry should be as specific as possible to ensure that __________________
all bidders respond on a common basis. But inquiry __________________
documents should not be so restrictive that they exclude __________________
alternative proposals. The inquiry document should instruct __________________
the bidder to provide his base bid exactly in line with inquiry
__________________
specifications. However, he should be permitted to offer
__________________
alternative designs which will meet the requirements so long
__________________
as deviations or alternatives to the base specifications are
clearly defined. In this way you allow the bidders to show __________________
Receive Bids
As soon as the inquiries have been issued, phone the vendors
to check that they have received the bid documents. Midway
through the bidding period, make another call to check that
the vendor is working on the bid and intends to submit the
bid by the required date. Finally, a week prior to the bid due
date, remind the vendor that the bids are due on the date
specified. This continued contact during the bidding period
is well worthwhile for major equipment. It lets you know
how active and responsive the individual vendors are to your
inquiry. And you get an early warning if a vendor is going to
decline to bid or be late with his submission.
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Preliminary Evaluation
Once the bids have been received and opened, simply check
that the bids are complete. Have the bidders responded
fully? Do you have all you need to make a proper evaluation?
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 125
For the preliminary evaluation, prepare a checklist of the Notes
known components required, the drawings, datasheets and __________________
the documents that should have been provided and the key __________________
points in the commercial terms. A simple check is entered __________________
against each item under a column for each bidder. In case __________________
the commercial bid has also been opened, then at the bottom
__________________
of preliminary evaluation, enter the quoted cost plus any
__________________
extras or adjustments, which might apply for items omitted.
__________________
Also note the promised delivery date for the equipment and
for the drawings. __________________
__________________
In the case of single bid procedure where technical and
__________________
commercial bid is common, it is worthwhile to list the bidders
in ascending order of quoted price and eliminate those whose
bids are far beyond the budgeted cost, for further evaluation.
Time need not be spent on bids where the price is obviously
high, the bid is incomplete, or the delivery and other aspects
are unacceptable. Another advantage of preliminary
evaluation is that it brings to light areas where required
information is missing or bid data need clarifications. In these
cases vendors can be immediately contacted for providing
additional information needed.
Technical Evaluation
Once the bids have been initially checked out for
completeness or additional information received for making
the bid complete, perform a complete technical evaluation
from the short list of the most promising bids.
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 127
Look for hidden additional costs or cost savings. A smaller, Activity 7C
lighter piece of equipment will require smaller foundations, Prepare an enquiry document
for the equipment selected by
smaller structures and less permanently installed handling
you for procurement.
and maintenance equipment. A well laid out modular piece
__________________
of equipment may require fewer piping connections and
__________________
better access for installation and maintenance. A simpler,
more positive design may require less external __________________
instrumentation and control for operation. __________________
__________________
Look also at the availability of vendor support. Has he got a
__________________
local representative and service facilities? What is the
quality of drawings and documents provided with the bid? __________________
Commercial Evaluation
A preliminary commercial evaluation is performed when the
bid is received and opened. The main purpose is to establish
a shortlist of bidders requiring serious consideration. The
detailed commercial evaluation should be performed after
the technical evaluation is completed.
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Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Having checked the basic items, which could affect the cost,
examine the commercial terms. Is a down payment required
with intermediate progress payment? What warranties and
guarantees are offered? What delivery date is promised?
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 129
Check that unit rates or per diem rates have been quoted Notes
for possible additions or extensions of service personnel. If __________________
the price is not fixed, but subject to escalation, check that __________________
the escalation formula clearly defines the material, labour __________________
or other components and the national indices used. Figure __________________
7.3 shows a typical commercial bid evaluation form, which
__________________
enumerates the above points.
__________________
__________________
__________________
__________________
__________________
Once the basic prices have been checked, the next step is to
apply adjustments and corrections. Add allowances for
differential freight costs, import costs, currency exchange,
agents or any other additional services, which may be
required.
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Activity 7D Take into account the cost of money. The simplest method is
Prepare a technical bid to adjust all costs to a present day value. Allow a discount
evaluation sheet for the
equipment selected for equal to the prevailing interest rates for money, which will
procurement. be paid in future. This will penalize vendors requiring a high
__________________ down payment and large interim progress payments and
__________________ favour those vendors who do not require payment until job
__________________
completion. If you can defer payment of money, you have
the benefit of "float" - interest the money can earn while
__________________
in your possession. Paradoxically, this approach may
__________________
realize a vendor offering a delivery date much earlier
__________________
than that is required. Too early a delivery date will cost
__________________
money. It may also invalidate warrantees if the equipment
__________________ is not put into service for some months after it has been
__________________ received.
__________________
The best plan is to insist upon a delivery date that meets
your erection plan. The conversion of quoted cost to present
day values applies to down payments, progress payments,
final payments, operating costs, field service costs and other
costs. Figure 7.4 shows methods of converting future costs
to present day costs.
Pre-award Meetings
Pre-award meetings should be held with short listed
bidders prior to selection. At the pre-award meetings,
review any questions which have arisen during the
technical and commercial evaluations. Give the bidder a
final chance to confirm or clarify points contained in his
bid.
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 131
Activity 7E
Prepare a commercial bid
evaluation sheet for your
equipment.
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
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Vendor Selection
Having completed all the above steps, the vendor can now
be selected. Normally, this is not done by one person alone.
The technical and commercial evaluation will be signed off
by the technical management, commercial management and
possibly the client. If the case has been prepared properly,
support and approval may be a matter of circulating the
forms for signature. In some cases, it may be necessary to
call a meeting and make a walk-through presentation of the
pros and cons of the bidders and justify the basis for
recommendation.
Pre-commitment Meeting
Once agreement and approval have been reached about the
vendor, call the vendor in for a pre-commitment meeting.
This meeting is to let him know that he is close to getting an
order. But before you actually place the order, be sure that
all points are fully understood and confirmed.
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UNIT 7 Project Procurement - Evaluating Bids for Major Equipment 133
subsequent correspondence and, in general, to be sure that Notes
the vendor has a complete understanding of the requirements __________________
and that there are no ambiguities in the scope of supply or __________________
his pricing arrangements. If the pre-commitment meeting is __________________
complete with no outstanding points, then the vendor may __________________
be verbally advised that he has received the order. If,
__________________
however, as a result of the pre-commitment meeting there
__________________
are still some points to be clarified or confirmed by the
__________________
vendor, then the vendor should be required to put these in
writing before he officially receives the order. __________________
__________________
Awarding the Order __________________
Summary
This unit lists out and explains various steps involved
in the procurement of major equipment. Each stage of
procurement starting from vendor pre-selection to issue
of enquiry, bid evaluation, vendor selection and
placement of order has been described with special
emphasis on various important points to be considered
at each stage.
Review Questions
1. Why vendor evaluation and registration is important?
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UNIT 8 Attributes of a Good Project Manager 135
Unit 8 Notes
__________________
__________________
Attributes of a Good Project __________________
Manager __________________
__________________
__________________
__________________
__________________
__________________
__________________
Objectives
After reading this unit, you will be able to understand:
Creative Endeavour
A "project", as we now use the term, is a one time unique
endeavor by people to do something that has not been done
the same way before. A 'successful' project is finished within
a time and for a cost that makes it economical or profitable
and serves it's intended function.
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UNIT 8 Attributes of a Good Project Manager 137
style of project management and the type of training required Notes
for him. __________________
__________________
Authority and Responsibility __________________
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Leadership Factor
Think in terms of what the project manager contributes. If
the project will proceed as well without him, he is
contributing nothing. Merely observing and reporting events
to his superior throws the job of managing the project back
to his superior. Furthermore, he makes little contribution if
he does not anticipate problems and take action to head
them off. This is particularly true if the project manager only
criticizes the group perceived to be at fault when things go
wrong. The other groups in the project team will do this
anyway. They need no help from the project manager.
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UNIT 8 Attributes of a Good Project Manager 139
In thinking about style, the project manager should review Notes
the project status and evaluate his own contribution. Is the __________________
project proceeding better because of his contribution? Or __________________
would it be going well without him? Is his objective setting, __________________
planning, scheduling and motivating saving money? Is it __________________
saving time and improving serviceability? Or is it the
__________________
reverse?
__________________
If the project manager cannot say that he is making a __________________
meaningful contribution, he should change style. __________________
__________________
Experience Requirement
__________________
Suppose the project manager does report to the officer or
manager having overall responsibility for the project. He
does share this authority and responsibility. He uses a style
of aggressive leadership. Given these points, what then
should be his background?
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UNIT 8 Attributes of a Good Project Manager 141
Knowing the People Notes
__________________
The best equipped person for the position of project manager
__________________
is one who knows and understands the working of the
__________________
project-team group that will make the most decisions
__________________
affecting other groups and over-all project objectives.
Usually, most of such decisions are made by engineering. __________________
Summary
This unit lists out and explains the important attributes
of a good project manager. Importance of qualities like
managerial skills, leadership, creativity, decision
making etc. has been explained. The need for a project
manager and the authority he should have in order to
fulfill his responsibility has also been explained.
Review Questions
1. State the qualities required to become a successful
project manager.
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UNIT 9 Modern Trends 143
Unit 9 Notes
__________________
__________________
Modern Trends __________________
__________________
__________________
__________________
__________________
__________________
Objectives __________________
__________________
After reading this unit, you will be able to understand:
Introduction
Project Management is a relatively young and emerging
profession. It started its development from the fore runners
'Operations Research and Operations Management' in the
seventies. Automated software were also developed for use
in project management. Focus of research during this period
was PERT (Project Evaluation and Review Techniques), cost
and schedule control, performance measurement, use of WBS
(Work Breakdown Structure) and life cycle management. The
concept of design to cost and life cycle costing appeared
during this period.
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PM Software Categories
Project Management software can be divided into two
categories:
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UNIT 9 Modern Trends 145
capabilities e.g. Milestone etc. Such software are Notes
very useful for preparing summary schedules e.g. __________________
single page proposal schedule. __________________
__________________
q Level-2 Software: Designed for single project
management and aid project leaders in planning, __________________
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u What-if analysis;
Developments in PM Software
During the past few years, all PM software has been
improving using Internet technology. Most of the software
are web enabled now-a-days and offer Internet based
facilities such as:
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UNIT 9 Modern Trends 147
u most of the time PM software data can be exchanged Notes
with MS Office products e.g. MS Excel and MS Access. __________________
__________________
u all software allows customization (only degree varies)
__________________
to suit organization specific needs/systems.
__________________
General Data Requirements __________________
__________________
PM software data input requirements depend on the
capabilities and features of the software as software having __________________
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MS Project
MS Project has been improving its spread and quality along
with other Microsoft family products. Initially its
capabilities were mainly limited to preparation of bar-
charts, PERT networks.
Milestone Etc.
This is very easy to use software and very useful in
preparing level-1 schedules. Milestone Simplicity is freely
downloadable from www.kidasa.com.
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UNIT 9 Modern Trends 149
Project Engineering Notes
__________________
During the last 10 - 12 years, engineering procedures have
__________________
undergone a lot of improvement. From the conventional
__________________
drawing boards, drafting has moved to PCs which has
__________________
revolutionized the production of drawings required for
construction/procurement. Following are the software __________________
Autocad is the most widely used software for drafting. Latest __________________
version of Autocad (ver. 14.0) offers many facilities for __________________
drafting of engineering drawings. Microstation, however,
have more database thus allowing greater ease and flexibility.
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Project Construction
For scheduling, progress monitoring and resource allocation
of construction jobs, PM software like Primavera/MS
Project are used which provide the necessary Gantt (Bar)
charts alongwith 'S' and Bell curves for review and
analysis.
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UNIT 9 Modern Trends 151
refinery projects. This shop alongwith a pipe fabrication shop, Notes
in which pipes are bent to the field requirements thus __________________
obviating the need for standard bend and additional welding, __________________
can considerably reduce the construction period. __________________
__________________
Summary
__________________
A brief history of project management evolution and __________________
modern trends in project management are described in __________________
this unit. Various PC based software used in project __________________
management have listed along with their merit and
__________________
capabilities. Other software that can be effectively used
__________________
in the management of engineering, procurement and
documentation have also been listed.
Review Questions
1. Describe evaluation of project management systems.
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Bibliography 153
Bibliography Notes
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Bibliography
__________________
1. A Guide to the Project Management Body of Knowledge __________________
(PMBOK Guide), Project management Institute, __________________
Newtown Square, Pennsylvania, USA.