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I would like to express my profound gratitude to all those who have been instrumental in the preparation of my project report. To start with, I would like to thank the organization GMM PFOLDER for providing me the chance to undertake this internship study and allowing me to explore the area of marketing which will prove out to be very beneficial to me in my future assignments, my studies and my career ahead. I wish to place on records, my deep sense of gratitude and sincere appreciation to my company guide and mentor, Mr. Chirag Mehta (HR
Manager and Admin) GMM pfaudler Ltd, who suggested and prepared
the frame work of the project. I would also like to thank him for his continuous support, advice and encouragement, without which this report could never have been completed. A thank-you is also deserved for the staff of the GMM Pfaudler. - Rajal R. Brahmbhatt
Introduction to the Company
Introduction Industry Overview Gmm Pfaudler is a manufacturing company in the market. It is today among the leading suppliers of engineered equipment and systems for critical applications in the global chemical and pharmaceutical markets. To drive our growth, we continue to attract, develop and retain the most talented people. There is going to offer exciting and challenging careers within a stimulating knowledge-driven work environment where ideas and skills are valued; where people can realize their full potential through dedicated different types of programs; and where individual contribution respected and recognize. Products:The company is a manufacturer and dealer of various types of structural steel works, industrial machinery and glass lined chemical vessels. GMM also manufactures wiped film evaporators, agitated nutche filters, mixing systems and polytetrafluoroethylene (PTFE)-lined equipment. It has supplied more than 9,000 reactors for different corrosive processes to suit client’s specific needs, glass-lined stainless steel reactors and lab reactors. GMM manufactures storage tanks in both horizontal and vertical designs. Its fluoro polymer division manufactures various PTFE products, such as Teflon envelope gaskets, nozzle liners and bushes, and control system pipes internally lined by is statically molded PTFE liners. Its filters and filter-dryers are utilized in the inorganic and organic chemical, fine chemical and pharmaceutical industries.
GMM fully acquired Switzerland’s Mavag AG, a leading supplier of highly engineered critical equipment for the pharmaceutical, bio engineering and fine chemical industries through its wholly owned subsidiary GMM Mavag AG.
Achievements:GMM Pfaudler is a world-class organization with ISO9001 certified processes and is also accredited by ASME and TUV for U Stamp and ADM – HP 0 respectively.
HISTORY AND DEVELOPNMENT:-
GMM PFAUDLER LIMITED formerly Gujarat Machinery Manufacture Limited was incorporated in India by Late Shri Jethabhai V Patel on November 17, 1962. The company manufacturing unit is located at karamsad because Late Shri Jethabhai was interested in social and economical development of the people of his native place karamsad. The company’s principal activity is the manufacturing of corrosion resistant glass lined equipment used primarily in the chemical, pharmaceutical and allied industries. In the beginning year 1962 only fabrication work was started but in the year 1968 they started manufacturing of glass lined equipment. At the primarily stage it was private firm later on it turned into public company. GMM PFAULDER LTD is the leading supplier of highly engineered, application critical equipment and systems for the chemical process industry. The success of the company is based on close and continuous interaction with its customers, innovative products, application
engineering customer support and a competitive manufacturing cost structure. The Indian pharmaceutical and fine chemical segment has been witnessing a strong growth for the past few years. The steady stream of drugs that are getting off patent protection will provide Indian generic manufacture for several years to come. Capital expenditure in this segment will continue in the medium to long term. With never capacities being added by established companies and new companies being formed to manufacture generic active pharmaceutical ingredients and to offer contract manufacturing for both domestic and overseas companies. Infrastructure GMM Pfaudler has a state of the art plant spread over 20 acres at Karamsad, Gujarat,. The plant has a covered area of over 21,000 sq. Meters. It is equipped with the latest equipment required for quality fabrication. In addition we have 5 furnaces - 3 electric and 2 natural gas. GMM Pfaudler has a sales and service presence across India with regional offices in Ahmedabad, Bengaluru, Chennai, New Delhi, Hyderabad, Mumbai and Vadodara. Strength Of the company (in terms of Human Resource) A company is its people. GMM Pfaudler's 130 trained and motivated workers are supported by 60 engineers and 110 staff and officers to ensure that the plant delivers quality equipment on time. Mission:• To achieve international standard of excellence in all aspect of diversified business with on customer delight through value of produces and cost reduction. • • To maximize create on a wealth value and satisfaction for the stockholders. To attain leadership in development and assimilating state of the wet technology for competitive advantages.
They shall create a joyful and happy GMM pfaudler ltd. OBJECTIVES:GMM PFAUDLER LTD believes in themselves and thus has set a few objectives for them which they thrive on:To delight our customers by supplying the required product in time. • To built relationship with our sub-contractor business associates. of family of smiling focus through love and honesty. The like hood of millions of promise to do so in future keeping the interest of our customer foremost in our minds and needs. To help enrich the quality of the community and preserver ecological balance and heritage through a strong environment conscience. To cultivate high standard of business either and total quality management a strong corporate identity and brand quality. VISION:For the last 46 years GMM pfaudler ltd has contributed to nation building activity through infrastructure developed and both material handling solution there by positive importing. • To attempt continuous improvement in efficiencies and environmental protection. • To constantly carry out improvements in our product processes and method. Courageously ahead in the company shall continues strive to to improve and adopted changes and be a market leader by always remaining a step technology and quality and wide our horizons globalization.• • • To fast culture of participation and innovation for employee growth contribution. • .
Gmm had collaboration with Pfaudler Inc a U.COLLABORATION OF THE UNIT:In 1963. KEY PEOPLE: BOARD OF DIRECTORS:P. KARAMSAD-388325. 230416. GMM entered into collaboration with a Hungarian company namely m/s Repartment emamil industry works and started making glass lined chemicals vessels with the help of latest and advanced technology.S. GUJARAT PHONE: (02692)-230516. MUMBAI. ANAND-SOJITRA ROAD. In 1988. CA VIGIL JURIS STATE BANK OF INDIA .A. Mittal Mehta KALYANIWALLA & MISTRY. DELOItTE HASKINS & SHELLS. Pfaudler inc is the world level company in glass lined equipments. Gmm became subsidiary company of Pfaudler inc as it owned 51% of the total issued share capital of Gmm in 1999. KRISHNAMURTHY ASHOK J PATEL PETER C WALLACE KEVIN J BROWN DR S SIVARAM DARIUS C SHROFF TARAK A PATEL CHIEF OPERATION OFFICER : FINANCIAL CONTROLLER : COMPANY SECRETARY : STATUTORY AUDITORS INTERNAL AUDITOR SOLICITOR BANKERS REGISTERED OFFICE VITHAL UDYOGNAGAR. 236562. This collaboration was up to 1973. CHARTERER A/C. Company. SUBSIDIARY COMPANIES:CHAIRMAN MANAGING DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR EXECUTIVE DIRECTOR ASHOK C PILLAI AMAR NATH MOHANTY Ms.
Then after remaining nuts and bolts are fitted. It is then bended with help of rolling bending machines. MANUFACTURING PROCESS:GMM Pfaudler manufactures the equipments. KARAMSAD HOLDING LIMITED. There are few industries. Glass lined vessel is corrosive. MAIN COMPETITOR:. Cutting of plates is done with the help of CNC machine. haste alloy.Rs 42 CR. first the design of the equipment is prepared so that the raw material is effectively used. alloy steel. When GMM gets an order. according to the need of the customers. Their main raw-material is carbon steel. Welding is done on the two ends are covered by top and lower dish. the pharmaceutical and oil industries has occupied important position in the Indian economy. stainless steel. TURN OVER:. KARAMSAD INVESTMENT LIMITED.NYLE LTD AT HYDERBAD. Lastly the paint is applied and finally glass lined equipment gets ready CONTRIBUTION:In the growth and development. MAGAV AG. After that a coat is applied inside to make the vessel last longer and to avoid the leakage of chemical and physical properties.• • • • GMM MAVAG AG. They buy raw material from SAIL(Steel Authority India Limited) and from local market. The thickness of the plate depends on the capacity of the equipment. which are competent among them GMM Pfaudler is playing a leading role in the reactor systems and in manufacturing . Steel plate is the basic raw material.
or semi-permanent functional activities to produce products or services. organizing.  The secondary and more ambitious . The temporary nature of projects stands in contrast with business as usual (or operations).of glass lined equipment in India. it can be said that the company has a better prospects in the coming years PROJECT MANAGEMENT AT SIEMENS 4. The production and sales turnover of the company is very impressive and bond a good market. and as such requires the development of distinct technical skills and management strategies. motivating. the management of these two systems is often quite different. permanent. and often constrained by funding or deliverables). as described in the below • Project Integration Management describes the processes required to ensure that the various elements of the project are properly coordinated. These processes have been organized into nine knowledge areas. The Project Management has different Knowledge Areas describes project management knowledge and practice in terms of the various component processes. In practice.1 Introduction to Project Management Project management is the discipline of planning. The primary challenge of project management is to achieve all of the project goals  and objectives while honoring the preconceived constraints. Looking all the angles and aspects of the company. and controlling resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end (usually time-constrained. It consists of . which are repetitive. The primary constraints are scope.challenge is to optimize the allocation of necessary inputs and integrate them to meet pre-defined objectives. quality and budget.  undertaken to meet unique goals and objectives. time.  typically to bring about beneficial change or added value.
information distribution. • Project Procurement Management describes the processes required to acquire goods and services from outside the performing organization. dissemination. and responding to project risk. It consists of resource planning. It consists of communications planning. cost budgeting. risk identification. quality assurance. It consists of organizational planning. cost estimating. schedule development. scope definition. performance reporting. risk response planning. • Project Time Management describes the processes required to ensure timely completion of the project. It consists of risk management planning. It consists of initiation. project plan execution. and integrated change control.project plan development. It consists of activity definition. and quality control. • Project Cost Management describes the processes required to ensure that the project is completed within the approved budget. and team development. and risk monitoring and control. and cost control. scope verification. • Project Quality Management describes the processes required to ensure that the project will satisfy the needs for which it was undertaken. • Project Human Resource Management describes the processes required to make the most effective use of the people involved with the project. and administrative closure. to complete the project successfully. and only the work required. scope planning. quantitative risk analysis. analyzing. • Project Communications Management describes the processes required to ensure timely and appropriate generation. It . collection. • Project Risk Management describes the processes concerned with identifying. staff acquisition. and ultimate disposition of project information. qualitative risk analysis. • Project Scope Management describes the processes required to ensure that the project includes all the work required. It consists of quality planning. activity sequencing. and schedule control. and scope change control. activity duration estimating. storage.
cost. source selection. duration. tasks. contract administration. A WBS can be developed by starting with the end objective and successively subdividing it into manageable components in terms of size.2 Work Breakdown Structure The work breakdown structure (WBS) is a tree structure that shows a subdivision of effort required to achieve an objective – for example a program.. service-. product-. subsystems.g. The work breakdown structure provides a common framework for the natural development of the overall planning and control of a contract and is the basis for dividing work into definable increments from which the statement of work can be developed and technical. schedule. . The WBS may be hardware-. systems. and responsibility (e. which include all steps necessary to achieve the objective. project. solicitation planning. and labour hour reporting can be established. and contract.consists of procurement planning. and contract closeout. subtasks. or process-oriented. solicitation. 4. components. and work packages).
4.3 Project Management at Siemens A. Sales Department • PM 010 – Go/ No-Go decision Process Document lead Evaluate and select lead Identify responsible Internal business Check lead for cross – division Execute and document the decision Phase Lead Management • PM 020 – Bid Decision Process Initiate opportunity development Evaluate expected business Evaluate customer’s business situation & competitive environment Analyze and structure customer’s requirement Define bid strategy Check commercial feasibility Check technical feasibility Check delivery feasibility Analyze resource implications Determine bid scope and plan bid Perform LoA Risk Assessment Execute and document bidding decision Phase Opportunity development .
complete and verify relevant data and documents Handover to execution Closes sales phase Phase Project Handover .• PM 040 – Bid Approval Process Handover to Sales Expert/ Bid Manager Set up bid preparation Create technical bid part Create commercial and contractual bid part Create delivery bid part Perform LoA Risk Assessment Compose bid Phase Bid preparation • PM 070 – Project won/ lost Process Handover bid to customer Obtain and process customer feedback Repeat bid preparation for changes Determine negotiation strategy and roles Nominate project manager for execution Conduct contract negotiation Obtain contract approval Conclude contract with customer Analyze and document win/ loss Phase Contract negotiation B. Project Execution Department • PM 080 – Start of Project Process Determine Liability Update.
manufacturing & service orders Ensure fulfilment of orders Prepare & release products for dispatch Phase Purchasing & Manufacturing • PM 400 – Material and Resource at site Process Prepare dispatch/ stage products Conduct & monitor transportation Prepare infrastructure/ schedule & request resources Receive & verify products at site Phase Dispatch .• PM 100 – Order receipt clarified Process Structure & create Project in IT application Set up project organization Analyze contract technically & clarify open points Analyze contract commercially/ legally & clarify open points Enter order entry calculation in IT application Appoint project manager/ conclude target agreement Planning & teaming workshop Perform project management assessment Phase Project opening & clarification • PM 200 – Approval of detailed planning Process Create/ release technical realization plan Confirm & evaluate reference selection Update product requirements specification Create project execution plans Finalize quality plan & hazard analysis Compose/ release realization plan Create/ release detailed planning Realize product integration Prepare & release to supply chain Phase Detailed • PM 300 – Dispatch Approval Process Place purchasing.
• PM 550 – Construction/ Installation completed Process Prepare site Installation of plant/ system Preparation of the commissioning phase Phase Construction/ Installation • PM 600 – Release for customer acceptance Process Start up plant/ system Conduct internal plant & system tests Conduct customer training Release acceptance Phase Commissioning • PM 650 – Customer acceptance Process Prepare & conduct acceptance test Update customer documentation Conduct customer debriefing meeting Request preliminary acceptance certificate Phase Acceptance • PM 670 – Project Closure Process Work off open points Clarify open claims with contract partners Create closing invoice/ execute receivables management Create final customer documentation Handover service-relevant documents to after sales Archive project documentation Write final project report Close project Phase Project Closure • PM 700 – End of Warranty Process Perform warranty activities Request final acceptance certificate Phase Warranty .
Close warranty Archive project 4.4 Project Management Process at Siemens .
Hedging Booking of Order Value in the System i. Negotiation & Order Confirmation Stage: • Gets involved during Order Negotiation with Customer / Vendors from the commercial aspects • Ensuring Purchase Order is in Line with final Quotation – i. Solvency Certificates etc • • Verifies correctness of Offer Calculation & calculation of Financing costs Ensures valid Quotations are available for Bought outs 2.e. Spiridon 3. Preparation of invoices / Performa invoices with relevant documents & its submission to customers as per PO terms • • Periodic review of Unbilled Cost & its Adjustments Updating of Order Value / Estimated Cost . EMD.e. scrutiny of Terms • • • Comparing Order Cost Sheet with Quotation Calculation Organize Bank Guarantee. Insurance. Order Execution Stage: • Booking Turnover in Spiridon system. Pre offer & Offer Preparation Stage: • Scrutinize & Comment on Commercial Terms & Conditions of Tender / Bid Enquiry • • Implication of Taxes & Duties Organize necessary documents to be submitted along with the offer viz.1.
Bank Guarantees & Tax matters with Corporate Finance & Accounts / IDTs • Coordination with Banks. Consulates & Chamber of Commerce primarily for export orders • Interaction with Legal & Company Secretariat Department for Power of Attorneys & related issues 4. Insurance Companies. release of provisions etc Return sub . Order Closure Stage: • • • • • • • • Make final payment reconciliation Get all sales tax forms Issue all sales tax forms to vendors Get bank guarantees back Clear all open provisions Ask for completion certificate Close SAP order after closing costs.suppliers guarantees . Customs.• • Creation & Regular review of Provisions Understanding Document flow at Customer’s end to enable quick collection of payments /TDS Forms & Sales Tax Forms • Interaction with Engineering and Field service dept in case of site related activities primarily for Project type of business • Involvement in Negotiations with Sub-suppliers & finalising Terms & Conditions • • Discussions with Works on Debits / Excise formalities Discussions / Finalisation of Forward Covers. Clearing Agents. UOV.
schedule. ( pay or adjust ) Settle all internal claims Make separate file for retention 4. the defined process needs to provide an appropriate framework for the project manager to act and decide as an entrepreneur for this project. the Sales processes were harmonized to the same phases and milestones.) that may endanger project success are systematically analyzed and early decisions can be made by the responsible project managers.5 Project Management Models at Siemens The project phase model describes the standardized process steps of Project management at Siemens. The project execution and preparation phase model as well as the project warranty phase model is divided into three categories according to the type of project (Plant and Solution Project. Each project has to follow this model. At the same time. System. Particular care should be taken on milestones that have to be executed according to the Quality Gate system. often the same Sales people acquire Product. The Quality Gate principle ensures that at critical points during a project all issues (technical. At Siemens. The completion of every milestone defined in the project phase model has to be documented. . resources. Service Project and Small Project).suppliers. commercial. The process documentation needs to define how the authorization to declare a milestone “completed” is achieved and how it is documented.• • • Regularize retention of sub . The project process description shall incorporate all necessary elements to ensure the quality of the execution as well as compliance with internal rules and regulations. etc. Therefore. compliance. Project and Service business.
PROJECT EXECUTION PHASE MODEL .A. PROJECT SALES PHASE MODEL B.
C. PROJECT WARRANTY PHASE MODEL .
An integrated approach and .4.6 Contract Management Contract Management starts with the generation of the bid (PM020). independent of the project category or allocation of the project to a group or region. Contract Management is important for all customer projects.
This requires strong involvement of appropriate management levels early in the sales process as well as during the project execution if changes occur. Contract Management represents the sum of all actions that are designed to: • • • • • Create sound contractual agreements for the project Provide a strategy for how to manage change orders and claims Support the systematic enforcement of legitimate claims against contracting parties. Jurisdiction . as well as terms and conditions in the contract are the main reason for non-conformance costs (NCC). mainly customers. Warranty 5. Delivery 6. Scope of Work 2. Liquidated Damrages 7. consortium partners and suppliers or third parties Fend off unjustified claims and Manage changes to the respective contract. Title Transfer Deed 10. Insurance 9. Inspection 13. Limitation of Liability 11. to prevent the occurrence of these costs or to minimize the impact. Unclear scope of services. Termination Clause 14. Export Control 12. Price 3. Performance 8. unclear rules of cooperation and escalation with customers and suppliers. Professional contract management helps to identify the risk of NCC. Terms of Payment 4. The various definitions in the projects are with regards to: 1.the necessary contract management competencies are required to ensure overall project success.
4. depending upon the nature and type of risk the project carries and relationship with the customer. A payments term varies from contract to contract.7 Payment Terms Payment terms are timelines and commitments that depends on the completion of the work and receiving the amount associated with it. Percentage of contract value Commitment to the level of work . A typical payment contract terms are shown in the table below.
Cash – in – advance • With Cash – in – advance payment terms.8 Limits of Authority (LoA) The Limits of Authority (LoA) process is the internal approval procedure for all division external projects of Siemens AG. 4. The document serves essentially as a guarantee to the seller that it will be paid regardless of whether the buyer ultimately fails to pay.10% 5% – 10% 10% . • Wire transfers and credit cards are the most commonly used cash – in – advance options available to exporters. The LoA process improves the quality of the decision at the bid / no bid stage for a project because it systematically incorporates major: • • technical commercial / contractual . In this way. A total project risk class will be determined on the basis of certain risk assessments such as a project classification. 2. or a similar party. the risk that the buyer will fail to pay is transferred from the seller to the letter of credit's issuer.5% . The seller then seeks reimbursement from the buyer or from the buyer's bank. and a Business-specific LoA risk classification. an AntiCorruption Risk Assessment. Letter of Credit A letter of credit is a document issued by a financial institution. assuring payment to a seller of goods and/or services. the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. The LoA process limits the authority to approve the acquisition of projects and the submission of bids to specific management levels. The letter of credit also insures that all the agreed upon standards and quality of goods are met by the supplier.15% 70% . its subsidiaries and affiliates.80% 10% Advance payment –signing of the contract against Pro-forma invoice Advance bank guarantee for the same Against after submission of GA drawing Against pro forma invoice on release of purchase order for equipments to be procured from vendors outside Siemens Against Pro-forma invoice on dispatch of materials Against Performance Bank Guarantee The Modes of Payment are 1.
warranty terms. To ensure that the project is in accordance with the business strategy (e. To ensure that the solution offered is feasible and available To ensure that the costing is realistic. To ensure that all necessary resources are available to prepare bids with a sufficient probability of securing an order. and is fully documented. To ensure that all applicable laws are obeyed. To make this possible. Guidelines and the internal rules on preventing corruption.). To ensure that the bid is prepared in accordance with the applicable Siemens AG processes. Execution of the LoA process The LoA process comprises at least the steps shown in the figure: . it governs the interaction of the main persons participating in the process. milestones and quality gates. The main goals of the LoA process are: • • • • • • • • • • To ensure an acceptable result for the project and keep non conformance costs to a minimum. with its defined phases.• • pricing. To ensure conformity with all internal guidelines and regulations. payment plan. portfolio. their roles and their responsibilities.and costing-relevant. Integration into the Project Management at Siemens Process The LoA process is a part of the Project Management at Siemens process in the project sales phase. and ethical / legal criteria into the decision. To ensure that risks deriving from the possible complexity of the project structure are identified and manageable. particularly the Siemens Business Conduct. creditworthiness. The key milestone is approval of the bid by the responsible business managers at PM040 (LoA meeting). At milestone PM070 the documents are finally reviewed and updated. etc.g.
At milestone PM070 the project data are finally reviewed and updated. Anti-Corruption Risk Assessment (ACRA) The Project Management at Siemens LoA Tool supports the mandatory review and assessment of issues relevant to corruption in accordance with the Siemens Business Conduct Guideline and the relevant Compliance circulars. if needed. and released by the project manager and the Compliance officer – if necessary – by his/her sign-off. LoA Meetings can be held any time before PM040.g. LoA update takes place. a decision is made as to whether or under what conditions the project will be bid on.1. including the timely involvement of any relevant experts. At the LoA meeting. at PM010 / PM020. It includes arranging the standardized LoA documents in preparation for the decisionmaking process. Additionally. • • After the first bid has been submitted (PM040 is completed) and before the contract has been signed (PM070). The project manager . LoA meeting is held at PM040. 2. 3. LoA preparation starts at PM010 or PM020 at the latest. E.
The Business Risk Class is a further factor in deciding the escalation level. at least one of these) is a high-risk country. the management level whose LoA meeting will decide on submitting the bid will be determined according to standardized rules. To include a Sector or Division specific Risk Assessment in the project evaluation. 1. a corresponding escalation path has to be followed. The more detailed Anti-Corruption Risk Assessment has to be completed mandatorily.confirms that these requirements have been met with his/ her electronic signature. The criteria for escalation are the three elements in the LoA Tool risk report: • • • Siemens uniform project categorization (categories A-F) Anti-Corruption Risk Assessment (AC Risk Class 0-3) Business-specific risks (Business Risk Class 0-3) Based on the determined escalation level. . Normally all projects are escalated upward through the hierarchy. the Risk Mitigation Level will additionally be determined. For projects that the Region itself executes under the above principles. When completing the Anti-Corruption Risk Assessment the project is assigned to Anti-Corruption (AC) Risk Class 0. Escalation within a Group or a Region Based on the results of the three risk analysis methods.e. This assignment is called escalation. or 3. a Business Risk Classification is included in the LoA process. which is different from the country of the Siemens ARE. Depending on the Risk Class. • • • • with project category is A or B and/or involving business partners and/or involving export credit agencies and/or multilateral development banks / financial institutions and/or Where the customer country or any of the project execution countries (i. 2. the rules for interaction with the Sector and Division must also be taken into account.
Project and Line Management should at all times have full understanding and knowledge of risk and opportunities in all projects. It should be emphasized that the ultimate purpose of ERM is not to avoid or eliminate all types of business risks. The Siemens ERM methodology is designed based on principles rather than on rules. The Risk and Opportunity management systematic consists of two major elements: • • Risk and Opportunity Categories Risk and Opportunity Management Process. integrated management tool. which ensures consistency across Siemens while allowing the individual units to embed the approach in their specific environment. Moreover. but rather to support entrepreneurial spirit by finding the right balance between managing risks and seizing opportunities. The focus of the Siemens Risk and Opportunity Management policies is not on avoiding risks by all means. facilitated by workshops and ensuring appropriate management attention.9 Risk and Opportunity Management in a Project With enhanced Enterprise Risk Management (ERM). Siemens ERM is an interactive and management-oriented approach. Decisions should be made on the basis of such knowledge and Siemens should at all times have room to manoeuvre. The focus lies in: • • Early detection and identification of risks and opportunities Detailed analysis and evaluation with a clear strategy for how to manage them. Siemens seeks to take risk and opportunity management to the next level as a holistic. These general principles also apply in the individual project. The Risk and Opportunity Management Process consists of four process steps that are repeated project core selected needed in consistently. team members The and experts participate as this process .4.
for efficiency purposes the risks and opportunities need to be prioritized according to their impact and likelihood. . This helps to get a good overview of the actual risk and opportunity portfolio of a project. such as their sources and reasons. Identify and assess Risks and Opportunities: The prerequisite of an effective identification process is a good knowledge of the customer. the tender / contract situation. The identified risks and opportunities need to be assessed in accordance with the Siemens risk and opportunity categories. the technical implications and the geographical conditions. the project members and experts need to find out more information about the risks. The focus is on financial impacts.1. Starting with the highest priority of risks and opportunities. special triggers and multipliers or interdependencies. Finally. a discussion among (sales) project members using one or more of the above methods is more successful than the analysis and opinion of a single person. In any case. but non-financial risks and opportunities shall also be integrated.
from an analysis of all risks and opportunities and their mitigation or use. Sustain and continuously improve Risk and Opportunity Management Ultimately. The multiplication of these factors is called “expected value of risk / opportunity. The costs of the actions need to be calculated and will become costs of sale of the project. the organization shall learn and improve their capability for risk prevention. After the initial Risk and Opportunity Analysis that consists of steps 1–3. Respond to and monitor Risks and Opportunities The project members and experts now focus on mitigation actions to reduce or avoid the individual risks and on enhancement actions for the identified opportunities. At a minimum. the controlling of the implementation of the defined actions and the analysis of the actual status of the already identified risks and opportunities marks the start of the new Risk and Opportunity Management process loop. The identification of new risks and opportunities shall take place at any time they occur. 4. 3. Clearly defined escalation procedures including ad-hoc reporting lines allow for timely reaction and reduction of negative impacts.” 2. early . the appropriate management levels need to be involved. during the regular Risk and Opportunity Management process existing and new risks and opportunities are analyzed. both before any actions are taken.The analysis leads to the calculation of the impact (most realistic case) and the estimation of the likelihood. Report and escalate Risks and Opportunities Depending on the nature and impact of a risk or opportunity.
which often influence the contract or calculation. How to create a Risk and Opportunity Management Plan in a project The Risk and Opportunity Management Plan serves as clarification for the whole project team with regard to the following topics and is part of the PM Siemens Project Management Plan. Thus. detailed analyses may not be possible or advisable in all cases. Nevertheless. Risk and Opportunity Management has a more strategic and less detailed character. in this phase Risk and Opportunity Management becomes vital for future project success. Risk and Opportunity Management during the different project phases In the preparation of PM010 and PM020. As of PM070 till the end of the project (PM700 / PM(S)1000) the newly initialized list of risks and opportunities (often named “Risk and Opportunity Log”) shall be updated in the respective regular process loops with the focus on early detection of new topics and consequent action implementation and controlling of effectiveness of such actions. deprives the project of almost all possibilities to transfer risks to other contractual partners. A lack of risk analysis and respective actions. At PM040 all inputs for a concise binding offer from Siemens shall exist. This requires a culture of risk and opportunity management throughout the organization and thus also all projects. Depending on the knowledge of the future project. the results of the analysis – together with other strategic inputs like PM project portfolio analysis and customer relationship – shall build the basis for a Go / No-Go and Bid / No-Bid decision respectively.detection of risks and opportunities as well as creating the best possible effect from them. • • • Aim and goals of Risk and Opportunity Management Roles and responsibilities Tools to be used .
e. A Risk and Opportunity Management Plan shall be drafted at latest prior to PM040 and established at latest prior to PM100.No Risk Type (A) Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Category (B) Have the Price. during a PM planning and teaming workshop for the project. The Risk and Opportunity Log is maintained throughout the project life cycle. Mode of invoicing and Mode of payment is arranged? Are there enough costing approaches available during packaging? Dito for Transportation Dito for Commission Dito for Travel costs.10 Check list of various Risks encountered in a Project Sr.g.• • • Cycle and frequency of the Risk and Opportunity Management Process Content and frequency of risk and opportunity reporting Addressees of risk and opportunity reports. including field allowances Dito for delegated customer personnel Is cost sharing to be expected when tolerance limits are exceeded? Are there special documentation guidelines and have their effects been taken into costing? Are tax payments that result from legal uncertainties possible? Risk Definition ( C) 1 2 3 4 5 6 7 8 9 . 4. and be documented in the Risk and Opportunity Log in writing respectively.
conditions of 22 payment. late invoicing and contractor's condition for payment? Are there any discrepancies between customers. the contract and the levied costing with respect to the performance? Dito for cost objectives Dito for technical and commercial houses Dito for delivery date and time. terms of delivery and Incoterms? Are modifications to components / materials to be expected during 14 processing and their effects on time and cost and their further consequences unclear? Have various insurance policies been taken? Have financial arrangements been made? Are potential rivals interested in the same project? Is a price war expected? 15 16 17 18 19 20 21 Are costs from penalties for delayed deliveries to interim and finish dates expected? Are the claims for the payment covered by the insurance / guarantees? Has insurance for export credit been taken? Will financing costs result from reduced liquidity.Risk 10 11 12 13 Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Risk Commercial Financial Are there deviations between the costing of the offer. nonpayment. price formula and supplier’s price formula? Is there a possibility of additional cost from escalation? Are special risks covered by insurance? Will the customer make advance payment or deposit? Is financing of the project guaranteed? 23 24 25 26 .
. political instability. etc) What is the procedure for outstanding customer payments? Are there regulations in the contract containing arrears for payment? Does an efficient claim management system exist? Do the chosen partners like suppliers have necessary financial power? Are guarantees of the sub .11 Project Monitoring: Calculation of Excess Costs / Excess Billings For each PoC-project.suppliers been deposited? 33 34 35 36 4.worthiness of the customer? Are their experiences with the financial morale of the customer? Are the negotiated dates of payments clearly fixed in the contract? Does the customer come from a risky country? (War prone. either excess costs or excess billings are calculated.27 28 29 30 31 32 Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk Commercial Financial Risk Risk How can claims of deliveries and performance be accepted by the customer? Have inquiries been made about the credit . to indicate if either the customer or Siemens is financing the project by advance payments or advance performance.
• • Value > 0: Costs and estimated earnings in excess of billings on uncompleted contracts (WIP). 1. Excess Costs: Siemens’ contract performance exceeds the progress billings to the customer. Value < 0: Billings in excess of costs and estimated earnings on uncompleted contracts (WIP). .
IN LAKHS) 10 15 (5) 2.The following table will help us to clarify the same: PARTICULARS Project Cash Inflows Project Costs Excess Costs AMOUNT (RS /. Excess Billing: Progressive billing to the customer exceeds the Siemens’s contract performance .
An unclear scope or unclear terms and conditions create additional costs and effort during execution. independent of the project . project deliverables and customer expectations.The following table will help us to clarify the same: PARTICULARS Project Cash Inflows Project Costs Excess Billing AMOUNT (RS /. comment on and negotiate contractual and / or cooperation agreements. Contract Management starts with the generation of the bid Contract Management is important for all customer projects.IN LAKHS) 15 10 5 1) CONTRACT MANAGMENT The contract is the basis for the project scope. Thus. When the contract is signed. terms and conditions provide the foundations for project success – Contract Management helps make that happen. Contracts with clearly defined scope. Contract Management contributes to the contract execution by enforcing legitimate claims against our partners as well as fending off unjustified claims and managing change orders. unclear contracts present a significant risk to achieving the project targets as well as customer satisfaction. Contract Management provides expert support to draft.
mainly customers. Quality Management creates project transparency and anticipated success. Its principles are applicable to projects of all categories. Deficits occurring in the early phases can strain the entire project substantially . It is one of the fundamental responsibilities of the whole project team and the business organization up to the top management. An integrated approach and the necessary contract management competencies are required to ensure overall project success. It enables and contributes to a process-oriented and transparent project management across all project phases. The objective of Quality Management in Projects is to fullfill our contractual obligations and thereby obtain the appropriate level of customer satisfaction. 2) Quality management:Quality Management in Projects is an integral part of the GMM Pfaudler process. Contract Management represents the sum of all actions that are designed to: _ Create sound contractual agreements for the project _ Provide a strategy for how to manage change orders and claims _ Support the systematic enforcement of legitimate claims against contracting parties. this will minimize non-conformance costs in the project. Quality Management in Projects includes the planning and safeguarding of product and process requirements over entire project lifecycle. In doing so. Quality Management in Projects covers those activities which assist the project manager and the project team to meet the project requirements in terms of functionality. This must be based on systematic. clear and proactive approaches toward fulfilling contractually agreedupon commitments and performances based on terms and conditions.category or allocation of the project to a group or region. consortium partners and suppliers or third parties _ Fend off unjustifi ed claims and _ Manage changes to the respective contract. costs and deadline.
projects benefi t from better knowledge of the market and of the supplier situation. The application of sound Quality Management in Projects has its foundation in the Siemens Quality Management System (QM System) and its mandatory elements. from lead management right up to the end of the warranty period. Besides reducing material costs.and can rarely be corrected – with all the consequences for the customer and our company. Procurement plays a major role in achieving positive project results and a long-term increase in cost productivity. this process also has an effect on higher hit rates in the bidding process through lower costs and risk reserves calculated for relevant supplier contributions. With externally purchased materials and services normally accounting for 40–60% of project costs. innovation is secured and any risks are minimized. For improveing project profit they focused on getting Procurement on the job As a result of consistent integration of Procurement. Procurement must be continuously involved over the entire project duration. if effective project control is to be achieved. A decision must be . projects are rigorously examined in terms of their suitability for “supplier integration“ with a view to exploiting potential for innovation and cost reduction. This module describes what kinds of quality-ensuring activities are required to fulfi ll Siemens standards throughout the project phases and highlights in particular the practices of: _ Implementation of Quality Management in Projects _ Implementation of PM Quality Gates _ Systematic handling of requirements based on PM Requirements Definition and Management _ Role of PM Quality Managers in Projects _ Quality planning as part of the PROJECT PROCURMENT Stringent customer-specifi c requirements and an ever-increasing share of external value added are characteristic for procurement when involved in project business. Before getting under way. which in turn means that quality is improved.
Every team member of the Siemens organization and the customer organization has his or her own background. the existing core team was established in 2008 as a corporate function to drive PM@GMM further. Based on the positive results. IMPLICATIONS:GMM has sucessfully done projects for more than 50 years. Collaboration is the secret of efficient and effective team performance. there are methods and tools for achieving and maintaining this important personal basis for project success. Accessing this knowledge and creating the willingness to support the targets defi ned for the project. The purpose is to create an organization able to adapt quickly to changes in the market. contributing as planned to the organizational unit’s overall results. The successful principles of the virtual PM@GMM organization were used to define the cooperation of the central function (PM Core Team) with the representatives of the Sectors / Divisions and Clusters / Regions with project business: . is individual to each project team. Therefore. COLLOBRATION IN PROJECT:Projects are highly interactive and executed across the usual line structures of an organization.made at PM. competencies and experience to draw from and contribute to the project success. as well as creating a common understanding of what those targets are and how to achieve them as a team. Nevertheless. Siemens created and maintained a virtual organization by the name of PM@GMM to exchange best practices as a basis for the joint definition of minimum standards for project business since 2000. the overall slippage of profits during project execution compared to the order entry in project sales was and is significant. The main objective is to achieve the targets of each project. reducing dependence on the quality of the individuals in the process. Clear PM roles and responsibilities are an important basis for the successful execution. As important as clarifying who is responsible for what is to establish and maintain a sound basis within the team and supporting organization for the ongoing efficient collaboration of all employees involved in the successful project acquisition and execution. personnel and innovations. Nevertheless.The individual process steps for successful supplier integration in projects are laid out in the Guideline ”Professional Supplier integration.
as well as create the basis for efficient cooperation in projects across Sector / Division or regional borders. which require substantial financial means. This module defines the global organization to implement PM@GMM and create value for each organization with significant project business. different investments and ongoing efforts need to be undertaken in all Siemens organizational units. they initially have a negative impact on the bottom line of a business before their results become effective and help to . INTERNAL PROJECTS……. to improve performance and quality of the internal processes by continuously increasing the productivity of operations. The targets are: 1. contribute to the ongoing financial success of GMM project business and make it easier for the organizations to ensure compliance with all rules and regulations for project business. These investments and process improvement efforts are usually executed as internal projects. to ensure current and future ability to deliver in all businesses 2. This will strengthen the competitiveness of GMM projects. To ensure the operational ability and increase the profitability of the GMM businesses.. Therefore._ Steering Comittee Innovation decides on general direction and objectives _ Every CEO / CFO or business manager is responsible for the successful implementation of these standards in his / her organization _ PM@Siemens Global Coordinator Board steers all operative activities _ Work Teams are staffed by all interested parties to jointly develop and mandate minimum standards _ Minimum standards reflect existing rules and regulations and help organizations and individual project managers ensure compliance with them _ PM Core Team facilitates all involved parties and supports them with knowledge and consultancy on successful implementation _ PM Core Team creates transparency for STC Innovation and other top management about the PM@GMM implementation status and suggests actions to improve the implementation.
There are different types of company internal projects: Process Improvement / IT Projects: Internal process improvement projects and related internal projects for the development of necessary IT support In scope of this PM Real Estate Projects: infrastructure projects to provide a building or other Guide facilities Infrastructure projects: infrastructure projects such as the construction and commissioning of a plant for the manufacturing of a new product line Not yet in scope of PM@GMM set up community to analyze good practices and develop standards M&A Projects: Merger & Acquisition projects to enhance the business portfolio as well as disinvestment / carve-out projects R&D Projects: product development projects to define and realize new products i A project is defined as a “Company Internal Project” if the end customer is a business consolidated within Siemens and the delivering unit is a cost center. To support this. the PM@GMM minimum standards as described in Modules 1–11 shall be applied to internal projects wherever possible and adapted or supplemented when needed. Their professional management ensures that this ability is achieved in time and budget“. To limit these investments to the necessary budget and to avoid “the internal burning of profi t.” all internal projects must be managed with the same professionalism as customer projects. . “Company internal projects enable Siemens to act successfully in its ever changing and challenging business environment.achieve the defined targets of the investment.
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