610-023-1

Pillar Stone Construction Ltd.: Project Evaluation

and Reporting

Taught by Professor Heather McCain, Jim Lourentzos & Karina Addari, from 10-Jan-2022 to 14-Mar-2022. Order ref F435587.
Construction industry is one of the most booming industries across the world and contributes
largely to a country’s development, particularly the developing countries. In India, with increasing
opportunities in the urban areas, migration of people from rural to urban regions has also increased,
resulting in high demand for infrastructure. Construction activity is an integral part of a country’s

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infrastructure and industrial development. The construction industry supports a country’s economy

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and is one of the basic elements for socio-economic development. The industry provides huge
employment opportunities and supports other sectors through backward and forward linkages.
Construction is a process that involves building and assembling of infrastructure and includes work
on new structures, additions, alterations and repairs to existing ones. The industry is broadly categorised
into three basic elements – construction involving heavy and civil engineering (involves large projects
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such as bridges, roads, flyovers, etc.), general or building construction (engage in building real estates
such as residential or commercial real estate assets, etc.) and lastly construction of specialised items
namely, electric works, wood works, etc.
The construction activity is seasonal and intermittent with the location and the quantum of work
varying from project to project. Construction is carried out, managed or coordinated by general
contractors, who specialise in any one construction segment. For instance, a contractor engaged in
building real estate construction may not go for specialised trade or heavy engineering works. The
industry is highly labour-intensive and workers are migrants, mostly unskilled. However, with changing
times, the industry is adopting advanced technology and creating formal system for training and
skilled certification for workers. The most significant aspect associated with the construction industry
trends is increased use of the latest IT technologies for pacing up the work.1 One of the latest
technologies used in construction industry is Building Information Model (BIM).
Being from a single activity, construction is a multitasking job. As for any other project, effective
planning is very essential for successful execution, particularly for construction projects because of

1
“Construction Industry Trends”, http://www.economywatch.com/world-industries/construction/trends.html

This case study was written by Mora Sowjanya under the direction of Dr. V. Srinivas, IBSCDC. It is intended to be used as the basis
for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was
compiled from published sources and generalised experiences.

© 2010, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever
without the permission of the copyright owner.

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 610-023-1
Pillar Stone Construction Ltd.: Project Evaluation and Reporting

complexity involved in the activity. Usually, the job is managed and controlled by the project manager
and supervised by the construction manager, design engineer, construction engineer or project architect.
Personnel involved in design and execution should consider the environmental impact of the job, site
safety, difficulty or inconvenience to the public caused by construction and other things – like material
availability, logistics and documentation.

Pillar Stone Construction Ltd.: Project Evaluation

Taught by Professor Heather McCain, Jim Lourentzos & Karina Addari, from 10-Jan-2022 to 14-Mar-2022. Order ref F435587.
Pillar Stone Construction Ltd. (PSCL) was established in 2007, a construction arm of the Quick
Business Solutions, a software company. Since its inception, the company handled projects in the
fields of topographical surveying, interior designing, structural designing, sewerage system and so on
and maintained an excellent performance record. The company gained experience in constructing

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commercial buildings, IT parks, resorts, hotels and institutions. It was awarded ISO 9001:2000 by

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Bureau Veritas Quality International (an international certification agency on Health, Safety and
Environmental aspects) for its quality standards.
Recently, PSCL was assigned a project of constructing a large
water storage tank for a residential building comprising of 50 flats, Exhibit I
in Hyderabad. The total project cost was INR 5,000,000 and had Penalty for Delay in Project
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to be completed within 6 months. There was also a clause in the

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Time period (Delayed by) Penalty (in %)

project contract which imposed a penalty on not completing the
1 week 2.0
project on time (Exhibit I). As per the design specifications, the
tank was to be 30-feet in diameter and should facilitate filling 200 2 weeks 3.0
gallons per minute. The tank should be modern and durable, having 3 weeks 4.5
design life of approximately 40–50 years and should be strong
enough to withstand earthquakes and other disasters. The 1 month 5.8
company agreed for a guarantee period of 2 years which meant 2–3 months 6.0 + INR 25,000
that any complaints or damages within 2 years from the project
4–5 months 7.0 + INR 50,000
completion will be repaired by the company free of cost.
6 months or more Project cancelled
This type of project (construction of water tank) was new
to the company. Therefore, before starting the work, the project Note: Penalty is charged as a percentage on project
management team comprising of the design manager, project cost.
architect and other team members chalked out a plan of action. Prepared by the authors
PSCL received resources like finance, technical support as well
as other required support from different functional departments on time. It also hired some expert
design managers and personnel with specific skills for the project. In the first month, the work
was carried out systematically, as per the plan under the proper guidance and supervision of the
project manager. In the mid-period of project, the project manager submitted the report containing
the details of work-in-progress and other scheduling activities. However, during this period, the
project manager had to handle another small-scale project, resulting in delegating responsibility to
the team members, but did not give the authority to take decisions. This resulted in delay of taking
timely decisions.

2
 610-023-1
Pillar Stone Construction Ltd.: Project Evaluation and Reporting

Ineffective Evaluation: Unsuccessful Project

PSCL could not complete the project in the given timeframe i.e., 6 months and had extended it for
a month. The top management convinced the client and put forth the reasons for the delay. Finally,
after 7 months, the project was completed and the project management team submitted the report to
the top management.
Unfortunately, after 2 months, the client came back with a complaint of water leakage from
the tank. Immediately, the top management called for a meeting and appointed a committee to

Taught by Professor Heather McCain, Jim Lourentzos & Karina Addari, from 10-Jan-2022 to 14-Mar-2022. Order ref F435587.
look into the project performance. In the investigation, it was
Exhibit II
found that the project manager did not evaluate the project
Revamping Expenditure
deliverables regularly. He followed a summary evaluation
technique where outcomes were examined with slight regular Resource Quantity

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monitoring. Besides, the management also hired an expert to Manpower 10

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check the quality of material used in project construction, it was
found that leakage of water was due to poor quality standards. • Skilled 4
As this project was the first of its kind undertaken by the • Unskilled 6
company, the company did not focus on setting appropriate
Material Plastic (polyethylene,
quality standards required for the project. Though the project
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polypropylene), fibreglass, concrete.

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plan was well-structured and the activities effectively mapped,

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the project did not succeed due to improper evaluation. Finance INR 100,000
Consequently, the company had to incur an additional outlay to
Prepared by the authors
rectify the flaws (Exhibit II).
Apart from the financial losses, one of the irrecoverable losses to the company due to this project
failure was – goodwill damage. During the end of the project, the company was in final dealings with
another client regarding a large-scale construction project. Having observed the previous project
failure, PSCL lost the deal to their competitor.
However, the questions that arise are – Had the project manager followed the formative evaluation
method, could PSCL avoid the negative feedback (from client)? Does project evaluation depend on
the nature of the project? At what intervals, should project evaluation be done?