PROM/009

IBS Center for Management Research

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Scheduling a Time-Constrained Project by Smoothing
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Resources Demand
This case was written by Vidudala Srinivas, under the direction of Debapratim Purkayastha, IBS Center for Management
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Research. It was compiled from generalized experience, and is intended to be used as a basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation.
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2011, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus,
Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org

www.icmrindia.org
 PROM/009

Scheduling a Time-Constrained Project by Smoothing

Resources Demand
MNO Project Solutions (MNO), formerly known as MNO Techno Services, was founded in 2002
in Bangalore. Two years later, the company had come to be recognized as one of the leading
business firms in infrastructure development. MNO’s core competence was dedication and

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continual improvement of its business in all the key areas of real estate. Maintaining high quality
standards was an integral part of its business operations. In mid-2010, the company bagged a
prestigious infrastructure project worth US$ 6.5 million. As per the Terms of Reference (ToR), the
project had to be completed without time delay. The company CEO, Chandra Shekhar Reddy
(Chandra), realizing the importance of project management, called for an emergency meeting with
all the team members. At the start of the meeting, the Director (Planning and Development) and
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Project Manager of the project, Vijai Desai (Vijai), was told to prepare a project schedule.

OVERVIEW OF INFRASTRUCTURE SECTOR IN INDIA

After economic reforms were introduced in India is 1991, several sweeping changes took place in
the economy. The reforms were aimed at deregulating the Indian economic structure and
stimulating foreign investments. These initiatives transformed the country into one of the rapidly
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growing countries in the Asia Pacific region. The Indian private sector too played a crucial role in
the development of the economy and accounted for over 75% of the nation’s gross domestic
product (GDP). The structure of the private sector was flexible enough to allow joint ventures and
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collaborations. Indian institutions created a transparent environment that guaranteed the security of
long-term foreign investments. India was equipped with a vibrant press and an independent
judiciary mechanism. The country was seen as an exciting emerging market as it provided skilled
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technical and managerial manpower that was on a par with world class professionals.1
The eleventh five-year plan in India highlighted the need for huge investments in infrastructure if a
more than 9% growth rate in gross domestic product (GDP) were to be achieved. The GDP growth rate
for the eleventh five year plan was fixed at about 9% as against 5% during the tenth five-year plan. To
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achieve this growth rate by 2011-12 (terminal year of Eleventh five year plan), it was estimated that
investments of about Rs.2 20,561,500 million would be required. To meet all these requirements, the
contribution of the private sector would have to increase to about 30% of total investments during the
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plan period from about 20% of total investments during the tenth five-year plan.3
In the initial five-year plans, the public sector contributed the lion’s share of investments in
infrastructure development. The government protected the public sector by providing it with large
subsidies and special privileges. To achieve the projected GDP growth rate, the Government of
India (GoI) also encouraged investments from Foreign Institutional Investors (FIIs) in the
infrastructure sector. Foreign investors considered the infrastructure sector in India lucrative as
they looked at infrastructure as a yardstick for development.4

1
“Economy and Infrastructure of India,” http://destinationsindia.com/india/economy-infrastructure.html
2
Rs. = Indian rupees. As of November 2010, US$1 was approximately equal to Rs. 46.16.
3
“Investment in Infrastructure - Introduction,” http://infrastructure.gov.in/pdf/IBEF.pdf
4
“Indian-Infrastructure Introduction,” http://www.asiatradehub.com/India/intro.asp

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 Scheduling a Time-Constrained Project by…

During the global financial crisis5, many countries changed their strategy for infrastructure
development. These countries utilized infrastructure expenditure to counterbalance the slowing
economic activities. These measures also served to counterbalance the ill-effects of the global
financial crisis. The GoI had also benefited by allocating huge investments for the infrastructure
sector. As of 2010, the contribution of the Indian infrastructure sector accounted for 26.7% of its
industrial output, which indicated the effective counterbalance of an economic slowdown. A
survey report based on a sample of the consolidated revenues of 22 Indian infrastructure
companies revealed that their financial positions had withstood the global financial crisis. Due to
positive government initiatives in the infrastructure sector, in 2009, the net revenues of these
companies had increased by 32.3%.6
The Chairman and Managing Director of the Oil and Natural Gas Commission (ONGC)7 opined
that to sustain a high economic growth rate in India, the pace of infrastructure development and
social political stability would be the key factors. The GDP growth rate of the country would be
determined by infrastructure development and the socio-political conditions of the nation. He also

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said that the India had become 70% self sufficient in exploring hydrocarbons in the mid-1970s.
However, in 2010, India was importing 80% of fuel from outside as the domestic energy demand
had increased sharply.8 To sustain the projected GDP, the GoI gave priority to infrastructure
developmental activities in India. Hence, opportunities in construction activity improved
significantly.

ABOUT MNO PROJECT SOLUTIONS CO

In mid-2010, MNO, a reputed realty firm in South India, bagged a prestigious construction project
in the Special Economic Zone (SEZ)9 at Bangalore. MNO Techno Services was established in
Bangalore by a leading architect Chandra Sekhar Reddy (Chandra). The company was founded in
2002 with its motto being to provide world class construction services in India. Chandra had
started his career as an assistant architect in a realty firm in Mumbai. After acquiring enough
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knowledge and practical exposure in construction, he started his own company, MNO. In the first
two years, the company’s operations were confined to only building residential apartments. Its
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operations were highly volatile in terms of quantum of business operations and financial profits.
Eventually, Chandra realized the reasons for the high volatility in business operations and the
uncertainties faced during project implementation. He understood the need to have highly talented
personnel for project planning and control processes. In 2005, Chandra had decided to transform
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the company into a world class construction company by incorporating global standards in the
quality system of the company. To adhere to the quality standards and to keep a control over the
projects during implementation, he absorbed his old friend and colleague Vijay Desai (Vijay) into
his company as Director (planning and development). Later, MNO gained customer satisfaction
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and grabbed several business opportunities for developing residential apartments along with
modern business and commercial ventures.
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As of 2010, the company had spread its operations to 15 locations in India and had more than 1500
personnel (excluding temporarily hired manpower) on its rolls.

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Global Financial Crisis: It is a special situation where money demand suddenly rises relative to money
supply. The crisis during 2007 was triggered by a liquidity shortfall in the United States Banking System.
6
“Infrastructure Companies of India,” http://business.mapsofindia.com/india-
budget/infrastructure/companies-in-india.html
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ONGC: It is an Indian Public Sector Petroleum Company whose main job is to produce crude oil and
natural gas.
8
“Infrastructure Key to India’s Growth: ONGC Chief,” http://economictimes.indiatimes.com, November
18, 2010.
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SEZ: It is a notified geographical area that has special economic and other laws which have free market
oriented.

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 Scheduling a Time-Constrained Project by…

THE CHALLENGE

In 2010, MNO bagged a multi-million construction project – building activities in an SEZ. It

entered into an agreement with the Karnataka state government to take up the construction-
activities in an SEZ Project. MNO agreed to the specified time frame and cost aspects of the
project which were discussed under the Terms of Reference (ToR) of the project. As per the ToR,
the company was not to exceed the imposed time limit of the project. Hence, the MNO
management considered this project as a priority and prepared its action plan for implementation
with a feasible project plan and control mechanism. The project was decomposed into respective
activities and their relationships were also fixed. The core project team was identified and the
details of the project were laid out (Refer to Exhibit I for details of the project). The details
described the various activities involved in the project, their relationships in terms of preceding
condition, slack time10, duration time, and required man days.
As per the ToR, the company had to complete the project in not more than the given time frame.

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The time frame and deliverables for each phase of the project were fixed. If the project exceeded
the scheduled time frame, a penalty clause was enforceable.
The major problem for MNO was that the company had limited human resources. The company
management had to utilize the human resources judiciously so that the project would be

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implemented at optimum cost. As per the Human Resources (HR) guidelines of MNO, during
overtime periods, the company has to double the cost of a man day or man hour. Hence, the project
manager had to utilize the man power carefully.
Under these circumstances, Chandra asked Vijay to prepare a project schedule so that the project
could be implemented effectively keeping all the constraints of the company in mind.
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Slack time: The difference of time period between Late start and Early start (or) Late finish and Early
finish of an activity.

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 Scheduling a Time-Constrained Project by…

Exhibit I
SEZ -Construction Activity Details
(Time-Constrained Project)

Activity Description of the Preceding Slack Time Duration Manpower

(AID) Activity Activity (Days) (Days) Requirement
(Man Days)
A Project Planning and --- 0 15 30
Design
B Land Acquisition --- 10 15 35

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C Site Preparation A,B 0 10 50
(including clearing,
leveling and Surveying)
D Material procurement and C 0 10 50
transportation
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F
Installation of Drainage
system
Landscaping and Roads
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C, D

C, D
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15
10

10
80

100
development
G Laying foundation D, E,F 15 15 100
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H Erecting Structural G 0 15 80
Frameworks
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I Roof work H 0 10 120

J Constructing walls and I 20 20 150
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floors
K Constructing building J 0 10 80
systems (electrical and
plumbing etc. works)
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L Plastering and painting K 10 10 95

M Wood Work and other L 20 20 100
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works
N Project closure M 0 10 30
Total 100 180 1100

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 Scheduling a Time-Constrained Project by…

References and Suggested Readings:

1. John M. Nicholas, “PERT, CPM, Resource Allocation, and GERT” Project Management
for Business and Technology- principles and practice, 2nd edition (ISBN 978-81-7758-485-
1), (Pearson Prentice Hall, 2009).
2. Clifford F. Gray and Erik W. Larson, “Developing a Project Plan” and “Scheduling
Resources”, Project Management The Managerial Process, 3rd edition (ISBN-13: 978-0-
07-060093-5, ISBN-10: 0-07-060093-7), (Tata McGraw-Hill Publishing company Limited,
New Delhi, 2008).
3. Frederick S. Hillier and Gerald J. Lieberman, Introduction to Operations Research
Concepts and Cases, 8th edition (ISBN-13: 978-0-07-060092-8, ISBN-10: 0-07-060092-9),
(Tata McGraw Hill Publishing company limited, New Delhi, 2008).

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Articles:

1. “Infrastructure Key to India’s Growth: ONGC Chief,”

http://economictimes.indiatimes.com, November, 18, 2010.
2. “Economy and Infrastructure of India,” http://destinationsindia.com/india/economy-

3.
4.
infrastructure.html CO
“Indian-Infrastructure Introduction,” http://www.asiatradehub.com/India/intro.asp
“Infrastructure Companies of India,” http://business.mapsofindia.com/india-
budget/infrastructure/companies-in-india.html
5. “Investment in Infrastructure- Introduction,” http://infrastructure.gov.in/pdf/IBEF.pdf
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