28 February 2013

wone/cs/0213/01/1.0

Project Moha

Mr Ashish Dhingra, CEO of a large Engineering Procurement Construction (EPC) construction

company based in Delhi was caught in a heavy traffic jam due to unexpected rains lashing the
National Capital Region in February 2013. He was returning home from a surprise site visit located
about 100 kilometers from Delhi. It was a prestigious construction project of one year duration which
had started in April 2012. With just two months remaining for the completion of the project, a visit to
the site had left Ashish worried.

Ashish is an alumnus of a very prestigious technology institute of India and is a qualified civil
engineer. He has about 30 years of experience in handling EPC projects. One round of the on-site
inspection had made him realize that there was no way that the project would be completed on time.
But the reports he had been receiving over the months from the project manager had indicated that the
project was going on well and within budget and schedule. He took out his recently acquired smart
phone to go through the last report again.

Month Budget Actual Deviation Percent completion

April 80 53 27 5%
May 80 105 -25 12%
June 157 112 45 22%
July 91 70 21 26%
Aug 66 125 -59 37%
September 136 117 19 42%
October 145 107 38 51%
November 184 137 47 57%
December 169 145 24 69%
January 89 133 -44 78%
February 120
March 93

According to estimates, around 80% to 85% of the project should have been over by now. So 78%
was slightly below the target. He knew that the region had one of the coldest winters

This case has been prepared by Prof. Ramesh Bhat, Former Professor of IIM Ahmedabad and
Sidharth Bedi, WOne Management Systems solely for the purpose of using as learning material
for class discussion.

Copyright © WOne Management Systems, New Delhi

coupled with frequent hailstorms and rains that had caused some delays, but he thought that 3% to 4%
slack could always be covered. On the cost front too, the project looked in good shape and except for a
few adverse deviations of actual from the budget in some months, the actual costs were within budget.
He began wondering why the ground condition was not being reflected in the reports which he had
been receiving from time to time…

Suddenly, the phone rang. It was Cyrus, the project manager.

Ashish: Hi Cyrus. How are you!

Cyrus: I am good Sir. How are you?

Ashish: I am good.

Cyrus: Great! Heard you were on the Moha site today.

Ashish: Ah Yes! I was close to the site for a meeting so decided to have a look.

Cyrus: Ok. Sorry! I was in a claims related meeting with a vendor in Delhi so could not meet you.

Ashish: Ok. Not a problem. But do you think we will be able to finish the project on time?

Cyrus: Well, the construction is a bit slow in some of the areas but overall we are doing within
limits.

Ashish: Bit slow??? Cyrus, it is just two months before the delivery schedule. And frankly speaking, I
don’t think we will be able to complete it on time. I really do not know what has gone wrong. All
these months I have been reviewing and discussing the variance reports with you and everything
appeared to be on schedule and with no cost overruns. Last month’s report also suggests the same. But
on ground, a lot of things are yet to be done!

Cyrus: Umm….. Yes Sir. In fact I was also having the same confusion in my mind.

Ashish: This is not the time for confusion Cyrus! You know we will face serious penalties if we do not
deliver this project on time. How am I going to explain this to the Board? I want to know what went
wrong with the project and how you are going to fix it now.

Cyrus: Ok Sir. I will get on it and will also again verify the numbers to check for any missing
details that could not be captured in reports.

Ashish: Yes. You do that. But tell me that despite having implemented a world class ERP system to
monitor our projects, why do I have to see this manual and excel generated reports and worry about
the correctness of the numbers? Is there no way I can myself see these reports and data on my system
as and when I wish rather than you sending it?

Cyrus: Sir, frankly speaking, I prefer the manual numbers rather than the ERP ones. There have been
frequent cases of entry not done or incorrectly done which leads to erroneous reports. And as far as I
know, there are no dashboards available where you can see the report in the format you require.
Ashish: This is not done. We need to do something about it. But first let us focus on this project. Do
what you need to do. I want the answers first thing in the morning.

It seemed Cyrus’ worst fears had come true. While sending the last report, he knew there was a
mismatch between ground reality and the report. He knew that managing projects was a complex
balancing task where three major variables – scope, cost and schedule need to be managed effectively
to deliver a commercially successful project. Changes in the scope were not that frequent. Moreover,
since the clients were involved in the decision regarding scope, it was relatively easier to handle. The
cost and schedule deviations were the toughest challenges.
Schedule changes not only affected the reputation but also resulted in cost escalations which the
clients rarely accepted. There was also the fourth dimension of quality which again affected the
project schedule and costs.

Cyrus knew that success required a good tracking of financial information. He always believed that
this was the key to success and the tracking of financial information was to be organized and analyzed
to provide complete insights of whether the project is on schedule, it is not having cost over-run, and
that the project will close on time. He also knew that such tracking was a very complex task. The data
can be tracked on an as-needed basis, but he preferred to follow-up it on monthly basis.

Project Moha was an important project for the company from a strategic point of view. Though its
scope was limited to only construction as against other EPC projects the company handled, its
successful implementation could mean opening up the door for a series of high profile projects. To
meet the tight deadlines, the project had been innovatively divided into three modules which would
run in parallel. The three modules were of exactly similar nature and were independent of each other in
execution. The total budget of the project was around Rs 1400 million. Module 1 was the critical in
terms of the cost with a budget of Rs 500 million while Module 2 and 3 had a budget of Rs 450 and Rs
460 million respectively.

During the project, Cyrus had experienced some glitches here and there but he felt that Project Moha
was on schedule and was quite hopeful of completing the project on time. It was only after receiving the
call from his boss Ashish, that he started examining what really went wrong. Cyrus was also keen to
find out which module out of three may be causing the delay.

At his company the reports submitted by each project manager were closely monitored and reviewed
by the top management. Cyrus has been submitting the reports on time each month. This enabled
effective communication with the top management and was also the means of appraising them about
the progress. The monthly reviews discussion and review each month enabled the project managers to
take faster and more effective project decisions.

The top management team had always been concerned about the focus on project issues/risks. Most of
the reports submitted to the top management did not adequately deal with the risks and key issues.
Hence, there were always concerns about whether the project managers were taking appropriate
actions, establishing standards regarding quality and consistency, managing workflows and ensuring
project deliverables, and ensuring that scarce project resources are used effectively.

Project Moha had gone through a fool-proof and systematic process of designing the plan.
Monthly budgeted costs of each module of the project were drawn very meticulously after
consulting all the concerned divisions. The month-wise budgeted costs of each module for the entire
duration of the project are provided in Exhibit 1. Module managers were responsible for their
budgets. The month-wise actual costs for each module till February 2013 are provided in Exhibit 2.

After his conversation with Ashish, Cyrus studied the budget and actual costs of the Project Moha on
an aggregate basis. He could not exactly find out why there are going to be delays. He asked all the
project staffs of respective modules to send him project completion details of each module. The
project progress report of each module showing cumulative actual completion percentages are shown
in Exhibit 3. Cyrus was not exactly sure what to do with the data now that he had it, but he figured
this was perhaps a good start.

Discussion Questions:

• Which of the three modules are underperforming according to the plan? How do you know this?

• Are the modules of the project within budget? How do you know?

• Why did Cyrus think that the project was going according to plan the entire time?

• How much longer will the project take?

• What should Cyrus have done earlier in the project timeline to prevent delays?

• What should Cyrus do when managing future projects to prevent similar problems from
developing?

• What should Ashish do so that these kinds of problems do not occur in future and projects are
tracked properly?
 Exhibit 1: Project MOHA Budget Cost (INR Millions)
Module 1 Module 2 Module 3
April 25 9 46
May 25 9 46
June 75 36 46
July 50 18 23
August 25 18 23
September 50 63 23
October 50 72 23
November 75 63 46
December 50 27 92
January 25 18 46
February 25 72 23
March 25 45 23
Total 500 450 460

Exhibit 2: Project Moha Actual Cost (INR Millions)

Module 1 Module 2 Module 3
April 25 10 18
May 60 15 30
June 60 30 22
July 35 15 20
August 40 35 50
September 50 25 42
October 50 27 30
November 70 12 55
December 55 52 38
January 60 33 40
February
March
 Exhibit 3:Cumulative Actual Completion Percentage
Module 1 Module 2 Module 3
April 3% 5% 8%
May 9% 10% 18%
June 22% 14% 30%
July 24% 18% 37%
August 30% 30% 50%
September 34% 37% 55%
October 42% 50% 60%
November 48% 55% 68%
December 55% 70% 82%
January 65% 80% 90%
February
March