Introduction to the Organization

The Kot Addu Power Company (KAPCO) runs a 1600 MW combined cycle Power plant at Kot Addu, a small town, in the middle of Pakistan. The company came into existence in the June of 1996 when the Water and Power Development Authority (WAPDA) the state run power generation utility of Pakistan, privatized the plant by offering 36 % stake to strategic investor “National Power” of U.K. along with management control. Kot Addu site is situated in District Muzaffargah, 100 KM north east of Multan on the left bank of river INDUS at a distance of 16 Km from TAUNSA BARRAGE. The area is surrounded by agricultural land stretched on the north and west side of Kot Addu. There are some adjacent areas covered with wind blown sand dunes which were formed with the passage of time. These sand dunes too are being gradually converted into agricultural land. Apart from above, there were very little educational facilities available in the area prior to setting up of this Power Station which has now almost been doubled and some of the School have been upgraded. The essential amenities are also now made available to the residents.

INTRODUCTION TO THE POWER HOUSE COMPLEX
The complex comprises three blocks, 1, 2, and 3. Each block is independent in it and can be considered a separate power station. There are 2 combined cycle modules in each block no. 1

and 2 whereas block 3 has only one module. This is the physical distribution. For the commercial purpose the complex is divided into three blocks called Energy block 1, 2, and 3. The power purchase agreement provides different energy charges for the electricity generated and dispatched from each block. The energy block 1 (plant block 3) is the latest and was in commissioning stage when NP took over management in June 1996 whereas other blocks were completed and commissioned between 1986-1995. The plant block 3, being latest, is the most efficient plant and provides the cheapest electricity to customer. Its total capacity is 397 MW. In order of priority, whenever there is generation demand from the customer, this block is run first. When the demand exceeds then only other plants are run. The complex history over past 4 years shows that plant block 3 runs round the clock throughout the year at maximum capacity. In case this plant can not run at full capacity due to any fault or break down of machines, the customer need is made up from other available plants that are relatively expensive but the customer pays lowest energy charges (of block 3) for the deficit generation. This results in significant loss. Therefore this block is the most valuable asset of the company.

HEAT RECOVERY STEAM GENERATING SYSTEM
The gas turbines, despite of their low installation cost, easy and speedy erection and high loading rate could not win the deserving popularity over the steam turbines due to the poor efficiency of the former. In the conventional gas turbine unit, substantial amount of heat energy was lost through the turbine exhaust gases which leave the turbine at about 580 Deg. Centigrade. To make use of this wasteful energy, an innovative

concept of combined cycle plant, now has been introduced by the gas turbine manufacturers. Under this design, the exhaust of the gas turbine is made to pass through a conduction type boiler (commonly called as HEAT RECOVERY STEAM GENERATOR). High-pressure steam so generated is then used to run the steam turbine, which thus produces power without any fuel. This raises the plant efficiency to nearly 49 % against the 28 % of the conventional gas turbine.

AGREEMENTS BETWEEN WAPDA & KAPCO
WAPDA entered into an agreement with KAPCO for the purchase of the power for next 25 years from this plant. The tariff covered two kinds of payments viz. capacity and energy payment. The capacity payment is made on the available capacity of the plant and is mainly used by the company to meet the fixed expenses and 756 million dollar debt liability that it inherited from WAPDA. The energy payment is done on the actual dispatch from the plant. It covers the fuel cost and there is hardly and saving from this part. The agreement allows 36 complex days for the scheduled outages and 500 complex hours for the unscheduled / forced outages. In case the accumulated outage period over the year exceeds the agreed allowance, the company is liable to pay the liquidated damages at a rate of 1.6 times of what it gets as capacity payment. The first year of the business went very well. WAPDA was prompt in making payments, but it did not lost very long. WAPDA as well as Govt. of Pakistan were in financial crises because of corruption and in efficiencies. Ultimately WAPDA engaged KAPCO and National Power in a complicated legal battle over the tariff issue

by filing petitions in the high court. The court finally passed an interim order in October 1998 that restricts KAPCO to receive Rs. 1.98 per KWh of electricity. The objective behind this legal wrangling was to pressurize KAPCO / National Power to agree and out of court settlement for deduction of tariff. With the incoming of present Govt. the matters have been solved to fair extent.

ORGANIZATIONAL STRUCTURE
The powerhouse complex is spread over 280 acres. As stated earlier there are three independent blocks and each block is independent in itself. Each block has machines of different make where different technology is used. Production department operates the plant and maintenance departments are responsible for up keep of the plant through preventive maintenance, trouble shooting, and major / minor overhauling after predetermined period. At the face, it is a functional structure. The specialist functions like finance, IT, Personnel, Legal / Administration are common and provide service which Production and maintenance departments need to carry out their work. The production department has it own centralized structure. Each block has its separate maintenance department that is further subdivided into three sections with respect to functions Viz. electrical, mechanical, and ‘instrument and control’. A senior engineer head each function. Resident Engineer 1 heads block 1 maintenance department whereas resident engineer 2 is responsible for block 2 and 3 maintenance teams. However there is an additional position of Assistant Resident Engineer at block 3 who is responsible to resident Engineer. The senior engineer of

this block report to both resident engineer and assistant resident engineer. . PERFORMANCE HISTORY The project has performed well thought the period ever since it has been privatized i. The contribution of block 3 in overall generation of the complex has been much beyond the satisfactory levels. June 1996.e.

c) To facilitate operation and maintenance of other power stations. . To firm up Hydel Power Generation during water shortage period.OBJECTIVES The project has been completed to achieve the following objectives: a) b) To reduce mass scale load shedding. d) To cover emergencies and power shortages with quick generation of power supply from this power station which is the salient feature of gas turbines.

Organization and had no formal corporate strategy. APPLICATION AT KAPCO Before the privatization the organization was working under WAPDA like a typical Govt. or how a firm can differentiate itself from the competitors. Corporate strategy provides an overall direction that serves as the framework for carrying out all the organization’s functions. after privatization in June 1996. and identifying and developing the firm’s core competencies. new opportunities and threats in the environment. Choices could include producing standardized products versus customized products or competing on the basis of cost advantage versus responsive delivery. monitoring and adjusting to changes in the environment. . Corporate strategy defines the business (es) that the company will pursue. The strategy is being kept secrete at the moment and no further details are available. Management sets corporate strategy by making three strategic choices: determining the firm’s mission. top management’s responsibility is to plan the organization’s long-term future. Strategic Choices Corporate strategy defines the direction of the organization over the long term and determines the goals that must be achieved for the firm to be successful. Also addressed is business strategy. the organization is working on the subject and a draft corporate strategy has been finalized.OPERATIONAL STRATEGY CORPORATE STRATEGY Whatever the type of firm. However.

understanding mission managers enter ideas and design new products and services. The proposed Mission Statement is as under: “KAPCO is an independent power produces that provides electricity for WAPDA distribution network.MISSION A firm’s mission An statement answers of the several firm’s fundamental helps questions. The employees in the organization just know that they have to work and produce electricity / power with minimum possible expenditure. If the mission is to narrowly defined. APPLICATION AT KAPCO The organization does not have any formal MISSION or VISION statement ever since its privatization. In the process of the organization development an in formal Mission Statement has been devised which is kept forth for achieving the organizational goals. If its mission is too broadly defined. the firms could miss growth opportunities. This should also include the aspects like environment and core competencies. The management should be able to identify and deal with environmental changes when formulating mission statements. It will continue to contribute in the developing economy of Pakistan by . the firm could enter areas in which it has no experience.

maintaining its capacity and maximizing availabilities.” .

There are eight possible competitive priorities for operations. COST 1. Low cost operations QUALITY 2. 3. 4. which fall into four groups. 3. 2. Workforce Facilities Market and financial know how System and technology COMPETITIVE PRIORITIES A firm gains an advantage with its operating system by outperforming competitors in terms of one or more of these capabilities. Fast delivery On time delivery Development speed . 2. High performance design Consistent quality TIME 1. 3. These core competencies include: 1.CORE COMPETENCIES AND COMPETITIVE PRIORITIES CORE COMPETENCIES Core competencies are organizational unique resources and strengths which management considers formulating strategy.

each designed to support a particular set of competitive priorities for a particular set of products or services. For the billing purpose formal financial procedures are adopted. The organization do not carry out any marketing function. 2.e. APPLICATION AT KAPCO CORE COMPETENCIES WORK FORCE A work force of approximately 800 to 900 hundred people is working in the organization in 4 technical shifts and 1 general shift as following: Technical shifts basis 1 x shifts remains at rest General Shift 1600 hrs) for 8 hours on daily basis (from 0800 to 3 x shifts work 8 hourly daily on rotational MARKET AND FINANCIAL KNOW HOW There is no marketing department nor are there any competitor. However. Customization Volume flexibility A firm may organize itself into one or more operating systems. a commercial and financial department exists. SYSTEM TECHNOLOGY In the recent past the organization has installed new technology plant for power production. Gas and . There are combinations of hybrid technology plants i.FLEXIBILITY 1. Gas and Furnace Oil combination.

The company is rather tied up with the strict schedules of using various plants. This is being achieved by the very extensive use of Gas Turbine plant i.e. 5. FLEXIBILITY There is no concept of flexibility. 3. with minimum cost maximum output. Priorities like Fast Delivery and On Time Delivery are applicable as the company is producing required amount of voltage at prescribed timing with complete accuracy. The company is also shifting their information system on the modern lines gradually.High Speed Diesel combination and Steam Operated Turbines. which is being implemented. 2. QUALITY High performance quality in the organization is referred as efficient use of plant i. Make-to-Stock Strategy Standardized service strategy Assemble-to-order strategy Make-to-order strategy Customized service strategy . 4.e. STRATEGY BASED ON FLOWS These are five fundamental manufacturing and service strategies based on flows are: 1. TIME The aspect is of utmost importance. COMPETITIVE PRIORITIES COST All efforts at every level are directed to reduce the production cost. block 3.

. One may say that make to order strategy is being follows for production of electricity. However.APPLICATION AT KAPCO No concept of strategy based on flows is being followed / observed in the organization. all production is being done on the orders / demand received from WAPDA.

Choose and implement the most feasible alternative. . theory and decision tray. Sometimes hard thinking in a quiet room is sufficient. At other times reliance on more formal procedures is needed. decision the information needed to analyze possible APPLICATION AT KAPCO None of the above method is being implemented by the company for estimating demand. Although the basic steps includes: 1. Recognize and clearly defined the problem.DECISION MAKING IN OPERATIONS Operations managers make many choices as they deal with various decision areas. Collect alternatives. 2. Various methods used are break-even. The demand is received directly from WAPDA (The only customer of the company) and company produces power / electricity accordingly. preference matrix. 3.

but also by collective “work products” that reflect the joint efforts of all the members.  The leadership roles are shared rather than held by a single.  Open-ended discussion. is prized at meetings. All three use some amount of employee empowerment. which are small groups of people who have a common purpose. One way to achieve employee involvement is by the use of teams. also called worker participation or labormanagement joint-ness. special purpose teams.  The members of the team do real work together. rather than delegating to subordinates.  Performance is judged not only by individual contributions. which . set their own performance goals and approaches. strong leader. and self-managing teams. rather than a managerially defined agenda. Teams differ from their more typical “working group” because:  The members have a common commitment to an overarching purpose that all believe in and that transcends individual priorities.WORKFORCE MANAGEMENT TEAM Employee involvement. is a key tactic for improving competitiveness. and hold themselves accountable for success. EMPLOYEE EMPOWERMENT The three approaches to teamwork most often used are problem solving teams.

However. This is more evident when major overhauls of the plants are done. Individuals are made responsible in different teams (each selected from respective shift) for specific jobs. Firms engage in a variety of training programs.moves responsibility for decision farther down the organizational chart – to the level of the employee actually doing the job. TRAINING In a global marketplace. (specially Engineer) are required. and increase productivity to remain competitive. To improve the skill and .e. Firms must rely on their employees to anticipate possible problems. the culture needs definite improvement. from 1984 (1st phase) to 1992 (last phase). As the project kept on developing in phases i. To this demand a highly skilled personal. APPLICATION AT KAPCO Generally the concept of problem solving team or special purpose team exist in the organization culture. The emphasis on efficient process requires the employees have a broader base of skills so that they can take on greater variety of assignments and communicate with employees in other areas. firms face changing market conditions brought on by new competitors and changing customer preferences. including the following:    Global training Administrative training Technical training APPLICATION AT KAPCO Although the company does not have any competitors yet the company face a grate a most of electricity demand from WAPDA. develop new products and services.

update the technical know how of the working staff for the new machinery. PHASE II Under this phase 30 engineers received training in the field of operation and maintenance of plant. PHASE-III For the combined cycle plant unit Forty engineers were trained in Germany. . A batch of 20 officials attended the course. PHASE-IV For operation and maintenance of steam turbine units 11&12. Training was imparted at France. As a result of this a number of station engineers received foreign training in different fields. Twenty engineers received foreign training in the relevant field. The training was arranged in France. A local training was also arranged at site for the staff where operation and maintenance of the gas turbines unit 5-8 was taught for a month. Locally the operation and maintenance staff for these units was trained at site by the foreign expertise for a period of 24 weeks. a local training was also imparted by foreign experts to the operation and maintenance staff. Besides the above one months local training was also imparted to the staff at site. a training program was launched right from the beginning of the project. In addition to the foreign training. The training was conducted at the training center / factories of the machine manufacturers. PHASE I As per contract agreement 7 engineers were trained in Germany and 9 in Italy. Entire program of training to different categories of staff was out in five Phases.

and other types of decisions. The participants of this course received training in the field of Electrical. These plans cover at least two years into the future. Mechanical and I&C maintenance of power plant. Long-term capacity plans. The operations manager must provide the capacity to meet current and future demand. managers have to consider questions such as the following. Capacity plans are made at two levels. Too much capacity can be as agonizing as too little. When choosing a capacity strategy. overtime budgets. uncertain demand? Should we expand capacity before the demand is there or wait until demand is more certain? MEASURES OF CAPACITY . covering a span of 13 weeks was arranged at the plant for local training of staff. Capacity Capacity is the maximum rate of output for a facility.PHASE-V 15 engineers were sent to Germany under this phase. The facility can be a workstation or an entire organization. short-term capacity plans focus on work-force size. inventories. otherwise. About 50 persons availed this training to get acquaintance with the new machinery. How much of a cushion is needed to handle variable. Whereas. the organization will miss opportunities for growth and profits. CAPACITY PLANNING Capacity planning is central to the long-term success of an organization. A multi field training course.

Output measures are the usual choice for line flow processes. Another type of demand uncertainty. effective capacity implies a one-shift operation. they reveal inefficiencies that may be masked by capacity excesses-problems with absenteeism. Supply uncertainty also favors large capacity cushions. Peak capacity can be sustained for only a short time. for example. STEPS DETERMINING CAPACITY CUSHIONS     Businesses find large cushions appropriate when demand varies. Small cushions have other advantages. In some organizations. EFFECTIVE CAPACITY The maximum output that a process or firm can economically sustain under normal conditions is its effective capacity. PEAK CAPACITY The maximum output that a process or facility can achieve under ideal conditions is called peak capacity. overstaffing. in others it implies a three-shift operation. Large cushions also are necessary when future demand is uncertain. such as excessive overtime. temporarily reduced maintenance activities. such as a few hours in a day or a few days in a month. or unreliable suppliers. Once .No single capacity measure is applicable to all types of situations. extra shifts. A firm reaches it by using marginal methods of production. and subcontracting. Input measures are the usual choice for flexible flow processes.

EFFECTIVE CAPACITY Effective capacity of the plant is 1340 MW at any instance during the entire year.e.managers and workers have identified such problems. Basing on this forecast capacity planning by the company is done. prolonged scheduled shut down for maintenance / overhauls WAPDA has . average ten ta demand is received in giga watts / hrs from WAPDA. 1340 MW (equal to effective capacity for the next 25 years to WAPDA)  Although the demand for power supply is received from WAPDA is any instance during the year. However as a process 95 days before the commencement of the next year. they often can find ways to correct them. APPLICATION AT KAPCO POWER GENERATION PEAK CAPACITY Peak capacity of the project is 1600 MW which is achieved through combined cycle power plants.  According to the contract the company is bound to provide same amount of power i. Brief calculations for generation of capacity is as following: 1340 MW x 365 days x 24 hrs 11738400 / 1000 hrs Thus total generation capacity per year is = 11738400 Giga watts hrs = 11738400 MW hrs = 11738.400 giga watts CAPACITY CUSHION Keeping in view the unscheduled break downs.

Contrary the company has to pay liquidation charges to WAPDA. then the company is bound to pay liquidation damages to WAPDA at a rate of 160% or 1. In case company maintain and efficient work standard and provide required capacity of power to WAPDA those grace has (670 MW hrs) are kept in reserve for the company which it can utilize during major overhauls which normally exceeds the prescribed time limit for one or the other reason. The calculations are as under: Cushion in terms of time = 500 complex hrs = 500 hrs x 1340 MW hrs = 670000 MW hrs By dividing with 1000 = 670000 / 1000 = 67 Giga watts hrs Company must try and maintain the unscheduled breakdowns and forced outages within this specified capacity cushion of 67 gigal watts hrs. . LIQUIDATION DAMAGES In case company is unable to provide required capacity of power to its customer WAPDA and over utilizes the grace capacity of 670 MW hrs.given a cushion of 670 Giga watts hrs to the company.6 times.

a 10 inches diameter pipeline has been to laid this power station and HSD pumping was commissioned in June 1989. and many others. From Mehmood Kot. quality. (Later on it has been switched over to furnace oil since 2nd Feb.). Managers can divide location factors into dominant and secondary factors.LOCATION Facility Location is the process of determining a geographic site of a firm’s managers must keep in minds various factors. local ordinances (such as pollution or noise control regulations). time. suppliers and transportation cost are important. community attitudes. Desirability of a particular site including proximity to customers. construction costs.  Existing PARCO facility for transportation of HSD from Karachi to Mehmood Kot.    Sweet under ground water Future load center of north west areas Possible use of gas from nearby Dhodak Field . the cost of shuffling people and materials between plants. Other factors may need to be considered. 1991. insurance costs. accessibility to multiple modes of transportation. Dominant factors are those derived from competitive priorities (cost. APPLICATION AT KAPCO In site selection following factors were kept in view. competition from other firms for the work force. which is about 35 km from Kot Addu. and flexibility) and have a particularly strong impact on sales or costs. including room for expansion.

What centers should the layout include? How much space and capacity does each center need? How should each center’s space be configured? Where should each center be located? The location of a center has two dimensions: (1) relative location. four questions must be APPLICATION AT KAPCO Layout of the company was although initially planned by WAPDA but basic considerations of expansion and keeping the various block and storage locations well within the reach of each other were kept insight. 2. The goal of layout planning is to allow workers and equipment to operate most effectively. Before a manager can make decisions regarding addressed. . Initial location of the plant which were constructed in 1985 facilitated the gradual development of the site till project completed in 1992. or the particular space that the center occupies within the facility. 3. 1. An economic activity center can be anything that consumes space. and (2) absolute location. Layouts Layouts’ planning involves decisions about the physical arrangement of economic activity centers within a facility. 4. or the placement of a center relative to other centers. physical arrangement.   Near to Kot Addu junction Railway Station To provide job opportunity to the Location General uplift and development of area.

monthly. As regard demand from WAPDA is concerned at times it is received right when required that even the demand received it is always unpredictable and tentative because of the typical requirement and technology involvement. It is a difficult task because the demand for good. reduce production times. weekly and even daily i. APPLICATION AT KAPCO POWER DEMAND FORECASTING KAPCO does not carryout any forecasting for the demand from its customer WAPDA. It is rather customer by itself forward the demand. Forecasting demand requires uncovering underlying patterns from available information. The demand from WAPDA is received five yearly. Forecasts are needed to aid in determining what resources acquiring are needed. FORECASTING FOR MAJOR / MINOR OVERHAULS AND MAINTENANCE Basing on WAPDA’s demand and running records of the various plants and personnel experience of the engineers forecasting for the overhaul minor maintenance and schedule outages is done .e. scheduling recourses. and services can very greatly. forecasts and allow additional Accurate schedulers to use machine capacity efficiently. A day ahead. existing resources. yearly.FORECASTING A forecast is a prediction of future events used for planning purposes. and cut inventories. One of the biggest challenges in business is forecasting customer demands.

. A very comprehensive procedure is being adopted for scheduled outages which are the major events for the company ( as these outages has direct bearing on the overall efficiency of the company).by the company.

High Speed Diesel and Spears. There are no storage of the gas at location SNGPL daily provide 70 million cubic feet of gas to the company for 8 months i. APPLICATION AT KAPCO INVENTORY OF OUTPUTS There is no inventory for the power which is being produced by the company.e. Whatever power / electricity is generated transmitted simultaneously to its customers. If this amount of gas is not received KAPCO charges liquidation damages from SNGPL Ltd. poor inventory management can seriously undermine the business. NATIONAL GAS No inventory of the natural gas is maintained.INVENTORY MANAGEMENT Inventory Management is an important concern for managers in all types of businesses. but to have the right amount to achieve the competitive priorities for the business most efficiently. from 15 March to 15 November. The challenge isn’t to reduce costs or to have plenty around to satisfy all demands. The gas is coming directly from SNGPL company and is used in the plants. For companies which operate on relatively low profit margins. Furnace Oil. FURNACE OIL AND HIGH SPEED DIESEL INVENTORY . INVENTORY OF INPUTS A huge inventory is maintain for various inputs i.e.

unscheduled outages and washing outages requires availability of huge amount of spares round the clock at location.An inventory of 21 days requirement of Furnace Oil and High Speed Diesel is maintain always in the company. These supplies are kept in storage tanks at location.000 metric cubic oil. All the spare parts are imported. to meet emergent needs spare parts are kept in stock for worth Rs. INVENTORY REVIEW Periodic inventory review (monthly basis) is conducted in the company. 2 billion. In addition a huge numbers of spare part are imported keeping JIT system in vogue. PSO is the only supplier and there are no problems on supply. . SPARES INVENTORY Minor maintenance scheduled outages for major overhauls. This demand is based on WAPDA’s requirement of power which is received 46 days before the start of the quarter. The company has 27 tanks each having capacity of 8. Quarterly demand is sent to Pakistan State Oil (PSO) 44 days in advance. Therefore.

it is necessary to be more specific.QUALITY MANAGEMENT Quality can be defined in a various ways. For practical purposes. Quality can be defined in terms of:      Conformance and specification Value Fitness for use Support Psychological impressions One of the important element of quality (TQM) is employees involvement in totality. . Quality has multiple dimensions in the mind of the customer. The new and latest concept of quality is continuous improvement or exceeding the level of customer’s satisfaction. quality may be defined as meeting or exceeding the expectations of the customer. Heat Recovery Steam Generators and Boilers. Good quality or total quality can pay off in terms of high profits. In a general sense. Gas Turbine Station. Instead achieving customer satisfaction or exceeding the level of customer satisfaction the organization measure quality in following terms:  Display of best efficiency in running the Furnace Oil / HSD plants. and one or more of the following definitions may apply at any one time. APPLICATION AT KAPCO In KAPCO the concept of the quality is followed but in slightly different form.

No line losses No unscheduled outages No extra tripping out Maintenance of regular operations Quality is also measured in terms of:     Preventive Maintenance Break down maintenance Condition based Maintenance Pro-active maintenance ISO 9000 CERTIFICATION The company. Furnace Oil. . Any break down. The company has direct Hot Line (electronically controlled) as well as a special monitoring system called SCADA. does not have any certification from international standard organization.e.  It is from this station that various demands are placed and in-turn plants are operated. fluctuation and tripping is monitored at National Power Central Station Islamabad. HSD. Their priority remains to use gas and steams. MONITORING QUALITY  Quality is monitored through National Power central station at Islamabad. Least utilization of raw material i. This contributes to the overall quality / efficiency of the organization.      Excellent maintenance mechanism.

plant performance of the plant at minimum cost environment. other competitors. QUALITY POLICY An explicit quality policy does not exist. threats of raw material.  Since there are no threats to the company from the market. In last three years many procedures. This standard is expected to last for the duration of contract of 25 years ever since its privatization. maintaining but with care possible reliability people. “Meeting This the for agreed is WAPDA’s by and and requirements”.  Another important quality measure is to maintain 1340 MW hrs output throughout the year. local management instructions have been issued and operational procedures defined from time to time The quality policy for KAPCO is defined as: The company business is to generate and sell electricity to its only customer “WAPDA” as and when it demands. Thus achieve required quality. Therefore quality for KAPCO means. . gas or HSD the company maintains high standard of efficiency. The best measure of the company’s quality is to have the least or No liquidated damages during the year.

Direct Employees. OPERATIONAL SCHEDULING This is one of the best application being applied in the company. 2. The organization has 3 x shifts of 8 hours working daily. APPLICATION AT KAPCO WORK FORCE SCHEDULING There are two types of workforces: 1. Operational scheduling focuses on how best to use existing capacity.SCHEDULING Scheduling allocates resources over time to accomplish specific tasks. Normally outages are . whereas 1 x shift remains on rest for 6 days. Basing on this 5 year planning annual plan is made and approved from WAPDA. In operational scheduling major outage plans for the next 5 years are scheduled. Normally. taking into account technical production constraints. Those who work in the energy blocks and on plants and boilers. Sound scheduling can help an organization achieve its strategic goals. Indirect Employees Those who work for general duties other than the energy blocks. General shift works for 8 hours daily. scheduling is done after many other managerial decisions have been made.

.scheduled from July to November which is low period for the Thermal Power Stations. SHUT DOWN SCHEDULING There are three types of scheduling for shut down as following: 1. All prose and cons of the shipment of material either by air or by sea are considered and efforts are made to have the least possible cost with best possible delivery means at due time. This scheduling process includes:  Scheduling for outage starts 18 months before when a particular plant is indicated for major overhaul.  1 to 2 months before the start of the project spares are received at location. Unscheduled outages or forced outages.   Many major items are received just in-time (JIT) as well. 12 months before the start of the project of the overhaul or scheduled outages the final demand is placed to the suppliers by the purchase department. Washing outages for gas turbines Following parameters are kept in view for scheduling of various types of outages discussed above. 3. Scheduled outage or planned outages.   It takes 3 months to receive the quotations. (Since the spares are imported from abroad therefore a cushion of 1 to 2 months is kept for negotiating the hurdles of the process).  15 months before the commencement of the project the purchase requisitions are sent to the purchase department. 2.

SCHEDULE FOR CRANES AND LIFTING EQUIPMENTS Schedules for cranes and lifting equipment have been developed very recently for the first time. For scheduled outages WAPDA gives 36 complex days for each machine. Inspection of these items is in progress nowadays through an independent agency. For hot gas path inspection 30 days are given.1. In addition red color market is also being put on tested equipments. This scheduled plan is approved by WAPDA and the maintenance are under taking accordingly. Identification no is being punched on each equipment. 2. 3. . For major overhauling 50 to 60 days at average are preempted by WAPDA for each machine. Basing on above parameters formal scheduling of shut down is made on annual basis.

8. Khan I Line 5: KAP 8 ---.132 KV. The power generated by this station is transmitted to the National Grid through network of ten lines as detailed below:           Line 1: KAP 4 ---.132 KV. 7. 2. 100 MW. Multan Line 2: KAP 5 ---. 250 MW. 100 MW.220 KV. D. 250 MW.132 KV. New Multan IV . I.DISTRIBUTION OF POWER APPLICATION AT KAPCO POWER TRANSMISSION For export of electric energy. 100 MW. 100 MW. 11.220 KV. 250 MW. Kot Addu Line 7: Multan I ---. Muzaffar Garh II Line 4: KAP 7 ---. New Multan III Line 10: Multan IV ---. 6. I. 13. Four auto transformers further provides an interlink between the two switchyards thus the system flexibility for power transmission of all the machines is enhanced. New Multan I Line 8: Multan II ---. 1.220 KV. Khan II Line 6: KAP 9 ---. 3. Muzaffar Garh I Line 3: KAP 6 ---. Six machines (Unit No. Industrial State. this station is equipped with a two level (132 KV & 220 KV) switchyard. New Multan II Line 9: Multan III ---. 5.132 KV. 100 MW. D. 100 MW. 4. 250 MW. 9 to 10) of the plant are connected with the National Grid through 132 KV swithcyard whereas the remaining nine machines (Unit No. 12.220 KV.132 KV.132 KV. 14 & 15) terminate at 220 KV Switchyard.

HSD and Spares. A minimum and maximum requirement levels have been finalized with SNGPL Ltd. In case SNGPL Ltd.SUPPLY CHAIN MANAGEMENT Supply chain management seeks to synchronize a firm’s functions and those of its suppliers to match the flow of materials.  For Furnace Oil and HSD the contractor is PSO. services and information with customer demand.  As regard gas it is directly coming from the SNGPL Ltd. a basic purpose of supply chain management is to control inventory by managing the flows of materials. The demand is placed 44 days in advance of the requirement on quarterly basis as the oil had to be transported from Kamari to Lal Pir and then to KAPCO location. . Furnace Oil. APPLICATION AT KAPCO  The KAPCO has an efficient supply chain management system for provision of Natural Gas.  A special 59 Km long pipeline has exclusively been laid from DHODAK to KAPCO for provision of Furnace Oil. does not meet the requirement liquidated damages are charges by KAPCO. by the Government on permanent basis. to the plant on daily requirement basis. This meets the major supply for the company’s requirements.

company must generate power to its requires capacity and demand. Liquidated damages (if any) are reduced to minimum. . Meeting are held quite often. 2. However the company has a performance section.  Physical coordination of various executives is done very frequently. which maintain all records on day to day basis.  Commercial and performance manager. 2 engineers. with minimum possible cost. Computer qualified staff. billing staff and HR staff monitor aggregate operations and insure followings: 1.Aggregate Planning APPLICATION AT KAPCO  As such no formal aggregate planning is done in the company.

It ensures the billing is done to the customer (WAPDS) on monthly basis according to the contract and power provided.  With the increase or decrease in prices the rates are automatically adjusted with the same ratio. The bills are made accordingly.FINANCIAL IMPLICATIONS APPLICATION AT KAPCO A formal finance / billing section exists in the company. Gas and HSD were kept as the base and energy charges were decided.  Bills for the raw material are also prepared and paid according to the contracts deeds. At the same time it maintain all bills received from suppliers and make necessary arrangements and adjustments of payments. In this connection following parameters are kept in view by the department:  Prices of the Furnace Oil.  This work is efficiently being performed by finance department. .

communicate to other people for comments or approval and incorporate the information into other popular business applications. managed and shared. to unlock real value you need to ensure that it can be easily retrieved. More than 120 officers / engineers have been provided with the network computers and are connected with each other through a server installed at a central place.INFORMATION SYSTEM Information is one of the most important corporate assets but. review or annotate them. The documents and other forms of information can be scanned and converted to electronic form. The IT system recently installed at KAPCO fulfils the requirements. From any workstation. . user can retrieve documents rapidly. The most modern computer aided maintenance management and stock control system has also been installed and made accessible for all the users.

Forecasting of the company is entirely dependent upon the forecasting received from WAPDA.e. Forecasting is also done for the provision of raw material supplies i. Therefore. Production department operates the plant and maintenance department is responsible for up keep of the plant through preventive maintenance. This 10 % was purchased by National Power England. It also maintain a huge inventory of spare . High Speed Diesel and Spare Parts for the plant machinery. Kot Addu Power Company came into existence in June 1996 when the Government privatize its 26 % shares to National Power England through open bidding with an option to purchase another 10 %. The power complex is spread over 280 acres of land. the then Government decided to privatize WAPDA in different stages. Mainly forecasting is done for various maintenance operations. Government ran this business through State owned “Water and Power Development Authority” (WAPDA). The company maintains an inventory of 21 days for Furnace Oil and High Speed Diesel.EXECUTIVE SUMMARY Until 1996. Furnace Oil. It has three independent blocks and each block has machines of different make where different technology is used. In 1996. in June 1996 a new company named “Kot Addu Power Company” came into existence. trouble shooting and major / minor overhauling after predetermined period. Government of Pakistan had monopoly over power generation and transmission all over the country. because of excessive in-efficiencies in the operation of WAPDA’s and to encourage in-ward investment into Pakistan.

The company believes in quality by maintaining high efficiency level of its operations. The company is shifting its existing manual information system to modernized information technology based system in which approximately 120 new computers along with a server had already been installed. There are no ISO 9000 certification obtained by the company. In this report an a detailed to analysis look of into various the operations management procedures has been carried out.parts. This analysis provides opportunity organizational functioning of KAPCO deeply. A fairly good Supply Chain Management System exists within the organization. . The company’s basic business is to produce required amount of power according to the customer demand with No liquidated damages.

Hayat M. Mr. I also extend very sincere thanks to the following executives of KAPCO who have really provided me with the most useful information about the project. Amjad Ali Sheikh Resident Engineer (Opeartions) Mr. I have learnt a lot and added to my experience during this process. Author . I with my all humility convey. General Manager Mr. Let me admit openly that without his dedicated guidance. Muhammad Yasin Manager Human Resources I am also thankful to all others who assisted me in completion of this report. experienced and most elegant personality Dr. I extend my deep gratitude and most sincere thanks to him. Nisar Asim Ex. my sincere thanks to GOD the ALMIGHTY for having granting me the Wisdom and energies to complete this assignments with in the stipulated time. In the process of the preparation of report I required lot of guidance and directions.ACKNOWLEDGEMENT To start with. most useful advises and wholehearted assistance the task was uphill. Awan. I could receive these from highly learned.

Preface To become an expert in any field. the study of this subject is incomplete without observing the applications in the real working environment. A formal questionnaire was prepared before the discussions were made with the General Manager of the Organization and Resident Engineer (Operations). A very informative. Operations Management is one of the core subject of MBA Program that gives us an idea as to how the various aspect of operations are dealt in the different organizations. I made a couple of visits to meet with the executives of KAPCO. During the process of study. All this prove to be an effective source of learning. only theoretical knowledge does not provide a concrete base. . exhaustive and valuable material has been collected during the discussion with experts. This is a unique approach of business education that provides an opportunity to the students to observe daily life business practices and problems. Therefore.

.....................................................................................................12 Flexibility..........................15 Application at KAPCO................................................................................3 Organizational Structure.................11 Application at KAPCO................................................................................................................................................................................10 Core Competencies.......................................................................................................................................................................6 OPERATIONAL STRATEGY.......................................................4 Performance History..........................................................................................................................................................................................................................................................................................................................................................................................................................14 WORKFORCE MANAGEMENT..............................................................................................................................................15 Team..............................................................................................10 Time............2 Agreements between WAPDA & KAPCO.....................................................................................8 Application at KAPCO..........................10 Competitive Priorities........................................................1 Introduction to the Power House Complex..............................................................................................................................................................................12 Time.....................15 Employee Empowerment.................................................................16 ......................12 Quality ........................................11 Work force.............................................................................................................................................................................................11 Competitive Priorities ......................................16 TRAINING...................................................Contents Introduction to the Organization...........................10 Quality............................................................................................10 Cost....................................................................................................................................................................12 Cost ...10 Flexibility..................11 Market and Financial know How...............................................................................................................................................14 Application at KAPCO...............................................1 Heat Recovery Steam Generating System.............................................................................................................................12 Strategy Based On Flows................................................................................................................................11 System Technology.......11 Core competencies ............................................................................................................................................................................................................................................................................................................5 OBJECTIVES...........................................................................................................................................12 Application at KAPCO.....................................................................7 Corporate Strategy........................................................................................7 MISSION..8 CORE COMPETENCIES AND COMPETITIVE PRIORITIES....................................................................................................................................................................13 DECISION MAKING IN OPERATIONS........................................................................................................................7 Application at KAPCO...........................

..........26 Furnace Oil and High Speed Diesel Inventory.................................................................................................................................................................................26 National Gas...........................................................................................................17 Phase II..................22 Layouts....................................................................................................................23 Application at KAPCO........................................................................................................................................................................................................................................................................................................................................31 Application at KAPCO......................................................................................................................24 INVENTORY MANAGEMENT................24 Application at KAPCO.......................26 Spares Inventory.........................................................................22 Application at KAPCO................................17 Phase-V..17 Phase-IV.27 QUALITY MANAGEMENT.................................................................................................26 Inventory of Outputs............................................................28 Application at KAPCO............................................................26 Application at KAPCO.................................................31 ....................................Application at KAPCO....................................................................26 Inventory of Inputs.......................................................................................................................................................................................................................................................................................................................................................................16 Phase I........................................................................................................................................................................31 Operational Scheduling..............................................17 Phase-III........................................18 Capacity......................................................30 SCHEDULING.............................................20 Power Generation..............................................................................................................................................................................20 Liquidation Damages......................................................................................................................................28 ISO 9000 Certification............................................................23 Forecasting.......................................18 Measures of Capacity .............................................................................................................................20 Capacity cushion....................................................20 Peak Capacity..............................................................................................................................29 Monitoring Quality ..............................................................................31 Work force Scheduling....................................................................................................19 Application at KAPCO........................................................................................29 Quality Policy.......19 Effective Capacity..........................................................................................................................................................................19 Steps Determining Capacity Cushions.............................................................................................24 Power Demand Forecasting...............................................................................24 Forecasting for Major / Minor Overhauls and Maintenance ..........................................................................................................................................21 LOCATION...........................................................................................................................................................................................................................................................................................................................................................18 Peak Capacity...............................20 Effective Capacity............................................................................................................................18 Capacity Planning ......................................................................................................27 Inventory Review...........................................................................................................

.......................................................................................................................................41 Preface.43 ..............................................................................Shut down Scheduling................39 ACKNOWLEDGEMENT..............................................................................................................................................................................................................................................................................34 Power Transmission..................................................................35 Application at KAPCO....................................35 Aggregate Planning...........................................................................................36 FINANCIAL IMPLICATIONS...............................................................................................32 Schedule For Cranes And Lifting Equipments ..................................................................37 Application at KAPCO...............34 Application at KAPCO...38 EXECUTIVE SUMMARY.........................................................................................................................................................................................................................................................37 INFORMATION SYSTEM..................42 Contents ......................................................................................................................................................33 DISTRIBUTION OF POWER..............................................................................36 Application at KAPCO.....................................................................................................................34 SUPPLY CHAIN MANAGEMENT.....................................

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