Earba" L.
Bajaj
-
General Hanager, =. Hew Delhi
Chairmau. I 5 A d a Pacific - Education
Execution of a turnkey engineering
project invariably requires close co-
ordination among many independent
entities both within and outside the
organisation. More the number of such
entities more skillful and effective
is the co-ordination required. How-
ever, when a project is undertaken in
a transnational environment when more
than 10 nationalities are involved,
coupled with extremely short time to
complete the pro jec t from grass root
stage, the execution becomes more
exciting and challenging. Authors
describe their experience of the late
70's in executing a Turnkey Power
Project in Saudi Arabia where all such
variables were present. The paper
describes some of the methods adopted
to execute this project in a transna-
tional environment and how some of the
pro j ec t management problems were
overcome.
~ODUcTIoIa
The project management of a turnkey
contract is complex by its nature.
Bharat Heavy Electricals Ltd was
entrusted the work of implementing a
turnkey power pro jec t by the Kingdom
of Saudia Arabia in 1977. The manage-
ment of BHEL took up the challenge in
right earnest to live upto the confi-
dence reposed in them by the Electric-
ity Corporation,
The first step was to constitute a
project management team so that focus
and thrust for e x e c u t i o n of the
project is provided. A comparatively
young but dedicated, enthusiastic and
motivated team was chosen to form the
core group for the project execution
of this .prestigious contract. New
concepts in turnkey project management
were implemented and the task force
was provided with full powers commen-
surate with their responsibilities to
execute the project. It has to be
86
International Council Bepresentative
Institution of Electrical Engineere. UK
recognised that till then BHEL experi-
ence to execute a turnkey project in a
multidisciplinary environment was
limited. Further the project was to
be executed in an unfamiliar environ-
ment where the means of communication
were not reliable. The project was of
great importance to the local people
both politically and economically.
This project was to feed power to the
unelectrified villages though due to
sudden wealth of petro dollars people
could buy all comforts of life. Thus
there were high expectations of the
people from the project and delays
could not be accepted by the people.
The living conditions were not good.
The site was in desert and not even
temporary housing was available for
the project staff. Even in the nearby
town availability of accommodation was
limited. The project was to be exe-
cuted under such constraints. The
task force lived upto the expectations
of all agencies. The project was
executed in time within cost estimates
and project owners appreciated the
quality and workmanship. Some of the
methods used for executing the project
are described below which helped the
task force in completing its objec-
tives.
project Description
The project envisaged construction of
six units of seven mega watt Diesel
Engine Power Station at the outskirts
of GIZAN, Saudi Arabia with common
auxiliary services like bulk fuel oil
system, water treatment plant, cooling
water system, lubricating oil system,
starting air system etc.
The scope included construction of 33
KV overhead lines between the power
station and towns of Abu Arish, Sabya,
Hudayrah and Gizan, 33/13.8 KV sub-
stations, 13.8 KV distribution lines
and 13.0 KV/220V distribution sub-
stations in villages and small towns
and laying of 220 volts lines with Erection Works
consumer connections to more than 8000
households in these villages and 1. IAEC (Madras) Ltd., India
towns.

The Civil Engineering and building Main EQuiDment I

works included Main Power Plant Com-
plex, Administration Building complex 1. Diesel Engines, Delaval, USA
including drainage, roads, landscap- 2. 336r13.8 KV Switchgear - CalorEmag,
ing, construction of temporary offices Germany
and residential accommodation for 3. Alternators - BHEL, India
supervisory engineers, permanent 4. Excitation Equipment - BBC,
residential complex for operation and Switzerland
maintenance staff, substation complex- 5. Power Transformers - BHEL, India
es and finally plantation of some 5000 6. Power and Control Cables-BICC, U.K.
trees in this desert. 7. Cable Jointing System-Raychem, USA
8. Power House Cranes -
WMI, India
The project was to be progressively 9. Fire Fighting System Vijay Fire-
completed in stages commencing within Systems, India
24 months and final handing over in 36 10.Telephone system -
Siemens, Germany
months. The starting point of the 11.Wooden Poles -
OY Impregno, Finland
project was a n area marked in the 12.Conductors -
BICC, UX
desert where the project was to come 13.Airconditioning System Blue Star, -
up without any infrastructural facili- India
ties. 14.Battery & Chargers - Chloride, U.K.
15.Preformed line fittings - Dulmison,
The - t i d miment Thailand
16.Prefab Housing -
ATCO, Australia.
The complexity of project management
can be judged from the key players who In addition to the above there were a
were involved in the project: large number of suppliers from India
and other countries. The project was
Customer : General Electricity Corpo- truly transnational and each and every
ration, Saudi Arabia member was having a crucial role to
play for timely and successful execu-
tion of the project.
The generation and distribution of
power is as per American Standards, Project Co-ordination
i.e., distribution voltage is 220
volts 3 phase 60 Hz in the Kingdom of The project had large number of play-
Saudi Arabia. ers who had equally important roles to
play physically located in various
Project Consultant: Preece, Cardew and countries having different standards
Rider,United Kingdom and methods of execution which posed
unique co-ordination problems. The
Supervising Engineers : Taiwan Power success of the project depended on
Company, Taiwan effective co-ordination and in ensur-
ing that communication is clear and
Main Contractors : Bharat Heavy Elec- effective to all participants. Spe-
tricals, India cial emphasis was laid in developing
an effective and foolproof system of
Main Sub-contractors : project co-ordination which was de-
veloped in a systematic manner. Some
--
Civil Works of the tools that were adopted in se-
quence were:
1. Engineering Projects (India)Ltd,
India 1. Correspondence system
2. Som Dutt Builders Pvt Ltd, India 2. Project Bar Chart
3. Letter of procedure
Transmission and Distribution 4. Initial list of drawings
5. Project management block diagrams
1. Bombay Suburban Electric Supply and flow of functional responsi-
Ltd, India bilities.

87
These initial documents helped each
participant to understand the total
project, his role and the unified co-
ordinated approach to project execu-
tion.
The contract was executed by BHEL as
main contractor who were responsible
for project management and control.
In order to have effective co-ordina-
tion with all constituent partners, a
special Project Group was constituted
which was entrusted the overall re-
sponsbility of project co-ordination
and management. However, within BHEL,
the Engineering Co-ordinator ensured
preparation of overall schemes, ap-
proval of vendor drawings and design,
and overall engineering co-ordination.
The Divisional Co-ordinators at manu-
facturing plants were entrusted the
responsibility of co-ordinating manu-
facturing activities in their respec-
tive areas.
Early in the project execution stage,
the Project Co-ordination group with
the help of the Engineering Co-ordina-
tor prepared a "Contract Handbook".
This detailed out the complete scope
of the project and indicated which
agency had the prime responsibility
for the defined area of work. It also
gave details of exact scope of works
and Elupply. The Contract Handbook
helped each player to understand his
own role/responsibility and also learn
about the roles and responsibilities
of other players. The responsibility
of co-ordination between the various
agencies rested with the project co-
ordination group.
Proiect Manaaement and Control
The project was managed by network
techniques. A Master network was
prepared with two different completion
times. A 36 month network was pre-
pared to review and monitor as per
project requirements including with
the Project Owner and the Technical
Consultants. In order to achieve high
probability of success in completing
the project in time, another network
with completion time of 34 months was
prepared. The second network was
mainly used for project monitoring and
control by the project co-ordination
group. All review and time planning
was based on a 34 month network. The
network gave an overall picture of the
project and was monitored with the
help of a computer. At the beginning
88
of the project weekly reports were
generated after feeding weekly data.
Based on the master network level I1
networks were prepared by each Divi-
sional Co-ordinators for their area of
work. These networks included:
1. Network for project engineering
2. Network for civil construction
3. Network for electrical and
mechanical works
4. Network for transmission and
distribution works
5. Network for BHEL manufactured eq-
uipment and bought out equipment
These networks were monitored by the
project co-ordination group with the
Divisional Co-ordinators, initially,
on a two week interval and, subse-
quently, on a monthly basis.
However, each manufacturer/ subcon-
tractor of the project prepared his
own network deriving key dates from
the level I1 network. These were
called the level I11 networks and were
reviewed regularly by the concerned
Divisional Co-ordinators on a regular
basis and it's review provided infor-
mation for feeding data for the review
of level 11 networks.
Apart from review of progress of the
project regularly on network basis,
regular review meeting were also held
with the Project Owners, Consulting
Engineers and main project execution
agencies. These meetings helped in
expediting decisions on project execu-
tion matters which had direct bearing
on the time and cost of the project.
The project was being executed simul-
taneously in many parts of the world.
In order to have fast communication
and to have acceptable level of turn-
around time on information many new
concepts were used:
1. It was necessary that all commu-
nications either by letter or by
telexes is received by the concerned
agencies and in case of any missing
communication both sender and the
receiver agency should be alerted: A
specific letter/telex numbering scheme
for each agency was devised. A record
was kept by all agencies receiving or
sending messages to check that these
are being received regularly and no
message is missed. The system of
message numbering was as follows:

J/A/B - T 001
where
J = denotes the name of the project
A = name of the issuing agency
B = name of the receiving agency
T = stands far telex but it can be
changed to F for fax or to L
for letter
001= it is the sequential numbering
of the message.
2. The communication between project
site and project co-ordination in New
Delhi bas strengthened. A radio link
was established between Gizan and
Liasion office in Riyadh. Then a
telex link was established between
Riyadh and New Delhi. T h e was fixed
for a call between Gizan and Riyadh.
Telex messages from New Delhi were so
sent that there was proper co-ordina-
tion with Radio link timings.
3. In order to cut down the drawing
approval time, after the desighs were
ready a team of engineers would visit
the Supervising Engineer for drawing
approvals. Wherever changes were
required by the supervising engineer,
these were carried out during the
meeting itself. Drawings were resub-
mitted and approvals obtained, thus
reducing the time of drawing approvals
to the barest minimum.
4. A n executive was earmarked pri-
marily for collection of reports on
LII 'networks for updating L1 networks.
He was travelling every week to dif-
ferent centres of activity for collec-
tion of such information.
5 Due to postal limitations, the
feedback from the project site was
time consuming. Similarly, it was
difficult to rush resources at short
notice if t h e project was behind
schedule. A concept of rolling plan
was developed. The site activities
were planned in detail for the next
four weeks. Review was taken at the
end of each week and a new week aded
to the planning process. This review
along with resource planning for the
fourth week was sent every week to the
Project co-ordination group in New
Delhi for overall project review and
feed back.
A strong and sound project planning
was the backbone of the project. It
was rigidly adopted and followed. It
89
was one of the key factors for the
success of the project. In house
detailed review was also undertaken
with BHEL top management every two
months and help sought wherever sup-
port from outside agencies including
Govt of India was required.
-~
Cost Control
The success of the project was also
dependent on its execution at the most
optimum cost. A tight budgetary
control was enforced to ensure no cost
over runs. In brief following mecha-
nism of budgeting was adopted.
1. The cost of each component was
estimated. It was compared with the
overall cost and with minor adjust-
ment, the cost of each package was
frozen. (It is to be kept in mind
that overall project cost was already
fided).
2. A s i n c a s e of time planning,
three percent was estimated as the
probability factor.and it was deducted
from the frozen cost of each element.
The new cost became the target cost of
each element.
3. Whenever a c d t m e n t to purchase .
was made it was compared with the
target-cost. If the purchase price
was more, engineering design require-
ment was closely evaluated to check if
requirements could be ref rdmed to
avert cost over run.
4. Tendering system was adopted for
major components, but the price of the
competitors was' not advised to the
bidders. Negotiations were again
conducted with the lowest bidders to
elicit further concessions. Overall a
saving of 3.5% was achieved in the
target costs of purchased items.
5. As the payment of various compo-
nents was in different currencies like
US$, DM. Sw.Fr., etc., and the receipt
was in Saudi Rials, management of
exchange risks was extremely important
for cost control: Offshore bank A/c
in Bahrain and London were opened and
surplus funds converted into these
currencies at the most appropriate
time to hedge against exchange risks.
Such funds were then invested in short
term deposits.
6. One of the major expense was that
of shipment and transportation of
equipment to the site. In order to
cut d o w n expenses, equipment w a s
directly shipped to Gizan port, by
clubbing the shipments and chartering
small ships having their own derrick
cranes. This arrangement not only
reduced the cost but also reduced
transportation damages to the minimum.
Survey of road from port to project
site was done by experts and the road
was either strengthened or diversions
built.
7. I n short all areas of expenses
were carefully monitored and it was
ensured that only minimum possible
costs are incurred. This resulted in
a net saving of 8% from the budgeted
project costs.
Problems in a Transnational Environ-
a well within budgetary estimates. The
The challenges of execution of a
project in a transnational environment
are great, but the experience could be
equally rewarding. As a project
management team, consideration of many
external factors are important and so
also the practices in different coun-
tries. Some of the issues that came
up while executing this project were:
1. Varying standards in each country
like ASTM/BS/VDE/IS/IEC etc. and the
role of project engineers to ensure
interchangeability and compatibility
of gquipment in the project. 1.t was
also necessary to ensure that the
character of the project is kept
intact rather than appearing like a
patchwork.
2. Effective, fast and reliable
means of communication with all the
agencies was of paramount importance.
Though w i t h the advent of modern
communication means like Fax, E Mail
and video conferencing, etc., many
such hurdles are likely to be overcome
easily but it will remain an important
aspect of transnational projects.
3. Laws of each country, Visa re-
strictions, currency fluctuations add
dimensions of uncertainity. These
have to be watched carefully and
wherever necessary suitable advance
actions must be taken to avoid delays.
4. In spite of modern communication
means, flow of drawings and technical
documents will remain important. An
effective, fast and reliable means of
postal communication is necessary.
5. Co-ordination of timely supplies
is important. Role of establishing
an optimum shipment and transportation
facility is very important, as materi-
al will flow in from many countries.
It is also important to ensure that
transportation damages are minimum.
6. Preparation of drawings, O&M
manuals, and consolidated spare part
lists is important for smooth opera-
tion after commissioning. Practices
in each country differ yet the final
project should show an unified ap-
proach.
Goncluaiap
The project was completed in time and
experience of executing such a project
was rich and rewarding.
With globalisation of trade and break-
ing of economic barriers, a new world
order is likely to.emerge. Polarisa-
tion of manufacturing facilities in
competitive environments is likely to
take place. Thus turnkey projects in
the coming years would necessarily be
executed in a global environment.
Standardisation of engineering prac-
tices o n a n international level,
international acceptance of products
are key issues which will play an
important role, w h i l e e x e c u t i n g
projects in a transnational environ-
ment s
A c ~ l e d g ~ t
Authors acknowledge the help provided
by members of the project team who
participated in the project execution.
Authors also wish to gratefully ac-
knowledge the opportunity given to
them by the management of Bharat Heavy
E l e c t r i c a l 8 L t d to e x e c u t e this
challenging pro ject .