Development of a project

Initial concept  Market survey  Economic feasibility  Selection of process and site location  (For small plans issue enquiry) (For other plans firm up bid process) (For large plans negotiate or take cost plus bids)  Bid process  Develop bid specifications and issue enquiries for bids and develop source of finance  (Fixed sum lump bid) (Fixed sum bid services) (Cost plus for contractors – engineering, procurement, construction)  Bids received analysed  contract awarded  work commenced

Bid preparation strategy

Does the company have capabilities and resources to perform the work Can the company phase the work to meet client schedule What is the company’s technical position What is the company’s approach to project execution Is the project, special importance to the client Would doing the project enhance our reputation What has been our past experience and contractual relationship with the client

What is company’s commercial approach and price strategy What are client’s future capital expenditure Who are the competitors and do they have any special advantages Does the client has preferred contractor and if so why What is the probability of project going ahead Does the project meet the immediate or long term objectives of the company Other work prospects for the company in the next six months? One year? Other special features and considerations

Control Time Cost Performance

Price adjustment formula

Applicable / preferred – long term project Need – win / win for both – supplier / buyer Exclude profits – seller may argue no profit – even then apply min 10% Arrive at cost of supply (price – profit) Break cost into raw material (inputs) and labour For raw material (inputs) agree for bench mark Bench mark – widely published price (indexed?) – atleast three reference BMs For labour – reckon cost of living index

Project evaluation First hand observation Oral and written reports Review and technical interchange meetings Graphical displays

Proper graphical displays can result in cutting project costs and reducing time scale coordinating and expediting planning estimating idle time obtaining better scheduling and control of sub-contractor activities developing better trouble shooting procedures cutting time for routine decisions but allowing more time for decision making

Bar chart for single activity Plot Contract negotiated  Contract Signed  Long lead procurement  Manufacturing schedule  Bill of materials  Short lead procurement  Material specifications  Manufacturing plans  Start up Against Weeks after go ahead

Manufacturing schedule Work load scheduled Work load completed Lack of material Down for repair / maintenance Schedule operations

Cost distribution Labour Transportation Material Depreciation Overhead Profits (percentage of total cost)

PERT (Programme Evaluation Review Technique)

Basis for all planning and predicting Provides plan for best possible use of resources to achieve a given goal within time/cost limitations Provides visibility and enables management to control one of a kind programmes as opposed to repetitive situation Helps to handle uncertainties involved by answering such questions as to how time delays in certain elements influence project completion, where slack exists between elements and what elements are critical to meet the completion dates

This provides mean for evaluating alternatives Provides basis for obtaining necessary facts for decision making It utilizes so called time net work analysis as the basic method to determine manpower, material and capital requirement as well as providing a means for checking progress Basic structure for providing information

PERT nomenclature EventO Activity 

Network fundamentals Charts’ inability to show interdependencies between events and activities Impact of early start Impact of late start Cost of a crash programme Slippage in programme

PERT What job immediately precedes this What job immediately follows this What jobs can be run concurrently Slack time

PERT / CPM

Primary objective Best time Least cost Least risk

Secondary objectives Studying alternatives Optimum schedule Effective use of resources Communication Refinement of existing / estimating process Ease of project control Ease of time or cost revisions

Constraints Calendar completion Cash or cash flow restrictions Limited resources Management approvals

PROJECT DIRECTION

Directing is the implementing and carrying out (through others) of those approved plans that are necessary to achieve or exceed objectives

Directing involves Staffing Training Supervising Delegating Motivating Counselling Coordinating

Staffing Seeing that a qualified person is selected for each position

Training Teaching individuals and groups how to fulfill their duties and responsibilities

Supervising Giving others day-to-day instructions, guidance, and discipline as required so that they can fulfill their duties and responsibilities

Delegating Assigning work, responsibility and authority so others can make maximum utilization of their abilities

Motivating Encouraging others to perform by fulfilling or appealing to their needs

Counseling Holding private discussions with another about how he might do better work, solve a personal problem or realize his ambitions

Coordinating Seeing that activities are carried out in relation to their importance and with a minimum of conflict

Directions are most effective when the KISS rule is applied

Keep it Simple and Stupid

Controlling

Controlling is a three-step process of measuring progress toward an objective, evaluating what remains to be done and taking the necessary corrective action to achieve or exceed the objectives Measuring Evaluating Correcting

Measuring Determining through formal and informal reports the degree to which progress towards objectives is being made

Evaluating Determining course of and possible ways to act upon significant deviations from planned performance

Correcting Taking control action to correct an unfavourable trend or to take advantage of an unusually favourable trend