1. PSWR GOA Summit For Excellence 28-31 Aug 2009 PRESENTATION BY SYNDICATE GROUP – 3 OPTIMISING MONITORING AND CONTROLLING PROJECT COST 1.U V KULKARNI GM/IOCL BARODA 2. H K GAIKWAD AGM 2.G VASUDEVAN AGM 4. J MATHEW AGM 5. P K SAHU AGM 6. V M MALAVI AGM 7. R K GOEL SDGM/HRDD

2. BHEL - PSWR PERFORMANCE PROFILE OF PSWR

3. YEARVALUE ADDITIONPROFIT VALUE % OF TURNOVER NET OF STVALUE % OF TURNOVER NET OF ST RS. LAKHSBUDGETACTUALRS. LAKHSBUDGETACTUAL 2004-051393431.7830.71896222.1619.75 2005-062412940.3338.001752731.5927.42 2006-073580637.6236.402838029.5428.85 2007-082955941.3130.421972031.4520.30 2008-092477633.0424.861591824.5915.97 2009-10 32.00 25.61 BHEL - PSWR PERFORMANCE PROFILE OF PSWR

4. Major Cost Drivers

5. Enabling Works - Costs Present StatusRecommended ProcessSolution/Actionable Point Non-standard specifications Storage & Office space to be standardised and re-usable for different classes of Projects. Standard layout for both covered and open storage areas to be developed – to be done by ISX Dept.

6. Storage & Handling costs Present StatusRecommended ProcessSolution/Actionable Point Unscheduled receipt of materials when Site is not equipped to handle the same MUs shall obtain clearance of PSWR Project Manager before despatch of unscheduled materials, failing which the associated additional costs incurred by PSWR shall be passed on to MU.

7. Deviation from scope & specs Present StatusRecommended ProcessSolution/Actionable Point Scope of work gets revised during execution. Tech Specs as given by Customer/Con sultant are not fully reflected in inputs received from Engg Centre(s) Task force to create data base for such deviations for commercial to take care for future project. Separate estimation cell to be created to provide estimates to commercial and subcontracting group. Addl cost to PSWR to be passed on to Engg. Centre(s)

8. Actual costs vis a vis estimates Present StatusRecommended ProcessSolution/Actionable Point Actual detailed past cost data to complete Feedback loop for detailed cost estimation not available. Inadequate cost accounting system. To have a closed loop i.e. quarterly review of Project cost viz a viz Estimates at HQ to be institutionalised and to be communicated to site for effective cost control

9. Storage of materials Present StatusRecommended ProcessSolution/Actionable Point Despatch before set up of system at site and traceability of materials due to improper storage SOMS / E-Store with adequate manpower to be in place before receipt of material at site.

10. Insurance costs Present StatusRecommended ProcessSolution/Actionable Point Policy being extended repeatedly due to contract conditions Insurance to be in scope of customer OR To be reimbursed by customer at actuals OTHERWISE Contract condition upto COD must be insisted by Marketing

11. Effective Use of Hired T&P Present StatusRecommended ProcessSolution/Actionable Point Hire duration is extended repeatedly due to non- availability of reqd inputs – Engg, Matl & Front Responsible agencies to be identified and communicated for passing the additional costs. Standard erection process to be adhered strictly irrespective of material availability.

12. Compensation Claims on Customer Present StatusRecommended ProcessSolution/Actionable Point Costs increases due to extra contractual work. Protocols for extra works must be jointly signed for commercial settlement

13. Proper maintenance of T&P Present StatusRecommended ProcessSolution/Actionable Point Improper maintenance results in high costs due to delays. History sheets and logbooks for T&P to be maintained. BHEL Manpower to be provided alongwith suitable subcontracts for technicians / with OEM’s

14. Rework / Rectification Cost Present StatusRecommended ProcessSolution/Actionable Point 1.System implementation of Documentation, Reporting & Control inadequate. 2. Back charges levy by Customer. 3. Extra work due to rework / rectification. 1.SFR / SDR to be strictly filled by site. 2.Joint protocol with commercial implications to be signed in case work executed by customer. 3. Should be adequately decided if due to contractor and reviewed.

15. Vendor Management Present StatusRecommended ProcessSolution/Actionable Point Few vendors available Higher subcontract costs Broadbasing of vendors and revisiting of QR.

16. Process Related Cost Present StatusRecommended ProcessSolution/Actionable Point No Construction Engg Group available to optimize erection processes Construction Engineering must be formed consisting of domain experts.

17. Vendor Management Present StatusRecommended ProcessSolution/Actionable Point Few vendors available Higher subcontract costs Broadbasing of vendors and revisiting of QR.