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IJPSM
13,7 Managing projects in fast track
A case of public sector organization in
India
588 Prasanta Kumar Dey
Department of Management Studies, University of the West Indies,
Bridgetown, Barbados, West Indies
Keywords Concurrent engineering, Organization restructuring, Team building, Contracts,
Materials procurement, Risk management
Abstract Completing projects faster than the normal duration is always a challenge to the
management of any project, as it often demands many paradigm shifts. Opportunities of
globalization, competition from private sectors and multinationals force the management of
public sector organizations in the Indian petroleum sector to take various aggressive strategies
to maintain their profitability. Constructing infrastructure for handling petroleum products is
one of them. Moreover, these projects are required to be completed in faster duration compared
to normal schedules to remain competitive, to get faster return on investment, and to give
longer project life. However, using conventional tools and techniques of project management, it
is impossible to handle the problem of reducing the project duration from a normal period. This
study proposes the use of concurrent engineering in managing projects for radically reducing
project duration. The phases of the project are accomplished concurrently/simultaneously
instead of in a series. The complexities that arise in managing projects are tackled through
restructuring project organization, improving management commitment, strengthening
project-planning activities, ensuring project quality, managing project risk objectively and
integrating project activities through management information systems. These would not only
ensure completion of projects in fast track, but also improve project effectiveness in terms of
quality, cost effectiveness, team building, etc. and in turn overall productivity of the project
organization would improve.
Introduction
Many industries are in a period of rapid change brought about by technological
breakthrough. Improvements in communications and networking technologies
have allowed many companies to expand their operations globally. Advances
in computer technologies are changing the management philosophies of
organizations. The explosive growth of the Internet and the World Wide Web
is creating virtual organization and changing the whole concepts of
management. Customers increasingly expect products and services of higher
quality at lower price and with quicker delivery.
The Indian Petroleum Industry is also passing through a very dynamic
business environment due to the liberalization of many Government policies.
These introduce multinationals, the participation of private players in core
sectors and the pressure of globalization. Due to sudden changes in industrial
The International Journal of Public
policy and the economic scenario in the country, public sector organizations in
Sector Management, the petroleum sector are expected to face an open economy, competition from
Vol. 13 No. 7, 2000, pp. 588-609.
# MCB University Press, 0951-3558 multi-national companies, private players, free pricing systems and public
participation in equity. This changed scenario demands competitive edge and Managing
quick response to the dynamic environment. projects in fast
To compete in this dynamic business environment, these organizations have track
taken up an aggressive strategy of constructing facilities (refineries, pipelines
and retail outlets etc.) for petroleum products by augmenting the present
capacities and installing new facilities. Moreover, completing these projects at a
faster pace is the challenge for the management of projects to remain 589
competitive.
The parameters for any project are:
. on time completion;
. within the specific budget; and
. with requisite performance (technical requirements).
Unfortunately, current project management practices of the organizations in
the petroleum sector do not always ensure success. The main problems with
project planning and implementation have been cost and time overruns and
quality non-achievement.
The main contributing factors are:
. expansion of the scope and subsequent quantity increases of input
resources;
. engineering and design changes;
. underestimation and incorrect estimation;
. unforeseen inflation.
Other prominent causes of problems are:
. project size and complexity;
. unforeseen technical difficulties;
. schedule changes;
. tight schedules and excessive concurrence of project phases;
. poor contract administration and policies;
. poor project definition;
. labor problems and poor industrial relations;
. changes in government policies and regulations;
. non involvement of the project staff in the planning stage;
. project staff not working full-time on the same project.
The problem multiplies with the size of the project as uncertainties in project
outcome increase with the size of a project.
This study attempts to determine the means of completing projects in fast
track without a major effect on the budget and without sacrificing quality.
IJPSM Methodology
13,7 This study adopts the concept of concurrent engineering (CE) as a technique for
drastically reducing project duration. Concurrent engineering is also called
simultaneous engineering and results from synthesizing two fundamental
observations. The first is that changes become more and more costly the later
in a project they are done. The second is that doing the different steps of a
590 project in parallel i.e. simultaneously or concurrently, gets the project done
faster (Kerzner, 1995).
The following steps are proposed for modeling projects to complete in fast
track:
(1) Mapping the current project management processes.
(2) Deriving the duration of the project in line with present practice.
(3) Fixing a stretched target for project completion by identifying the work
packages and activities that can be executed simultaneously.
(4) Identifying the means for achieving this target.
(5) Modeling the project through enablers.
All the above steps are carried out with the active involvement of project
executives through brainstorming and Delphi technique.
The methodology is explained through a case application on a cross-country
petroleum pipeline project by a public sector organization in India.
A cross-country petroleum pipeline construction project is characterized by
the complexity of its execution with respect to lack of experience in relation to
certain design conditions being exceeded (water depth, ground condition,
pipeline size, etc.), the influence of external factors that are beyond human
control, external causes which limit resource availability (of techniques and
technology), various environmental impacts, government laws and regulations,
and changes in the economic and political environments.
The project consists of laying a petroleum pipeline of length 1,300km in the
western part of India. The pipeline is 22 inches in diameter for a length of
218km, and 10.75 inches for a length of 123km (branch line). The pipeline is
designed for five million metric tons per annum (MMTPA) with an
augmentation capacity of 7.5 MMTPA.
591
Figure 1.
Current project
management model
IJPSM (6) Works contract preparation.
13,7 (7) Materials procurement.
(8) Project monitoring and control.
(9) Implementation and commissioning.
592 Figure 2 shows the bar chart of various activities in a conventional way of
managing projects. The standard project duration is 36 months. The
conventional project management model suffers from the following
shortcomings:
. All project phases are connected to each other by some precedence
relationships. These increase the cycle time of a project.
. Changes are part and parcel of any project. Most of the changes occur at
later phases of the project. These cause updating of plans, designs etc.
and result in considerable delay to the project completion.
. Owner project group, consultants, contractors and vendors constitute
project participants. They are inducted in various phases in line with
their requirement in the project management system. This results in
comparatively less commitment to the overall achievement of projects.
Ogunlana et al. (1996), outlined the factors responsible for delays in various
types of projects in the UK, other developed countries, and Nigeria and
Thailand. His study determined that projects in underdeveloped countries have
problems like materials procurement, skilled labor shortage, poor contractor
management, etc. However, projects of developed countries are generally not
affected by these factors. However, changes in orders are the major problems
for all types of projects in various parts of the world.
The same study shows the reasons for project delays on housing projects in
Thailand (Ogunlana et al., 1996). Incomplete drawings, materials management
Figure 2.
Schedule for
constructing
cross-country petroleum
pipeline projects in
conventional way
problems, deficiencies in organization, shortage of construction materials, and Managing
shortage of site workers are the main reasons for delay. A study was conducted projects in fast
by Dey (1997) to determine the causes of time and cost overruns in projects of track
various organizations in the petroleum sector of India. Fifteen recently
completed and ongoing projects were studied. This study identified the
common causes of time and cost overruns on projects. Delay in materials
supply and delay in execution and commissioning are the main causes of time 593
overrun. However, change in scope and cost escalation due to delay in
execution are the main causes of cost overrun.
Many researchers suggested steps in analyzing project delays. Al-Saggaf
(1998) suggested five steps (data gathering, data analysis, identification of the
root cause, classification of the type of delay, and assigning responsibility) for
analyzing delays and formulating their mitigation.
Yates and Audi (1998) developed a decision support system for analyzing
project delays through a perception program. The perception program
demonstrates the importance of categorizing, quantifying, and recording the
data generated on projects related to project delays so that the knowledge can
be captured for use during the remainder of the project and on similar types of
future projects.
This study proposes a major paradigm shift in managing projects, i.e.
project management in concurrent engineering framework with an objective of
completing projects in a shorter time. Figure 3 shows the bar chart for a
proposed model with a completion target of 18 months. The project executives
of the project under study derived this stretched target.
The model has the following characteristics:
. All project phases are carried out concurrently/simultaneously instead
of in sequence.
. The work packages are planned to be accomplished simultaneously.
Figure 3.
Schedule for
constructing cross-
country petroleum
pipeline projects in CE
framework
IJPSM . A cross-functional owner's project group is involved throughout the
13,7 project duration.
. All project participants (owner's construction group, consultants,
vendors and contractors) are engaged from the beginning of the project.
. Desired change in any phase can be carried out with the understanding
594 of implication on the overall project achievements.
. As all project phases are carried out concurrently, the risk of project
achievement increases considerably.
. All project phases demand more information exchange among project
participants for integrating plans and reports.
Ibbs et al. (1998) indicated through their study on 108 construction projects that
high levels of fast tracking result in somewhat greater project change
especially near project completion. Therefore, the owners and contractors
should be aware of the potential for a heightened magnitude and frequent
changes and accordingly plan their responses to tackle these.
Keeping the above in mind, this study proposes an effective project plan
along with dynamic project monitoring and controlling systems with a few
contingency plans.
595
Figure 4.
Proposed project
management model
IJPSM Organizational restructuring
13,7 The current organization structure (Figure 5) of project management of the
organization under study has following characteristics.
. There are common owner's project groups for planning, engineering,
contract preparation and materials procurement to manage a number of
596 projects simultaneously (multiple project environment).
. Only construction activities are managed by a dedicated construction
group (owner's representatives).
. Consultants, vendors and contractors are engaged on various phases of
a project throughout the bidding process.
The proposed organizational structure (Figure 6) with a cross-functional
owner's group dedicated for a specific project has the following characteristic:
Figure 5.
Current project
organisation
(internal-external)
Figure 6.
Proposed organisation
structure with
cross-functional groups
for project management
. Consultants, contractors and vendors are selected from a pre-qualified Managing
pool by examining their present commitment. projects in fast
track
Improving management commitment
The group of project executives decided to get the following commitments from
the management for successful completion of projects in CE framework:
. provide prompt funding and resources; 597
. provide fast approval;
. ensure that support activities actually support the team and do not delay it;
. promote innovation;
. select excellent project manager and project team;
. provide adequate delegation of authorities;
. provide incentive to project personnel for success.
Figure 7.
Implementation
methodology selection
for laying cross-country
petroleum pipeline
across river
the selection of the project participants is absolutely critical to ensuring project Managing
success. Many authors have suggested models for the selection of project projects in fast
managers, contractors and vendors and have used various operation research track
tools. Nguyen (1985) used fuzzy theory, Mustafa and Ryan (1990) applied
analytical high hierarchy process (AHP) (Saaty, 1980), and Holt et al. (1994)
applied multiple attribute value and utility theory.
This study used AHP for the selection of project participants, as AHP allows 599
objective as well as subjective factors that are conflicting in nature to be
considered in the decision model in a group decision framework. Figures 8-11
show owner's project group, consultants, contractors, and vendors selection
model respectively in AHP framework.
The following steps were followed to design the decision support system for
project team selection in AHP framework:
(1) Identifying goal and alternatives.
(2) Identifying the factors and sub-factors that lead to selection of the best
from the alternatives.
(3) Comparing the factors and sub-factors pairwise and form square
matrices in factor and sub-factor level to determine the importance of
factors and sub-factors in the decision model.
(4) Comparing each alternative with respect to each sub-factor to determine
the preference towards the alternatives.
Figure 8.
Owner project group
selection model in AHP
framework
IJPSM
13,7
600
Figure 9.
Consultant selection
model in AHP
framework
Figure 10.
Contractor selection
model in AHP
framework
601
Figure 11.
Vendor selection model
in AHP framework
603
Figure 12.
Risk mapping
Figure 13.
Project management
system of cross-country
petroleum pipelines
IJPSM
13,7
606
Figure 14.
Materials procurement
and control information
system
Figure 15.
Contract preparation
and contract execution
information system
through earn value analysis (EVA) and corrective actions are initiated in a co-
ordinated way at an appropriate level.
608
Figure 16.
Benefits of concurrent
engineering