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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.

Mapping the current process and fixing stretched target


Figure 1 shows the current project management model of a cross-country
petroleum pipeline project in India. It consists of the following phases:
(1) Project feasibility study.
(2) Project appraisal.
(3) Project planning.
(4) Detailed survey and land acquisition.
(5) Design and detailed engineering.
Managing
projects in fast
track

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.

Means of completing project in fast track


The group of executives through a brainstorming session employed the
following philosophies for applying CE in project management with an
objective of completing projects in fast track.
(1) Organizational restructuring.
(2) Improving management commitment.
(3) Supplementing project planning by including the following:
. selecting technology and implementation methodology;
. selecting contract type for various work package;
. selecting of owner project group including project manager;
. selecting of project team (consultants, contractors, vendors);
. designing incentive scheme for owner project group and project
team for motivating them in completing project.
(4) Managing project risk.
(5) Ensuring project quality.
(6) Implementing a Net-based information management system for effective
communication among project team members.
Figure 4 shows the proposed project management model in CE framework.
Managing
projects in fast
track

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.

Supplementing project planning


The group decided to strengthen the planning activities by incorporating the
following tasks:
. technology and implementation methodology selection;
. contract type selection;
. appropriate project participants selection;
. project incentive scheme design for better performance.

Technology and implementation methodology selection


These are very important issues in managing large projects. Managing projects
in CE framework demands responses to these issues in project planning stage.
Unless these are resolved in planning, these become constraints in the latter
part (during design and implementation) of the project. These may cause
considerable delay in completing the project. While selecting technology, the
decision makers should consider whether the technology is available, proven,
latest and implementable. They should further look into the compatibility of
the technology and implementation methodology with government policies and
organizational objectives along with the need of society as a whole. The
following steps were taken to resolve these issues for the project under study:
(1) All the work packages were studied with respect to their design,
engineering and implementation points of view.
(2) Critical packages were identified for further analysis.
(3) Alternative technologies and implementation methodologies were
determined.
(4) The factors that led to the selection of the optimum methodology were
identified.
IJPSM (5) The factors were analyzed with respect to the alternatives.
13,7 (6) The optimum selection was made.
Figure 7 shows an implementation methodology selection model in analytic
hierarchy process framework for laying the pipeline across a river.

598 Contract type selection


Selection was made from a few contract types like engineering, procurement
and construction (EPC), cost plus contract and unit rate contract for
implementing each work package.
The following criteria were considered for selecting contract type of each
work package:
. Design, engineering and implementation complexity.
. Knowledge and expertise of owner project group.
. Adequacy of survey and engineering before implementation.
. Degree of uncertainties of its completion within time and cost.
. Availability of manpower for supervision.
. Quality requirement.
. Experience of owner project group.
. Availability of contractors.
. Cost of the package.
These factors were thoroughly analyzed before selecting the contract type of
each work package.

Selecting appropriate project participants


Owners project group, contractors, and vendors, sub-contractors and
sub-vendors form a team to work together to accomplish a project. Therefore,

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

(5) Synthesizing the result across hierarchy to determine overall ranking of


alternatives.
(6) Selecting the best alternative.
The factors and sub-factors vary from project to project in line with the
objectives of the project and strategies of the project owner.
Managing
projects in fast
track

601

Figure 11.
Vendor selection model
in AHP framework

Project incentive scheme for better performance


An incentive scheme has been implemented for improving project performance.
The salient feature of the scheme is as follows:
. Determining overall saving in time (completion target ± actual
completion), n days.
. Deriving the extra cost ( A) of project for time overrun by one day as per
approved IRR.
. Total savings, B = n A.
. Determining saving in project cost (Budget ± Actual), D.
Incentive to owner project group:
. Total amount to be distributed among the owner project group, E = B +
50 per cent of D.
. Pay 20 per cent of basic salary (for the duration of involvement) to all
owner project group amounting to F, if F < E.
. If F > E, proportionately reduce the incentive amount.
The owner project group will be eligible for incentive only after accident free
project implementation, commissioning and trouble free running of plant
beyond the defect liability period.
Incentive to contractors and vendors:
IJPSM . Pay 10 per cent of contract amount to all contractors and vendors who
13,7 have completed implementation and delivered the materials respectively
in stipulated time if overall project is completed before schedule and if
B > C, where C is the total amount payable to contractors and vendors.
. If B < C, proportionately reduce the amount of incentives to all.
602 Contractors and vendors will be eligible for incentive only after maintenance
free operations of the system beyond defect liability period.

Managing project risk


Risk management is used as a tool for managing a project effectively
throughout its life cycle. Many authors (Baker, 1986; Cooper and Chapman,
1986; Hall, 1986; Williams, 1993; Yeo, 1996; Dey et al., 1994) have shown its
effective and efficient use in managing projects.
Risk management consists of:
. identifying risk factors;
. analyzing their effect;
. responding to risk; and
. controlling the responses.
The following steps were followed while managing risk of the project under
study:
(1) Forming a risk management group.
(2) Prioritizing all work packages with respect to their risk characteristics
through group decision process in project level.
(3) Identifying risk factors and sub-factors for each vulnerable work
package through check list method (Perry and Hayes, 1985) with the
active involvement of the people working in this work package.
(4) Listing out all potential risk factors in a register.
(5) Analyzing their effect by determining the probability of their
occurrences and likely impact (severity) on project outcome (time, cost
and quality achievement) from expert opinion.
(6) Mapping the risk with respect to probability and severity (Figure 12).
(7) Taking actions for mitigating the effect of risk for the zone as marked in
Figure 10.
(8) Preparing contingency plan for low probability and high impact risk.
(9) Repeating the above steps as per schedule of plan (e.g. every month for a
few work packages of the project under study).
The project risk management group worked very closely with the project
monitoring and controlling group.
Managing
projects in fast
track

603

Figure 12.
Risk mapping

Ensuring project quality


Quality management in a project is a team effort, employing a system of checks
and balances in a disciplined progression, to ensure the implementation of
design and construction according to established criteria, within constraints of
project requirements, environmental sensitivities, and professional and
regulatory standards (Wu and Harwell, 1998).
In the project under study, project quality was ensured through the
following steps:
(1) Forming a project quality assurance team for executing following
activities.
(2) Establishing a quality assurance program to ensure that the design met
the system objectives.
(3) Reviewing all design calculations, drawings, specifications and study
reports thoroughly by expert engineers and/or consultants.
(4) Controlling the use of all documents, drawings, specifications etc. to
ensure the use of the latest one.
(5) Archiving all projects documents sequentially for easy retrieval during
their uses in due course.
(6) Inspecting all procured materials with respect to specification on site
and/or vendor's premises.
(7) Inspecting site activities over and above the owner supervision.
(8) Identifying noncompliance and suggesting improvement plans.
(9) Playing active role in design change and scope change activities.
IJPSM Implementing integrated project management information system
13,7 The application of concurrent engineering for the radical reduction of project
duration demands an integrated information system for effective project
management. The conventional project management process remains no longer
valid in integrated project management framework. The business process
reengineering acted as a facilitator to integrating the entire project
604 management of cross-country petroleum pipelines.
As organizations strive to be more competitive in today's challenging
business environment, more of them are taking a radical look at what makes
them successful. Business process re-engineering (BPR) as introduced first by
Hammer and Champy (1993) is becoming a philosophy for success. According
to Hammer, BPR is the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical, contemporary
measures of performance, such as cost, quality, service, and speed.
BPR emerges as a management philosophy like total quality management
(TQM). Like many other authors Yeo (1996) suggested that TQM and BPR are
not mutually exclusive. Both TQM and BPR emphasized customer-focus,
teamwork and empowerment. The basic difference has to do with the nature of
change and the quantum of consequential improvements. If TQM is primarily
good for gradual, continuous and incremental improvements of Kaizen, then
BPR is supposed to bring about ``radical'' changes and ``dramatic''
improvements. TQM addresses quantitative change and BPR causes
qualitative change of ``revolution''.
The following steps were followed for carrying out process reengineering for
implementing integrated project management information system:
(1) Decomposing processes.
(2) Mapping of current processes.
(3) Preparing cost-time profile.
(4) Determining customer (external/internal/outside suppliers) value
structure.
(5) Identifying and prioritizing key issues.
(6) Analyzing root causes of key issues.
(7) Deriving paradigm shifts.
(8) Mapping re-engineered process.
(9) Preparing cost-time profile.
(10) Determining customer (external/internal/outside suppliers) value
structure.
(11) Identifying assumptions.
(12) Determining benefits.
(13) Deriving a few projects from identified assumptions.
(14) Preparing time bound action plan for implementation of above projects. Managing
(15) Following up the implementation. projects in fast
The detail of process reengineering has been explained elsewhere (Dey, 1999). track
Figure 13 shows the project management system in an integrated
framework for the project under study. The entire scope of work is classified to
form a few work packages through work breakdown structure and cost break- 605
down structure. These result in network scheduling and resource deployment
planning for each work package. The engineering design derives bill of
materials, materials and works specification. The online information (Net
based) related to completed projects, contractors/vendors database and cost
database provides generation of cost estimates and subsequent preparation of
contract proposal with strict adherence to the schedule. These lead to the
selection of appropriate vendors and contractors for implementation. The price
quoted by the successful vendors/contractors, specifications and plans become
the basis for project control and centralized monitoring (Net based) of these
parameters keeping projects within the schedule. Figure 14 shows the materials
procurement and control information management system. The information
management system for contract preparation and project implementation is
depicted in Figure 15.
Integrated information systems form a network among the project team
(owner group, consultants, contractors, vendors). The planning parameters
(schedule, resource requirements and specification) are standardized for all
project team members through common consensus with the objective of
completing projects on time, within budget and as per specification. The project
achievements are measured in line with control requirements, analyzed

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.

Summary and conclusions


The organization under study is the market leader in petroleum sectors
working in a closed economy and under an administered pricing system. Due to
sudden changes in the industrial policy and economic scenario in the country,
the organization is expected to face an open economy, competition from Managing
multinational companies, free pricing systems and public participation in projects in fast
equity. This changed scenario demands a competitive edge and quick response track
to the dynamic environment.
Completing projects more quickly is the need of the hour. Conventional ways
of managing projects are no longer valid for managing projects of this
dimension. This study explains the application of concurrent or simultaneous 607
engineering (CE) for completing projects quickly. Experienced project
executives of the organization decided the stretched target for completing a
project. Through brainstorming, they derived the means of achieving this
target. This study demonstrates a typical application of CE in managing
projects in a fast track by a case study on a cross-country petroleum pipeline
project in India. It suggests a different organization structure and improved
management commitment for project management. Further, it prompts the
strengthening of planning activities through the following:
. Appropriate technology and implementation methodology selection for
each work package.
. Selection of project team members ± owner project group, consultants,
contractors, and vendors objectively.
. Process re-engineering for effective management information system.
. Selection of contract type for each work package objectively on the basis
of a few factors.
. Forming quality assurance program.
This study strongly recommends controlling projects through project risk
management, quality monitoring and a Net-based integrated information
management system.
The benefits that can be achieved by using CE in managing projects are
depicted in Figure 16. These are as follows:
. CE reduces project cycle time considerably.
. Application of CE increases project cost marginally, but the life cycle
cost of project reduces considerably due to fast returns of investment.
. In CE all project phases and work packages are executed
simultaneously. This helps in managing the changes that are required
for effective project achievement.
. CE focuses on customer's requirement at every phase of the projects,
thereby ensuring quality project outcome.
. CE provides co-ordination and integration, communication, co-operation,
collaboration, commitment, consensus and compromise. These improve
project team effectiveness.
. All these and many others help the project to be completed with every
success.
IJPSM
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608

Figure 16.
Benefits of concurrent
engineering

CE philosophy can be applied to any type of project for rapid completion.


However, this study recommends process re-engineering for its successful use
as CE application demands a few major paradigm shifts in managing projects.
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