Project report- Impact of Supply Management on Project Management-PPP Projects

Kunal Delwadia IIM Kashipur Kunal Delwadia

Project Management

Professor Harsha Kestur, RIMSR

27th February 2014

Impact of Technical Supply Chain Aspects on Overall Project Management – RMSIR

In the present economic condition infrastructure facilities in India behaves as a critical bottleneck and its

way of durable step taken to revive economic growth on track. While many country was focusing on

developing physical infrastructure successfully through private participation or through public- private

partnership. However in India, Private sector had very uninspired response and tiny steps were taken by

government to promote PPP model through policy framework or without any incentives. This draft

consist of three aspects specifically the role of a Project Leader and Procurement Head with respect to

inadequate transparency of procedures, inappropriate risk allocation, improper project approvals, cost and

time overruns, overlapping of regulatory and lack of good governance. How can we implement and

execute PPP model successfully? In my learning process, Project Management will help me to enhance

growth.

Three successful projects in India with Public- Private Partnership (PPP Model)

1. GMR Infrastructure Ltd- Airport Authority of India, Indira Gandhi International Airport.

Delhi Development Authority granted Indira Gandhi International Airport to operate, manage and

develop for 30 years. The project concession can be extended by another 30 years on mutual interest of

both the stakeholders. The partnership was constituted with 50.1% stake of GMR; Airport Authority of

India and other stakeholders constitutes of Delhi International Airport Limited (DIAL). DIAL is a

consortium of the GMR Group (50.1%), Fra port (10%) and Malaysia Airports (10%), India Development

Fund (3.9%) and the Airports Authority of India retains a 26% stake.

GIL led consortium began its operation in May 2006. A major expansion plan, entailing an expenditure of

Rs.86 Billion, is to be implemented during FY-08-10E to increase annual capacity of the airport to 37

million passengers from 18 million in 2006.

http://en.wikipedia.org/wiki/Fraport

http://en.wikipedia.org/wiki/Malaysia_Airports

Kunal Delwadia IIM Kashipur

Stakeholder of Delhi International Airport Ltd

1. GMR (50.1%)

2. Fra Port (10%)

3. Malaysia Airport (10%)

4. Indian Development fund (3.9%)

5. Airport Authority Of India (26%)

6. Passengers from India and abroad

7. Various Airlines

8. Transport service provider etc.

Key Success factors of DIAL

1. Constant focus on risk mitigation

2. GMR demonstrated ability to overcome regulatory hurdles and secure favorable terms

3. Capital Structure for Project finance.

4. Strategic Partnership with leading operators.

5. Identified Growth Potential with multiple growth levels

a. Leveraged at parental level

b. Re leveraging Project Assets

c. Securitization

d. Keep cash flows in mind not profitability

e. Adjusted tax structure

f. Analysis of Project opportunities, operating scenarios and assessment to key assumptions

2. Tata Power- Delhi Government (Tata Power Delhi Distribution Ltd)

Tata Power Delhi Distribution Ltd commenced their operations from July 2002 through PPP Model

framework as a 51:49 joint venture between Tata Power and Government of Delhi. When Tata Power

entered into joint venture with Delhi Government, there were problems in supply front, huge backlog of

Kunal Delwadia IIM Kashipur new connections and billing payment complaints, poor infrastructure support, workforce, which was

anxious and has a sense of disillusionment with the post privatization scenario. The task for the

management was to take initiatives that deliver results quickly. This would help improve the ground

situation and instill confidence in the stakeholders that promise the reform process holds would be

implemented at the ground level. Nine years since inception of this public-private partnership has

produced excellent results, which include:

Unprecedented AT&C Loss Reduction: AT& C losses were approximately reduced to 40% since take

over in July 2002 from opening loss level of 53% down to 13.2% at present

Significant improvement in power supply reliability: Power Supply situation in Delhi government held

power station has improved significantly over years owing to intensive investment in the network,

stringent maintenance practice, innovative reengineered, deployed systems and processes that offer

consumer convenience and ensure consumer expectation are met with high degree of repetitive,

consistency and efficiency. The success story of Tata Power Delhi Distribution is gaining recognition,

which becomes a model for further replication.

Stake Holders

1. The Government

2. The Customer

3. The Employees

4. Tata Power

3. Yamuna Express Highway, UP Government- Jaypee Group: SPV: Jaypee Infratech Ltd

The Yamuna Expressway Project was the dedicated project of Government of Uttar Pradesh; it was

started in 2001 to promote tourism, industrialization and urban development in surrounding areas. The

main objective was to have better connectivity with National Capital, Delhi, to attract tourist and promote

tourism of India’s most precious monument “TAJ MAHAL”. For this purpose special purpose vehicle

Kunal Delwadia IIM Kashipur Jaypee Infratech Ltd was constituted for implementation, operating and maintaining 165 km long 6 lanes

accessed controlled Yamuna Express highway in the state of Uttar Pradesh connecting Noida and Agra.

Stake Holders

1. Government of Uttar Pradesh

2. Jaypee Group

3. Customers

4. Employees

4. Gujarat Pipvav Port: Joint Venture GPPL- PRCL

Gujarat Pipvav port limited, India’s first private port company was commissioned in 1996. Port

connectivity hampered cargo growth at Pipvav port. Therefore, the joint venture formed with Ministry of

railway, Pipvav Rail Corporation to overcome this problem, Ministry of railways undertook the task of

converting the existing 250 km meter gauge into broad gauge between Surendra nagar and Rajula and

extending the line from Rajula city to the port. At the same time, a 30,000 sq meter rail container terminal

was developed. The rail project was completed in April 2003, and the terminal became operational in

November 2003. There has been a dramatic increase in container throughput since 2004.

Stake Holders

1. Gujarat Pipvav Port limited

2. Ministry of railways

3. Customers

4. Excise and transportation company

Role of Project head and Procurement Head

1. Careful planning of project and carefully analysing time span of individual task.

a. Strong emphasis should be put on forecasting revenue and cost as a part of the feasibility

study. Over estimation of revenue can bankrupt the concession.


2. Portfolio of projects if necessary to complete simultaneously finish the supporting project.

3. Control the project portfolio early detection through dashboards.

4. Resource contention and priority of task.

5. Keep an eye on project from start, deliver project at 95% on time and within budget.

6. Resource planning, budget tracking.

a. Value of competitive procurement – uncompetitive gives a strong position to negotiating

private party and can lead to excessive cost to government.

7. Reconcile project budget.

8. Level of risk associated with a project schedule, planning and execution.

a. Asses willingness to pay and prepare communication plan- widespread public opposition

can prematurely end the concession. The absence of an assessment of willingness to pay

can lead to dissatisfaction, and violent protests.

b. An external macro economic shock can create an un expected situation for government

whereby it can not comply with its contractual duties.

9. Leverage available resources in order to maximize the throughput of the project.

a. Strong institutional arrangement- institutional arrangement should ensure co-ordination

technical support that checks and balances are appropriately applied.

10. Legal framework

a. Comply with contractual agreement, financial profitability and sustainability is heavily

depends on government respect of contractual agreements.

b. A solid legal framework for PPP is needed to specify the “rules of the game” for the

private sector and reduce the project risk, thus improving the success rate of PPP projects

Importance of this live project in my career growth

I pursued my Bachelor’s of Technology in Instrumentation and Control Engineering from National

Institute of Technology, Tiruchirapalli, Tamilnadu, India. After completing my Bachelor’s of Technology

I had work experience in the field of Project Execution/ commissioning and installation in India’s largest

Kunal Delwadia IIM Kashipur steel making company at single location, JSW Steel Ltd. To enhance my technical knowledge, I pursued

Masters Of Engineering in Power Systems from University of Western Australia, Perth in 2010-2012.

Thereafter, I started my own venture named Red Cherry Multi commodity Pvt Ltd, an export firm, to

work with farmer to provide seasonal agriculture products to western world. I worked almost one and half

year in my startup and realized that I need to get exposure in management. Therefor, currently, I am

studying my Masters Of Business Administration (PGDM) from Indian Institute Of Management

Kashipur. Moreover, learning is important at every stage of life, it always increases as it moves. Hence I

would like to make constant effort to become a successful manager, and an entrepreneur. From my

perspective Project Management course would help me to build and to grow my business in future. I want

to enhance the learning opportunity provided by RIMSR. It will be good learning experience as well as

saving of time, so that I can use and apply this knowledge in real life situation, more specifically in my

own business set up.

Project Plan

In this segment, we examine the customary parts of distinctive foundations included in overseeing

specific parts of the store network. This segment serves as a forerunner to the advancement of a system

that exhibits how PPPs in supply chains can organize open and private performers in chain-level

2/25/14 3/2/14 3/7/14 3/12/14 3/17/14 3/22/14 3/27/14

PPP Projects Literature studies

Emprical Studies

Power Projects

Road Projects

Port Projects

Airport Projects

Build Survey

Post Survey

Contact industry Professional

Analysis (AHP)

start Date

Duration

Kunal Delwadia IIM Kashipur mediations for destitution lightening, given that the business disappointments and tests exhibited in HVA

supply chains may oblige a more integrative methodology.

The many-sided quality of supply chains intimates that there are numerous conceivable passage focuses

for both open and private intercession. As a purpose of union and further elaboration, it is suitable to

depict the exercises embraced in an inventory network all the more thoroughly and expressly with a

specific end goal to comprehend and characterize the potential parts for open and private establishments.

Our beginning stage is the production network model of Cooper, Lambert, and Pagh (1997), which

highlights the systems of exercises and procedures in the inventory network. Every performing artist in

the production network will do various distinctive inner exercises (of differing degrees of vitality,

contingent upon the performer), including generation, buy of inputs, logistics, showcasing and deals,

monetary administration, and innovative work. Along the production network itself, there will likewise

exist various paramount techniques that supply each one company's exercises and incorporate on-screen

characters along the production network. These techniques incorporate overseeing client connections and

interest, satisfying requests, securing materials, and participating in chain-level innovative work (R&d)

and advertising. Figure 2 outlines this model in an outline and shows how production network procedures

join diverse members in the store network, while uncovering the fundamental interior capabilities

attempted at the firm level.

We adapt this framework to identify the activities and processes that play a predominant role in HVA

supply chains in developing countries. We maintain the internal activities: production, input purchases,

logistics, marketing, credit, and technological development. Key processes that support these internal

activities include extension services (related to product development and commercialization),

infrastructure development (such as storage facilities, related to issues of manufacturing flow

management), information systems (a kin to order fulfillment and demand management), and

certification, grades, and standards (related to demand management and customer service management).

An additional process not explicitly is the organizational mechanisms that coordinate supply chain actors

Kunal Delwadia IIM Kashipur at key points in the supply chain and provide information about supply chain specifications, such as

contracts and other forms of vertical and horizontal coordination.

Supply chain

activity

Traditional Needed Roles

for SCM

Market Failure Possible entry

points in PPP Public sector Private Sector

Production Input and

Output price

policies;

regulation of

competition

Generic

commodity and

final product

production

Production of

high value

specialized

commodities

and goods that

meet rigid

customer

specifications

Production

scale, limited

technical skills

in new

techniques, low

income.

Link public

services and

goods with

private sector.

Commodity

like power,

infrastructure,

cold storage for

agriculture.

Input

Procurement

Input and

output price

policies,

regulation of

competition

Purchase of

inputs for

production

Use of high

quality inputs

that meet

customer

specification

for end

products

High taxes/

subsidies lack

of credit access

for inputs

Creation of

producer

organization to

procure high

quality inputs

in bulk to

reduce costs.

Logistics Distribution

network

Specialized

logistics

function to

Cost reduction

activities to

reduce

Poor

infrastructure,

crowding out

Development

of partnership

of link


manage

Distribution

activities

transaction cost

in distribution

by public

sector, low

market access

for remote

areas

distribution

activities in

remote areas.

Marketing Public

certification

and promotion

of projects in

media and print

media. Spread

awareness

about the

collaboration

for inclusive

growth

opportunity for

public and

private sector

companies.

Development

of brands and

labels as SPV,

commodity

promotions and

retail activities

for

procurement of

the project.

Coordination

of production

system to

institutionalize

product

differentiation

and market

segment

branding

strategies for

adding value

Limited small

holders

capacity in

formal

marketing and

branding

strategies;

limited small

holder capacity

to meet

specifications

of brand

Use of

producer

organization to

establish

marketing

partnership

with processor

and retailers to

promote

innovative or

socially

beneficial

products and

create brands.

Credit Public sector

banks and

credit facility

at competitive

Private sector

bank, macro

finance

activities

Access to

credit to

purchase high

quality inputs

and finance to

Limit high

transaction

costs

In conjunction

with

underwriting

by public and

private sector


interest rate promote PPP

projects

lenders.

Research and

Development

Public R&D

input price

policy

Private R&D

for inputs and

variety of

projects

Development

of technologies

to raise

productivity of

high demand

projects

Private

profitability of

varieties with

social benefits

may be low or

negative

Research

partnerships to

develop

socially

beneficial input

to production

Learning

1. Strict governance arrangements are essential across all the tied supply chain.


2. Ensure alignment of public and private objectives.

3. Necessity of benchmarking costs to assess future value for money.

4. Selecting the right contractual model.

5. Verify and validate bid assumptions.


Project Management

For PPP preparations –

As for other large infrastructure projects – work streams are interconnected and interdependent in

so many ways; yet sometimes operate independently, as if in silos. The government project promoters

must take proactive steps to prevent that isolation and keep the work streams coordinated and aligned

through rigorous project management; otherwise, the inter linkages could cause problems that become

apparent only during procurement. And at that point, the promoters will have to backtrack to deal with the

issues, and the project could be delayed.

Establish an “activist” PMO to plan, coordinate and monitor the PPP preparation process. The PMO

should take an energetic and diligent role in driving the preparation process. Its list of duties includes the

following:

Kunal Delwadia IIM Kashipur Planning

– Define, align and articulate the top-level strategic objectives that the project is intended to address.

Select metrics that enable the measurement of project success.

– Initiate a staged feasibility study with gateway reviews, ideally following a standardized approach that

is used for all projects, as in the United Kingdom. Define clear criteria, required information and

decisions to be made to proceed through each stage gate (for example, the preparation of best practices in

this report could be used as checklist). Continuously and vigorously look for a “NO” at multiple possible

exit ramps because exiting at the earliest possible stage conserves funds, avoids the planning fallacy and

adds credibility to projects that move forward.

– Define required deliverables and timelines for the overall feasibility study and each workstream and

support the teams in drawing up their action plan and in detailing the tasks, milestones, accountabilities

and risks.

Coordinating

– Keep in contact with political leaders and high-level technocrats to maintain their support.

– Enable communication among the teams, and between them and the steering committee.

– Ensure the accountability of each work stream manager while enabling the exchange of functional

expertise within a project and across projects.

– Identify interdependencies between work streams; note, for example, the need for aligned assumptions.

Monitoring

– Check that progress conforms to the project plan, and evaluate work stream outputs against best

practices and country- and sector-specific PPP guidance. – Submit regular reports to the steering

Kunal Delwadia IIM Kashipur committee and stakeholders, customized to their information needs. – Identify, evaluate and track

emerging risks and issues proactively and continuously – and bring them to the attention of the steering

committee; develop risk-mitigation strategies, and institute a pre-defined issue-resolution process for

different scenarios.

– Track and assure the continued validity of underlying assumptions.

– Encourage work teams to raise concerns and warning signals early by fostering a culture of

transparency and assigning accountabilities for risks to individuals.

Responses from the corporate Professionals

Age in Years

Gender

Education

Up to 25 2 6% 25-29 9 28% 30-39 4 13% 40-49 6 19% 50 and above 11 34%

Male 28 88%

Female 4 13%

Technical qualification 1 3%

Under Graduate 2 6%

Graduate 10

31%

MBA/Post Graduation/Ph.D

19

59%


Project Manager [Experience (Project Management, Project Execution, Project Commissioning, etc..)]

Project Head [Experience (Project Management, Project Execution, Project Commissioning, etc..)]

Procurement Manager [Experience (Project Management, Project Execution, Project Commissioning, etc..)]

Procurement Head [Experience (Project Management, Project Execution, Project Commissioning, etc..)]

Project Finance Manager [Experience (Project Management, Project Execution, Project Commissioning, etc..)]

1-3 Years 17

61%

4-7 Years 6 21%

7-10 years 3 11%

10 years and Above 2 7%

1-3 Years 7 30%

4-7 Years 8 35%

7-10 years 5 22%


1-3 Years 9 60%

4-7 Years 2 13%

7-10 years 3 20%


1-3 Years 6 43% 4-7 Years 2 14% 7-10 years 2 14% 10 years and Above 4 29%


Project Finance Head [Experience (Project Management, Project Execution, Project Commissioning, etc..)]

Current Role, Industry (Project Management, Project Execution, Project Commissioning, etc..)

Project Manager 4 7% Project Head 12 20% Power 8 13% Infrastructure 9 15% Petroleum 7 12% Automobile 3 5% Manufacturing 10 17% Heavy Industry 3 5% Pharmaceutical 4 7%

1-3 Years 7 64%

4-7 Years 3 27%

7-10 years 0 0%


1-3 Years 6 43%

4-7 Years 0 0%

7-10 years 1 7%


Kunal Delwadia IIM Kashipur Types of project (PPP - Public Private Partnership) you have worked on?

What Supply Chain/Procurement risks or concerns are most likely to negatively impact your organization?

In your opinion, which of the following supply chain/ procurement solutions would have the greatest impact in minimizing risk to your organization?

Replacement Project 8 15%

Expansion Project 12

23%

Mordenisation 16

31%

New Business - Related line 6 12%

New business - New Line 9 17%

Other 1 2%

Supply interruption risk 18 36% Lack of an effective senior executive led sales and operation planning (S&OP) process

14 28%

Lack of timely and accurate information and spend analysis capacity for strategic sourcing.

18 36%

Other 0 0%

An integrated and supported supply chain and/or procurement strategic plan

18 36%

A formal and effective enterprise wide supply chain risk management process

17 34%

An effective corporate wide strategic sourcing process

15 30%

Other 0 0%

Kunal Delwadia IIM Kashipur Which of the following solutions, if any, are currently key business priorities within your organization?

An integrated and supported supply chain and/or procurement strategic plan

16 33%

An effective corporate wide strategic sourcing process

16 33%

Effective supplier management and contracts management and control capabilities

17 35%

Other 0 0%

How does your organisation manage sustainable Supply Chain issues? Forecasting Contracts & Materials department has to make it sure that indenters request raised are complied on time and other products that need to be purchased regularly are managed well in inventory and procured before the reserve stock end ERP Tools are only supportive engines. Process and flow are critical. While defining the flow ensure it is simple and awareness across the organization on the supply chain flow is available so that defined process will stay on. a) SAP R/3 & SRM for Procurement & Accounting b) Standard Inventory management techniques. c) Reduction of redundant actions, reduction in lead time, clean audit trail, information sharing across locations d) resistance to adapt new system, parallel legacy activities for legal requirements Business opportunity/problem definition [Project Management tools and Technique]

N/A 12 38% 0 (Not Improved ) 5 16% 1 (Very Limited Improvement) 5 16% 2 (Limited Improvement) 8 25% 3 (Extensive Improvement) 1 3% 4 (Very Extensive Improvement)

1 3%

Kunal Delwadia IIM Kashipur Needs/requirement analysis [Project Management tools and Technique]

Concurrent engineering [Project Management tools and Technique]

Stakeholder analysis [Project Management tools and Technique]

Assigned project sponsor [Project Management tools and Technique]

N/A 6 19% 0 (Not Improved) 9 28% 1 (Very Limited Improvement) 8 25% 2 (Limited Improvement) 2 6% 3 (Extensive Improvement) 7 22% 4 (Very Extensive Improvement)

0 0%


3 9%


1 3%


1 3%

Kunal Delwadia IIM Kashipur Gantt chart [Project Management tools and Technique]

Network diagram [Project Management tools and Technique]

Probabilistic duration estimate (PERT Analysis) [Project Management tools and Technique]


4 13%


2 6%


6 19%

Kunal Delwadia IIM Kashipur Critical path method & analysis [Project Management tools and Technique]

Critical chain method & analysis [Project Management tools and Technique]

Progress report [Project Management tools and Technique]

Electronic timesheet [Project Management tools and Technique]


3 9%


2 6%


5 16%


4 13%

Kunal Delwadia IIM Kashipur Value analysis [Project Management tools and Technique ]

Monitoring critical success factors [Project Management tools and Technique ]

Bid/seller evaluation [Project Management tools and Technique ]

Financial business benefits/risk metrics/ [Project Management tools and Technique]


3 9%


4 13%

N/A 2 6% 0 (Not Improved ) 3 9% 1 (Very Limited Improvement)

8 25%

2 (Limited Improvement) 6 19% 3 (Extensive Improvement) 10 31% 4 (Very Extensive Improvement)

3 9%


6 19%

Kunal Delwadia IIM Kashipur Task Scheduling [Improvement by use of IT tools and Technique in SCM & Project Management]

Resource Scheduling [Improvement by use of IT tools and Technique in SCM & Project Management]

Resource Optimization [Improvement by use of IT tools and Technique in SCM & Project Management]

Multiple Item/Project Scheduling [Improvement by use of IT tools and Technique in SCM & Project Management]

N/A 5 16% 0 (No Improvement) 5 16% 1 (Very Limited Improvement) 11 34% 2 (Limited Improvement) 5 16% 3 (Extensive Improvement) 4 13% 4 (Very Extensive Improvement)

2 6%


1 3%


1 3%


1 3%

Kunal Delwadia IIM Kashipur Multiple Project Resource Management [Improvement by use of IT tools and Technique in SCM & Project Management]

Cost Monitoring [Improvement by use of IT tools and Technique in SCM & Project Management ]

Portfolio Analysis (Project/Resource/Material) [Improvement by use of IT tools and Technique in SCM & Project Management ]

ERP [Improvement by use of IT tools and Technique in SCM & Project Management ]


1 3%


4 13%


4 13%


6 19%

Kunal Delwadia IIM Kashipur Cost Estimating [Improvement by use of IT tools and Technique in SCM & Project Management]

Scenario Analysis [Improvement by use of IT tools and Technique in SCM & Project Management]

Lean Operations [Improvement by use of IT tools and Technique in SCM & Project Management]

Lead Time Analysis [Improvement by use of IT tools and Technique in SCM & Project Management]


3 9%


3 9%


2 6%


5 16%

Kunal Delwadia IIM Kashipur Inventory Optimisation [Improvement by use of IT tools and Technique in SCM & Project Management ]

Route Optimization (Logistics) [Improvement by use of IT tools and Technique in SCM & Project Management ]

Forecasting (Sharing Info.with stakeholders) [Improvement by use of IT tools and Technique in SCM & Project Management]

Procurement [Professional skill set requirement for improving supply chain in over all project management]


6 19%


3 9%


3 9%

Low 7 22% Moderate 16 50% High 9 28%


Strategic Sourcing [Professional skill set requirement for improving supply chain in over all project management]

Lean Six Sigma Implementation [Professional skill set requirement for improving supply chain in over all project management ]

Inventory Management [Professional skill set requirement for improving supply chain in over all project management ]

Warehouse Management [Professional skill set requirement for improving supply chain in over all project management]

Logistics Route Optimization [Professional skill set requirement for improving supply chain in over all project management]






Kunal Delwadia IIM Kashipur Political Risk Managers [Professional skill set requirement for improving supply chain in over all project management]

Leadership/People Management [Professional skill set requirement for improving supply chain in over all project management]

Technology + MBA (Supply Chain/Operations) [Professional skill set requirement for improving supply chain in over all project management]

Operations Accounting/Finance/Strategy [Professional skill set requirement for improving supply chain in over all project management]





Project report- Impact of Supply Management on Project Management-PPP Projects

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Transcript of Project report- Impact of Supply Management on Project Management-PPP Projects