Project ReportConstruction of CNG Station

Submitted By:

M.Ejaz-ul-haq

B08-015

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Special thanks to Almighty Allah, creator of the creative minds

We pay abundant thanks to our encouraging professor Dr. Ali Ahsan for enlightens our minds

with the rich information about the topic.

Special thanks are extended for those who help us in printing & composing the research.

We are especially thankful to Mr. Tayyab Bashir (M.D MIDWAY CNG Station) and Mr. Saeed

Ahmed (Manager MIDWAY CNG station) who provided us the necessary information and show

us the process of conversion of natural gas into compressed natural gas (CNG).

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ACKNOWLEDGEMENTACKNOWLEDGEMENT

Table of ContentsEXECUTIVE SUMMARY ……… 4

PROJECT CHARTER 5

OVERVIEW OF CNG: 5

Present Demand: 5

Estimated demand during next five years: 5

Distribution channel: 5

OVERVIEW OF CNG IN GUJAR KHAN 5

VISION:6

MISSION 6

PROJECT DESCRIPTION 6

Means Of Finance: 6

Name Of Lender: 6

Name Of Sponsors: 6

Roles and Responsibilities 7

REQUIREMENT OF PROJECT 7

NOCs Required For CNG Station 7

Technical staff 8

Non Technical Staff 8

RISKS 8

MILESTONE: 9

PROJECT BUDGET 9

PROJECT MANAGEMENT PLAN 10

PROJECT SCOPE STATEMENT 12

PROJECT ACCEPTANCE CRITERIA 14

PROJECT DELIVERABLES 14

WORK BREAK DOWN STRUCTURE 16

PROJECT SCHEDULE 16

QUALITY PLAN 17

DEVELOP HUMAN RESOURCE PLAN 19

COMMUNICATION PLAN 21

RISK MANAGEMENT 22

PROJECT PROCUREMENT PLAN 22

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NATURE OF INDUSTRY CNG STATION

CORPORATE STATUS PARTNERSHIP FIRM

LOCATION OF PROJECT Gujar Khan

We are the fresh and energetic students of BBA. We are going to start a new business. We have selected

the business of CNG Station. We have selected this business because there is so much potential in this

business. Especially today’s there is increasing number of cars. This is also a challenging project. This will

be the test of our hidden qualities.

SKY LINK CNG STATION established with the objective of installing a CNG Re-Fuelling Station at Gujar

Khan, District Rawalpindi. The firm is intending to start its operations initially with one station in Gujar

Khan. The firm has plans to expand its network later to in other cities.

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Executive SummaryExecutive Summary

PROJECT CHARTER

OVERVIEW OF CNG:Present there are more than too many vehicles, which have been converted to CNG fuel. Due to the increasing prices of petroleum products, the trend of converting cars to CNG fueling system has been on a rise. However, there exist a large number of people who were reluctant to convert their vehicles from petrol to gas due to safety concerns. Recently, many car manufacturers have started manufacturing the cars with built-in CNG fueling system. This change has led to enhancing the confidence in the minds of the general public regarding the safety concerns, and now, more people are inclined towards purchasing these factory-fitted CNG fueling system cars.

Present Demand:The present demand of CNG is very high because the cost of CNG is very cheap as compared to petroleum, diesel and LPG. This is also beneficial for the life of engine of vehicles so the people prefer the CNG. Now the transporters also converting their vehicles in to CNG vehicles because cost of CNG is very low and in this way they can earn high profits and engine of their vehicles also saves so the demand of CNG is increasing day by day. Now a day the demand of CNG is so high that there is supply and demand gap generated for CNG. The use of CNG in vehicles brings an added blessing that it is much less polluting than regular gasoline (petrol).

Estimated demand during next five years:It is estimated that the demand of CNG in next five years will be so high. The only reason is that now a day’s all vehicles are converted into CNG vehicles. The millions of vehicles are converted into CNG vehicles. So it is impossible that the demand of CNG is going to be end in next year’s.

Distribution channel:No distribution channel is required for CNG. The customers come at CNG station and fill their cars with CNG. So no distribution channel is required.

OVERVIEW OF CNG IN GUJAR KHANAs I am constructing the CNG station in Gujar Khan so the overview of the CNG industry is as follows: The business of CNG filling station has marked its place in the country through growth during the last few years. This growth has opened up new opportunities and more CNG filling stations are being setup all over Pakistan. However, the growth of CNG Refueling Stations in Gujar Khan has been very slow despite a potential market demand. Currently there are only four CNG Refueling Stations fully operational in the Gujar Khan City. The challenges outlined in the preceding section are primary concerns impeding the growth of CNG industry in the city. The market for CNG is ripe for lucrative investment thereby providing us with a potential opportunity to install and start a CNG Refueling Station to target the large customer base in the Gujar Khan city alone.

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VISION:

Goal to build around 50 standard CNG Refueling stations in major cities of the country

MISSIONOur mission is to provide purify compressed natural gas (CNG). We will provide 24 hours service to our customers so that we can facilitate them according to their requirement. We will have also tuc shop, tire service shop and work shop at our CNG station

This project will serve the following objectives:

It will help us to start a profit oriented business which has a high expected future growth rate It will help us target potential market by providing environment friendly and quality fueling

services at reasonable prices It would also serve as a contributing factor to the growth of CNG industry in GUJAR KHAN city

PROJECT DESCRIPTIONThe company is doing partnership business. There are four sponsors of the company which are the partners of the company also. The company is doing legal business. Profit earned by the company is distributed among the members of the company. We are going to produce only one product i.e. CNG. We are not producing any other product. We are following the single product approach. Growth of sale does not matter. At initial stage we will be producing at 75% capacity

We purchased our plant from abroad and as well as from local. Plant reached at site at March 7, 2012. Our plant installed on March 8, 2012. It started its trial run on April 19, 2012. It started its commercial operation on June 8, 2012.

MEANS OF FINANCE:There are two types of means of finance. One is from our own resources and other is from taking debt from Bank. The ratio is of debt and equity is of 60:40

NAME OF LENDER:Our name of lender is Royal Bank of Scotland (RBS) Ltd which will provide us the entire loan which we need for the completion of our project. The interest rate of the Bank is 18%.

NAME OF SPONSORS:The sponsors of the project are professionally qualified and have valuable and extensive experience of business management regarding. They have got petrol pump & CNG and good trading contacts and market reputations in the city. The project faces no problems in terms of marketing its product. The sponsor’s experience would assist the firm in its smooth and profitable operation.

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The sponsors are financially sound and capable to contribute their part of the equity in the proposed scheme. The General Manager of the firm has vast experience in the managing of this industrial organization

SR.No. NAME DESIGNATION1 Ejaz-ul-haq General Manager2 Mohsin Ibrahim Project Manager3 Usman Khalid HR manager4 Tanveer Ahmad Procurement Manager

Roles and ResponsibilitiesThe overall management and control of the firm will be actively managed by its partners who will actively participate in management decisions and control the affairs of the firm. The partners will contribute equally in the equity of the project and will equally participate in the profit and loss of the firm's business.

All the documentation that is project charter, scope statement, constraints, assumptions, WBS, Project deliverables, cost estimates and the project budget, milestones, schedule, resource requirement, procurement plans, risk analysis and response plans project team structure and communication plan will be made by the mutual collaboration of all the partners.

The day to day running and operation of the project will be carried out by sponsoring partners with the help of team of professional. The team of professional will be hired for managing financial and technical aspect of the project. The team will consist of qualified and experienced personnel.

REQUIREMENT OF PROJECTFor the completion of the project we will have required the following things:

NOCs Required For CNG StationNo Objection Certificate will be required from the following department the prior to the Commencement of the business

Concerned development authority of the city (Rawalpindi Development Authority) Central Board of Revenue (CBR) Oil and Gas Regulatory Authority (OGRA)

No person can set up CNG station without first obtaining license from the Authority i.e. Oil and Gas Regulatory Authority Islamabad under Rule 6 of CNG (Production & Marketing) Rules, 1992. After obtaining provisional license from the authority, the licensee is supposed to start construction of the station.

The other input for CNG is natural gas which is obtained from SNGPL. This is the main input for the CNG then electricity is also required to run the compressor. In the case when there is no electricity the diesel is also required to run generator, so that the supply of CNG in the vehicles will not stop. Some chemicals

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also used these chemicals include one type of acid and one type of base. These two used in the cooling tower to purify the gas.

Technical staffFor the well check and running of compressor a person is required which should have done the diploma in Electrical engineering. So that he can understand the working and function of compressor, and one helper is also required having diploma in the electrical engineering

Non Technical Staff There are ten or more persons required which should be metric. These staff required to operate the dispensing machine for fulfilling the gas into vehicles. Gas filling is so simple process and it is not a technical process so there is no need for a special staff, which should have some specific kind of diploma. One sweeper is also needed for the cleanness of the CNG station. And one security guard is also needed for security purpose.

RISKSFollowing Risks are on the way to this venture:

Inflation Rate: 10% inflation rate has been considered while making the projections for cost of sales, operational expenses and salaries. The prices for gas, electricity, operational expenses and staff salaries are increased by 10% every year as a result of inflation. The selling price of gas has been increased by 5% every year. This shows that revenue will increase by less percentage than expenses in the earlier years.

High Depreciation Rate: High depreciation rate of different assets will also be a risk for the venture that may ultimately decrease the returns of the venture

Current political scenario and law and order situation in the country

Availability of license from Oil and Gas Regulatory Authority (OGRA)

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MILESTONE:Sr.No TASK MONTH YEAR

1 Bank approval March 2011

3 Purchase of land March 2011

2 Approval of License April 2011

4 Construction of building September 2011

5 Arrival of machinery at site March 2012

6 Installation completed March 2012

7 Trial run April 2012

8 Commercial operation started June 2012

PROJECT BUDGETThe details of the estimated budget of project are as follows:

Items Rupees

Land (9000 sq. ft.) 17,000,000

Building - civil works 1,700,000

CNG Equipment 8,732,100

Stores & Spares 513,040

Office Equipment 100,000

Furniture & Fixtures 85,000

Gas Security 1,800,000

Preliminary Expenses 820,000

Working Capital 377,390

Total 40,501,824

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PROJECT MANAGEMENT PLAN

Identify Stake HoldersSr.No

Name of stake holders

designation Department Role in project Type of communication

Expectation Interest Power

1Ejaz-ul-haq

General Manager

Nil To assure all the activities are being done as scheduled

Face to Face and daily meetings

Successful construction and running of CNG station

High High

2Mohsin Ibrahim

Project Manager

Project Management Office

--as above-- --as above-- --as above-- High High

3Usman Khalid

HR Manager

Human Resource Department

--as above-- --as above-- --as above-- High High

4 Tanveer Ahmad

Procurement Manager

Procurement Department

To assure all the procurements are being done on time and as per quality

--as above--

Successful Procurement according to the Budget and quality

Low High

5 Affan. Finance Manager

Finance department

Develop and analyze information to assess the current and future financial status of firms

Written and Verbal

Successfully Analyze the financial resources

high Low

6 ALI Quality Manager

Quality Assurance Department

To assure that all the work are being done according to the quality as given in the charter

Face to face & Verbal

Successfully work done as per quality

High Low

7Royal Bank of Scotland

Nil Loan Department

To finance 60% of the project

Written and Verbal

Success of project so that they can get their interest back on time

High High

8 Real estate agent

Nil Nil To give the best available place for operations

Verbal and written

Contract between the two parties

Low Low

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Labor

Work Force

Operations To construct CNG Station and to carry out the day to day operations

Face to Face

Time to Time salary

Low Low

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Supplier

Nil Nil To provide the basic machinery required to carry on the operations

Written and verbal

Maximum numbers of contracts

High Low

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Project Team

Engineers, builders and skilled labor

Project performance feedback, face to face communication

To perform work as per the requirements and collect wages.

high Low

In above grid the serial number represents the name of the stakeholder which are given in the above table

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PROJECT SCOPE STATEMENT

Project Scope DescriptionThis project will serve the following objectives:

It will help us to start a profit oriented business which has a high expected future growth rate It will help us target potential market by providing environment friendly and quality fueling

services at reasonable prices It would also serve as a contributing factor to the growth of CNG industry in Gujar Khan city

Target CustomersThe target customers for the proposed project would be the vehicles running on CNG fuel in Gujar Khan and its outskirts

Name of the CNG Station:The name of the CNG Station would be:

”SKYLINK CNG STATION”The choice of this name for our project is based on the potential for growth in the Gujar Khan city which usually takes a backseat when it comes to investment in such projects where the market supply does not meet the escalating market demand. We want to make the Gujar Khan based consumers feel that their needs are being catered to.

Legal Status of the Project:The proposed legal status of our project would be a partnership among four members because of the capital and services that each of us would be investing in this project. It would, therefore, be comparatively easier to form, manage, administer and operate our business in this setting.

Proposed Location:The proposed locations for the CNG filling station that has been considered in Gujar Khan are as follows:

• Dualtala town

• Sukhoo town

• Jatli town

CNG Consultancy Services:Hydrocarbon Development Institute of Pakistan (HDIP) is offering consultancy services to the investors, which include the whole range of activities like formation of company, selection of site, legal formalities, design of station, specifications of the equipment, selection of equipment, selecting and appointing the contractor, training of manpower, commissioning and supervision, etc. depending on the clients’ needs.

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LocationFor setting up a CNG filling station, location is the prime factor. As per the requirements of the Government of Pakistan, the filling station must be situated in a commercial area. CNG filling stations are not allowed to be installed in the residential areas.

LandA minimum of nine thousand (9000) square feet of land with at least 75 feet front opening is required for installing CNG Refueling Station. An amount of Rs.17 million has been allocated for the acquisition of nine thousand square feet of commercial land in Gujar Khan

BuildingThere are certain civil works required to be carried out at the proposed location. The civil works would be carried out on an area of 2250 square feet. The rest of the area will be floored with tuft tiles. Civil work includes the following:

• Office

• Control Room

• Compressor and Cascade/Cylinder Storage Room

• Shed for Dispenser

• Toilet/washroom

• Underground Gas Piping and Power Cables

• Flooring

Material InputsThere are two main inputs required for the CNG filling station, one is the natural gas and the other is electricity. The sponsor of the project is required to obtain both the connections from the relevant authorities i.e. WAPDA and Sui Southern Gas Pipelines Limited (SSGPL). The cost associated with obtaining the gas connection is Rs. 75, 000/-. In addition to this, a minimum security deposit of Rs.1.8million is also required to be deposited with the concerned authority. Bank guarantee is also acceptable in case of gas security. An amount of Rs. 0.35 million is required for obtaining electricity connection. There is no security deposit required for the electricity connection

Stores & SparesThe whole equipment required for setting up a CNG filling station is imported. Therefore, it is required to build an inventory of necessary spare parts to meet the unforeseen circumstances such as breakdown or any other fault in any part or equipment. For this purpose, a stock of necessary spare parts worth $8,000 will be imported along with other equipment to maintain a minimum level of spare parts.

Furniture and FixturesFurniture and fixtures mainly include tables, chairs, sofas, fans & lights, carpet, curtains and fire extinguishers. It is estimated that the furniture and fixtures of Rs. 85,000 would be purchased.

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Office EquipmentSome office equipment is also required for the proposed project. A provision of Rs. 100,000 ha been made for acquiring the required office equipment.

PROJECT ACCEPTANCE CRITERIA

Project Budget:60% project budget will be accepted by the Royal Bank of Scotland (RBS) and will be finalized after the mutual collaboration with the four partners. The budget will be accepted only if both the parties agree on certain criteria.

Procurement of Machinery and Equipment:It will be ensured that the procurement of materials, machinery and equipment will be done at the right time, according to the schedule.

Regulations and Licenses: License from OGRA Certificate (by HDIP) No Objection Certificates

It will be ensure that above these requirements will be done on specific time and schedule

Deliverable Acceptance: The deliverable will be accepted only if the construction of CNG station will be completed according to the plan.

WORK PACKAGES

Project Deliverables 2 dual-hose CNG pumps with sheds A 250 square feet storage cascade and compressor unit with underground gas Pipes A 200 square feet land covering 1 office room, 1 bathroom, 1 control room and 1 ware house. 6750 square feet (approximately) of flooring covered with tuft tiles

WORK PRODUCTS First and Foremost work product of our project is to procure machinery from abroad as well as

in our country and purchasing of land and construction. This work product is like the backbone of the project as all the future actions will be dependent upon the report.

The stakeholder register will also be an important part of the project that will help us to know that what are the expectation of each stakeholder, how much is their power and level of interest in the project. I think the vital stake in this project are four partners and bank

All the Project related plans like Human Resource Plan, Quality Plan, Risk Management Plan, Communication Plan, and Procurement plans are important work products as it helps Project Manager to understand that which technique will be used to handle which type of situation.

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PROJECT CONSTRAINTS: Loan approval is the biggest constraint in project Only 4 cars can be served at one time The chosen equipment can refuel approximately 50 cars per hour

PROJECT ASSUMPTIONS: We are taking 360 days a year There will be no load shedding problem from August and we are starting from June, 2012 and

the load shedding will be for 3 hrs a day. After 1 year there will be no load shedding in the year 2012 We are assuming a 15 % increase in wages every year. Overheads are .5% of sales Erection for improved machinery is 15% Prices of the machinery will increase in the future It is also assumed that the need of CNG will be increased in the future Imported machinery will be purchased on loan from Royal Bank of Scotland (RBS) @18%. We are using straight line method for depreciation. Income tax will be charged at 35%. The Debt to equity ratio will be 60:40respectively There will be the business of CNG filling. Other income is generated from the tuck shop, tire service shop and also from the oil exchange

and vehicle service shop. The cost and sale of CNG will be increase 5% each year

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WORK BREAK DOWN STRUCTURE

PROJECT SCHEDULE

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QUALITY PLANPurpose of the Document

A Quality Manager sets standards for policies and often works with the production manager to assure that the standards of production are up to the mark. They also review past records of quality production to check if current standards are suitable enough to maintain good customer relations. There are several organizations where teams of quality inspectors are allowed to check products as soon as they come off the production line. This helps to ensure that the goods meet the quality standards.

Roles and Responsibilities

Quality manager (Ali) will monitor it throughout the entire project according to the requirement and schedule. He will be responsible for assuring that all the activities carried out under the Project are within the quality standards. The Quality Manager will equally be supported by the Project Manager (Mohsin).

To explain the requirements of clients to the sales and marketing department and identify the ways in which the organization can meet them.

To analyze various business statistics. To determine the areas of improvement and document them. Review existing policies and develop new plans to improve the existing quality system. Ensure that procedures conform to legislation such as Equal Opportunity, Health and Safety and

financial regulations. Review and assess the effectiveness of changes made.

Procurement of Machinery and Equipment:

He will ensured that the procurement of materials, machinery and equipment will be done at the right time, according to the schedule and quality

Quality Check List

Following will be the list of Activities that will be considered by the Quality Manager:

1. Project Quality PlanQuality Manager has to support Project Manager for the Preparation of Project Quality Management Plan.

2. Identification of StakeholdersQuality Manager will also help the Project Manager in collecting the requirement, making of stakeholder register and in making the Power/Interest Graph.

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3. Project Scope StatementHe wills also going to coordinate with the whole project team for the creation of the Project Scope Statement.

4. Project Communication PlanThe Quality manager will interact with the team of project so that the complete plan of communication can be created.

5. Procurement of MachineryQuality Manager will be completely involved in the process of procurement of Machine so that the Machinery that is being procured is of standard quality.

6. Final ReportThe Quality Manager with the collaboration of other Project team members will going to create the final report of the project. This report will then be submitted to the General Manager

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Develop Human Resource Plan

Roles and Responsibilities Sr.No Job Title Roles and Responsibilities

1 General Manager Managing both the revenue and cost elements of a company's income statement

General manager usually oversees most or all of the firm's marketing and sales functions as well as the day-to-day operations of the business

2 Project Manager Identifying, tracking managing and resolving project issues

Proactively disseminating project information to all stakeholders

Identifying, managing and mitigating project risk

Ensuring that the solution is of acceptable quality

Proactively managing scope to ensure that only what was agreed to is delivered, unless changes are approved through scope management

Defining and collecting metrics to give a sense for how the project is progressing and whether the deliverables produced are acceptable

Managing the overall schedule to ensure work is assigned and completed on time and within budget

3 Human Resource Manager

Maintain and develop HR policies, ensuring compliance and to contribute the development of corporate HR policies

To ensure timely recruitment of required level / quality of Management staff, other business lines staff

4 Procurement Manager

Responsible for planning, developing and buying materials, parts, supplies and equipments in a timely and cost effective way

Dealing with suppliers and brokers

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5 Finance Manager Develop and analyze information to assess the current and future financial status of firms

Communicate with stockholders and other investors to provide information, and to raise capital

6 Quality Manager Quality managers also monitor and advise on the performance of the quality management system and produces data and report on performance, measuring against set indicators

the product or service an organization provides is fit for purpose and meets both external and internal requirements, including legal compliance and customer expectations

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Communication Plan Communication with the Bank will be through monthly meetings. Meetings will be scheduled

before the start of construction. Communication with the project team will be done on daily basis with a face to face interaction. Communication with the supplier will be done through documentation on every purchase, RFQ

will be submitted to the supplier in return the supplier will give quotations and best suitable supplier will be chosen. The supplier will submit invoices of the delivered materials on each purchase.

Message Owner Recipient DeliveryVehicle

Notification Medium

Frequency Cycle

Project Status Project Manager

Project Sponsor and Key Stake holder

Project status report

Word Document sent via e-mail

Monthly

Informational updates on issues, schedules, task assignments that must be communicated before the next status meeting

Project Manager

Project Sponsor and Key Stake holder

Message Email with attachment as needed

On an as needed basis when information becomes available

Status updates on Tasks

All team members

Project Manager

Task Updates EPM Task Reporting

When a team member has a task due during the current week

Executive Presentation

Project Manager with Project Sponsor

Executive Sponsor and Key Stakeholders

Slide Presentation or Report

PowerPoint or Word document

As often as needed for  Stakeholder involvement and commitment

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RISK MANAGEMENTA risk is defined as "an uncertain event or condition that, if it occurs, has a positive or negative effect on a project's objectives." Risk is inherent with any project, and project managers should assess risks continually and develop plans to address them. Here Mr. Mohsin (Project Manager) identifies some risk. The detail is given below in table and also tells us how to respond that risk

Statement Of Risk

Priority Probability/ Likelihood

Possible Causes

Possible Consequences

Mitigation Strategy

Money Factor

High 60% Required Document

Construction Work would be Stop

More bank loan and investment attraction.

Machinery breakdown

Medium 40% Transportation/Manufacturer Fault

CNG station will not work/ would be stop

Buy warranty for the machine/ repair immediately

Lost power supply

High 70% Load Shedding

Compressor does not work without power

Extra power supply / reserved power supply

CNG Station fire

High 70% Its natural gas so quickly burn

Buy Fire Insurance

Employee leaving

High 80% Dispute with Management / workers

Leave job Pay more for employee

PROJECT PROCUREMENT PLAN

Procurement DefinitionFor construction of CNG station we have to procure following things:

Procurement of machinery Procurement of Material

Bricks steel reinforcement, Cement Stone Ballast Sand Wood Glass Flooring Electrical & Plumbing Equipments

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Procurement of office Equipments Printing and Stationary

Vendor Selection We will float tender for purchasing these equipments, after that we will receive different quotations from different vendors / suppliers. In this statement we will provide different criteria’s after receiving quotations we will short list the vendors who will meet our requirements related to cost and quality after that we will select those vendor/ supplier in short listed who will give the products in cheap prices and best quality.

Project Procurement Team

Sr.No Name: Designation Procurement Role1

Mohsin Ibrahim Project Manager

To oversee the procurement

2 Mr.Tanveer Ahmad

Procurement Manager

Responsible for planning, developing and buying materials, parts, supplies and equipments in a timely and cost effective way

Dealing with suppliers and brokers

3 Zahid, Usman Mirza

Procurement Team Member

Give idea about the product that which one is better

Help to take decisions

Estimated CostThe estimated cost of all the procurements are given below

Procurement of Machinery = "19,535,000/ +/- 20% Procurement of Material = "1,26,645/= +/- 20% Procurement of Stationary = 50,000 /= +/- 20%

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