Chetan Project Management

7/29/2019 Chetan Project Management

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Case Analysis : Enercon India ~ Project Planning

Team Members:Vivek Deshmukh (Reg # 9) / Chetan Patil ( Reg # 16) / Sitikantha Das (Reg No 28)

Prof Bodhibrata Nag

Indian Institute of Management, Calcutta

PGPEX VLM 2012-13


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Enercon India Ltd (EIL)

Founded in 1995, collaboration between Mehra family and

Enercon GmbH

Breakthrough in Technology : Gearless WEC - Optimal power at any

speed and does not draw any reactive power at lower speed.

Mfg facilities: Germany, India & Brazil.

Growth : Rs 0.54 Billion in Yr 1997-98 to Rs 4.45 billion in Yr 2001

02.


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What EIL offers ?

As a result : EIL offers hassle free avenue for investments. Many of

customers had never visited WEC locations owned by them.

Complete gamut of services which includes

Concept to commissioning and beyond.

Exploration of potential wind sites.

Micrositing for Wind energy convertors within a location.

Interfacing with regulatory authorities for required permissions. Agreements with electricity boards.

Erection and commissioning of WEC including construction of

approach roads &

Operations and maintenance of WECs.


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Nawapur Project:

Jamnagar district of Gujarat.

Task : Erection and commissioning of 14 WECs

Total cost : Rs 600 million

Project start date : July 2003

Deadline : 30 Sep 2003

Difficulties faced so far: Location : remote place.

Private land. Agitation by villagers.

Monsoon season spoiled the approach roads. Material for only 10 cranes is received.

One consignment is damaged.

Breakdown of 220 ton crane. Minimum two days waiting

time for spare part availability.


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We have considered following activities. Reference exhibit 15

Activity no 4 - Foundation casting 49 days *(3 x14 7) days+

Activity no 8Machine erection 28 days *2 x14 = 28 days+

Activity no 911KV overhead line 30 days .parallel activity.

Activity no 10 Precommisioning of ofWEC 14 days .* 1x14 days+Activity no 12 VCB charging 0.5 days

Activity no 13 - Commissioning - 2 days

(NOTE : 49 days for foundation casting include 3x14 Foundation

Casting work +7 days curing) &3 days of inter WEC transfer of 220 tonne crane

Erection & commissioning need 98 Days.

a) How much time is required to complete an erection & commissioning project involving 14

WECs at EIL ?


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Answer to question (a) continued.


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(b) Consider today is June 1. Top management has decided to offer the Navapur site to PCBG &

also honour 30 Sep deadline .Is the project feasible ? Assume that land acquisition& survey

had been completed. Use MS Project software & submit your file.

The Project is crossing deadline of 30th September.


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(c ) Consider today is August 23. Is the project on schedule? What resource allocations would

you as a project leader demand from Daman headquarters?

Based on exhibit 18 ,

Foundation Casting completed for 6 out of 14 WECs.

Material received for 10 out of 14 WECs.

Subsequently machine erection & further activities are held up

It is clear that project is lagging behind the schedule & going up to mid November.


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On time material Delivery for 4 WECs in 10 days. No in transit damage.

Extra commissioning team (not entire project team) / Erection & pre

commissioning hand in hand

PCB availability Availability of spares

With additional resources expected Project completion date 28 September.

Contd


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(d) What are the implications immediate & strategic of missing the 30th September Deadline?

You may assume the 30% corporate tax for cost calculation?

Loss due to less DepreciationProject cost: Rs 600 millions

Depreciation benefits for the year : 80 %

As the project is delayed beyond September 30th the client can claim only half (40 %) =

600 * 0.4 =240 millions

Corporate tax rate = 30 %

So the depreciation postponed for the next financial year =240 * 0.3= Rs 72 million

Loss due to loss of Revenue:

The units of electricity failed to deliver to Gujarat EB from 14 WEC: 1.4million units

Unit cost for electricity to be sold: Rs 5 /unit

Total Cost lost/day = 1.4 * 5 = Rs 7 million

Considering the 4 % wheeling charges to client site & expected transmission loss of 10 %

Net loss to the client = 7 * 0.96*0.9 = Rs 6.048 million


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(e):What else can go wrong with the remaining project implementation (give at most 5 major

reasons). How could you as the project Leader plan for such contingencies?

Out of 14 WECs, material has been received only for 10 & one consignment of Nacelle

assembly has been damaged. The pending material can get further delayed & damaged.

The supplier needs to be coordinated with, on more frequent basis & if possible, spare

material needs to be ordered at least for critical items

Case sites the heavy rains disrupting movement of trailers carrying WEC equipment

form Daman to project site in past. The approach roads could not handle heavy loads &

trailers got stuck in the mud. The roads had to be rebuilt / strengthened. Movement of

further trailers can be at risk if roads are not in proper condition. Roads may be

surveyed for their condition before material arrives & repair work if any required may beundertaken.


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Contd

Case sites the instance of Crane Stoppage due to blowing out of PCB. Rectification in

past, involved getting replacement PCB form the supplier & crane remaining out of

action for 2 days. This PCB can get damaged again, delaying Machine erection &

further tasks. There is also a chance that supplier may not have stock of this particular

PCB at his end. To overcome such adversity, a spare can be kept for this PCB at site.

A project can come to a stage where services of additional 220 tonne crane will be

required. However, country has only 7 such cranes &may not be available if required.

Hiring or owing 220 tonne cane may be looked into.


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To take decision we need to calculate pay back period.

From Exhibit -19 :

Annual cost of hiring the crane : 15.6 million

Annual cost of operating crane : 7.606 million

Annual saving on owing the crane : 15.6 7.606 = 7.994

(Annual savings on owing the crane =8 million)

Hence Pay back period of owning a crane : 31.65/8= 3.9 years

From Exhibit -4A & 5 :

It is also evident that EIL has upcoming projects in hand for year 2003-04. Also case mentions

that in India this sector is growing at consistent 15% growth, so looking at growth

perspective of this industry and Enercon being significant market player, Enercon should go

for buying a new 220 crane.

(f):As VP (Projects) do you favour the acquisition of a 220 ton crane ? Give the detailed

justification for your answer .


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Scheduling / Monitoring of Task

Material management

Coordination of activities Risk Management

(g): Assume that as the project Leader at Nawapur, you have been asked by top management

to suggest methods for improving implementation of such projects . Write a short memo

(limited to 500 words) listing 3 major suggestions with succinct justification..


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Thank You !!

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Chetan Project Management