Composite Final Report

of

Executive Diploma in Project

Management (EDPM) Class of 2014

To:

I2P2M

By:

Ramesh Kumar Roy

Project Manager (Electrical)

Indian Oil Corporation Limited

PLHO, Noida

Title: Advanced concepts of project management for projects in Indian Oil Corporation Limited (IOCL)

Synopsis:

Project management is an art as well as science of managing projects which has the potential of

managing projects within schedule, cost and quality. The world is changing day by day and the dynamics

of the project field is also getting more complex. The emphasis of Advanced concepts of project

management and their implementation may be one of the key factors for ensuring project timeline, cost

and quality lines.

Some of the advanced concepts in project management have been discussed in the present paper.

Applicability for oil and gas sector companies has also been a part of the project report.

Introduction:

Indian Oil Corporation Ltd is a fortune 500 company with the ranking of 96 and only Indian company in

the top 100 league of fortune 500 companies. The company hosts all type of functions including project

management in a full fledged way. Company has taken major refinery projects like ongoing project of

Paradip refinery and mega petrochemical project at Panipat refinery.

Pipeline division of the company having its head office at Sector-1, Noida has its own project

management team which has delivered many cross country projects from concept to commissioning.

The project team at IOCL always strives for the best practices in the industry and adopts them so that a

world class project culture is maintained. Implementation of some of the advanced concepts of project

management discussed in the project report can be useful for the company.

Advanced concepts:

1. Build and maintain high Consciousness Quotient for the project team:

This is one of the concepts put forward for NASA project management team by Mr. Adesh Jain, chairman

IPMA. As per this concept project thinking is different from operational thinking and in project

management there are much more attributes to manage than in operation management. Every

individual in the project team is having unique E4 (Education, Emotion, Experience & Expectations). The

outcome or project success is management of all these E4 qualities through leadership qualities.

Mapping of these E4 through interactions with the team members, experts help, etc. may be done

which can be of great tool to achieve never before success from the same project team. The right kind of

motivation for people as well as responsibility and freedom matrix for the whole project team should be

devised and mapped from time to time. These latest concepts may be harnessed for increasing

effectiveness of project team. The project should always remain fully conscious in the present moment

and should not be engrossed in the past history, glory or even failures or successes. Learning should be

transferred from projects to projects but consciousness of projects being unique and requiring constant

consciousness should not be lost.

2. Strategic Project risk management:

Through strategic project risk management it is ensured that the success of projects, programs and

portfolios with regard to achieving the intended objectives is the main focus of management, for which

decisions may be required from higher levels than those of project management.

Some of the strategic elements of portfolio managements include following:

1. Project and portfolio selection that is alignment of the projects with the strategy

2. Project and portfolio delivery method

3. Projects and portfolio control (Time, cost, quality, scope)

4. Project and portfolio risk management

There are many methods for strategic project risk management, however, most widely used method is

AHP (Analytic Hierarchy process).

The overall performance could be managed via weighted scoring model called Faire and Square Portfolio

scoring model (F&SPSM). The indexes used for project performance management are the traditional

measures such as SPI, CPI.

AHP method is an effective method of portfolio and project selection.

The project selection is done on the basis of project attributes. Five most common attributes used for

project selection are management support, resource requirements, technical merit, schedule

effectiveness & cost benefit ratio.

Weightage of how project A is preferred over project B is decided for every pair of attributes and

accordingly an array of preferences is created. AHP weights scales are used for the purpose to convert

preferences into numbers. Sum of scoring for attributes is averaged . This one column matrix is derived

for all the projects one by one and then an array of project x averaged preferences is formed. This

matrix multiplied with vector of relative weights is used for ranking the projects.

Project risk contingency budget planning is also an important aspect of project management.

3. Critical Chain management:

Critical chain method of project management is a revolutionary approach which can fetch faster project

delivery and can increase the reliabilities of project deliverables. It is a paradigm shift in project

management derived from the ‘ Theory of constraints’ by Dr. Goldratt. It inegrates human behavioural

aspects with project management methodology.

In general, task time estimation has two significant factors: Student syndrome, which means

procrastination defeats safety and second factor is Parkinson’s law of creeping elegance, which says that

the work expands to fit allotted time. By virtue of these two there are almost no early finishes

encountered in projects.

In traditional project management, a lot of safety margin is built in the duration estimates. The safety

with each activity invites delays as per Parkinson’s law and hence if safety margin in activities could be

aggregated together and could be put at the projects due date, i.e. in the end, then the creeping

elegance effect can be encountered. This approach at first suggested by Dr. D. Goldratt, is known as

Critical chain management. Safety here may be defined as the difference between the median of the

probability distribution and the actual estimate.

In the critical chain method, plan is developed backward from a target finish date for the project. All

tasks set to As Late As Possible (ALAP) and thus latest date to start the project is calculated. Resource

dependence is studied and resources are assigned to tasks. Resource leveling is performed. Both task

dependencies resource availabilities are considered. Surplus resource availability causes task delays so

their utilization is tried to be ensured.

Safety removed from tasks is pooled into buffers, which absorb task overruns. Project finish delays only

when the project buffer is consumed. Two types of buffer, project buffer and feeding buffers are used.

Project buffer is kept as a protection against critical task overruns and the feeding buffers restrict non

critical task overruns influence critical chain. Project manager is guided by buffer absorption.

An early finish of a critical task replenish the buffer incursion.

Tracking of the project is done in forward direction. The goal is the target finish date. All tasks ASAP (As

soon as possible) and all tasks are critical. Resource allocation is based on project and task priority to

ensure minimize buffer penetration.

Buffer management is based on the total number of days of buffer used, based on which green zone,

yellow zone and red zone are defined. Green Zone corresponds to no action, yellow zone to plan action

and red zone suggests to act quickly. Thus, project manager uses the buffers as early warning signals and

takes action according to the status of buffers.

Constant monitoring of following is done in chain project management method:

1. % chain complete

2. % chain complete as compared to % buffer penetration

3. Rate of buffer penetration

4. Focus on the most penetrating task during execution

5. Resource buffer (alerts)

Some of the noted advantages of critical chain method are:

1. Projects to be completed faster

2. Improvement in the morale and effectiveness of project team

3. Provides an operating environment that s comfortable with uncertainty

4. Avoids micro management

5. Simple, highly effective macro level method for evaluating project performance

6. Effective tool for making decisions

7. Easy to learn, plan and track

8. Can be implemented for multiple projects

The theory of constraints analysis on which this method is based is a four step process:

1. Identify the system’s constraints: to identify the weakest link, it could be something like human

resource or some policy or some other resource.

2. Strengthen the weakest link: by adding capacity, training, hiring more machines, experts, etc.

may be the ways for that.

3. Sub-ordinate everything to the system’s constraints: Plan as per constraints which remain in the

system.

4. Evaluate the system: after strengthening the weakest chain so than it no longer remains the

weakest chain, review the new weakest chain and study its impact on the project and so on.

Implementation of the critical chain management and making an organization ready for it may need

initial consultation but it can yield much more if practiced in true spirit.

4. Stakeholder management:

In recent times, it is noted that the contradictions exist not only between stakeholders but at some

times between stakeholders’ interest and overall project interest. The project parameters of success

should be defined well in advance and stakeholder’s views should be clearly defined on all these issues.

Relative importance of stakeholders may also be decided. E4 of stakeholders should be studied well in

advance and their management strategy should be devised. Type of information, approvals required

from stakeholders may also be recorded and updated from time to time.

Out of the abovementioned advanced concepts of project management all are equally applicable to oil

and gas project also. In addition, due to multiple stake holders in oil and gas projects also uncertainties

in these projects have increase much due to diverse expectation of stake holders as well as statutory

issues and resource criticality and much more emphasis on timely completion of projects like never

before, advanced project management principles are right candidates for implementation in the oil and

gas projects. An organization and project based study is further required to create resources and in-

house competence with these new feathers in the cap of project team for excellence in project

management.

Reference:

1. Module on ‘ Advanced Project Management concepts and case studies’- 12.09.14 to 14.9.14

2. ‘The Goal’- book by Dr. Goldratt

3. A Guidebook for Project and Program Management for Enterprise Innovation by Prof. Shigenobu

Ohara