15-Month Executive MBA 2010Course: Project ManagementAuthors: Abhik Tushar Das (20104001) Ajay Cecil (20104002)PMC Report: Construction of aMarine Tank Farm School of Petroleum Management, Gandhinagar, Gujarat, India www.spm.pdpu.ac.in Comments: firstname.lastname@example.org
Contents: The authors would like to thank Mr. ANAND KUMAR SINGH (Energy Risk Professional) for his sincere efforts towards guiding them through the project in terms of Project Risk Management. - Abhik Tushar Das / Ajay Cecil 1. Project Charter 2. Project Objectives 3. Technical Details 4. Project Organization Structure 5. Work-Breakdown-Structure (WBS) 6. Network Diagram (PERT/ CPM) 7. Project Risk Management 8. Microsoft Project Applications 9. Conclusions 10. Key Findings All facts and data used in this report are hypothetical and do not correlate to an actual project. The sole purpose of this report is to demonstrate understanding of concepts learnt in the course titled “Project Management in Oil & Gas”.
Project Charter:Trade is an important facet in the economic development of any nation. The ASSOCHAMSTUDY ON PETROLEUM TRADE™ for the period FY 1999-00 to 2006-07 has found thatpetroleum products exported by India have been growing at a whopping rate of 73 per centfor last three years with the value of oil exports expected to surpass its imports in next sixyears. Petroleum is emerging as the largest foreign exchange sector in India with 16.2 percent share petroleum exports are expected to exceed US$ 20 billion in FY07. To facilitatethis trade, it is essential to supplement our ports with custom-bonded storage warehousesto reduce ship turnaround time and help exporters reduce inventories at theirmanufacturing locations thus reducing transaction cost.This project envisages constructing a marine tank farm near the port of NHAVA SHEVA(JNPT) which will cater to the numerous chemical/ petrochemical industries in the MIDC(Maharashtra Industrial Development Corporation) as also to the two PSU refineries (BPCLand HPCL) located at Mumbai. The Marine Tank Farm would be spread over an area of5acres and have a cargo capacity of 100000 kilolitres with a receiving/ discharging capacityof 200 kilolitres per hour (pumping rate). The tanks farm will be designed to storehazardous liquid cargo (Class-A Storage) and will conform to best-in-class safety standards.The tank farm shall have an access from NH4B which is a spur from NH 4 which links four ofthe 10 most populous Indian cities - Mumbai, Pune, Bangalore and Chennai. NH 4constitutes roughly 90% of the Golden Quadrilaterals Mumbai-Chennai segment and hencethe tank farm is strategically connected to highly industrialized cities. The tank farm is alsoin proximity to Mumbai, the financial hub of India and caters to JNPT which is spread over10 square kilometres (2,500 acres) handling bulk consignments of 7.88 million tons perannum. The port handles 65% of Indias container traffic has an average berthing period of37 hours which is considered very long. Hence the tank farm is expected to cater to highbusiness volumes.
Technical Details:The technical details for construction can be detailed as; Material of construction is Mild Steel Type of Tank: Floating Roof tanks (20 nos) Diameter of Tanks: 20 meters (largest tank) Height of Tanks: 12 meters (highest tank) Tank foundation: Reinforced Concrete piling with Bitumen and sand surfacing Associated pipelines: 2650 meters (diameter 100mm and 200mm NB) Material of Storage: Petroleum derivatives (non-reactive) Design guidelines: OISD-STD-105/ OISD-RP-108/ OISD-STD-110/ OISD-STD-112/ OISD- STD-113/ OISD-STD-114/ OISD-GDN-115/ OISD-STD-117/ OISD-STD-118/ OISD-STD- 119/ OISD-RP-149/ OISD-STD-156/ OISD-GDN-166/ OISD-RP-167 Tank construction method: Jack-up methodTank Foundation Details:
Project Organization Structure: Project Director Project Manager Project Management Resource Risk Management Team Management Team Team 1. Technical Manager 1. Finance Manager 1. Configuration 2. Communication 2. Accountant Manager Manager 3. Purchase Manager 2. Scheduler 3. Personnel Manager 4. Transportation/ 3. Estimator 4. Project Administrator Logistics Manager 4. Senior Consultant 5. Mechanical Engineer 5. IT Manager (vendor) 6. Civil Engineer 6. Systems Manager 5. Senior Consultant 7. Electrical Engineer 7. Metrics Analyst (customer) 8. Draftsman 8. Contract Manager 6. Insurance Consultant 9. Safety Manager 10.ContractorsPMI’s Standard for Portfolio Management:
Work Breakdown Structure (WBS):Work breakdown structure (WBS), in project management and systems engineering, is adeliverable oriented decomposition of a project into smaller components. It defines andgroups a projects discrete work elements in a way that helps organize and define the totalwork scope of the project. Preconstruction Activities: 1. Develop Technical Specifications 2. Contractor Solicitation 3. Pre-construction Meetings 4. Acquisition of Permits and Licences 5. Construction Agreements with vendors, suppliers and sub-contractors 6. Land surveys/ Aerial Photographs/ Soil Tests Construction Preparation: 1. Clearing of Site/ Demolition 2. Land excavation/ filling 3. Levelling 4. Ground water removal Resource Acquisition: 1. RFQ/ Tendering 2. Vendor Selection 3. Ordering 4. Delivery 5. Testing 6. Payments 7. Construction Equipment hiring Construction: 1. Excavation 2. Piling 3. Tank Foundation 4. Plate welding Testing and Handover: 1. NDT Testing for Welding joints 2. Hydro test of Tank 3. Handover to operations
Tank Construction pictorial representation:Some Pictures:
Project Risk Management:Risk likelihood is the probability that a potential risk factor will actually materialize. It isexpressed numerically between: never happen (0) will happen (1)Risk likelihood table:S No. Qualitative Quantitative 1 Low 0 to 0.20 2 Medium 0.21 to 0.50 3 High 0.51 to 1.00 Composite Likelihood Factor (CLF)Activity Nos Activity Name Likelihood of Failure Weight-1 (Finance) Weight-2 (Manpower) Weight-3 (Technology) CLF 139 Develop Technical Specifications 0.1 0.05 0.05 0.2 0.03 140 Contractor Solicitation 0.3 0.05 0.055 0.05 0.0465 142 Construction Agreements with vendors, suppliers and sub-contractors 0.5 0.01 0.0025 0.03 0.02125 150 RFQ/ Tendering 0.5 0.2 0.05 0.05 0.15 152 Ordering 0.1 0.0025 0.01 0.01 0.00225 153 Delivery 0.7 0.05 0.03 0.055 0.0945 154 Testing 0.7 0.0025 0.25 0.2 0.31675 155 Payments 0.3 0.05 0.05 0.05 0.045 158 Piling 0.3 0.055 0.05 0.25 0.1065 159 Tank Foundation 0.5 0.2 0.2 0.05 0.225 160 Plate Welding 0.7 0.25 0.2 0.05 0.35 163 Hydro test of Tank 0.9 0.03 0.05 0.0025 0.07425 164 Handover to operations 0.5 0.05 0.0025 0.0025 0.0275 Project CLF (max value) 1 1 1 0.35 Composite Impact Factor (CIF)Activity Nos Activity Name Cost impact Weight-1 (Financial) Time impact Weight-2 (Schedule) CIF 139 Develop Technical Specifications 0.1 0.7 0.28 140 Contractor Solicitation 0.5 0.7 0.56 142 Construction Agreements with vendors, suppliers and sub-contractors 0.3 0.5 0.36 150 RFQ/ Tendering 0.3 0.3 0.3 152 Ordering 0.1 0.7 0.28 153 Delivery 0.1 0.7 0.28 154 Testing 0.1 0.7 0.5 0.3 0.22 155 Payments 0.1 0.5 0.22 158 Piling 0.5 0.7 0.56 159 Tank Foundation 0.5 0.7 0.56 160 Plate Welding 0.9 0.7 0.5 163 Hydro test of Tank 0.3 0.7 0.42 164 Handover to operations 0.1 0.9 0.34 Project CLF (max value) 0.56
Low 0.1 Minor 0.3 RCR (Risk Consequence Rating) 0.714 Likelihood Moderate 0.5 Significant 0.7 High 0.9RCR = Impact * LikelihoodSince the RCR of the project is 0.64, it is a moderately risky project and hence can beexecuted with proper safeguards.# for detailed calculations, please refer to the attached MS Excel worksheet.MS Projects Applications:Project Overview:
Conclusion:The tank farm project, which is supposed to be a very lucrative project in terms of futurebusiness prospects, faces immediate project implementation challenges in terms of highrisk of failure. Also the project envisages to be completed in 4months, would face a delay ofa fortnight, where only a remote possibility of completion (6%) within the timeframeannounced by the promoters. Although a detailed cost analysis was not undertaken due toresource constraints, it can be safely concluded that adequate safeguards should beimplemented to mitigate project risks. In case of cost over runs due to delays in projectimplementation, a cost-benefit-analysis should be performed to ascertain the benefits ofemploying more man-hours during for the project vis-a-vis the cost of capital and theopportunity cost of completing the project before time. Contractors can be givencommensurate benefits based on early completion of project.Key Findings:The key findings in the project can be summarized as; 1. Lucrative business prospects 2. Project deadline would be breached by a fortnight (inclusive of holidays) 3. Project risk is high (RCR=0.714) 4. High risk due to critical activities like Piling & Plate Wielding 5. Mitigation required for the above activities which would significantly reduce risk exposure 6. Manpower deployment to increase at the fag-end of the project (phase- 4/5) 7. RFQ/ Tendering process has to be critically monitored for smooth project execution 8. Due to high project risk, equity should be preferred over debt for capital infusion as high cost of capital (debt) could make the project unfeasable