Managing infrastructure projects requires a professional orientation, especially so in developing economies like India. Herein a materials management and suppl chain management orientation is taken to highlight some of the successful projects.

1. Infrastructure Project
Management : Special
requirements
Dr S G Deshmukh
Director,
ABV-Indian Institute of Information Technology & Management
Gwalior
deshmukhsg@gmail.com
9 Apr 2012
Session at TECHNO-CONCLAVE 2012
ITM University, Gwalior

2. Preamble
Infrastructure is the key
driver for the Sustenance
of India’s economic growth
Courtesy:
Manage India (Newsletter of PMI )2011, Vol 3(4)

3. 3
Typical Scenario in our
country

4. Solution..
 Infrastructure development involving
Public utilities to improve the Quality of
life

5. Some examples..
 National highway development and Prime Minister’s
Gram Sadak Yojna
 Reliance Jamnagar Refinery
 Konkan Railway project
 Delhi Metro rapid transit system
 Bandra—Worli Sea Link Bridge Project in Mumbai
 Mundra Port & Special Economic Zone (SEZ): India’s
largest private sector port and SEZ
 New/modernized airports—Hyderabad, Bangalore, Delhi
 Nationwide telecom networks

6. Several changes taking
place..
 Public Private Partnerships (PPP) using models such
as Build Operate Transfer (BOT)
 Increase in size and capacity of Projects
 Consortia, joint ventures, strategic Alliances
 Rapid entry of new entrants and rapid corporatization
 Improved practice of project management
 Improvement in productivity, quality, and delivery
capability
 Mega project financing, both within and outside India

7. Infrastructure Projects
 Typical examples
 Road
 Power
 Telecom
 Airport
 Port
 Gas-oil Pipeline
 Urban facilities' (Housing )

8. Characteristics of
infrastructure projects
 Huge stakes involved
 Time and Cost overruns
 Issue of ownership
 Multiplicity of agencies

9. Speaking points..
 SWOT Analysis of Infrastructure
 Project Management Approach and issues
involved
 Application in Construction industry
 Role of Materials Management
 Role of IT
 Supply chain orientation
 Learning from Delhi Metro
 Concluding remarks

10. Present scenario in
Infrastructure ..1..
 Infrastructure projects, in terms of number, size
and complexity, have grown dramatically in the
past few years. The overall investment and
spending have almost quadrupled in many
infrastructure sectors.
 Managing infrastructure projects is no easy
task. The gestation period is long. The capital
investment is high.
 There are many stakeholders to address.

11. Present scenario in
Infrastructure ..2..
 There are also many variables beyond the control of
the developer, such as government policies, clearance
process and weather events. These projects are thus
quite prone to time and cost overruns.
 At the same time, project developers and managers
can minimize risks by following the basic principles of
project management – proper planning, execution and
monitoring.

12. Reasons for cost/time overruns of
central govt projects
Reasons Projects
Fund constraints 31
Law and order matters 10
Land acquisition issues 22
Slow progress in areas other than civil works 79
Delay in equipment supply 5
Environmental clearance 2
Others (proper technology selection,
award of contract, delay in civil works, geo-mining, court
cases, inadequate infrastructure support, bad weather,
government clearances)
48
Source: Project Management Practices in India 2010
(Indicus Analytics and Ace Global), Project Implementation Report (MOSPI)

13. SWOT Analysis
Strengths
 Liberalized and Growing
economy
 Strong financial base
 Good consumer base with
a focus on Urbanization
 Improved Connectivity
with the world (Thanks to
IT infrastructure!)
 Availability of Competent
manpower and natural
resources
Weaknesses
 Bureaucratic mindset
 Inadequate facilities
 Lack of proper orientation
on Cost/Time awareness
 Emphasis on Rules and
regulatory approach

14. SWOT contd..
Opportunities
 FDI increasing in
infrastructure projects
 Success stories of T3/ Delhi
Metro
 Development of Quality
infrastructure to improve
quality of life , and
 Development of quality
manpower
 Our strategic Positioning in
Asian Region
Threats
 Foreign investors may
choose other countries
 Economic meltdown
 Danger of moving away
from original mission?

15. A Project Management
Approach to Infrastructure !

16. Project
 A temporary
endeavor
undertaken to
create a unique
product or
service.
Ref: Kanda A, 2011, Project
Management: A Life cycle
approach, Prentice Hall India Ltd
Project
Management
 The application of
knowledge, skills,
tools, and techniques
to project objectives
to meet stakeholder
needs and
expectations.

17. Project Management
 Management of time, scope and
cost of project
 A project is a non-routine, non-
repetitive, one-off undertaking with
discrete time , financial and technical
performance goals !
Ref: Kanda A, 2011, Project Management: A life cycle
approach, Prentice Hall India Ltd

18. Knowledge Areas in PM
 Scope Management
 Time Management
 Cost Management
 Quality Management
 Human Resources Management
 Communications Management
 Risk Management
 Procurement Management
 Integration Management

19. Project Management
Context
 Project Phases and Life Cycle
 Stakeholders
 Leadership Skills
 General Management Skills
 Communications Skills

20. Project Phases and Life
Cycle
 Divide Project into Phases
 Better Management Control
 Review Deliverables and Performance
 Fast-tracking

21. Example of Project Phases
 Conceptual Design
 Detailed Design
 Coding and Testing
 Training and Documentation
 Deployment

22. Stakeholders
 Individuals and Organizations
 Actively Involved in Project
 Interests Affected by Project

23. Key Characteristics of PM
approach
 System Approach, Integrator
 Multi Faceted, Multi Disciplinary
 Focuses on delivery ,timeliness,
flexibility, cost as performance
characteristics
 PM has a set of tools and techniques,
the list is expanding with the increase in
the complexity of business.

24. Typical characteristics in a
construction project..
 Finite horizon and the associated transient
involvement of the firm contracted to
execute the project
 Unique nature of many of the
equipment/materials
 Drastic impact of material shortage

25. Conception Planning Implementation Completion
Leadership and
Team work
Organization &
People
Management Skills
Project
Management
Techniques, Models
Computer Support
& Information
Systems
THE PROJECT PROCESS
Identification
Appraisal
Selection
Work breakdown
Networking
Scheduling
Time/cost tradeoffs
Resource issues
Monitoring & Control
Updating costs & times
Problem solving:
- Behavioural
- Technical
Accounting
Report writing
Disbanding team
Handing over
ENABLERS

26. Typical Phases in a project
 Concept and Feasibility phase
 Planning Phase
 Design Phase
 Commissioning phase

27.  Role of Materials
Management in a Project
(Construction)

28. Role of Materials
Management ..1..
 Concept and Feasibility Phase: estimate
costs of major items, develop list of
vendors , estimate availability and lead
time of critical items
 Planning Phase- Contribute to
specification of requirements, evaluate
contractor bids, prepare project
procurement plan of execution

29. Role of Materials
Management ..2..
 Design Phase-Expedite design on long lead time
items, work with engineers in timely development
of specific equipment and materials
 Construction Phase- Check when installation of key
equipment is possible and how it will be handled,
influence construction schedule when appropriate
 Commission Phase- dispose of surplus, ensure
availability of spare parts , operating and
maintenance instructions

30. Informational role of MM..
 General information on lead times
 Supply sources with associated lead
times
 Development of new sources
 Information on new equipment and
material

31. Imperatives
 Significant Cost of materials
 Invisible costs
 Complexity due to various alternatives
 Implications on delays
 Customer-supplier chain everywhere

32. Perspective...
A total concept involving an
organizational structure unifying
into a single responsibility for the
systematic flow and control of
material from identification of need
through usage and accounting of
the same.

33. Importance..
 Materials represent a major expense in
projects (for example in construction
projects), so minimizing procurement or
purchase costs presents important
opportunities for reducing costs.
 Importance of Purchasing
 A multi-dimensional function comprising
 Acquisition of materials required to support the project
 Procurement of capital equipment needed for
development projects
 Procurement and upkeep of public utilities by adequate
material support

34. Importance .. (contd.)
 Decisions about material procurement may also be
required during the initial planning and scheduling
stages. For example, activities can be inserted in the
project schedule to represent purchasing of major
items such as elevators for buildings.
 The availability of materials may greatly influence the
schedule in projects with a fast track or very tight time
schedule: sufficient time for obtaining the necessary
materials may be allowed.
 At times, more expensive suppliers or shippers may be
employed to save time !

35. Typical Benefits
 Improved availability of materials may
reduce craft labor costs
 Reduction in project delays
 Enhancement in productivity
 Reduction in storage costs
 Reduction in chasing and firefighting !!

36. Concerns..
 Poor materials management can result in large and
avoidable costs.
 First , if materials are purchased early capital may be tied
up and interest charges incurred on the excess inventory
of materials. Materials may deteriorate during storage or be
stolen unless special care is taken.
 Second, delays and extra expenses may be incurred if
materials required for particular activities are not available
Accordingly, a timely flow of material is an
important concern of project managers.

37. Concerns...
 Cost of materials and
 Cost ON materials
 Timely delivery so as to have smooth
flow and avoid PROJECT DELAYS
 Service centric approach

38. Typical Costs..
 Costs of purchasing
 Packing costs
 Transportation costs
 Insurance premia
 Cost of Receiving
 Inspection costs
 Material Handling costs
 Loss caused by scrap, rework
 Inventory carrying costs
 Cost of Paper work

39. Objectives of Materials
Management
 Support operational requirements
 Manage the material process efficiently &
effectively
 Select, develop,& maintain sources of supply
 Develop strong relationships with other
groups
 Support organizational goals
 Develop integrated strategies that support
organizational goals

40. Types of Materials : Examples
from construction projects
 Bulk Materials
 Example: Wet concrete mix, earthwork to be
excavated required in large quantities
 Standard off-the-shelf material
 Example: Standard piping and valves required in
chemical processing
 Fabricated members or units
 Example: Steel beams, columns for buildings are
pre-processed in shop

41. Example: Impact of Materials
Rs
Lakhs
@ 2 %
saving
on
matl.
@ 2%
saving
on
labour
Materials 70.00 68.60 70.00
Labour 16.00 16.00 15.68
Overhead 26.00 26.00 26.00
Profit 18.00 19.40 18.32
Total 130.00 130.00 130.00

42. Scope of Materials Management
 Materials Requirement Planning &
Control
 Purchasing
 Inventory control
 Receiving and Inspection
 Transportation
 Material handling
 Disposal of materials
 Value analysis

43. Materials Management:
Procurement
• Definition of Procurement Activities
– Identify or reevaluate needs
– Define and evaluate user requirements
– Decide whether to make or buy
– Identify the type of purchase
– Conduct a market analysis
– Identify all possible suppliers
– Prescreen all possible sources
– Evaluate the remaining supplier base
– Choose a supplier
– Receive delivery of the product or service
– Make a post purchase performance evaluation

44. Item Procurement Importance
Matrix

45. Reasons to Hold Inventory
 Meet unexpected demand
 Meet variations in customer demand
 Take advantage of price discounts
 Hedge against price increases
 Quantity discounts

46. Types of Inventory
 Raw material
 Work-in-progress
 Maintenance/repair/operating
supply
 Finished goods

47. Factors contributing to high
inventory ..1..
 Surplus inventory
 difficulty in disposing of items
 No scientific policy
 difficulty in standardization
 ineffective powers of delegation
 frequent modifications
 upgradation of technology hence
items become obsolete

48. Factors contributing to high
inventory ..2..
 Inability to predict the consumption
pattern
 inability to decide on critical/non-critical
items
 overbuying of items
 few suppliers sending items in more
than desired quantities
 improper organizational structure
 Lack of control

49. Possible options for
managing projects
 Selective inventory control
 Use of Inventory models
 Standardization
 Vendor management
 Lead time management
 Use of IT
 Supply Chain orientation

50. Selective Inventory
Control
 Prioritize items on some logical basis
 Prioritize managerial efforts
 Monitor and control selectively

51. Pareto (ABC) Analysis : Vital few/ Trivial
many !
10 20 30 40 50 60 70 80 90 100
Percentage of items
Percentageofdollarvalue
100 —
90 —
80 —
70 —
60 —
50 —
40 —
30 —
20 —
10 —
0 —
Class C
Class A
Class B

52. Selective Inventory Control
 ABC (Based on Price and volume of
use)
 VED (Vital, Essential, and
Desirable)
 FSN (Fast, Slow, and Normal).
 HML (High, Medium, and Low)
 SDE (Scarce, Difficult, and Easy to
Obtain)
 GOLF (Government, Ordinary,
Local, and Foreign)

53. Multi-Unit Selective Inventory
Control (MUSIC)-3-D Analysis
 CONSUMPTION VALUE
 High value vs Low consumption value
 LEAD TIME
 Long LT vs Short LT
 CRITICALITY
 Critical vs non-critical items
Classify and Analyze Items in the above
categories and Review them periodically

54. Decisions based on
 Purchase quantity
 Follow up
 Tighter
procedure/systems
 Safety stock
 Average inventory
 Powers of delegation
 Information systems
 Consumption norms
 Application of value
engineering
 Development of new
sources
 Reporting
 Central
purchase/stocking
 Delegation of
authority
 Planning
 Vendor rating
 Forecasting

55. Use of Inventory Models..
 Tradeoff between Inventory carrying and
ordering costs
 Basic issues to address: When to order and
How much to order
 Economic Order Quantity (EOQ) based
models
 Computerized models

56. Standardization

57. Facilitate international exchange of
goods and services and to develop
mutual co-operation in the sphere of
intellectual, scientific, technological
and economic activity
Benefits to
 Manufacturer Trader
 User Society at large
Objectives of standardization
(as per ISO)

58. Benefits of Standardization
 Standardization helps in having a
common platform for communication
 Interchangeability of items, sub-
assemblies etc.
 Facilitate the process of documentation
 Reduces inventory !

59. Supplier Management

60. Models for supplier
Arms Length Model
 Closed, Competitive
 Evaluation on lowest
bid
 Data/Information
sharing very limited
 Inspection based
quality regime
 No shared R&D
Partnership Model
 Collaboration based
 Multi-criteria evaluation
of sources
 Sharing of
data/information
encouraged
 Participative attitude
towards quality
 Shared R&D

61. Long Term Strategic
Partnerships
• Develop supplier partners, especially in the
commodities key to their company's growth
and future success
• Ensure that there is a close match in
technology, growth plans, and corporate
culture to have an open and successful
relationship
• Plan and execute for a long-term relationship
• Exchange much more data than traditional
relationships

62. Lead Time Management
Time between feeling the need for
materials and the time when that
need is actually realized.

63. Components of Lead time ..1..
 Need is felt for an item
 Specifications are drawn
 Approval by relevant
authority
 Indent transferred to
purchase dept
 Rates, terms etc identified
 New sources to be
identified
 Tabulation and
comparison of
quotations
 Rates/terms of
contracts negotiated
and finalized
 Requisite number of
POs prepared

64. Components of Lead time ..2..
 Acceptance by
supplier
 Manufacturing of
the item
 Follow-up with the
supplier
 Stage-wise
inspection
 Transport
 Material received
 Invoice quantity checked
 Material inspected
 Accepted material used
 Rejected material sent back
 Cheque issued to the
supplier
 Documents filed

65. Increase in Lead Time due to
...
 Bad planning
 Wrong specifications
 Incomplete indents
 Incomplete POs
 Too much
centralization
 Improper/incomplete
negotiations
 Inadequate technical
support
 Inadequate
inspection/testing
 Sources not known
 Inadequate legal
knowledge
 Wrong estimation of
requirements
 Wavering on choice of
mode of transport

66. Compress Lead Time
Select and Involve Supplier Early in Design
Value-added Time/Lead Time = 3.8%
Lead Time ± 33 weeks
… …± 1 week
Select
Supplier
direct work time =
Value-Added time
…
± 2 mh
Start
Design …
Lead Time
Ready
to Ship

67. Compress Lead Time
Value-added Time/Lead Time = 4.6%
New Lead Time ± 25 weeks
..± 6 weeks
..Engineer and Supplier
Collaborate
Ready
to Ship
Start
Design ..
..

68. Use of IT

69. Information Technology: An
Enabler
 Information links all
aspects of supply chain
 E-business
 replacement of
physical business
processes with
electronic ones
 Internet/web enaled
 allows companies to
communicate with
suppliers, customers,
shippers and other
businesses around the
world, instantaneously
 Bar code and point-of-
sale
 data creates an
instantaneous
computer record of a
sale
 Radio frequency
identification (RFID)
 technology can send
product data from an
item to a reader via
radio waves

70. Use of IT
 Full integration of various functions at
office as well as at site
 Sufficient flexibility to respond to various
contractual arrangements
 Line reporting on various purchase orders
 On line status on various projects
 Hardware portability
 Compatibility with other engineering, cost
accounting, and project control software

71. Use of IT: Desirable Features
 Full integration of various functions at office as
well as at site
 Sufficient flexibility to respond to various
contractual arrangements
 Line reporting on various purchase orders
 On line status on various projects
 Hardware portability
 Compatibility with other engineering, cost
accounting, and project control software

72. Use of IT:
Enterprise Resource Planning (ERP)
 Accounting oriented information system for
identifying and planning enterprise wide
resources needed to take, make,ship and
account for customer orders
 As an enabler to quickly access information
and integrate different functions.

73. ERP system: Typical Modules
 Purchasing
 Inventory management
 Waste management
 Invoice Verification
 Information System
 Project monitoring & Control

74. Supply Chain Orientation

75. Supply Chain Management
Supply Chain Management (SCM) is the
practice of a group of companies working
collaboratively in a linked chain of
interrelated processes designed to best
satisfy end-customer needs while
rewarding all members of the chain.

76. Why SCM?
 Process improvements
 Cost and time reductions
 Enhancements in profitability
 New business opportunities

77. SCM Stakeholders
• Owners
• Engineering firms
• Contractors
• Subcontractors
• Equipment and material suppliers
• Raw material suppliers
• Lenders and insurers

78. Construction Supply Chain
RAW MATERIALS
PROVIDER
tier 3
tier 2
SUB-
CONTRACTOR
tier 1
tier ...
tier 2
SUPPLIER
tier 1
OWNER
CONTRACTOR
specialists
ARCHITECT/
ENGINEER
EPC FIRM

79. Salient features of
construction environment
 Changes in schedule and scope are common
 Constraint on availability of resources and
poor site conditions pose real costs and
limits on subcontractors and suppliers
 Retarded information sharing
 Transient nature of projects

80. Insights...
 Decisions in each part of the supply
chain affect the other parts
 Accelerator or Bullwhip effect
 Demand changes by the end-user create an
acceleratory effect in the supply chain which
magnifies the size of demand changes in
upstream Supply Chain elements
 Best way is to reduce Lead Time !

81. Challenges in SCM
 Project unique design and materials
 Specifications
 Uncertain demands
 Project specific supply chain
 Unpredictable environment
 Client intimately involved

82. Barriers to SCM
Implementation
 Traditional contracting practices
 Functional silos
 Lack of SCM skills
 Local project vs. global program perspective
 Must be practiced at strategic, tactical, and
task levels
 Risk aversion
 Lack of incentives
 Lack of standards

83. Tools & Techniques of SCM
 Supplier-Managed Inventories
 Supplier Relationship Management
 Web-Based Project Management
 Strategic Inventory Placement
 Core Competency Leveraging
 Streamlining

84. SCM Activities
 Integrated behavior
 Mutually sharing information
 Cooperation
 Customer Focus
 Integration of processes
 Partners to build and maintain long-
term relationships

85. SC Orientation...
 Systems view
 Strategic view
 Willingness to address
 TRUST
 COMMITMENT
 COMPATIBILITY
 VISION
 KEY PROCESSES
 TOP MANAGEMENT SUPPORT

86. SCM Benefits
 Compression in longest paths of the SC
 Reduction in variability of lead times
 Reduction of cost risks and charges for extra
services
 Reduction of communication errors and delays
 Reduction of waste
 Increased net present value due to savings in
maintenance, repair and operation
 Additional income to all stakeholders
Rewards Are Worth the Effort!

87. Remark..
Dissatisfaction due to fragmented
processes in construction will lead to
Collaborative construction
environment and integrated
management of materials

88. Case of Delhi Metro

89. Delhi Metro Rail
Corporation(DMRC)
 Established in 1995
 Phase I(67.5 km) and Phase II(125 km) as
route length
 Investment of US$ 2.3 Billions
 Began construction in 1998 and completed
Phase I in 2006 (3 years ahead of schedule)
 There are 6 lines, and a total of 142 stations
 Today a fleet of 280 coaches with 70 trains run
daily

90. Features..1..
 Appointment of Mr E Sreedharan as Project
Manager !
 Effective project design
 Business culture based on punctuality,
honesty and strict adherence to deadlines
 Lean organizational structure (just 2 deptts:
Project Organization, Opns & Maintenance)

91. Features..2..
 GOI enacted Delhi Metro Act superseding
local acts/regulations and hindrances
 Primavera software for project monitoring
 Trained manpower through own training
programme as well sent abroad

92. Features ..3..
 In order to steer clear of political
interference, the DMRC sought
autonomy on all major matters and the GoI
promised to give it this autonomy.
 Financial powers were vested in the
managing director. Also, MD was the last
authority on tenders,

93. Remarks
Major infrastructure projects are often stalled
because of
a. lack of funds,
b. political interference,
c. lack of professionalism and accountability,
d. property disputes, corruption, etc.
Even before the commencement of the
project, the DMRC attempted to put in place
effective systems to ensure the smooth
progress of the project.

94. Summary of DMRC project
 Project Management
 Project Skills
 Quality Skills
 Timeliness
 Flexibility
 Empathy & Safety

95. Learning from DMRC
Develop Project Management
Systems
Organizations must create PM processes using well accepted process
groups and knowledge areas. PMI’s global standard, A Guide to the Project
Management Body of Knowledge (PMBOK® Guide), focuses on five process
groups and nine knowledge areas.
Define and Measure Project Success
Project success is generally measured using “efficiency measures” like
scheduled delivery dates, budgeted costs, and other efficiencies.
These are “necessary” measures across infrastructure, but not “sufficient.”
Project success must consider long-term impact on customer, project team,
business, and preparedness for the future.
Ref: Korgaonker MG, India Emerges as a Global Brand in Projects , PMI News, Sep
2011, Vol 3(4)

96. Learning from DMRC
Develop Strategic Perspective of PM
An international survey of over 400 Architectural, Engineering, and
Contracting (AEC) companies revealed acute gaps in Strategic Management
(SM) processes. AEC companies are 30–40 percent less involved in SM activities
than Fortune 500 companies. They have dispersed SM profiles and pay
selective attention to knowledge resources, finance, and markets.
Innovate to Manage Complex Project
Supply Chains (PSC)
There are wide variations in capabilities across the supply chain & gaps exist in
design, consultancy, technical talent, specialized technology, and vendors.
Coordination and integration of PSCs is a formidable challenge
Ref: Korgaonker MG, India Emerges as a Global Brand in Projects , PMI News,
Sep 2011, Vol 3(4)

97. Closing Remarks..
 Infrastructure development is a necessity
for economic development
 Management of infrastructure requires
project management approach
 A systems approach involving all
stakeholders

98. Useful Resources
Web sources
 www.pmi.org
 www.iimm.org
 www.construction-institute.org
 www.wholesaleelectric.com/ns_cmms
 www.wasteless.org
Books
 Kanda A , Project Management, A life cycle approach, Prentice
Hall India Ltd
 Monczka, Trent and Handfield, Purchasing & Supply Chain
Management, Thompson

99. Thank you very much !
My coordinates
 Telephone: 0751-2449801
 Fax: 0751-2449813
 Email: deshmukhsg@gmail.com