Name- Tanmay Sanghvi
Name of the Organisations- L&T
Total experience- 3 years
Current Designation- Project Engineer
Research questions of thesis work:
* Investigating the problems of the cost overruns in the
* Tools and techniques used for cost controlling and its efficiency
1- Practices adopted for project costing
* Cash flow- Monitoring cash inflow and cash outflow of the project
* Frequency of payment received from the client
* Planning payments on milestone basis.
* Initiating procurement activities by forecasting delivery date of materials. *
Planning, monitoring and control goes hand in hand.
* Use of SOPs.
2- Techniques used for project cost estimation and budgeting
* Earned value management
* Three point estimation
* Top down approach
* Bottom up approach(new project)
3- Reasons for cost overruns
* Scope creep
* Underestimating complexity
* Inefficient communication
* Unanticipated regulatory requirement
* Resource shortages
* Inaccurate proposal of project cost
* Inaccurate risk planning
* Technology and design changes
* Poor contract management
* Poor estimation
* Poor planning and scheduling
4- Techniques used for mitigation of cost overruns
* Early Contractor Involvement(ECI)
* Detailed scope definition and change management
* Value engineering
* Phased construction
* Vendor and supply chain management
* Time and motion studies
* Contingency reserves based on assessments
* Contractor performance metrics
* Training and Upskilling the Workforce
* Adaptive Project Management Tools
* Planning payments according to contract
* Proper negotiation during the procurement stage
* Claims from the client for unforeseen delays
* Proper cash flow management
* Accurate estimation and budgeting
* Regular project progress report
5. Softwares used during project planning and execution
* MSP for planning and scheduling
* QPR Process Analyzer for project motinitiring and control
* Excel for cost comparison and project cost baseline
6. Real life project details-
Project name- Hyderabad Metro Rail Project, Andhra
Pradesh Project cost- 165375 CR
Project Duration- 5
Years Project starting-
July, 2012 Project
stage- Closed Cost
overruns- 3000 CR
Reasons for cost and schedule overrun in project-
* L&T raised debt from a clutch of 10 banks with the State Bank of India as the
lead banker in March 2011 at a floating rate of interest of 10.5%.
* But since then, interest rates have risen by two percentage points.
* Problems of land acquisition have pushed the project timeline by at least 15
months behind schedule.
* Decision of the Telangana government that is seeking a realignment in at least two
stretches at Sultan Bazaar and State Assembly could further delay the project.
* An independent committee studied technical, financial and legal implications of the
realignment that was sought by the government.
* Days after engineering major Larsen & Toubro sought additional time of more than
two years to complete Hyderabad Metro, it has been reported that the delay has
increased the cost of the project from over Rs 14,100 crore to an estimated Rs
18,800 crore. The cost escalation is to the tune of over Rs 4,600.
* Due to land acquisition delay, the cost increased by 770 CR.
* The project was to be completed by July, 2017 but was completed
by 2020. Ways to mitigate overrun:
* Company was able to claim the extra coast with the client and were successful in
getting EOT.