Project Management for Operators of large Assets

This procurement manual provides insights on project management for large assets. It covers project financing, project team, execution, project control, and quality assurance. The project is about the procurement and installation of major equipment in a thermal power station. The desired goal for the project is quick delivery and installation to get the power generator up and working through modularized step by step approach to delivery.

Project Management for Operators of large Assets
Name
Date

Table of Contents
Project Definition.........................................................................................................................................4
Contract process and project justification...................................................................................................4
Justification..............................................................................................................................................4
Contract Process......................................................................................................................................5
Project financing..........................................................................................................................................6
Identification...............................................................................................................................................6
The project team.........................................................................................................................................7
Execution.....................................................................................................................................................7
Tender estimate..........................................................................................................................................7
Labor........................................................................................................................................................7
Plant.........................................................................................................................................................8
Materials..................................................................................................................................................8
Sub-contractor.............................................................................................................................................8
Project changes requirements.....................................................................................................................9
Project control and quality assurance.........................................................................................................9
Project governance, document management, and reporting....................................................................10
Dispute resolution.....................................................................................................................................11
Safety.........................................................................................................................................................12
References.................................................................................................................................................13

Project Definition
The project for which this procurement manual is made is in the plant and construction
sector; specifically, the project is about the procurement and installation of major equipment in a
thermal power station. Among the equipment to be installed include generators, boilers, and
turbines, along with their accompanying components and accessories. The customer for the
project is the electric power generating company that generates electricity using thermal power.
The major customers targeted include IPP’s (independent power producers), government
agencies, and wholesale power producers. Below are the basic details of the thermal power plant
 Thermal power station with a combined cycle
 Conventional thermal power station using coal and oil fuels to generate power
 Thermal power station using diesel
 Gas turbine thermal power generating station
The desired goal for the project is quick delivery and installation to get the power
generator up and working through modularized step by step approach to delivery. This will
enhance efficiency as well as help ensure safety and optimal operation. The supplier will arrange
for transportation of all equipment, including extra ordinary loads, to the site of the power plan
for installation. The power plant has major equipment and components that are replaced based on
a set schedule, after being used for a period of time. This is done to ensure operational efficiency
in power generation, as well as to ensure safety of the entire plant and those working in and
around the plant. As such, the providers need to have the capacity and experience to manage the
project scope and meet the objectives of this project.
Contract process and project justification
Justification
Over 80% of all electricity generated in Australia uses coal energy ('Origin Energy',
2015); this is not only bad for the environment in terms of pollution and emissions; coal mining
adversely affects the environment where it is extracted and adversely affects the health of those

mining it as well. In line with global trends including the need to conserve the environment and
help offset the concept of global warming and climate change, as well as shift to cleaner sources
of energy, the authorities are in favor or a thermal power generating plant, with suitable backup
to generate electricity. This has been the trend in recent years, with concentrated solar power
(CSP) generation being quickly adopted. The Australian outback has the fitting weather and solar
radiation that can support large scale thermal power generation (Maher, 2015). The CSP power
plants can be considered large scale to very large scale as generating power in megawatts using
CSP requires considerable capacity to harness and convert solar energy into kinetic, and then
electric energy (Clifton & Boruff, 2010). This also requires a suitable capacity to effectively trap
and concentrate solar energy, creating thermal energy that is then converted into kinetic energy
to generate clean and renewable electricity. The main aspects of constructing s CSP power plant
is efficient tracking and concentration of the solar power, as well as the storage and efficient
conversion of the thermal energy into kinetic, and subsequently, electric energy ('Australian
Renewable Energy Agency', 2017). This tender requires the successful construction, installation,
testing, and commissioning of a thermal power generator that uses solar energy where the solar
rays must be harvested and harnessed to reach critical thermal level, and then converted into
kinetic energy for generating electricity.
Contract Process
The thermal power plant is a complex project that can be long drawn and result in legal
and other project issues that can take equally long to settle (Eberhard & World Bank, 2016). The
limitations of available resources, and the triple constraints of project finance, scope, and time
place enormous challenges on the project hence the need for effective planning and execution
(Westland, 2018). To manage the project, this tender will have a project contract governing the
relations between the client and the supplier. To ensure no legal issues and challenges, the
project will have a project manager who understands the project requirements as well as the
governing laws and regulations that pertain to the project. The project must therefore be
effectively governed, right from the tie the objectives and deliverables are set to the evaluation of
delivered work post contract, as per Alie (2015)

Project financing
This project is going to be a large scale project that requires a well structured financing
plan in order for the objectives of the project to be met. The project financing will follow the
model of limited, non-resource financing and will be achieved through a separate financing
vehicle. The fact that this is a non-resource project helps create the distinction between
traditional corporate financing and project financing. One major aspect of corporate finance is
repayment to investors and creditors; a responsibility that lies with the sponsoring company that
is itself backed by its entire balance sheet, as well as the project itself. This model ensures that
investors and creditors are secured in the event that the project fails or faces a major challenge;
the creditors and investors will be paid through the balance sheet and revenues from the
sponsoring company (Cumming, 2012). For large scale and capital intensive projects such as this
one, project financing is used to provide financial resources for the execution of the project.
Using the project financing model where a single financing contract is negotiated is better than
several smaller project financing agreements as this reduces legal and operational costs due to
the economies of large scale. However, financing a large scale project through hard currency
also exposes the vendor to various risks and in such an event, the host government can fail to
back the project by signing an agreement to renew, or extend the concession (Al-Thani & Merna,
2013). The government can further change rules and regulations or expropriate the cash and
assets of the projects for political capital or fail to support the projects’ access to hard currency in
the event of a market downturn.
Identification
Project condition
One of the most significant factors in such a project that must be taken into consideration
at the initial stages is the condition of the project because future plans for the project depend
directly on the projects’ condition. The condition of the project should be taken into
consideration by a expert as the overall viability and working of the project depends on its
present condition. Poor judgment can result in the project failing or not being able to meet its
objectives especially if a different strategy related to the working of the project is not used.

The project team
The team that will run and execute the project to its completion are the most important
aspect of the project; they, in addition to relevant stakeholders, are directly responsible for, and
play a big role in getting the project executed to completion. The project team incorporates the
stakeholders for the project, the sponsors (the executive and business sponsors), as well as a
project board, the project manager and assistant project managers, and the project delivery team
consisting of specific persons with defined roles such as the project accountant, was well as
contractors that form part of the project team. The most important and highly visible person in
the project team is the project manager, who bears the greatest responsibility for the successful
delivery of the project. The project manager is responsible for planning, execution, controlling,
and getting approval for changes to be made for the project, as well as motivating other project
members to be able to achieve the project objectives. The team members work based on the
project plan developed by the project manager in order to achieve the project goals and
objectives (Cobb, Schön, Allex, & Harman, 2012).
Execution
The project manager works with members of the project team to process the project. The
goal and objectives of the project determine how the project is executed and this in turn n
determines the planning for the entire project and its execution. If the project is not executed as
per the set goals and objectives, then the project manager is liable for whatever failures
experienced.
Tender estimate
Labor
This is among the important inputs for the project because its successful execution
requires skills provided by human labor. The project will require strategic human resource
acquisition to get the right personnel for the right job; the labor should be made up of highly
skilled persons that will ensure the project is executed and completed as per the objectives.

Plant
The project will be located at a strategic place that ensures it can harness maximum solar
energy and does not interfere with existing activities, artifacts, or infrastructure. Further, raw
materials must be acquired for setting up the pant, along with other materials that must be
transported to the site, so it should also be accessible. Further, circulating water must b
discharged and the system designed with a safety release in the event of an accident or
malfunction that causes pressure build up (Maithani, 2008).
Materials
Description Weighting
Excavation works 0,05
Circulating water system discharge 0.3
Circulating water system structure 0.1
Intake canal for the circulating water system 0,1
Waste water treatment and disposal 0.1
Land 0.15
Batching and crashing plant 0.05
Underground utility and firefighting location 0.15
Sub-contractor
On average, 30% of the entire project budget is usually taken up by purchase of
equipment and materials. Materials and equipment purchase can be defined either as being
domestic or foreign. An external procurement office and team will handle all foreign
procurement, preferably at the source to attain efficiencies, and cost effectiveness ('Cargenie
Mellon University', 2014). The purchasing for materials requires all technical considerations to
be taken into account. Subcontractors will play an important role in the successful delivery of the
project; subcontractors will be involved in the design and technical specifications, as well as
other elated works. Subcontractors will also deal with issues such as site condition,
environmental concerns, performance limits, the outline of the power plant, and sea and

industrial water quality. Technical aspects include the operating conditions of the plant, and
responsibility for various performance aspects (Marzouk, El Kherbawy, & Khalifa, 2013)
Project changes requirements
Changes in projects are inevitable in most cases, and this requires prior preparation and
anticipation of these changes. These changes, including scope creep, have the effect of adversely
affecting the final project delivery and overall project success. As such, what is required is an
effective risk management strategy, coupled with a strict scope control and management plan.
The main objective is to decrease or limit the scope changes required for such a massive project,
as well as an effective risk management plan. The control of scope also requires that changes to
scope are highly controlled and follow a well-defined process where scope changes are recorded
in the scope management document and with justification, and then approvals sought from the
sponsors before changes to the scope can be made. The project manager takes the lead in dealing
with any changes to the project scope (Coventry, 2015).
Project control and quality assurance
A large public project such as this requires value for many, which implies that the project
must have a comprehensive project management plan. Quality management encompasses quality
control and quality assurance. The goal of any project management initiative is to ensure the
desired quality is attained (Rever, 2007).
Quality management includes commonly three stages – Quality Planning, Quality
Assurance and Quality Control.
Quality Planning: Here, the quality arrangement is made. Each arrangement ought to
have a coveted goal or objective and quality arrangement is no special case. The objective of
value administration ought to be obviously imparted to every one of the partners in a venture.
After the objective is characterized, the measures to guarantee the level of standard ought to be
worked out. In what manner will the clients be fulfilled? What is the level of value that the
partners are anticipating? How to decide whether the quality measures will prompt extend
achievement? At the point when every one of the responses to these inquiries are set up, errands

ought to be appointed to individual colleagues and quality arrangement is started (Association of
Energy Engineers, 2011).
Quality Assurance: This is a procedure that moves alongside venture all through the
lifecycle. Quality confirmation is tied in with assessing if a venture is moving towards conveying
quality administrations. On the off chance that all the quality attributes are set up the quality
arrangement can continuing in a powerful way. At the point when quality objectives are not
accomplished or are not during the time spent getting accomplished, vital advances and remedial
activities ought to be distinguished. Guaranteeing restorative activities too falls in the period of
value confirmation.
Quality Control: Here, operational systems are utilized as a part of request to guarantee
quality benchmarks. Whenever an issue emerges identifying with quality or if the quality
arrangement isn't executed in the coveted way, restorative activities ought to be compelling.
Quality control includes observing task results and conveyance to check on the off chance that
they are meeting wanted outcomes or not. If not then elective activities ought to be actualized.
Project governance, document management, and reporting
The project governance plan is an essential procedure created as a major aspect of the
administration period of the project administration process. This is because the responsibilities
and accountabilities associated with a project need to be well laid down, just as happens with
organizations’ usual business ventures; this is more so or capital investment projects such as this.
The project governance document and methodology provides a logical, repeatable, and robust
framework for decision making to govern the capital investments of an organization. With a well
defined governance framework, the organization will have a structured way to conduct both its
usual activities as well as project activities (Graham, 2015)
Documentation management: Project documentation is a a crucial component for any
successful project management. Documentation performs two major functions that include
making sure the project requirements are fulfilled and establishing traceability with respect to
what has already been done, the person responsible, and when it was done. Documentation can

be managed manually, although the preferred method is through the use of various software,
especially project management software. Each document must be recorded with a version, an
authors, and any revisions done, along with the dates of these revisions. This can be aided by
project management tools to enhance the effective management of different sectors of a project
activity in the organization.
Reporting: This refers to the use of both informal and formal reports to communicate
project status; reporting is an important tool for effective project management given that it
creates visibility and it provides a framework thorough which expectations can be better
managed with regard to stakeholders and the project team members. The reporting is able to
enhance the management of project scope, budget, and time for the project to ensure they are in
track. As such, reporting should be done periodically, but regularly enough to allow the team to
rectify a situation, should a report show that one constraint is being overshot. The project
manager pr project supervisor is charged with the role and responsibility for reporting project
progress
Dispute resolution
Conflict in project management is inescapable and it is never about if it will happen, but
when it will happen. As part of their day to day activities, project managers and administrators
face various types and forms of conflicts from various sources, including both internal and
external sources when dealing with various stakeholders and their expectations. While there is
awareness about conflicts in projects, there is little awareness of its dynamics, and especially
how to effectively resolve these disputes. With knowledge and awareness of the various
available action alternatives they can use, a real opportunity exists to diffuse and eventually
resolve the conflict. Further, valuable lessons can be learned from the conflict episode in order to
better avoid or resolve similar conflicts in the future. Further, conflicts should not be avoided
because not all conflicts are necessarily bad; some conflicts result in positive outcomes and
better project delivery (Pinto & Kharbanda, 2015.
In every project, different attributes must be taken into consideration; a project can have
several small attributes but care must be taken because such small attributes can adversely
impact the project. Solving problems and conflicts in projects can be a challenge; as such, one

excellent way to resolve conflicts quickly is through mediation. This approach has a structured
process that enables the mediator to analyze, handle, control, and guide the project parties in the
conflict towards a resolution of their conflict. Once the conflict mediation process begins, the
management of the conflict itself will go through three major phases; the initiation, meetings that
can be private or joint, and the outcome where there can be an agreement of non agreement.
Mediation is the best approach to resolving conflicts because it is based on a collaborative
approach to solving issues.
Safety
Safety during such a construction project is paramount not only for its success, but to
ensure the project is not interrupted or injuries and fatalities occur. Safety must be looked at in th
wider context of individual safety as well as safety to the environment. The organization must be
aware of, and implement an elaborate workplace health and safety program that aligns with, and
fulfills the needs of the relevant work place health and safety laws and regulations. Once they
have a WHS policy document, they must train their staff on the need for safety, with safety
officers appointed to spearhead the the WHS before and during the execution of the project.
Safety must be part of the culture of the organization and all staff must follow basic safety
principles, including wearing personal protective clothing, taking care not to cause any damages
to the environment. Any safety related issues must be immediately reported as per the
requirements of the WHS policies for further remedial action to be taken.

References
Alie, S. S. (2015, October 6). Project governance #1 critical success factor. Retrieved from
https://www.pmi.org/learning/library/project-governance-critical-success-9945
Al-Thani, F. F., & Merna, T. (2013). Corporate risk management. Hoboken, NJ: Wiley.
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GA: Fairmont Press.
'Australian Renewable Energy Agency'. (2017, March 8). Paving the way for concentrated solar
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'Cargenie Mellon University'. (2014). Cost Estimation. Retrieved from
https://www.cmu.edu/cee/projects/PMbook/05_Cost_Estimation.html
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development in rural Australia. Energy Policy, 38(9), 5272-5280.
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project management and team leadership.
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from https://www.pmi.org/learning/library/requirements-management-planning-for-success-
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Graham, N. (2015). Project management for dummies. Chichester: For Dummies.

Maher, S. (2015, June 24). Paths to renewable energy efficiency. Retrieved from
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efficiency/news-story/cbf394490daa720df1b4f0c0adfbfc8b
Maithani, P. C. (2008). Renewable energy in the global context. New Delhi: Concept Pub. Co.
Marzouk, M. M., El Kherbawy, A. A., & Khalifa, M. (2013). Factors influencing sub-contractors
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from https://www.pmi.org/learning/library/project-management-organizational-conflict-
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Rever, H. (2007). Quality in project management--a practical look at chapter 8 of the PMBOK®
guide. Retrieved from https://www.pmi.org/learning/library/quality-project-management-
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Westland, J. (2018, March 22). The Triple Constraint in Project Management: Time, Scope &
Cost. Retrieved from https://www.projectmanager.com/blog/triple-constraint-project-
management- time-scope-cost