Project Management Leadership and Skills: Carillion's Project Analysis

This project management assignment analyzes the key aspects of project management, including planning, execution, controlling, and risk management. It explores the application of these theories within the context of Carillion's construction project, identifying challenges and offering recommendations. The report covers project constraints, life cycle, portfolio management, and program management, while also examining project risk theory. The analysis delves into Carillion's Aberdeen peripheral route project, highlighting issues that led to financial difficulties and stock price decline. The project emphasizes the importance of effective planning, resource allocation, and risk assessment for successful project outcomes. It also discusses various theories related to project management, such as project theory, management theory, planning theory, execution theory, and controlling theory. The study emphasizes the significance of considering these factors to overcome project constraints and achieve project objectives.

Project Management Leadership and
Skills: Planning and Control

ABSTRACT
A process in which plans for particular event or project are made, implemented, analysed
as well as evaluated at the workplace is known as project management. It is one kind of highly
supportive for making an effective plan of the project and complete the objectives properly and
within deadline. Under the present study, various aspects related to project management are
performed appropriately. Basic constraints associated with the project are described. Such key
constrains are like cost, time, quality, risk as well as scope which are mandatory manage
properly. The project consists of wide range of theories and approaches which are clearly
explained in the study. Apart from this, features as well as the characteristics of Carillion's
project are also described. It can be analysed that, basic four theories involved in specific project
which are like theory of planning, execution, controlling and risk managing. It can be suggested
to Carillion throughout the project, it must make a proper and effectual planning of the project
while preparing any event. The reason is that, it will help to meet objectives and goals behind the
project in an appropriate and effective manner.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Project Management...................................................................................................................1
Analysis of Carilions's Project....................................................................................................7
RECOMMENDATIONS...............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Project management is an art of managing different functions and aspects of project from
its starting date to its closing date by using various structure and scientific methodologies.
Project is a temporary program that is to be completed within stipulated time and specified
resources. In order to successfully complete a project, it is important to consider main three
components that are time, cost and quality. This means, for successful completion of a project it
must be completed within specified time and resources allotted to the project along with the
fulfilment of quality standards. The present report focuses on management of construction
projects supported by different concepts and theories. Various aspects of Carillion's projects are
discussed below where different issues and risks associated to the project are identified along
with providing suggestions and recommendations. Different stakeholders that are associated with
a project along with their influences are also identified below.
Project Management
In order to create a unique service, result or a product, temporary efforts are applied
which is referred as project. It is just an endeavour of temporary in nature. While, a project
management refers to managing various functions that are associate to a project from its
inception to its conclusion with the help of using various project management theories (Larson,
and Gray, 2013). Project manager prepares a project management plan that must be realistic,
achievable and time bound. To allocate resources to project, funds are generally raised through
buy-in from all stakeholders. Role of project manager is to ensure that the project is working
efficiently and its overall objective will be achieved in a stipulated time. However, he need to
take care about following concepts of Project Management:
Operation or project: An operation and a project is often misunderstood. An operation is an
ongoing and repetitive process while a project is unique and temporary in nature. Project gets
terminated once its objects are achieved while, purpose of operation is to sustain a business along
with adopting new objectives when the previous ones are accomplished.
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Project Constraints: A project had to face different challenges during its process such as time,
risk, quality, cost, scope and customer satisfaction. These challenges are called project
constraints.
Illustration 1: Project Constraints
(Ferri and et.al., 2016)
Role and responsibility of project manager: Following three broad areas are covered under the
job of project manager:
 Providing leadership to team
 Implementing relevant and effective process of project management
 Assuming responsibility of the project as a whole
Project life cycle: A project had to go through different stages before completion, therefore, it
has a proper life cycle that includes following stages (Phillips, 2013):
1. Initiating
2. Planning
3. Executing
4. Controlling
5. Closing
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Project Portfolio Management: In order to achieve a specific strategic business goal, a group
of programs and individual projects are implemented which is known as portfolio. However,
centralised management of processes, technologies and methods that are used by project
managers in order to analyse and manage proposed and current projects based on different
characteristics is a Project Portfolio Management (Van Meerveld, Nauta and Whyles, 2015). Its
objective is to determine optimal mix of resources in order to deliver and schedule activities that
are required to achieve the best organisational objectives.
Program Management: Department that centralizes the management of project is referred as
Program Management. This means project management officer is a person in charge of all the
projects that are being executed in an organisation. Main purpose of program management is to
serve necessary information to Chief Information Officer regarding regular status update along
with the progress of all the projects of an organisation.
Other than the above discussed concepts of project management, it also includes various
theories that are as follows:
Illustration 2: Project Management Theories
Theory of project:
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The theory was proposed by Turner who claimed that project management is all about
managing work and work can be managed by dividing it into small parts that are called tasks and
activities (Kerzner, 2013). These tasks and activities are units of analysis under the process of
project management such as cost management, scope management and time management along
with the centralised control. Theory of project focuses on the answers of various questions that
arise during the effective execution of project that are as follows:
 What needs to be done?
 What work is to be performed by whom?
 When the actions are to be performed?
 How much cash resources are required to be spent in total?
These questions constitute to the work breakdown structure (WBS).
Theory of Management:
Theory of management simply divides the process of project into initiating, planning,
execution, controlling and conclusion processes (Walker, 2015). However, a central idea is
provided by this theory that states planning is a process that provides a plan which is then
realised by the execution process, variances are then analysed and corrections or changes are
made in further plans. This basically includes theory of planning, theory of execution and theory
of controlling.
Theory of Planning: In order to efficient execution of a project, planning is necessary
which helps in forecasting future events that can cause a significant impact on the overall project
(Project Management Theory, 2017). Planning is essential as it provides relevant information
such as how many resources will be required, how much are available, how available resources
can be optimum allocated, required time frame for efficient completion of project, determination
of risks etc. by knowing all this information, manager would be able to make an efficient plan.
Process of planning is structured into facilitating and core processes. The core planning process
includes:
1. Scope planning
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2. Scope Definition
3. Activity Definition
4. Resource planning
5. Activity sequencing
6. Activity duration estimating
7. Cost estimating
8. Schedule development
9. Cost Budgeting
10. Project Plan development
Once the plan has been developed, it is translated into actions by simply issuing order to
sub-ordinates. However, management at operation level is required to centralize creation,
revision and implementation of plan.
Theory of Execution: Once the planning is done and project plan is prepared by stating
the time frame for the completion of project, required resources and allocation of available
resources, risk associated and the standards of quality are determined, stated plan is then
executed by project manager (Mir and Pinnington, 2014). Further, work authorisation system is
the only direct interface between plan and work. This system involves sanctioning of project
work that ensures work is done in proper sequence and at the right time. This system must be
designed in order to balance cost of control with value of control. The process of execution
involves making a person responsible for undertaking aspects and different functions of project.
Authorisation can be provided in mere communication either oral or written or notification to
start work from principle authority.
Theory of Controlling: After the execution of project plan effectively, the next process
is controlling its activities. Hence, theory of controlling deals with the aspects of to control the
project process. It is further divided into two sub processes that are performance reporting and
overall change control (Sears and et.al., 2015). Main purpose of performance reporting is to
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prescribe corrections for execution process and main purpose of overall change control is to
prescribe changes in planning processes. Theory of controlling corresponds to the model of
management control that consists of the following elements:
 Setting the standard of performance
 Measuring performance at either output level or input level
 Variances are determined among standard performance and measuring value and
corrections are made accordingly in order to reach standards.
Manager must consider the above discussed theories of project management in order to
attain desirable and project objectives (Hwang and Ng, 2013). Further, risk is a main component
that is associated with the effective execution and completion of project. Project Manager is
required to analyse future events in order to determine the areas of risk. For this purpose, project
risk theory will be beneficial for project manager:
Project risk Theory: A project which can have an impact of unplanned or uncertain events is
called a risk. By identifying, assessing, prioritizing, and mitigating risks that are associated with
projects is known as risk management. Risk is generally involved in every step of project. There
is risk of failure of project, delay in time, increase in cost and improper planning (Liu, Liu and
Liu, 2013). To avoid it first of all proper planning should be done, a plan is a list of steps made to
achieve an objective or goal. Improper planning may lead to more risk as there will not be an
alternative to a problem. Most of projects fail because of improper planning done by top
management.
There is always a risk of cost increase in project. It can be because of rise in cost of
production, raw material, workers, inflation, etc. to solve it proper cost evaluation theory is
needed which is formulated by top management. Rise in cost will lead to increase in cost of
project thus by having chances of project a failure. At each step cost of project must be evaluated
to check whether project goes according to allocated budget or not.
Most crucial element in risk is timely completion of project. If time is not properly
managed according to activities described in planning then there is risk of delaying in project.
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For example if a task is to be completed within 3 days and if it takes 4 days to complete that task
then further schedule tasks in projects will also take one day extra time to get completed
resulting in delay and increase in cost of entire project (Ferri and et.al., 2016). So to complete a
task effectively and efficiently in given time, proper time management theory must be adopted.
Above discussed theories of project management and risk are essential to be considered
in order to eliminate all the constraints that are associated with project such as quality, time,
scope and cost.
Analysis of Carilions's Project
In reference to the given scenario of Carillion's construction project plan, below is the
description and analysis of overall plan.
In order to improve travel in North east Scotland, The Aberdeen peripheral route was
billed which was provided to Carillion Construction company. This project turned out to be a
headache for the company that significantly affected it finances. The company was managed by
two partners namely Balfour Beatty and Galliford. Initially the decision of taking the project of
route was welcomed by both the partners (No signs of let-up for Carillion as share price slide
continues, 2017). However, the project of Aberdeen route was not successfully implemented and
Carillion's had to face different problems which even caused decline in the stock prices of
company.
Analysing what went wrong in overall Project:
 Initial step of the company that highly affected was that the contract was then provided to
the small contractors by both the partners. This was the initial wrong decision of the
company which begin downfall of project.
 Delegating contract to the subcontractors caused increase in cost because due to the
current environment there was shortage of labour and prediction of cost of material such
as steel was difficult to predict.
 As discussed above, in order to implement a project efficiently, a project plan is to be
prepared which includes forecasting techniques of management and making of various
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assumptions and preparation of budgets for different activities (Todorović and et.al.,
2015).
 In the overall scenario, it has been analysed that the project plan was not prepared in a
proper manner by project manager.
 Budgets were not prepared by the subcontractors which are necessary to estimate future
expenses and activities that can negatively affect project plan.
 Further, due to inefficient project plan, execution was delayed along with pushing costs
up and causing serious cash flow to the company.
 Carillion also suffered with the problem of procurement. Procurement in general terms
refers to the act of buying goods and services, it includes payment receipts and approvals.
Problem faced by the company was that the management was unable to estimate correct
prices of raw material and time scales of different aspects and activities of project
(Carillion under pressure to inject funds amid growing pension concerns, 2017).
 The main problem was the company pitched the price before and then they started
searching for subcontractors who came back with more expensive prices.
 Another reason that caused downfall of project was, company lost the control over work
to be done by subcontractors and delegated all kind of work such as drainage, hiring of
plant and equipment, rock crushing, steel reinforcement which was the contract worth
almost £200 m to subcontractors.
 The cost estimation of government for overall project was between £295 m to £395 m.
But cost was increased to £745 m. this was just double of the estimated cost of
government.
 Contract was received by the company in December 2014 but was executed in February
2015, which was already two months late. The overall time frame required for
completion of contract was 9 months, i.e. it was about to get ready till November 2015.
But, management was not able to accomplish this target.
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 Further, transport minister announced that cost of delay would be borne by contractor and
not by taxpayers, that means the extra cost that was incurred by subcontractors was direct
loss of company.
 Carillion was undertaking three project at the same time and thus, partners were not able
to provide their full attention to any of the project.
From overall analysis, it can be said that the main reason causing all the headache to
company was ineffective management of partners and project managers. It has been noted that,
the company did not use proper project management theories, portfolio and program
management processes. Due to this casualty company had to face following situations:
 Prices of Carillion stock continued to slide down wiping further 27pc of its total market
capitalisation.
 Debt of the company risen to more than expected and hence, FTSE 250 issued shock
profit warning to the organisation (No signs of let-up for Carillion as share price slide
continues, 2017).
 On an interim basis, its chief executive was replaced and it also suspended shareholder
payments. Due to this negative image of the company was built in the market and among
its stakeholders.
 Pension deficit of Carillion was expected to more than double to £800 m.
 Due to the speculative investors £600 m was wiped from its stock market value amid
aggressive short fund hedging.
 Carillion suffered a loss of almost £587 m in a week and shares of the company fell to
71pc from 192pc.
After all the above causes, Carillion was keen to reassure the trust of anxious investor
into the company again and for which it appointed HSBC to its roster of financial advisor. Due to
this, share of the company in first week jumped to 11.9pc. HSBC then advised the company to
take a move of debt to equity swap (Carillion brings in HSBC as it fights back from share price
plunge, 2017). HSBC can also negotiate refinancing options for the company's existing debt.
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RECOMMENDATIONS
 It is recommended to Carillion to use project management concepts before initiating any
project such as project Portfolio Management, Program Management and should also
consider constraints of project like risk, cost, scope, etc.
 Before quoting any price of project, it is recommended to company to take help of
forecasting technique of management and other management accounting techniques like
budgeting along with procurement. This will enable management is estimating the best
future prices which in turn will reduce the risk of increase in cost in the future.
 Proper planning is to be done and an effective project plan is to be made. This can be
done by using steps discussed above.
 Controlling of the process of project is essential but it is not necessary that all the
activities is to be controlled by a single manager. Therefore, project manager should
delegate authority of handling different aspects of the project to different employees
along with managing the balance between cost of control and value of control.
Furthermore, various Project Management Methodologies can be used such as: Traditional project management: As per this methodology, there is the requirement of
little more assessment of tasks that are required to complete a project along with a
process to monitoring the completion. Mangers are required to provide teaching,
feedback and assessment of team members in order to attain project objectives. Waterfall project Management: it is the next level of tradition project management
according to which individual members of team need to rely upon each other to complete
tasks in sequence. More team members can be enables to take large tasks (Project
Management Methodologies, 2017). PERT project management: PERT refers to project evaluation review technique. Under
this project is evaluated and reviewed on continuous basis. This methodology works very
well in one time development processes that can be expanded in the future.
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 Critical Path Project Management: This method relies upon estimates of task duration
and dependencies. Using this method, management can determine estimated time
required to implement change in process.
 Critical Chain project management: This method is evolution of both PERT method and
Critical Method. This method helps project manager in reshaping their goals and terms
around budgets and other constraints.
CONCLUSION
Project management includes criterion and different methods to manage works under
project. From the above report it has been concluded that, in order to attain objectives of project,
it is necessary to apply theories and techniques of project management. In the above report
various concepts of project management has been explained which can help a project manager in
understanding various aspects and functions of projects in a better manner. It is also concluded
that, for the effectual implementation and execution of project, theories of planning, execution
and controlling are necessary. Further, some kinds of risk are associated with each kind of
project for which risk management theory has been explained. Scenario of Carillion construction
company has been provided which has been analysed and recommendations for the same has
also been provided. It has been analysed that the company suffered a huge loss under a project of
construction of a route in Scotland. Reasons that affected downfall of project are identified some
of which are ineffective planning and controlling, increase in cost due to delegation of work to
subcontractors, etc.
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REFERENCES
Books and Journals
Ferri, L. M. and et.al., 2016. Implementation of responsible procurement management: an
institutional perspective. Business Strategy and the Environment. 25(4). pp.261-276.
Hwang, B.G. and Ng, W.J., 2013. Project management knowledge and skills for green
construction: Overcoming challenges. International Journal of Project
Management, 31(2), pp.272-284.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Larson, E. W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Liu, H.C., Liu, L. and Liu, N., 2013. Risk evaluation approaches in failure mode and effects
analysis: A literature review. Expert systems with applications, 40(2), pp.828-838.
Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking
project management performance and project success. International journal of project
management, 32(2), pp.202-217.
Phillips, J., 2013. PMP, Project Management Professional (Certification Study Guides).
McGraw-Hill Osborne Media.
Sears, S.K. and et.al., 2015. Construction project management. John Wiley & Sons.
Todorović, M.L. and et.al., 2015. Project success analysis framework: A knowledge-based
approach in project management. International Journal of Project Management, 33(4),
pp.772-783.
Van Meerveld, H., Nauta, J. and Whyles, G., 2015. Forward commitment procurement and its
effect on perceived risks in PPI projects. Cheltenham: Edward Elgar Publishing Limited.
Walker, A., 2015. Project management in construction. John Wiley & Sons.
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Online
Carillion brings in HSBC as it fights back from share price plunge. 2017. [Online] Available
through :<http://www.telegraph.co.uk/business/2017/07/14/carillion-brings-hsbc-fights-
back-share-price-plunge/>.
Carillion under pressure to inject funds amid growing pension concerns. 2017. [Online]
Available through :<http://www.telegraph.co.uk/business/2017/07/15/carillion-pressure-
inject-funds-amid-growing-pension-concerns/>.
No signs of let-up for Carillion as share price slide continues. 2017. [Online] Available
through :<http://www.telegraph.co.uk/business/2017/07/12/no-signs-let-up-carillion-
share-price-slide-continues/>.
Project Management Methodologies. 2017. [Online] Available through
:<https://www.wrike.com/project-management-guide/methodologies/>.
Project Management Theory. 2017. [Online] Available through
:<https://www.pmi.org/learning/library/underlying-theory-project-management-obsolete-
8971>.
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