Project Management Strategies For Construction Of Natural Gas Liquid Plant

Project Definition/Parameters and Risks

Current project is based on developing Natural gas liquid plant located on the west coast region of South America along with the support of the government as the local government has initiated for this project by giving the contract to a European company named as Inter Europe plc that taken this contract in $195M which consists of $175M as the targets constructions and rest amount includes the profit element demanded from the government for the construction of this project (Kerzner, 2018).  This project highlights on various elements which helps completing the same within the stated deadline given strictly by the government as delaying penalty of $1M per well will get imposed on the construction for not giving the final outcome on time which creates a pressure on a project manager to fulfil the aim of its clients within the time (Martinsuo and Hoverfält, 2018).

Firstly, project objectives are created that is based on the entire nature of the overall project to guide a manager to achieve all its targets before the time get elapsed (Remeljej and Hoadley, 2006). Secondly, all the existing and potential risks related to this project are identified to craft mitigation strategy to safeguard the interests of the client (Carnall, 2018). Gantt chart is prepared to visually all the tasks to know the actual completion time required to achieve all the aims (Kidnay, Parrish and McCartney 2011). Resource histogram is prepared to the know the requirements of all the resources required for this project for a weekly period (Jiang and et.al., 2018). Human resource budget is prepared for all the team members to know the personal expenses incurred by all the members separately. Gross profit is determined by deducting all the expenses incurred in the project from the total revenues generated from this project (Tonchia Tonchia and Mahagaonkar, 2018). Re-scheduling of the project plan after considering all the incomplete tasks taken into consideration (Long and Lee, 2013). Earned value analysis will be based on several criteria such as calculating the projected completion date of the project; the projected final costs required in completing this project and also reflect its impact on the entire project (Westerveld, 2003). Justifications for all the acceleration options are covered to decide which option to select or reject (Jiang, Bian, 2017). In the final stage, reflective essay will be attached to this project analysis report to target all the challenges and the problems encountered by the project manager as in this stage the personal experience of the project manager and all its team members are included in this phase as the motive of the owner and the project supervisor is to appreciate the talents and special skills of all the action and the passive users participates in this project to accomplish all the aim and the targets of the project to get it complete within the prescribed time period (Pinto and Prescott,  2018).

Salvaje Bay is a project initiated by the South American government which is based on that is NGL that is Natural gas liquids which is small scale plant about to build on the undeveloped port of the South America country located in the west coast region (Umble, Haft and Umble, 2013). The operation of the plat includes various steps such as filtration phase which covers the separation of oil from the gas to keep the natural ingredient in the produced gas which will further pumped into marine terminal setup at the Salvaje bay. This will piped to two kilometres new plant from which methane is separated and sent to the national grid plant (Kim, Noh and Chang, 2018). Ethane is piped to the nearby ethylene cracker plant for the further processing. In the further processing, propane and butane will get chilled to create liquid solution to get stored in the tanks (Priswanti, Andini and Putri, 2018).     

Planning and Costs

This plant have the support the national government as this development of the plant will generates several local jobs and also boosts the overall economy which in turn induces the entire productivity of a start up who intends build NGL plant in the backward area (Matthews and et.al., 2018). South America is good for the education purpose whose tourism will get increases when this plant comes into operation that produces several jobs that enriches the existing capabilities of all the employees are expert in the chemical engineering or related to the current field to give benefit of their skills to the owner of the pant also the government whose motive is to conduct several social welfare activities (Bryde, Unterhitzenberger and Joby, 2018).

Before the final operation of this plant, the government of these regions invites tenders for the construction of the plant by inviting several engineering and oil companies to show their interest in this particular project (Jadhav and Shinde, 2018). After some moths of the negotiations, finally the salvaje bay project were taken by European company named as Inter Europe oil and gas plc in a contract price of $175M for the construction costs and $195M for the profits in the first year (Strucker, 2018). One condition is included in this contract that if the targets costs does not included the profit element for the first year then they will get an additional 5% savings in the total profit in a proportion of 1:1 with the government but if the cost of this project exceeded then the contractor will get liable for first 5% after sharing equal profit with the government as mentioned in the legal contract. Late fee of $M per week will get imposed on the contractor for not submitting the final project within the stipulated deadline (Liu, Sun, Ni, Yang  and Song,  2018).

• To determine the scope of the construction of NGL Project
• To evaluate the costs of the construction of NGL Project
• To determine the time of the construction of NGL Project
• To determine quality of the service provided by the contractor in constructing NGL project

Iron triangle parameters of the project play an integral role in determining the project objectives for the current project of constructing plant of NGL located in the countryside area of the South America that is the west coast region which is underprivileged that needs further development in terms of the population residing there, facilities and basic amenities available there (Semerci and Çelik, 2018). These three parameters include scope, cost and time which are the three criteria’s used to accomplish the overall aims and set targets created by the project manager to deliver the quality oriented service to its clients that are the government (Pheng, 2018). Quality is one of the important things uses by a contractor in building existing as well as the future relationship with its clients to increase the quantity of the work supplied by its clients (Pinha and Ahluwalia, 2018). Higher levels of the customer satisfaction will get achieved by an entity by satisfying its current user which will get achieved with the help of high quality of the services provided by the firm to its clients to keep them motivated with their business for a longer period of time (Bredillet, Tywoniak and Tootoonchy,  2018). In the current project (Vinegar, Akkurt and Tutunjian, Shell Oil Co, 2010), European construction companies will create a strong business connection with its clients that is the national government of South American to reduce the complexity of the legal proceedings of its business (Qyyum, Ali, Hussain, Bahadori and Lee, 2018).

Managing Progress and Spending

Estimate at completion schedule

Budget at completion= $17250, 000

Actual costs = $6900000

Planned Value (W.N.1) = 55.83% of $17250, 000

=$9630675

Earned Value (W.N.2) = 42.33 of 17250, 000

= $7301925

Cost Performance Index

= EV/AC

= $7301925/$6900000

= 10.58

Estimate at completion= Budget actual cost/ cost performance index

= $6900000/10.58

= $65217

Working Notes

W.N.1

W.N.2

There are five acceleration options given above such as subcontracting of plumbing will result in the savings of 2 weeks time but by adding extra $100,000, chilling electrical systems requires additional $50, 0000 but this saves 3 weeks, revising specifications will save 1 month time period but requires $175000 cost, two additional engineers recruited in the project will save 1 week but incurs $50,000 and bring additional labours will save 3 weeks and additional cost of 80, 0000.

Out of the above options, last option will be selected in which additional labours are recruited that saves the 3 weeks in a cost of 80,000 as these labours will help in reducing the entire workload to generate higher revenues to cover this cost.

This phase will include the information about the overall experience in conducting this particular project by considering all the need and the expectations of all the users related to this project. South American government was the client in this project as they initiated a government project of Natural gas liquid setting up in the backward region to generate 400 local jobs for all the backward region and urban region people of the country to enhance their skills and knowledge to practice in the chemical engineering field as this particular field has become rare in the current period which requires appreciation by giving ample of jobs in this sector. I witnessed both positive and negative sides of this project just like two faces of a coin which get flipped according to the changes takes places in the external environment. I notices several challenges such as increase in the cost structure which is consider as the biggest challenge for me to encounter before it leads to the penalty of 5% of the total profits after giving 50% share to the government as this information has stated clearly in the contract that I have encountered by creating budgets for all the major costs incurred in this project by comparing the same with the previous year costs structure to know the weaknesses lies in the costs managing system uses by me and my team members. After creating the budget, prediction results are created to know its overall impact as my aim is to remove this issue on a high priority by categorizing all the risks and issues in general in the construction of this project to eradicate the same from this project. If these issues are not rectified then this will leads to the overall delaying in completing the construction of the plant which leads to the clear-cut penalty of $1M per week as imposed by the government. I can’t afford to submit the late work in the first and foremost business deal started with the government as this will affects my overall market image and also affects my credibility in front of all the investors who will divest their shares from my company if I deliver low quality work or withdrawing my interest from this project which is not good for getting all the assignments and the constructions projects in the present and as well as in the future period.

Earned Value Analysis and Acceleration

Another issues I faced in performing this project is related to the site accidents’ due to less efficient safety equipments used on the sites which leads to the site accidents which in turn, increases my overall costs and also creates overall project delay which I can’t afford as my image is on stake while first time dealing with the government. I have encountered this issue by increasing the quality and quantity of the safety measures equipped on the sites to avoid the site accidents and also to safeguard the entire costs incurred in this project.

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