2017 Effective Project Management in Steel Industry
2017 Effective Project Management in Steel Industry
2017 Effective Project Management in Steel Industry
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ABSTRACT:
The iron and steel industries have undergone a technological revolution in the last 30 years. In a relatively short
time, the steel industry has observed the almost complete disappearance of few old technologies and wide spread
adoption of new modern, cost effective, state of-the-art technologies. These replacements of technologies deal
with great challenges at every step of implementation. A traditional phased approach identifies a sequence of
steps to be completed. In the traditional approach, different components of a project have been distinguished in
the development of a project. Each new project involves unique challenges that require unique solutions with
aim to deliver new products to markets. This new project in context of steel industry may be either green field
project, gray field project, merger project or internal project. All the projects mentioned are different in nature.
Greenfield projects will need different treatment as compared to gray field projects or merger project or internal
project. These undergo great changes along either dimensions and need extra resources. Research and
Developmental projects are creative, high-end process; companies have different expectations about results and
different strategies for funding and managing it than they do for other commercial projects. In present scenario,
timely completion of the projects is of great challenge. In this paper, based on previous experience of project
implementation is discussed with probable difficulties which may hinder for timely completion of projects with
minimum capital investment for new projects in steel industry.
KEY WORDS: Project Management, Indian Steel Plant, New Projects, Modernization.
1. INTRODUCTION:
Between FY2008 and FY2013, India’s steel production
Today, the steel is considered as the backbone of Indian
has grown at a compound annual growth rate (CAGR) of
economy and has occupied a dominant position in the
about 7 percent (1). Today, besides achieving the rank of
socio-economic development of the country. The Indian
the 3rd largest global crude steel producer against 8th
steel industry has entered into a new era of development
position ten years back, India also made a mark globally
since 2007-08, riding high on the resurgent economy and
in the production of Sponge Iron (2, 3). India is expected
robust demand for steel. Rapid rise in production has
to become the second largest producer of steel in the
resulted in India becoming the 4th largest producer of
world by the year 2020. The country is likely to achieve
crude steel and the largest producer of sponge iron in the
a Steel production capacity of nearly 110 million tonnes
world. The Indian steel industry has achieved significant
by the year 2019-20(2).
milestones in terms of growth in capacity, production
and exports to become a major player in the global steel
Though this is true, the problems in Indian steel industry
industry.
cannot be neglected as they are now affecting the pace as
well as the prospects. The progress of Greenfield
expansion projects have almost halted due to problem in
Received on 06.01.2017 Modified on 02.02.2017
Accepted on 11.07.2017 © A&V Publications all right reserved land acquisition, environmental clearances and getting
Asian J. Management; 2017; 8(4):1379-1386. iron ore and coal allotments. Brownfield expansion
DOI: 10.5958/2321-5763.2017.00210.4 projects are comparatively going on well and these will
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surely take the industry further to some extent. But as added products such as cold rolled coils, galvanized
everybody knows, there is a limit to this expansion mode coils, angles, columns, beams and other re-rollers, and
and soon saturation may be reached. Looking at the user sponge iron units. Both sectors cater to different market
industries, auto, infrastructure, white goods, engineering, segments.
all are progressing quite well. Their appetite for steel is
going to increase every year and if it is not satisfied by On the basis of ownership, the Indian steel industry is
the domestic steel producers, they will have to opt for broadly divided into private and public sector
imports. Analysts fear that India can be a net long term enterprises. The private sector dominates production
importer post 2015-16 if the domestic steel making accounting for almost 85 percent of the finished steel
capacity does not grow as projected. output while the public sector has higher capacity
utilizations.
2. INDIAN STEEL INDUSTRY, OPPORTUNITIES
AND PERSPECTIVE:
The Indian steel industry has recorded remarkable
performance in recent years. The industry is now capable
of producing high quality materials to stringent
international specifications for high end applications in
sectors like construction, engineering, automobile and
infrastructure. Higher production of value-added
products, capacity expansion, up gradation of production
process and to achieve cost effective production in an
environment friendly manner, have been the major thrust
areas of the Indian steel producers in the recent times.
The growth is directly linked with the demand of steel.
Indian economy is growing at a very high rate and the
demand for steel is also showing an upward trend. World Fig:2- Country wise share of steel production
steel production scenario from last 11 years is shown in
Fig.1. The growth over last 3 years is varies depends on
global economic condition. In 2016, there are only 0.8 %
growth in total steel production worldwide where as steel
production in India grow at 6.6% over previous year(2).
Despite of growth of Indian steel production, gap
between export and import was quite high in 2015-16.
Table: 1 Indian steel industry scenario since last 5 years (4) (In million tons)
Items Description 2011-12 2012-13 2013-14 2014-15 2015-16
Finished Steel Production 75.70 81.68 87.67 90.55 89.32
Import 6.86 7.93 5.45 9.32 11.21
Export 4.59 5.37 5.98 5.55 3.81
GAP -2.27 -2.56 0.53 -3.77 -7.4
Pig Iron Production 5.37 6.87 7.95 9.70 9.70
Sponge Iron Production 19.63 14.33 18.20 20.38 17.90
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4. PROJECT MANAGEMENT FOR STEEL manage projects of any capacity and scale. These
PLANTS: includes Project Planning, Schedule Management,
The project structure has to different from the Project Evaluation and Progress Reporting, Contract
organization structure created for running routine Management, Risk Management, Procurement
business operations, because the nature of activities Management and Performance Monitoring, Materials
involved in projects and operation are quite different. Management, Assistance in Commissioning, Follow-up
Organization structure for project management would be and expediting Services and Budgetary Cost-Control (12).
effective only if it allows room for creativity, flexibility, Project management processes and techniques are used
quick response cycle and loosens the line of to coordinate resources to achieve predictable results.
accountability but strong commitment along with being The successful accomplishment of the project objective
focused on strategy and plans on one side and being could be constrained by many factors, including scope,
practical i.e. well grounded in reality on the other. quality, schedule, budget, resources, risks, and customer
However, project management is “the application of satisfaction. The generic project life cycle has four
knowledge, skills, tools and techniques to project phases: initiating, planning, performing, and closing the
activities in order to meet stakeholders’ needs and project. Figure 6 shows the five phases and the relative
expectations from a project”. level of effort and time devoted to each phase. The time
span of each phase and the associated level of effort will
Effective Project Management is the key to managing vary depending on the specific project. Project life
change and innovation successfully in today's rapidly cycles vary in length from a few weeks to several years,
evolving technology domains with in-depth depending on the content, complexity, and magnitude of
understanding of the concepts and techniques required to the project(13).
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5. CHALLENGES IN PROJECT STAGES FOR Earlier, only scrap could be used as a feed material in
INDIAN STEEL PLANTS: electric arc furnaces. With growing scarcity of scrap, a
Setting a steel plant of 10 MTPA capacities requires replacement could be found in the form of pig iron and
around Rs 50,000 crore of investment. Also, every such DRI produced from iron ore with reformed natural gas/
plant consumes 16 Mt of iron ore and 10 Mt of coking non-coking coal as reductant.
coal annually. The huge funding and raw material
requirement, coupled with heavy land, water and power Setting up of Basic Oxygen Furnaces is capital intensive
demand, pushes up input costs of large-sized steel plants. and successful only at a large scale. However, with the
The industry was, therefore, demanding captive mines advent of modern electric arc furnaces, steel could be
(14,15)
. produced in electric arc furnace by use of hot metal or
Pig Iron that substantially replaces steel scrap and results
5.1 Conceptual Stages: in huge savings in electricity consumption.
Hiring of Consultants:
The consultant's primary role is to assist organization Considering above, pig iron to steel conversion has seen
with certain areas of inclusiveness work. While the a new outlook and organization can outer easily to
consultant may act as an educator, a catalyst for deeper prominence of steel markets with more profit margins.
change, a resource, or a facilitator, the leadership of the
5.2 Planning Stages:
process. The Inclusiveness Committee, staff, board
The planning phase includes defining the project scope,
members, and executive director have the power, and the
identifying resources, developing a schedule and budget,
greater responsibility, to lead the process of becoming
and identifying risks, all of which make up the baseline
more inclusive. Therefore proper selection of consultant
plan for doing the project work.
is prime important for effective project completion.
Land Acquisition: Milestone:
Delays in the government regulatory approvals and The milestone is an event that represents a point of
challenges in land acquisition have slowed many steel special significance in the project. Usually it is the
projects. Major investments from leading MNCs and completion of a major phase. For example, when training
large Indian corporate across Karnataka, Odisha, people to write course materials is completed, that is a
Jharkhand and West Bengal have been affected due to milestone to be followed by actual writing. A milestone
land acquisition challenges in recent past. is characterized by deliverables, that is, something you
can see or touch e.g. a report or the learner support
Selection of Process: model of a particular study programme.
Selection of process depends on availability and cost of
inputs like quality of raw materials (iron ore, coal/coke) Scheduling:
and electricity. Scheduling is the activity of specifying milestones and
Cost economics of steel making process primarily assigning target dates to those milestones to ensure that
depends on deadlines are adhered to.
(1) Charge material:- 100% Solid or 100% liquid or
Project Team:
mixed
The project team is made up of all those who participate
(2) Type of process:- LD converter or Electric Arc
in the project, and typically, members are committed to
Furnace/ Induction Furnace the activity of the majority. A project team is more than
It is known to steel fraternities that all big players greater a group, because while the group might be involved in a
than 1 million ton per year capacity of steel has gone for project, group members may not have the required
integrated plant having BF-BOF-CC/BC-RM. But for commitment.
the small players in the line of 0.2-0.5 Mt steel making 5.3 Execution Stages:
could not choice for BF rout of steel making. It is more Administration is all pervasive through the stages of the
economical to procure pig iron/scrap liquidate the same project execution stages. Project management needs the
and converting to steel making by EAF where power support of a strong, proactive and effective
cost is reasonable. Above organization can afford to administrative system. Administrative structures,
operate with following plus points policies and process on one side and an effective
(a) Less land requirement leadership and strategies plans on the other are critical in
(b) Less capital making project management a tool for corporate growth
(c) Less investment and value creation.
(d) More turnover
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In the performing phase, the project plan is executed, Several Indian steel companies have acquired iron ore
and work tasks are carried out to produce all the project and coking coal assets in countries such as Canada,
deliverables and to accomplish the project objective. Australia and South Africa through joint ventures. One
During this phase, the project progress is monitored and of the leading Indian steel companies acquired a majority
controlled to assure the work remains on schedule and stake in a new iron ore reserve in Canada. It had
within budget, the scope is fully completed according to acquired a minority stake in an Australian mine, which
specifications, and all deliverables meet acceptance was sold last year to a leading global miner. Another
criteria. Also, any changes need to be documented, Indian steel company has acquired and operates
approved, and incorporated into an updated baseline anthracite mines in South Africa. It has also acquired a
plan, if necessary. significant minority stake in an Australian coal miner
with exploration rights for coking coal in Queensland.
Store Facilities:
Project involves lot of procurement of equipment, raw Work packages:
materials, consumables, structural steels, other structures It is commonly known that breaking down work into
for erection and commissioning of equipments. Once manageable pieces (work packages) is a process that
execution stage come during project management, depends on the project .A big steel Project cannot be
handling with these materials become a critical. So handled by a single person. Work packages contain brief
stacking and storing in proper way at proper place is statements of Activity Description, Activity Resources
most important. it is generally observed that stacking of of Skill and Expertise, Activity Estimates of Effort and
these materials in a haphazard way, creates lot of mess Duration, Activity Schedule, Activity Risks, and
and delay project unnecessarily. Activity Budget. Work Packages are assigned a Work
Allocation of Fund: Authorization or Control Account.
A business needs to finance its projects. Project
financing does not mean just getting funds. It means For effective execution and timely completion of project,
getting an appropriate mix of funds as debt and equity, at sub packages or work packages is to be subdivided in
the minimum cost, at the right time. Businesses should such a way that it could not interfere other sub-packages
be aware of the various sources of funds, should so that parallel work is to be continued till completion.
strategically design securities for raising funds keeping By creating proper work packages the overlapping
in mind control requirement, cost of funds, liquidity, activities will be minimized and save time.
flexibility , future growth requirements etc. Right mix of
debt and equity and correct design of security, issued inManpower Strategy:
time, may cost less, optimize financing risks, reduce Another important point is scarcity of technically
pressure on liquidity during project construction and qualified manpower. Even today, getting a qualified and
ensure continued control of current owners or promoters experienced metallurgist is not easy. Even the present
on business, allowing scope for future growth as per planpopulation of consulting and contracting companies is
and ambitions of the business. not enough to take the responsibility of such huge
projected expansion. In liberalized economic model,
Availability of Raw Materials: government in general and Steel Ministry in specific
The sources of raw materials are limited. Need to secure does not have a regulatory role but providing industry
raw material supply have led Indian steel companies to infrastructure in terms of technical manpower can be a
look at global asset base The raw material security prime task of them.
scenario has slightly improved due to regulatory support
to overseas acquisitions. The Indian steel companies are Health and Safety:
actively seeking mining leases and assets globally to Nothing is more important than the safety and health of
secure raw material supplies. The capability to acquire, the people that work in the steel industry. Mostly in steel
develop and operate these assets has become a key project, all of the jobs are carried out at height. So health
strategic imperative. These assets provide a natural and safety of workers and employees must be a foremost
hedge at the raw material portfolio level, and are also priority. All injuries and work-related illnesses can and
important for overcoming the short-term domestic must be prevented. Employee engagement and training is
challenges. essential.
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occur. Taking the time to develop a well-thought-out effective project team and it is critical for successful
plan before the start of the project is critical to the global project management.
successful accomplishment of any project. A project
must have a clear objective of what is to be 6. CONCLUSION:
accomplished and defined in terms of end product or A project is an endeavour to accomplish a specific
deliverable, schedule, and budget, and agreed upon by objective through a unique set of interrelated tasks and
the customer. Involve the sponsor or customer as a the effective utilization of resources. It has a clear
partner in the successful outcome of the project through objective that establishes what is to be accomplished in
active participation during the project. Achieving terms of the end product or deliverable, schedule, and
customer satisfaction requires ongoing communication budget.
to keep the customer informed and to determine whether
A successful project also known as capital expenditure-
expectations have changed. The key to effective project
is important for the survival and growth of business and
control is measuring actual progress and comparing it to
for creating shareholder value. There are many pitfalls in
planned progress on a timely and regular basis and
project management, largely because of the
taking any needed corrective action immediately.
management’s unfamiliarity with the project and due to
Resolution of Commercial Disputes: the uncertainty and risk associated with it. As a result, a
One of the cause of delay of project is commercial well-defined process and administration top handle
disputes arises during project execution. Here various stages of project management are required.
administrative role is foremost important for early
resolution of disputes. 7. ACKNOWLEDGEMENT:
Authors are grateful to the colleagues of SAIL for the
Promotion of Ancillaries units: support and sharing their thoughts for the problems and
Steel plant is basically having heavy and costly solutions in project management implementation.
equipments. Any damage of equipment required a costly Authors are highly obliged to the management of RDCIS
sphere parts. These parts and other engineering services for their valuable supports extended to them in bringing
can be made available at low cost by promoting small this paper.
scale units nearby of the steel plant. Promotion of
ancillary units provides good scope for the development 8. REFERENCES:
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documents are to be organized and archived. Feedback
should be obtained from the sponsor or customer and the
project team. Learning and understanding the culture and
customs of other project participants will demonstrate
respect, help build trust, and aid in developing an
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