BRIEF GUIDELINE ON

AUTOMATION PROJECT
MANAGEMENT

BY IIATCA
1 Steps in Project Management
The various steps in a project management are:
1. Project Definition and Scope
2. Technical Design
3. Financing
4. Contracting
5. Implementation
6. Performance Monitoring

2 Project Definition and Scope

“A project is a one-shot, time-limited, goal-directed, major undertaking, requiring the
commitment of varied skills and resources”.
Projects are vehicles for change. Such change can be sought or it can be resisted.
Changing practices or investing money for automation is an occurrence of change.
Any project contains several elements i.e.:
ƒA specific objective
ƒA resource constraint
ƒA time constraint
ƒAn interdisciplinary approach
ƒAn organizational context
The basic simplicity of these elements underlies the management of any project.
However, there will, almost inevitably, be problems. These include the constraints of:
ƒManpower
ƒEquipment
ƒMaterials
ƒFinance
ƒTime
All imply conflicts, which will need to be resolved.
The first step in the project development cycle is to identify components of the project.
Projects may be identified both internally and externally:
ƒInternal identification takes place when the facility manger identifies a package of
control and automation opportunities during the day-to-day production activities, or
from facility audits.
ƒExternal identification of scope of automation can occur through a systematic process
undertaken by any reputable automation consultant, or a service provider or any
automation component/equipment manufacturer.
In screening projects, the following criteria should be used to rank-order project
opportunities.
ƒCost-effectiveness of complete package of measures (Internal rate
of return, net present value, cash flow, average payback)
ƒSustainability of the savings over the life of the equipment.
ƒEase of quantifying, monitoring, and verifying automation opportunities.
ƒAvailability of technology, and ease of adaptability of the technology to Indian
conditions.
ƒOther environmental and social cost benefits (such as reduction in local pollutants,
manpower costs etc)
3 Technical Design
Once a project makes it past the screening process, the hard work of developing technical
specifications begins. For a project to be considered a viable investment, its proponent
must present a sound technical feasibility study that identifies the following elements in
some
detail:
™The proposed new technologies, process modifications, equipment replacements and
other measures included in the project.
™Product/technology/material supply chain (e.g., locally available, imported,
reliability of supply)
™Commercial viability of the complete package of measures (internal rate of return,
net present value, cash flow, average payback).
™Any special technical complexities (installation, maintenance, repair), associated
skills required.
™Preliminary designs, including schematics, for all major equipment needed, along
with design requirements, manufacturer’s name and contact details, and capital cost
estimate.
™Organizational and management plan for implementation, including timetable,
personnel requirements, staff training, project engineering, and other logistical issues.

4 Financing
When considering a new project, it should be remembered that other departments in the
organization would be competing for capital for their projects. However, it is also
important to realize that automation is a major consideration in all types of projects,
whether they are:
• Projects designed to improve production efficiency, manpower costs etc.
• Projects where automation is not the main objective, but still plays a vital role
The funding for project is often outside the control of the project manager. However, it is
important that you understand the principles behind the provision of scarce funds.
Project funds can be obtained from either internal or external sources.
Internal sources include:
• Direct cash provision from company reserves
• From the revenue budget (if payback is less than one year)
• New share capital
Funding can become an issue when energy efficiency projects have previously been
given a
lower priority than other projects. It is worth remembering that while the prioritization of
projects may not be under your control, the quality of the project submission is.
External sources of funds include:
• Bank loans
• Leasing arrangement
• Payment by savings i.e. A deal arranged with equipment supplier
• Automation services contract
• Private finance initiative
The availability of external funds depends on the nature of your organization. The finance
charges on the money you borrow will have a bearing on the validity of your project.
Before applying for money, discuss all the options for funding the project with your
finance managers.
It is reiterated that often automation projects add substantially to the viability of other
non-automation projects.

5 Contracting
Since a substantial portion of a project is typically executed through contracts, the proper
management of contracts is critical to the successful implementation of the project. In this
context, the following should be done.
• The competence and capability of all the contractors must be ensured. One weak link
can jeopardize the timely performance of the contract.
• Proper discipline must be inculcated among contractors and suppliers by insisting that
they should develop realistic and detailed resource and time plans that are congruent
with the project plan.
• Penalties may be imposed for failure to meet contractual obligations. Likewise,
incentives may be offered for good performance.
• Help should be extended to contractors and suppliers when they have genuine
problems-they should be regarded as partners in a common pursuit.
• Project authorities must retain independence to off-load contracts (partially or wholly)
to other parties well in time where delays are anticipated.
If the project is to implemented by an outside contractor, several types of contract may be
used to undertake the installation and commissioning:
ƒTraditional Contract: All project specifications are provided to a contractor who
procures and installs equipment at cost plus a mark-up or fixed price.
ƒExtended Technical Guarantee/Service: The contract offers extended guarantees on
the performance of selected equipment, and/or offers service/maintenance
agreements.
ƒExtended Financing Terms: The contractor provides the option of an extended
lease or other financing vehicle in which the payment schedule can be based on the
expected savings.
ƒGuaranteed Saving Performance Contract: All or part of savings is guaranteed by
the contractor, and all or part of the costs of equipment and/or services is paid down
out of savings as they are achieved.
ƒShared Savings Performance Contract: The contractor provides the financing and
is paid an agreed fraction of actual savings as they are achieved. This payment is
used to pay down the debt costs of equipment and/or services.

6 Implementation
A great deal of the emphasis in the planning stage of any project is on understanding
where and when problems may occur. Don’t forget that many projects introduced by
energy managers end up as something else’s responsibility, e.g. a production manager, a
works engineer or the training department. You need to think ahead and anticipate.
• Anticipate the type and extend of measurements needed to control and measure the
success of the project
• Anticipate who will be involved and get them on your side.
• Anticipate the need to communicate to participants in an appropriate manner.
You should also forecast when you would safely be able to hand the project over to, for
example, the production or maintenance manager.
With proper techniques, changes and modifications can be understood and incorporated
without loss of control.
Some guidelines based on the experience of severally project in the Indian market
include:
™Limit Long Lead Times. Delays due to government procedures cause severe cost
increases—some energy efficiency projects must obtain government clearances that will
always take longer than planned for. Plan for these over-runs in the pro forma financial
model. Also, if non-standard equipment is specified, extend the period of delivery and
acceptance.
™Manage Out-of-Pocket Development costs by Focusing efforts. Because project
implementation takes time and money, ensure that the development budget includes costs
for travel, specialized consultants (e.g., process consultants, geo-technical engineers),
permits and fees.
™Manage Projects Carefully. On energy efficiency projects, the main issues are
technology selection risk, the overall risk sharing criteria in the installation contract,
structure and relationship with subcontractors, and enforcing penalties among parties.

7 Project Planning Techniques

There are a variety of basic planning techniques. All monitor progress and costs against
resource budgets.

Gantt Chart
Gantt chart is used for scheduling the tasks and tracking of the progress of energy
management projects. Gantt's scheduling tool takes the form of a horizontal bar graph on
a time scale, a basic sample (Figure 7.1) of which is shown below:
The horizontal axis of the Gantt chart is a time scale, expressed either in absolute time or
in relative time referenced to the beginning of the project. The time resolution depends on
the project - the time unit typically is in weeks or months. Rows of bars in the chart show
the beginning and ending dates of the individual tasks in the project.
In the above example, each task is shown to begin when the task above it completes.
However, the bars may overlap in cases where a task can begin before the completion of
another, and there may be several tasks performed in parallel. For such cases, the Gantt
chart is quite useful for communicating the timing of the various tasks.
For larger projects, the tasks can be broken into subtasks having their own Gantt charts to
maintain readability.
Gantt chart is the simplest and quickest method for formal planning.
Gantt charts can be very useful in planning projects with a limited number of tasks and
with few inter-relationships This chart typically depicts activities as horizontal lines
whose length depends on the time needed to complete the activities. These lines can be
progressively overprinted to show how much of activity has been completed.
Drawing a Gantt chart requires information on:
ƒThe logic of the tasks;
ƒThe duration of the tasks;
ƒThe resources available to complete the tasks.

CPM - Critical Path Method

In 1957, DuPont developed a project management method designed to address the
challenge
of shutting down chemical plants for maintenance and then restarting the plants once the
maintenance had been completed. Given the complexity of the process, they developed
the
Critical Path Method (CPM) for managing such projects.
CPM provides the following benefits:
• Provides a graphical view of the project.
• Depicts the interrelationships among various tasks/activities.
• Predicts the time required to complete the project.
• Shows which activities are critical to maintaining the schedule and which are not.
CPM models the activities and events of a project as a network. Activities are depicted as
nodes on the network and events that signify the beginning or ending of activities are
depicted as arcs or lines between the nodes. The following is an example of a CPM
network diagram (Figure 7.2):
Steps in CPM Project Planning
1. Specify the individual activities.
2. Determine the sequence/interrelationships of those activities.
3. Draw a network diagram.
4. Estimate the completion time for each activity.
5. Identify the critical path (longest path through the network)
6. Update the CPM diagram as the project progresses.
The critical path can be identified by determining the following four parameters for each
of the activity:
• ES - earliest start time: the earliest time at which the activity can start given that its
precedent activities must be completed first.
• EF - earliest finish time, equal to the earliest start time for the activity plus the time
required to complete the activity.
• LF - latest finish time: the latest time at which the activity can be completed without
delaying the project.
• LS - latest start time, equal to the latest finish time minus the time required to
complete the activity.
The slack time for an activity is the time between its earliest and latest start time, or
between its earliest and latest finish time. Slack is the amount of time that an activity can
be delayed past its earliest start or earliest finish without delaying the project.
The critical path is the path through the project network in which none of the activities
have slack, that is, the path for which ES=LS and EF=LF for all activities in the path. A
delay in the critical path delays the project. Similarly, to accelerate the project it is
necessary to reduce the total time required for the activities in the critical path.

PERT
Complex projects require a series of activities, some of which must be performed
sequentially and others that can be performed in parallel with other activities. This
collection of series and parallel tasks can be modeled as a network.
CPM is a deterministic method that uses a fixed time estimate for each activity. While
CPM is easy to understand and use, it does not consider the time variations that can have
a great impact on the completion time of a complex project.
The Program Evaluation and Review Technique (PERT) is a network model that allows
for randomness in activity completion times. PERT uses three time estimates-optimistic,
pessimistic and most likely, which help in establishing the probability of completing a
project within a specified time and take calculated risk before commencing a project. It
has the potential to reduce both the time and cost required to complete a project.
The Network Diagram
In a project, an activity is a task that must be performed and an event is a milestone
marking the completion of one or more activities. Before an activity can begin, all of its
predecessor activities must be completed. Project network models represent activities and
milestones by arcs and nodes.
The following is a very simple example of a PERT diagram (figure 7.3):

The milestones generally are numbered so that the ending node of an activity has a higher
number than the beginning node. Incrementing the numbers by 10 allows for new ones to
be inserted without modifying the numbering of the entire diagram. The activities in the
above diagram are labeled with letters along with the expected time required to complete
the activity.
PERT planning involves the following steps:
1. Identify the specific activities and milestones.
2. Determine the interdependencies and proper sequence of the activities.
3. Construct a network diagram.
4. Estimate the time(three time estimates, if probabilities are to be computed) required
for each activity.
5. Determine the critical path.
6. Update the PERT chart as the project progresses.
Benefits of PERT
PERT is useful because it provides the following information:
• Expected project completion time.
• Probability of completion before a specified date.
• The critical path activities that directly impact the completion time.
• The activities that have slack time and that can lend resources to critical path
activities.
• Activity start and end dates.
PERT/CPM
At present, concept of PERT and CPM are same, taking the best of both techniques and is
generally called as PERT/CPM technique.
8 Performance Monitoring
Once the project is completed performance review should be done periodically to
compare
actual performance with projected performance. A feedback device, it is useful in several
ways:
a) It throws light on how realistic were the assumptions underlying the project
b) It provides a documented log of experience that is highly valuable in future decision
making
c) It suggests corrective action to be taken in the light of actual performance
d) It helps in uncovering judgmental biases
e) It includes a desired caution among project sponsors.
Performance indicators (PIs) are an effective way of communicating a project’s benefits,
usually as part of a performance measuring and reporting process. Performance indicators
are available for a wide range of industries and allow a measure of energy performance to
be assigned to a process against which others can be judged.
An important function of the project manager is to provide appropriate feedback to
decision makers.
It is also important for the project manager to continue to observe and exploit other
advantages and disadvantages as they become apparent.
Depending on the nature of the project, savings are determined using engineering
calculations, or via metering and monitoring, utility meter billing analysis, or computer
simulations.
Implementation Plan for Top Management
As a result of energy audit, many energy saving opportunities would emerge. These could
be classified broadly as measures with and without investment. House keeping measures
and moderate cost measures need no intervention from top management. However, top
management need to be appraised of these measures.
In case of projects where considerable investment are required, project manager has to
prioritize the list of projects based on the technical feasibility and financial analysis
indicated in the previous chapter (Simple payback, IRR, ROI etc.) and submit the same to
the top management for appraisal and approval. This will help top management in
allocating resources and other facilities.
Planning Budget
Budget requirement varies depending upon the duration and size of the project. For
projects involving long duration with multiple tasks and procurements, resources have to
be allocated judiciously as and when required. Top management should ensure that this is
done to ensure successful completion of project.
Procurement Procedures
Having identified the material and equipment required for the project, the next step is to
identify the various vendors, provide specifications, invite quotations, and carryout
discussions with select vendors. For medium to high value items, tendering process can
be adopted. Tenders have to be evaluated for technical and financial aspects. It would be
desirable to have purchase manager as part of energy efficiency team to facilitate smooth
procurement process.
Construction
During the construction phase, depending upon the requirement, plant may need to be
shutdown. Careful planning is required, so that the task is carried out without affecting
the production. Project manager has to be aware of the annual maintenance schedule,
holidays, annual maintenance or any major breakdown period during which anyway plant
will be shutdown. Construction activity should be carefully supervised by energy and
project manager so as to ensure quality and safety.