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AN INTERNATIONAL RAILWAY PROJECT – A PROJECT MANAGEMENT CASE

STUDY

Conference Paper · September 2013

DOI: 10.13140/2.1.1098.0487

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Vanita Ahuja Hitesh Khanna

National Institute of Design Haryana Delhi Technological University
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AN INTERNATIONAL RAILWAY PROJECT – A PROJECT
MANAGEMENT CASE STUDY
Vanita Ahuja1 and Hitesh Khanna2
1
Associate Professor and Program Director, RICS School of Built Environment, Amity
University, Noida, INDIA
2
Director (Works), IRCON International Ltd., New Delhi, INDIA

ABSTRACT

Infrastructure development in a country is crucial for its development. Developing countries in Asia
are experiencing unprecedented pace of urbanization, resulting in increased demand for infrastructure
including transport infrastructure. Thus, number of projects are being undertaken by the respective
governments as government of a country is the Client for infrastructure projects. Successful delivery of
these projects is defined by the project management approach adopted by the Clients or the respective
governments. Authors present a project management case study of an Electrified Double Railway
Track project being executed by an Indian Public Sector Unit organisation incorporated by the
Government of India. This international project is being executed in Malaysia and the client is
Government of Malaysia. Project is nearing completion and can be categorized as a successful project.
The project is analysed with respect to ten knowledge areas of project management and the study
summarises that effective project management can be achieved in a project or at an industry level only
if it is client driven.

Key Words: Project management, International railway project, India, Malaysia

INTRODUCTION

Infrastructure development is an important component of a nation’s development and

adequate transport infrastructure is essential for sustained economic growth. It has been
reported that greatest impediment to growth in the Asia-Pacific region generally is the
availability of infrastructure to not only meet current needs, but also the future
requirements of the nation (Sinclair Knight Merz Magazine, 2010). Population growth
and large scale migration leading to unprecedented pace of urbanization in this region is
further resulting in increased demand of infrastructure including transport infrastructure.

Development and maintenance of infrastructure in a country is in the domain of the

government. In terms of usage and funding, actual client of these projects is the public,
but government bodies are the de-facto clients and formulate the strategies and
administrative framework for planning and execution of these projects. Thus, successful
execution of infrastructure projects is dependent upon the role of the government or the
Client.

1
[email protected]
2
[email protected]
Case study project is an Electrified Double Railway Track project being undertaken by
the Government of Malaysia. Objective of the project is to upgrade Railway
Infrastructure including Signaling and Telecommunication between two strategic
stations, with the intention of increasing the speed, frequency and capacity of train
services whilst enhancing operational safety of both, passengers and freight trains. From
origin to finish point there are six stations. Once the project is completed it would also
facilitate running of through trains to a border country with which there is a high to and
fro traffic on daily basis. The project is being executed by IRCON International Ltd.
(IRCON), a Public Sector Unite government organization incorporated by the
Government of India. This discussion is a project management study with the perspective
of Lead Contractor IRCON and discusses progress upto March’13.

PROJECT DESCRIPTION

IRCON is executing the project on a ‘Design and Build’ contract. Project elements
include:
• Infrastructure works comprising soil improvement works, earthwork and related
retaining structures, drainage works, bridges, station buildings and yards, staff
quarters etc.
• Electrified double railway track in all respects with total track length of 215 km.
• System works of signaling, communication and track electrification.
• Landscaping of area within the Railway reserve during and upon completion of
construction.
• Environmental Impact Analysis mitigation/measures.

Scope of work of IRCON includes:

• Detailed planning, design, construction, testing, commissioning and maintenance
of completed works for two years.
• All procurements and manufacture, insurance and handling of all local and
imported material necessary for satisfactory completion of the works.
Though the project scope includes maintenance of completed works for two years, this
discussion is restricted to the execution phase of the project.

The designed track alignment runs parallel to an existing railway track, but the proposed
track is criss-crossing the existing operational track at 23 locations. Laying of the new
track and its commissioning had to be done without disrupting services on the existing
track and this was a project execution challenge. The new double track is as far as
possible accommodated in the existing railway land. However, to improve track
geometry for the new design speed and for realignment requirement due to criss-crossing
of the existing and new track, more land had to be acquired. Land acquisition was
under the scope of the client.

PROJECT ORGANISATION STRUCTURE

Project team structure is as discussed below:

 • Client ‘The Government of Malaysia’ has appointed a ‘Project Management
Consultancy (PMC)’ organization for overall supervision and monitoring of
project on their behalf. Thus, all approvals and certifications of bills are done by
the PMC.
• The Lead Contractor IRCON has appointed a ‘Design Consultant (DC)’ for
design works. This was necessitated because of the contract condition that all
design works are to be approved by local certified engineers. DC is a local
Malaysian organization and on behalf of IRCON, also functions as a Supervisory
Consultant. Thus, DC monitors the quality of work at site and interacts with
Client’s PMC.
• IRCON has also appointed sub-contractors for specific areas of work. Sub-
contractors work under the same design and contractual philosophy as agreed
between IRCON and the Client.

IRCON primarily operates under the system of Project based Organisation structure.
There is a skeletal staff in the head quarters in India and for each project a team is
constituted that is stationed near the project site. For this project also, their team is
functioning on the basis of ‘Project Organisation structure’.

PROJECT MILESTONES AND PHASES

Project has been divided into following two phases:

• Phase I: Comprising two stations and track length of 11.266 km one way.
• Phase II: Remaining project.

Major milestones are shown in Fig. 1. Project execution was originally planned for 48
months. But, during four years of execution, the project schedule has been revised four
times. Details are discussed in the following sections.

Project scope was adequately defined by the Client at the start of the project. But, during
the progress period, there was delay in land acquisition and due to operational
requirements, project technical scope was modified. These delays were attributable to the
Client, thus IRCON was granted the extension of time. IRCON could avail the extension
of time because of structured scheduling and reporting system and detailed project
documentation maintained by them.

Phase I Project Execution

Planned Project Start Completion Completion
Milestones

January, 2008 July, 2010 January, 2012 April, 2011 July, 2013

Status
Project Phase I Project Execution
As in
Started Completed Completion
Sep’2012
(Rev. 4)
Fig. 1: Project Milestones
PROJECT COST

At the time of award of work, cost of the project was MYR 3450 million (approx. US $
1,126 million). But subsequently due to alignment review to avoid the originally planned
tunnel, the contract sum got reduced to MYR 3366 million (approx. US $ 1,098 million).
It is an international project with significant import of equipment, material and services.
Thus, IRCON opted for dual project currency. Partly the fee was agreed in local currency
of the Client country and partly in Euros. The component of payment in Euros was
basically for procurement of materials for which payment was to be made in Euros, hence
taking care of risk of currency market fluctuation during the course of project execution.

During the project duration, local currency remained more stable. Thus, significant
benefits have not been accrued in adopting dual currency. But, the local currency became
stronger and that resulted in higher profits for IRCON in terms of Indian Rupees.

PROJECT PROCUREMENTS

Structure of the Contract drawn between IRCON and the Client is based on the guidelines
prescribed by the Government of Malaysia. These guidelines include best global practices
customized for the local working environment. To safeguard professional interests of the
local industry, there was a stipulation by the Client that work of 30% of the contract
value was to be executed by local contractors (Bhumiputra Contractors). Studying the
strength of the local industry, civil work contracts were primarily awarded to local
contractors. Electrical and Track works were primarily awarded to Indian contractors, but
their sub-contractors executing the work are local. Signaling works being specialized
works are awarded to overseas contractors.

PROJECT PLANNING, SCHEDULING, TRACKING AND MONITORING

Planning and Scheduling

Project Planning was initiated by conducting ‘Project Situation Analysis’, leading to

identification of ‘Project Objectives’. This led to the setting of ‘Project Goals’ to achieve
the identified Objectives. This also identified broad Resource requirement for the project.

Detailed Project Planning was conducted under the concept of ‘Whole to Part’. Planning
and Scheduling of the project has been done using robust Project management software
Primavera (P6). The Master Implementation Plan (MIP) was prepared upto four levels of
Work Breakdown Structure (WBS). Further detailed schedules were prepared by sub-
contractors executing each component of work. Lead Contractor IRCON has a Design &
Build Contract for this project. Thus, Project Cost in their contract was estimated by the
Cost of each Work Package. At MIP level, following steps were followed to arrive at the
cost of each project component and its weightage:
• ‘Budgeted Project Cost’ was calculated by ‘Cost Summary Analysis’ as the sum
of costs of all Work Packages. Based upon the ratio of the cost of all Work
 Packages, weightage was assigned to each Work Package. Sum of weightages of
all the Work Packages is equal to one.
• Each Work Package was divided into broad Tasks and as per the agreed
guidelines, each Work Package cost was divided into its constituent Tasks. Ratio
of the cost of each Task with respect to the cost of the Work Package determined
the weightage of the Task. Sum of weightages of all Tasks is equal to the
weighatge of the Work Package.
• Each Task was divided into Activities and as per the agreed guidelines, the cost of
each Task was divided into its constituent Activities. Ratio of the cost of each
Activity with respect to the cost of the Task determined the weightage of the
Activity. Sum of weightages of all Activities is equal to the weighatge of the
Task.

Before initiating project execution, MIP Baseline for the following criteria was finalized
between IRCON and the Client and approved:
• Budgeted Project Cost
• Weightage for each component of MIP
• Time Schedule
• Scheduled S-Curve in terms of ‘Percentage financial progress with respect to
time’ and ‘Percentage physical progress with respect to time’.

For the execution stage of the project IRCON has item-rate contracts with the sub-
contractors. For each contract, detailed execution schedules were prepared by the specific
sub-contractor and finalized with IRCON. MIP schedule milestones were to be adhered
to in the execution schedules and in these schedules, duration estimation of the activities
was based on the quantity of work, resources’ availability, productivity and their usage
pattern during the activity duration. This led to sequence of activities finalization and
preparation ‘Execution Time Schedules’ and ‘Resource Requirement Schedules’. Cost of
each activity was derived from the Bill of Quantities of the contract document drawn
between IRCON and the concerned sub-contractor. This led to the calculation of
‘Contract execution cost’. Thus, before initiating execution of each individual project
contract, Baseline for the following criteria were finalized between the specific sub-
contractor and IRCON and frozen:
• Execution Time Schedule
• Resource requirement schedule
• Cost of each activity and Contract execution cost
For Lead contractor IRCON, at MIP level, Budgeted Project Cost finalized with the
Client is the Value of the project, since payments from the Client to IRCON were based
upon the Value of work completed or achieved. Payments to be made by IRCON to sub-
contractors and other agencies were their Cost of the project. Thus, cash inflow was the
VALUE of the project and outflows were the COST. (Value – Cost) was the project
profit for IRCON and to achieve successful project completion, at all stages Cost <
Value.

Tracking and Monitoring

Effective tracking and monitoring of project schedule was conducted by keeping a record
of progress of each activity through detailed measurement sheets. For each type of work,
format of Measurement Sheets was prepared by IRCON and approved by the Client at the
start of the execution stage of the project. For tracking and monitoring the project, data
was gathered accordingly. Format of the Monthly Progress Report was also approved by
the Client. Following steps are followed in tracking and monitoring the project with
respect to Time:
• Weekly actual progress for each activity of the Baseline is gathered through the
detailed Measurement sheets. Status date for each week is the Friday of that week.
These Measurement sheets are forwarded by the site team to the IRCON Head
Quarter office by subsequent Saturday.
• Based upon the collected actual progress data, schedules are updated by the
Planning Team with the Status Date as Friday of that week and the weekly
progress report is submitted by Tuesday of the subsequent week. When Friday
coincides with Month ending i.e 25th day of the month, the Weekly Progress
report gets included in the Monthly Progress Report.
• The progress report shows the variance between the ‘Scheduled % complete’
(obtained from the Baseline) and ‘Performance % complete’ (Actual progress data
obtained from the Measurement sheets).
• In the updated schedules, updated ‘Critical Path’ is identified for management
attention. Critical activities with negative total float are identified for specific
attention. Performance of delayed activities including non-critical activities is
analysed and remedial actions are undertaken to resolve the issues.
• If the project gets delayed with respect to the Baseline schedule, Delay analysis is
conducted to crash the schedule to achieve the Baseline Project Finish Date.
• As per the Contract conditions, if it is ascertained that the delay is attributable to
the Client, Extension of Time (EOT) becomes applicable. In that scenario,
IRCON has to put up its case for EOT with proper documentation, which they are
able to do because of detailed records being maintained. At the time of study
(March, 2013) Rev. 4 of the Original Baseline was applicable. These revisions
were done as follows:
o Rev. 1: Due to the delay by the Client in removing land encroachments, 7
months extension was granted for the project finish date.
o Rev. 2: Due to scope modification by the Client, 2 months extension was
granted for Phase I only.
o Rev. 3: Due to flash floods, work on Phase I got delayed and 2 months
extension was granted for Phase I only.
o Rev. 4: Due to delay by the Client in providing clear area for work, 11
months extension was granted for remaining work, that was Phase II.
• During Delay analysis, if it is ascertained that the delay is attributable to one of
the sub-contractor’s, relevant clauses of the Contract between IRCON and the
specific sub-contractor become applicable.

Following steps are followed in tracking and monitoring the project with respect to Cost:
• Cost of each work package is monitored as the overall cost of all the activities of
that work package. On Quarterly basis, IRCON conducts Cost variance analysis
 based on the Actual Cost incurred and Remaining Estimated Cost. Reasons for
cost variance are analysed and remedial actions undertaken.
• At bidding stage of the project, IRCON had conducted Risk Analysis.
Contingency allowance was identified and allocated for Risks’ mitigation. At
project execution stage, contingency allowance of the risks that do not become
operational get identified as profit or become the Contingency allowance for new
identified risks.
• Earned Value Analysis is conducted as follows:
o Financial delay = Planned Value Cost – Earned Value Cost
o As per the Client’s guidelines if Financial delay > 10% the project is
declared as ‘Sick Project’. Thus, requirement is that Financial delay can
not exceed this limit.
As per the Monthly progress report of March’13, Financial delay is -1.38% and is within
the prescribed limit.

Discussion

This case study is the study of an International engineering project where the Client is the
Government of Malaysia and the Lead contractor is a leading Indian organisation IRCON
International Ltd. Scope of the project was well defined at the start of the project. There
were Scope modifications which primarily arose due to technical considerations, but
Scope creep was not evident. This indicates good planning by the Client at the Initiation
stage of the project. Project Procurements in terms of procurement of equipment,
material and services was influenced by requirements of the Client in terms of
procurement procedures and safeguarding the interests of their local industry and global
financial factors. Tender documents designed by the Client incorporate best global
practices customized for the local working environment. Also, to facilitate working as per
local working methodologies, it was necessitated that all design works were to be
approved by local certified engineers. Thus, in-house expertise of IRCON for
understanding local issues and working methodologies was very important. IRCON
achieved this by appointing a local Design Consultant (DC) and hiring local people also
as team mmebers. This resulted in the team having the required multi-cultural hue which
was essential for Human Resource Management of such a project. Effective
communication is maintained between the site office and head quarter of IRCON as well
as with the Client and other sub-contractors and as part of stakeholder management,
senior executives of IRCON regularly interact with the Client and visit the work site. In
Cost Management, Client defined the guidelines to assess the financial status of the
project and the limits of Financial delay, beyond which project would be declared as
‘Sick Project’. Such an established framework drives a contractor and the project team to
achieve the targets. Due to the international nature of the project, IRCON opted for dual
project currency though it did not provide much benefit as the local currency of the
country of the project remained more stable and also became stronger. This resulted in
higher project profit for IRCON. They have also achieved higher profits due to extensive
Risk Analysis conducted at the planning stage and Risk Monitoring and Control at the
execution stage of the project. Project Time scheduling was conducted at two levels.
Master Implementation Program (MIP) detailed upto 4th level of WBS was scheduled and
 finalized by IRCON with the Client. Further detailed execution schedules were finalized
between IRCON and its respective sub-contractors. The execution schedules were to
adhere to the MIP schedule in terms of achieving the milestones. During project
execution, four revisions to the Baseline schedule have been agreed between the Client
and IRCON. The revisions are due to delays attributable to the Client like non availability
of land and scope modification. Following factors contributed to effective planning,
scheduling, tracking and monitoring of the project:
• Prior to start of project execution, baseline schedules, formats for measurement
sheets required for tracking actual progress and format of the Monthly Progress
Report to be prepared by IRCON were approved by the Client.
• A dedicated team of experienced planners was constituted for planning and
scheduling of the project. This team had required technical experience as well as
proficiency in Primavera.
• Project schedule was finalized by the planning team after consultation with the
site team as well as trade experts. Apart from the schedule of execution activities,
schedules were also prepared for administrative issues like land acquisition
status, receipt of drawings, submission and approval of method statements, status
of non-conformance reports, status of material approvals etc.
• The planning team maintained detailed records of project progress data,
communication with the client regarding progress issues, other issues that could
attribute to delay in projects like weather details.
Quality Assurance and Management is an important aspect of the project. Apart from
quality of drawings, documents and execution, issues like health, safety and environment
issues are also given due consideration. All issues in the project are dealt with through an
integrated approach leading to effective project management.

Conclusions

In this project Client had conducted extensive planning at the Initiation stage and defined
the framework for all aspects of project management including human resource
management, procurements, planning, scheduling and monitoring and cost management.
Such an established framework and guidelines helped and facilitated the Lead Contractor
IRCON in executing this project successfully. Study of this project highlights that
effective project management can be achieved on a project if it is ‘Client driven’. In any
country, government is the client for major construction and engineering projects
including infrastructure projects and if the government follows the approach as discussed
for this project, a project management culture would be developed in the industry.

REFERENCES

The case study has been prepared through discussions with the staff of IRCON and by
studying the documents forwarded by them.

Sinclair Knight Merz Magazine, 2010, Sustainable Infrastructure in Developing

Countries, Available at http://www.globalskm.com/Insights/Achieve-Magazine/Issue3-
2010/article3.aspx, Accessed on 20th March, 2013

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