Advanced concept of project risk management project report

Composite Final Report
of
Executive Diploma in Project
Management (EDPM) Class of 2014
To:
I2P2M
By:
Ramesh Kumar Roy
Project Manager (Electrical)
Indian Oil Corporation Limited
PLHO, Noida

Title: Advanced concepts of project management for projects in Indian Oil Corporation Limited (IOCL)
Synopsis:
Project management is an art as well as science of managing projects which has the potential of
managing projects within schedule, cost and quality. The world is changing day by day and the dynamics
of the project field is also getting more complex. The emphasis of Advanced concepts of project
management and their implementation may be one of the key factors for ensuring project timeline, cost
and quality lines.
Some of the advanced concepts in project management have been discussed in the present paper.
Applicability for oil and gas sector companies has also been a part of the project report.
Introduction:
Indian Oil Corporation Ltd is a fortune 500 company with the ranking of 96 and only Indian company in
the top 100 league of fortune 500 companies. The company hosts all type of functions including project
management in a full fledged way. Company has taken major refinery projects like ongoing project of
Paradip refinery and mega petrochemical project at Panipat refinery.
Pipeline division of the company having its head office at Sector-1, Noida has its own project
management team which has delivered many cross country projects from concept to commissioning.
The project team at IOCL always strives for the best practices in the industry and adopts them so that a
world class project culture is maintained. Implementation of some of the advanced concepts of project
management discussed in the project report can be useful for the company.
Advanced concepts:
1. Build and maintain high Consciousness Quotient for the project team:
This is one of the concepts put forward for NASA project management team by Mr. Adesh Jain, chairman
IPMA. As per this concept project thinking is different from operational thinking and in project
management there are much more attributes to manage than in operation management. Every
individual in the project team is having unique E4 (Education, Emotion, Experience & Expectations). The
outcome or project success is management of all these E4 qualities through leadership qualities.
Mapping of these E4 through interactions with the team members, experts help, etc. may be done
which can be of great tool to achieve never before success from the same project team. The right kind of
motivation for people as well as responsibility and freedom matrix for the whole project team should be
devised and mapped from time to time. These latest concepts may be harnessed for increasing
effectiveness of project team. The project should always remain fully conscious in the present moment
and should not be engrossed in the past history, glory or even failures or successes. Learning should be

transferred from projects to projects but consciousness of projects being unique and requiring constant
consciousness should not be lost.
2. Strategic Project risk management:
Through strategic project risk management it is ensured that the success of projects, programs and
portfolios with regard to achieving the intended objectives is the main focus of management, for which
decisions may be required from higher levels than those of project management.
Some of the strategic elements of portfolio managements include following:
1. Project and portfolio selection that is alignment of the projects with the strategy
2. Project and portfolio delivery method
3. Projects and portfolio control (Time, cost, quality, scope)
4. Project and portfolio risk management
There are many methods for strategic project risk management, however, most widely used method is
AHP (Analytic Hierarchy process).
The overall performance could be managed via weighted scoring model called Faire and Square Portfolio
scoring model (F&SPSM). The indexes used for project performance management are the traditional
measures such as SPI, CPI.
AHP method is an effective method of portfolio and project selection.
The project selection is done on the basis of project attributes. Five most common attributes used for
project selection are management support, resource requirements, technical merit, schedule
effectiveness & cost benefit ratio.
Weightage of how project A is preferred over project B is decided for every pair of attributes and
accordingly an array of preferences is created. AHP weights scales are used for the purpose to convert
preferences into numbers. Sum of scoring for attributes is averaged . This one column matrix is derived
for all the projects one by one and then an array of project x averaged preferences is formed. This
matrix multiplied with vector of relative weights is used for ranking the projects.
Project risk contingency budget planning is also an important aspect of project management.
3. Critical Chain management:
Critical chain method of project management is a revolutionary approach which can fetch faster project
delivery and can increase the reliabilities of project deliverables. It is a paradigm shift in project
management derived from the ‘ Theory of constraints’ by Dr. Goldratt. It inegrates human behavioural
aspects with project management methodology.
In general, task time estimation has two significant factors: Student syndrome, which means
procrastination defeats safety and second factor is Parkinson’s law of creeping elegance, which says that

the work expands to fit allotted time. By virtue of these two there are almost no early finishes
encountered in projects.
In traditional project management, a lot of safety margin is built in the duration estimates. The safety
with each activity invites delays as per Parkinson’s law and hence if safety margin in activities could be
aggregated together and could be put at the projects due date, i.e. in the end, then the creeping
elegance effect can be encountered. This approach at first suggested by Dr. D. Goldratt, is known as
Critical chain management. Safety here may be defined as the difference between the median of the
probability distribution and the actual estimate.
In the critical chain method, plan is developed backward from a target finish date for the project. All
tasks set to As Late As Possible (ALAP) and thus latest date to start the project is calculated. Resource
dependence is studied and resources are assigned to tasks. Resource leveling is performed. Both task
dependencies resource availabilities are considered. Surplus resource availability causes task delays so
their utilization is tried to be ensured.
Safety removed from tasks is pooled into buffers, which absorb task overruns. Project finish delays only
when the project buffer is consumed. Two types of buffer, project buffer and feeding buffers are used.
Project buffer is kept as a protection against critical task overruns and the feeding buffers restrict non
critical task overruns influence critical chain. Project manager is guided by buffer absorption.
An early finish of a critical task replenish the buffer incursion.
Tracking of the project is done in forward direction. The goal is the target finish date. All tasks ASAP (As
soon as possible) and all tasks are critical. Resource allocation is based on project and task priority to
ensure minimize buffer penetration.
Buffer management is based on the total number of days of buffer used, based on which green zone,
yellow zone and red zone are defined. Green Zone corresponds to no action, yellow zone to plan action
and red zone suggests to act quickly. Thus, project manager uses the buffers as early warning signals and
takes action according to the status of buffers.
Constant monitoring of following is done in chain project management method:
1. % chain complete
2. % chain complete as compared to % buffer penetration
3. Rate of buffer penetration
4. Focus on the most penetrating task during execution
5. Resource buffer (alerts)
Some of the noted advantages of critical chain method are:
1. Projects to be completed faster
2. Improvement in the morale and effectiveness of project team
3. Provides an operating environment that s comfortable with uncertainty

4. Avoids micro management
5. Simple, highly effective macro level method for evaluating project performance
6. Effective tool for making decisions
7. Easy to learn, plan and track
8. Can be implemented for multiple projects
The theory of constraints analysis on which this method is based is a four step process:
1. Identify the system’s constraints: to identify the weakest link, it could be something like human
resource or some policy or some other resource.
2. Strengthen the weakest link: by adding capacity, training, hiring more machines, experts, etc.
may be the ways for that.
3. Sub-ordinate everything to the system’s constraints: Plan as per constraints which remain in the
system.
4. Evaluate the system: after strengthening the weakest chain so than it no longer remains the
weakest chain, review the new weakest chain and study its impact on the project and so on.
Implementation of the critical chain management and making an organization ready for it may need
initial consultation but it can yield much more if practiced in true spirit.
4. Stakeholder management:
In recent times, it is noted that the contradictions exist not only between stakeholders but at some
times between stakeholders’ interest and overall project interest. The project parameters of success
should be defined well in advance and stakeholder’s views should be clearly defined on all these issues.
Relative importance of stakeholders may also be decided. E4 of stakeholders should be studied well in
advance and their management strategy should be devised. Type of information, approvals required
from stakeholders may also be recorded and updated from time to time.
Out of the abovementioned advanced concepts of project management all are equally applicable to oil
and gas project also. In addition, due to multiple stake holders in oil and gas projects also uncertainties
in these projects have increase much due to diverse expectation of stake holders as well as statutory
issues and resource criticality and much more emphasis on timely completion of projects like never
before, advanced project management principles are right candidates for implementation in the oil and
gas projects. An organization and project based study is further required to create resources and in-
house competence with these new feathers in the cap of project team for excellence in project
management.

Reference:
1. Module on ‘ Advanced Project Management concepts and case studies’- 12.09.14 to 14.9.14
2. ‘The Goal’- book by Dr. Goldratt
3. A Guidebook for Project and Program Management for Enterprise Innovation by Prof. Shigenobu
Ohara

Advanced concept of project risk management project report

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