Monitoring physical progress of the projects
Called Follow-up or Project Supervision Department, it is an essential part of an organization to take care of its projects. Banks which advance loans for setting up industrial units do have such departments where their staff watches the progress of the project and makes reports for the management perusal.
Whether a bank or industrial conglomerate, a well established department is a must:
- To watch progress of a project and to report well in time if there is a slippage in time-schedule or budget.
- To ensure that the project would fulfill its objectives and is not deviating from it.
- To train its officers to use the experience gained or feedback received in dealing with other projects of the same nature.
- To share information with others financial institutions to promote inter-institutional coordination for safeguarding their interest.
- To involve beneficiaries of the Projects in the analysis of project progress and ultimate operations.
In order to keep the projects on track, the physical progress should be ascertained at regular intervals depending on the past progress and magnitude of the investment. The sponsors or their representatives should know when and how to intervene in during project implementation. If it is observed that the project is not progressing as per schedule, timely action is called for. There are a number of techniques to get a slipping project back on track such as (i) working overtime, (ii) re-locating sources, (iii) swapping resources, (iv) switching over to crash-schedule, (v) fast-tracking, (vi) cutting down scale of work and finally (vii) making it a priority number one.
How information is gathered:
To watch physical progress of the projects, two methods are widely used:
(i) Follow-up Team, and (ii) Digital Monitoring system
These are briefly narrated below:
(i) Follow-up teams regularly visit the plant to ascertain progress to date. They compare their observations with estimated time and cost schedule and pin-point deviations, if any, for timely action by the top-management.
Before such visits, the follow-up officers would meticulously go through available operational data and accounting record - whether supplied by project team or retrieved from own records.The purpose is to have a mental picture of the project and compare it with the funds incurred. An experienced follow-up officer could smell a rat and ask for a detailed checkup by a multi-functional team of engineers, architects and cost accountants.
The frequency of visits depends upon the magnitude and status of the particular project.
The banks also employ commercial intelligence officers who visit projects in disguise and send feedback to the management. In addition industrial surveys are carried to acquaint one-self with environments.
(ii) Satellite Digital Imaging System which captures and measures the field progress at regular intervals and passes it on to the management. It comes in many ways. The most sophisticated system takes and transmits digital photos from an aircraft in flight to a ground station. In a simple version, photos are captured by a digital camera and are uploaded to the company websites. In some way, it is an interactive system which integrates 3D CAD drawings and digital images. CAD software enables the user to (i) Zoom in and out for close-up and distant views. (ii) Rotate images to view them from different perspectives and (iii) Change the scale of images.
In this way, the user can have a clear idea of the ground realities and can measure the progress between one period to another. This is compared with estimates and a comparison is drawn between the two which may call for corrective action. Thus, a user can get the necessary information without leaving his or her desk. In some way, this is a much better than personal visit and observations which at times could not be correct due to bias of the reporter or dishonesty. Since images come directly from a reliable instrument, there is no chance of misrepresentation or fact-twisting or distortions.
Purpose of Followup
This is done to ensure that:
(i) the projects are completed in time, within budget and under approved concepts,
(ii) the projects’ operations are successful enabling them to meet all their obligation to economy in general and lenders in particulars,
(iii) to provide feedback for identifying suitable investment opportunities, upgrading appraisal standard and evaluation of completed projects. Also, it shows a bank role in industrial development.
Why project suffer?
Over the years, a lot of information has been gathered for projects delays in Pakistan which is summarized as follows:
- Late Completion of Loan formalities.
- Stoppage of work due to shortage of funds or late disbursements
- Infra-structural problems
- Managerial in-efficiencies
- Prolonged trails runs
- Inflationary Pressure
- Changes in custom duties or incentives
- Sub-standard project appraisal reports
- Change in concept of the project
.A sound early warning system can safeguards interest of the project.
EARLY WARNING SYSTEM
An early warning is a signal or a message or an observation that can be treated as a sign or indication of some problems. There are two types of problems which an industrial project can face:
(i) Ongoing and rapid threats like Incidents or natural calamities (Earthquakes, floods etc)
(ii) Creeping problems such as financial crisis or brewing labor troubles or environmental issues
These problems eventually results in cost-overruns or delays or poor-quality of construction or faults in machinery installation.
In order to avoid such problems, an Early Warning System (EWS) is must which may a computer-based or just a mindset or a way of thinking. Whatever the case, the following questions are raised for each and every project due to its peculiar situation:
- What can go wrong?
- How severe?
- How frequent?
Problems occurring before implementation:
- Late completion of loan formalities
- Non-availability of competent officials or experienced workers for machine installation
- Delay in fund-releasing by the banks
- Problems in finding a suitable location for the project.
Problems occurring during implementation
- Time over-run
- Cost over-run
- Bankruptcy of main machinery supplier.
- Delay in arrival of machinery at site due to infrastructural problems
- Shortage of funds
- Change in project scope
The management should take necessary precaution in dealing with each potential problem through Risk Management Techniques covered in http://hafeezrm.hubpages.com/hub/Project-Management---Managing-Risk
Monitoring and Supervision
Both terms are sometime used inter-changeably. However, supervision is wide word which includes monitoring. Of course, taking corrective action is part of supervision. Simply monitoring means collecting information and reporting as is done by newspapers or the other media.
CAD stands for Computer-Aided- Design. It is a modern version of the old drafting boards to draw and create designs. Being computer-based, it provides a great deal more functionality and complexity.
More by this Author
For over three decades, I worked for a development bank. My main job was to evaluate proposals for setting up of industrial projects initially as an Officer and later as Head of the Division. I have many interesting...
This is in continuation of my previous Case Study on CPM & PERT. Here I would describe ways and means to calculate Floats or Slacks. A little change has been made in Sketch # 3 in the previous article. Description...
A financial market is a place for buying and selling of financial securities such as stocks and bonds. It facilitates: The raising of capital (in the capital markets) The transfer of risk (in the derivatives...