Tthe construction of an underwater train station that will connect West Malaysia with East Malaysia

Author: Iloka Benneth Chiemelie
Published: 23 / July / 2016

Introduction

Considering the high level of industrialization across the globe, there is a growing need for management approaches to be integrated into project design in order to ensure that sustainability is created in the project concepts. This is because the management approaches will help to draft the right measures that will be undertaken in order to create the most favourable conditions for executing projects right on the neck and also ensuring that executed projected are capable of meeting set standards. As such, this paper is designed to understand the right approaches involved in project management. Such approaches include the management of cost, time and resources. All these approaches will be incorporated into this paper in order to design the right platform for understanding the factors that influences successful project process.

For this paper, the project that will be studied is the construction of an underwater train station that will connect West Malaysia with East Malaysia. Considering the increasing level of cost of air travel as a result of increase in the fuel prices, it is thought that an underwater high speed train would help provide the right platform enhance transportation network in the country and provide people with the privileged to travel across parts of the country.

Project life cycle

Time frame for the project

Basically, analysing the timeframe involved in a project is important for detailing how the whole project processes will be executed. This is because the time frame divided the project process into individual groups and allocated the necessary duration required to ensure that the project is achieved. On that ground, the timeframe required for the completion of this project is as detailed in the table 1 below.

Table 1: project timeframe

Time factor	Time frame
Project conceptualization	June 2013 – September 2013
Project execution	October 2013 – December 2015
Transfer	January 2016 – March 2016

 Project life-cycle

Project life-cycle is an integral part of any project design and it is a description which details the whole stages involves in the project. Another element contained in any given project lifecycle is the activities that will be undertaken at every stages in the project life-cycle. Basically, the content of the project-life cycle is what is to be done and when such activities will be done.

As described in the figure 1, there are three phases in the project life-cycle, and the first phase starts with the conceptualization of the project. The conceptualization stage is the stage at which all the project features are mapped out into details, drawing the architectural design and drafting the approaches to the undertaken in executing the whole project.  

The second stage as illustrated in the above figure is the execution stage. This is the stage at which all the features described in the project conceptualization will be put to shape and aligned together to create the project. Basically, this will include the projective shelter design for aquatic animals that will be affected in the project process, and the design will also see to understand the influence of the project on the ecosystem. In cases where the project is expected to yield high negative influence, the project process will be suspended until right measures are drafted to ensure that such negative influence is significantly reduced. This stage will also contain the project control stage – which involves all the processes in the project execution being put through rigorous scrutiny to ensure that they meet set standards and are capable of yielding long-term positive influence on the overall project outcome.

Following the completion of the project is the transfer. This is the stage at which the executed project is transferred to the rightful shareholders that sponsored the project process. This is because the project was not designed for individual use, but is instead a project awarded by shareholders and government agencies that also sponsored the project financially. Thus, the project will be transferred to them after successful completion.

Time planning

Advantages and disadvantages of project management tools (milestone charts, Gantt charts and networks)

The three project management tools above are very useful in the project process, and their level of essence can be illustrated in the rate at which they are adopted in project design. They are very common amongst project managers because they help to highlight the main features of a given project process and draft the right approaches that will be undertaken in order to ensure that the project is a success. While these tools have been applauded for their positive contributions in a project process, it must also be understood that they have numerous disadvantages. As such, their advantages and disadvantages will be discussed below.

These tools are very advantageous in the project design as they help to outline the main features of a project and create the right platform for ensuring that the project process becomes a success. Milestone on its own highlights the stages in a given project design. It is more like a virtual timeframe that details the whole project process and the necessary stages that must be completed in a given process before moving to another process. Just like the name implies, milestone measures the distance between a specific project stage and another stage. The Gantt chart is more like a support to the milestone as it presents a detailed visual analysis of the project and helps to create a better understanding of the project process as managers can easily pin-point ideas and meanings form the visualizations presented. Networks on its own serve as the link between the projects. Just as the name implies, network establishes relationships between processes in the project design, detailing what will be done and how it will be done, as well as how processes in the project will influence the outcome of other processes. On that note, it can be seen that these tools are very helpful in project management as they provide a detailed and visual step-by-step approaches to the project design, as well as control measures that will be adopted in the project processes.

While these tools are very helpful in the project process, it must be noted that they lack the advantage of forecasting and projection, and this is their disadvantage. All of the tools discusses above are merely design and monitoring oriented and cannot be used to forecast the outcome from a project design. This is a limitation because forecasting is part of a project process and is important to understand the features in a project that has the highest potential of influencing the project process positively.

A simple milestone chart and Gantt to illustrate the major milestones of the project

Activities	Duration
1.      Employment of designer
2.      Project design
3.      Project discussion with shareholders
4.      Project approval
5.      Contract awarding
6.      Employment
7.      Purchases
8.      Delivery of purchases
9.      Initial starting of work
10.  First management meeting
11.  First approved monitoring
12.  Study of the aquatic life to be affected
13.  Creating of artificial sources of food
14.  Insertion of underwater bridges
15.  Construction of underwater rail roads
16.  Second approved monitoring
17.  Second general meeting
18.  Docking
19.  Installation of high speed trains
20.  Testing
21.  Discussions of finding from training
22.  Amendments
23.  Final approved monitoring
24.  Final general meeting
25.  Transfers

 Time definition

The issues relating to estimating activity duration

The main issue that comes when estimating an activity is the issue of uncertainty.

The causes of poor time estimates

There are numerous factors that influence uncertainty in the duration of a given project and such factors include:

 Lack of experience – in order to estimate the time required to complete any given project, the project estimator need to have had experience in such project as it is related to starting and finishing the project somewhere else. Such an experience will better position the person to understand necessary obstacles that might stand on the way of the project becoming a success, and as such help guide the estimator to estimate a more accurate date. As such, lack of necessary experience will mean that the person will not be able to provide a more accurate estimation (Mansfield Community Education Centre, 2013),

Eternal influence – external influence such as the weather and investors relation and resources can also led to an estimator presenting wrong estimate about a given project and the outcome will be that the person will not be able to present accurate estimation about a project (Mansfield Community Education Centre, 2013),

The effects of resources on activity durations

Resources yield the highest influence on the duration of any given project and the influence can be either positive or negative. The influence if said to be positive when the resources are readily available, as it will be used to ensure that the project is completed within the estimate time. However, in cases where the resources are not readily available, it can then be said that the influence is negative as the implication will be that the project will not be completed within the stipulated time (Mansfield Community Education Centre, 2013),. 

The techniques available for estimating time

1.      Work breakdown - this form of estimation is done by understanding the individual duration of all processes in the project.

2.      Historical – the duration for such projects in the future can be used to determine the estimated time for similar projects in the present time.

3.      Analogy - the time for a given project can be estimated by understanding the activities involved in the project and comparing it with a similar project that a company had done before, through a machine or software for estimation.

4.      Expert judgment – just like the historical estimation, experts can make predictions about how long a project can last by comparing their past experience with the current project being handled.

5.      Volume of resources – the amount of resources available at the time the project was started can also be used to estimate the duration of such project.

Network analysis

Types of networks

As described earlier. It is important to establish networks between processes in any given project design as it will help to understand what is required at each stages of the project. The types of network available include:

1.      PERT - is typically represented as an activity on arc network, in which the activities are represented on the lines and milestones on the nodes. The Figure 7.4 shows a simple example of a PERT diagram.

2.      Gantt Chart - This is a specialised bar chart developed by Henry L Gantt showing current progress on each major project activity relative to necessary completion dates.

3.      Linear programming - is a quantitative tool for planning how to allocate limited or scarce resources so a single criterion of the project is optimised;

4.      Queuing, or waiting-line models are mathematical models describing operating characteristics of queuing situations, in which service is provided to persons or units waiting in line;

5.      Routing, or distribution models are quantitative models assisting managers in planning the most effective and economical approaches to distribution problems, and;

6.      Simulation models, being a mathematical imitation of reality (Mansfield Community Education Centre, 2013),

Principles of network analysis

1.      Identify the specific activities and milestones.

2.      Determine the proper sequence of the activities.

3.      Construct a network diagram.

4.      Estimate the time required for each activity.

5.      Determine the critical path.

6.      Update the Network chart as the project progresses.

Issues to be considered in project scheduling

In the process of scheduling a project, a number of issues need to be put into consideration, and some of these issues include:

Resource availability – the level of resource availability is necessary to ensure that the project is scheduled in such a way that the objectives will be meeting within the scheduled period of time.

External factors – other factors from the stakeholders need to be considered as well, such as the level of investment, and control also influences the duration of a project and as such should be put into consideration.

Value of determining the ‘critical path’

The critical path is determined by adding the times for the activities in each sequence and determining the longest path in the project. The critical path determines the total time required for the project. The value of critical path is that since the critical path determines the completion date of the project, the project can be accelerated by adding the resources required to decrease the time for the activities in the critical path. Such a shortening of the project sometimes is referred to as project crashing.

Network analysis of the above project 

Cost planning

Strategic financial issues related to cost management the project

In the course of undertaking the selected project, numerous financial issues occur as either mitigating factors or enhancing factors. Some of these issues are:

The source of funding – this is a very significant issue in the sense that is there is no funding, the project won’t be undertaken. As such, it is important to understand the sources of the funds needed for the project to become a success. This is a strategic issue because it is not clear as to who the investors might be and whether they might be from the public or private sector. Considering that the project being design is a underwater train station, it becomes clear that investors from both the private and public sectors might be interested as it is a significant investment that has the potentials of returning heavily in the future if it becomes a success. However, since the project is still not yet undertaken in the sense that the investors need to fund it from the beginning to the finishing stages, it becomes very difficult to convince these investors to undertake such funding approach as they might vie wit as being quite risk in the sense that if they don’t have enough resources to finish the project, they might be facing potentials for high investment losses.

Changes in price of commodities over time – another issue to be considered in sourcing the fund for this project is the issue of inflation that will subsequently increase the cost of resources required to make the project a success. Since the funding will be based basically on estimation, and the project will last for a period of 3 years, this is a serious issue because such duration is significant enough for the price of resources to increase and the end product is that the increase in price of resources will man a direct increase in the cost of completing the project, and since the cost has been predetermined prior to the increase, it will mean that the more investment will be required to complete the project. The outcome of this issue is that both the investors and contracted company will be negatively affected.

Insufficient funding – even when the source of fund has been found and the price of resources doesn’t change over the period of the project, there is still an issue of insufficient funding which comes from the investors not being able to provide the required amount of funding. This is a serious issue as it will put the project on hold and even decrease the possibility of the project being completed.

Likely source of funding

Direct investment – this is a potential source of funding and it involves the project being funded directly from the investors’ pocket.

Bank loan – another potential option is bank loan as it serves as the most reliable source of funding but such a high project will definitely accumulate high interest which might affect the profitability of the project upon completion.

Leasing – another option is a leasing format that takes the form of build-operate-transfer (B.O.T), in which contractors from other companies can actually build some of the facilities in the project and operate it for an agreed period of time then transfer it to the shareholders. This is quite helpful as it will reduce the volume of investment required to make the project a success.

Cost definition

Types of estimates that might be required at various stages

Personnel item estimation – as the name implies, this form of cost is undertaken to understand the amount of money required to handle all issues related the workforce. The workforce in this case is defined as all the staffs involved from the initiation stage to the project completion stage and an estimation need to be undertaken, which will look into the salary and wages payable, the health insurance, allowances and the cost of other factors in the project process that influences the workforce.

Non-personnel estimation – this estimation is undertaken to understand the cost of other factors that are not related to employees. Such costs resolve around the amount of investment on resources, where resources are defined as the materials needed to make the project a success. Such cost will come in the form of purchases, delivery, and maintenance.

Both of the costs described above are significant on their own as they cannot function independently and the project cannot be completed without a careful integration of these costs. For instance, the personnel cost is irrelevant is the resources are not there, and the resources are irrelevant if the personnel are not there.

Cost estimating methods appropriate for each type

Resource Costing for Personnel Items - A common technique for cost estimating is to list the resources needed for the project and to total their costs. Typical resources include equipment, material, services and labor. Costs for equipment, material and services can be gotten by consulting price lists or by going out for bids for the larger pieces. Labor costs are hourly, and can be based on the total costs on estimates from similar projects or ask for bids to carry out the work.

Cost monitoring and control

Appropriate steps to establish cost monitoring and control procedures for the project

In order to establish the cost monitoring and control measures, there are a number of steps that needs to be put into consideration and they include:

The actual amount of resources needed – this is important as it will help to understand the actual amount of cost that will be incurred and how such cost will be incurred in relation to the resources that it will be used to purchase.

The actual amount of employees needed – as stated earlier, employees and costs work together and one cannot function independent of the order. As such, it is also important to determine the number of employees needed to understand the procedures in the project, and such an understanding will help to understand the right measures for controlling costs.

Budge of the project

Activities	Cost (RM)
Employee salary	20,000,000
Employee health insurance	5,000,000
Allowances	7,000,000
Resource purchases	500,000,000
Resource delivery	80,000,000
Hiring of machineries	200,000,000
Construction contract	198,000,000
Monitoring	3,000,000
Overhead	100,000,000
Total	1,113,000,000

The purpose for developing this budget is to understand the amount of money that will be needed for the whole project. Such an understanding will help the project manager to know the right amount to source for the various sources in order to fund the project, as well as increase the chances of success in the sense that such funding will also cover the contingency plans and overheads that might arise from the project process.

Cost histogram

Planned value

The planned value is the actual value that is expected to be invested in the project for the project to become a success. This is the perceived value that will be gotten following the successful investment of the funds provided, but it is doesn’t include profit. It is the actual value at which the investment made has been able to achieve the set objectives for such investment.

Activities	Cost (RM)	Duration (Months)
Employee salary	20,000,000	3
Employee health insurance	5,000,000	3
Allowances	7,000,000	26
Resource purchases	500,000,000	8
Resource delivery	80,000,000	8
Hiring of machineries	200,000,000	36
Construction contract	198,000,000	36
Monitoring	3,000,000	36
Overhead	100,000,000	36
Total	1,113,000,000	192

Actual cost at half way

While the planned value is the value expected to be earned, it must be understood that planned value are not always achieved in the business process and this is where the actual cost comes into play. Actual cost is the real value that has been invested and it can either be lower, equal to, or higher than the planned value.

Activities	Cost (RM)	Duration (Months)	Actual cost at half way
Employee salary	20,000,000	3	21,500,000
Employee health insurance	5,000,000	3	6,900,000
Allowances	7,000,000	26	6,000,000
Resource purchases	500,000,000	8	480,000,000
Resource delivery	80,000,000	8	81,000,000
Hiring of machineries	200,000,000	36	NA
Construction contract	198,000,000	36	NA
Monitoring	3,000,000	36	NA
Overhead	100,000,000	36	NA
Total	1,113,000,000	192	NA

Earned value at half way

Earned value on the other hand is the value that has been generated after the planned value has been achieved. Basically, it is the profit gained from the investment and it is calculated as the outcome from the generated value after deducting the planned value.

Activities	Cost (RM)	Duration (Months)	Actual cost at half way	Earned Value at half way
Employee salary	20,000,000	3	21,500,000	-1,500,000
Employee health insurance	5,000,000	3	6,900,000	-1,900,000
Allowances	7,000,000	26	6,000,000	1,000,000
Resource purchases	500,000,000	8	480,000,000	20,000,000
Resource delivery	80,000,000	8	81,000,000	-1,000,000
Hiring of machineries	200,000,000	36	NA
Construction contract	198,000,000	36	NA
Monitoring	3,000,000	36	NA
Overhead	100,000,000	36	NA
Total	1,113,000,000	192	NA	16,600,000

Gap analysis

While the project has been designed in the most favourable way to ensure that it yields successful outcome, it must be noted that a number of reasons exist as hindrance to the success of the project and these issues are described as the gap analysis. They are as described below.

Budgeting – in any project, budget is the main issue that influences success or failure as the amount of money dedicated for the project might end up not being enough as a result of external influences such as change in commodities and labour that will influence changes in the budget and risk the chances of the project being completed. As such, this if of significant importance in the sense that it bridges the gap of the project being completed in cases where such is applicable.

Time horizon and weather conditions – although the time frame has been well defined in such a way that extra time is allowed for management of any delay in the project process. There is a need to understand that environmental forces that yield negative influence in the form of delaying the project excessively through environmental issues such as flood, earthquakes or unfavourable weather conditions and this means that the gap for success if expanded if such issues occurs.

Conclusion

Project management is a very complex field, and the complexity comes in the form of uncertainties that are associated with the high level of probability involved in the project process. It is never easy to determine the extent of success in any given project as certain external forces might actually influence the chances of success negatively is not well managed and controlled.

As such, the main purpose of this paper was to understand the features that need to be analysed and understood in project management in order to ensure a successful project process. The indication is that there are numerous processes in a project management that needs to be carefully understood and well implemented if the project is to become a success. Such processes where discussed in this paper as project life-cycle, cost planning and management, execution, resource planning and management and transfer.

The findings from this paper reveals that when projects are carefully designed and well implemented, the chances of success is enhanced as the management of the project process will be much easier than when compared with unplanned project.

Recommendations

A number of uncertainties were identified in this project, with most of them coming in the form of sourcing funds and fund management. In the case of sources of funding, it was not clear where the source of fund will come from as the project is such that attracts high interest because of the expected returns, but the level of investment needed is very significant and as such will incur high fund  which might not be easy for expected shareholders to source. On the management aspect, the focus was to understand how the sourced funds will be spent and the indication revealed is that the sourced funds might not be enough if it is influenced by external factors such as inflation and changes in government policies.

The implication from the above analysis is that cost planning and management is the most significant aspect of any project design, and it should be well understood as it directly influences the chances of success of failure of any given project. As such, it is recommended that project managers should take extra time towards understanding the influence of cost related variables on their project design and ensure that all cost enhancing factors are well controlled in order to ensure that the projected cost doesn’t actually exceed the actual cost as shown in the above analysis.

References

Mansfield Community Education Centre (2013), “Introduction to Project Management.” Available at: http://www.mansfield.vic.gov.au/Libraries/Community_Development/Intro_to_Project_Management_Manual.sflb.ashx [Accessed on: 25/03/2013].