Assignment Principles of Proj Mgmt - Anas Alam Faizli

Name: Anas Alam Faizli Student ID No. CGS 00385017 Centre of Graduate Studies MPM Intake: January 2009

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JANUARY SEMESTER 2009 PRINCIPLES OF PROJECT MANAGEMENT – EMPM5103

ASSIGNMENT (45%)

LECTURER

PN NORAINI BINTI HAMZAH

STUDENT ANAS BIN ALAM FAIZLI


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TABLE OF CONTENTS CONTENT PAGE NO

PART A

In order to be a successful project manager it is important to have broad-based knowledge regarding the technical

aspects of the industry as well as managerial knowledge. Many organisations are utilising IT to improve the efficiency

in managing projects.

1a. Obtain a relevant journal article or book reference (attach a copy of the journal abstract or introductory page of

the book to your answer) that is related to IT-enabled project management and discuss two key issues

identified by the author of the article/book.

03 1b. Discuss the importance of information flow with respect to project coordination that can lead to faster-time-to-

market of products.

11 1c. The favoured organisation structure for managing projects is the matrix organization. Provide an organisation

chart of an existing project organisation (providing actual details of the company profile) and clarify how this

structure suits the way the company aims to optimize its use of resources.

17 PART B

In their efforts to improve the quality of service and products, your organisation is employing external consultants that

promise increased productivity through the introduction of new management ideas and techniques; and additionally by

obtaining ISO accreditation that the businesses can be more profitable. However, the many ideas and techniques

have often required the company huge investments in training and consultancy with limited returns such as increased

market share. Additionally, in terms of ISO accreditation, the initial benefits have gradually been reduced as more

competitor companies are being ISO certified. Hence, besides providing some benefits the annual accreditation

process adds to the cost of maintaining quality, and is often referred to as the “added cost of quality”.

Assuming that you are the Quality Manager of this public-listed electronics factory dealing with producing electrical

household appliances, provide a clear description of a proposal for quality initiatives in order to improve the quality of

the service (maintenance) and products of your company that you would offer your General Manager who is very

reluctant to agree to proposals that incur “additional” initial costs to your company. The arguments in the proposal

should point out the mainly existing externally-driven approach to improvement and provide some more permanent

approaches and solutions as well as the clear ability to plan for higher productivity.

It is important that the proposal should describe the issues related to two existing management ideas and techniques

by initially introducing their key fundamentals briefly, similarly with the ISO standards for products and services related

to the industry.

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PART A

In order to be a successful project manager it is important to have broad-based

knowledge regarding the technical aspects of the industry as well as managerial

knowledge. Many organisations are utilising IT to improve the efficiency in

managing projects.

a. Obtain a relevant journal article or book reference (attach a copy of the

journal abstract or introductory page of the book to your answer) that is

related to IT-enabled project management and discuss two key issues

identified by the author of the article/book.

[20 marks]

CONSTRUCTION MANAGEMENT AND ECONOMICS Journal Title: An Integrated construction project cost information system using

MS Access and MS Project

Publication Date: 01 February 2004

Author: A. A. D. A. J. Perera, K. Imriyas

Department of Civil Engineering, University of Moratuwa, Sri Lanka

Abstract: <Begin> The integration of time and cost management of construction projects has been

recognized as the most effective way for close management. However, it has not

been effectively used due to the presence of a large quantity of data with many

complex interrelationships. Advanced software using current state-of-the art

could be developed to solve this problem. Nevertheless, construction

organizations, especially those of small to medium size, cannot afford to procure

such software due to the high cost involved in development and training.

Probably, the maximum capability of small to medium size contractors is to

purchase general applications – spreadsheet, database, etc. – and general time

planning software. Thus, a computer solution for an existing problem using

general software will have a higher potential for application. In this context,


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Research was undertaken to establish the feasibility of the use of MS Access

and MS Project to provide an integrated time and cost management information

system encompassing estimating, scheduling, cost control, resource monitoring

and costing, and financial control. First, through a literature review, documentary

search in contractor organizations and interviews of professionals, the

requirements of such a system were identified. Second, detail procedures were

established by use of standard system design procedures. Third, a data

modelling was developed and a relational database was established with data

transfer mechanism between database and time planning software. The research

proved that an effective integrated project cost management system could be

developed using MS Project and MS Access as an economical solution

for small to medium construction organizations.

Keywords: Integrated cost management, DBMS, time planning software,

management information system

Abstract: <End>

ANSWER The journal touches how project management can be IT enabled using cheaper

database and scheduling software offered by Microsoft instead of going for full

fledged project management software. Despite the cheaper cost and faster

learning time it still offers the same result compared to its superior project

management softwares.

Project management is the discipline of planning, organizing and resource

management in ensuring project completion within time limit, quality and safety.

This involves managing resources from the start of the project until project

completion dates. Managing projects is defined into four major categories,

planning, organizing, controlling and influencing.


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Planning is the process of outlining what is needed to be done, its duration,

when to start and end. This involves short term and long term. Planning

involves detailing the steps required to achieve the objectives. There are also a

good set of tools and proven theories to assist in better planning. MS Project and

Primavera despite the different ability is oftenly used to achieve this.

Organizing is the process of assigning the activities to its resources and is a

mechanism to put the plan to act. Everybody will be assigned to a task and is

required to ensure that it is executed and will contribute to the organizational

goals. Good organizing skills will come with better understanding of

responsibility, authority and delegation roles.

Influencing is another project management functions. This involves motivating,

leading and directing. This is critical as a better influencer will get a higher

productivity level.

Controlling is the continuing process of control and monitoring of the activities

that has commenced. Control is the activity of managing or exerting control over

something. According to Roberto Mockler, controlling is a systematic effort by

managers to compare performance to standards or plan and determine the

variation and take remedial action required to ensure it will achieve

organizational objectives. The four basic management functions are all inter-

related and cannot be separated.

A successful project needs to ensure that these four basic functions of

management are executed. This will ensure the success of the project.

However, IT software has given new fresh breath for project management.

Many of project management function are now captured and are enabled using

software and IT tools. We have STAADPro, BOCAD, AutoCAD for the

engineers. These softwares have assisted the engineering departments. MS

Office Suite (MS Access, MS Excel, MS Word, MS Powerpoint and MS Project)


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also strongly assisted the costing, planning, quality, and the administrative

departments. There are also famous integrated powerful project management

software like Artemis, Primavera, AceProject, Copper, Crest, Deltek, Codel,

Cerebrum and many others.

As project grows from small construction work building a small toilet or

renovation works to 20 storey building and further into building RM 5 billion

offshore platforms, the need for better and more sophisticated project management software arises. Good project management software that can

capture the four management function currently in the market is as listed above.

However, theses softwares are expensive and are difficult to learn. Users will

need to go for proper training and spend expensive resources before mastering

the software. Due to this, many small to medium companies goes for simple

database and spreadsheet software which is fully optimized to get the same

result as using full fledged project management software.

The journal touches on a spesific aspect of the project management which is

project cost information system. Software that can manage and process all the

data and provide information will definitely assist in great deal for the project

costing management. This is not only required for the cost control department,

but every department will be able to contribute more data and rates and also

have access to the project costing at the fingertip. A good project cost

information system needs to be able to computerized and assist in managing

from the initial inputs until the final inputs. The sections involved in the system is

estimating, cost budgeting and control, material management, man-hour

management, plant management and interim billing. This will greatly boost

productivity and faster work flow in the organization. User will need to prepare

the initial input such as priced bill of quantity (BOQ) and the schedule of prices

which will be integrated as the estimate and cost budget. The other information

will become as intermediate data which can be separately extracted as required.


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Figure 1-1 Initial Input for BOQ Cost Budget and Project Cost Information System

Stages

User then need to do process modelling which is required to model the

processes for the cost control budget system. This model will dictate the data

flow both from external data and internal data input for the system which

includes schedule of rates, labour sub contractors cost, schedule, labour

attendance sheets, material suppliers order and all cost related data. Refer

Figure 1-1 which explains how the external and internal data flows to produce

one integrated cost system which covers all aspect of project cost exposures.

The second diagram on the right explains the six sections of the project cost

information system.

Data modelling again follow the project cost information system stages from

estimating to interim billing which is broken into Estimating, Cost budgeting and

control, Material costing, Man-hours costing, Plant costing and Interim Billing. All

this sections will be incorporated seamlessly into the project cost information

system. From here, MS Access and MS Project interfacing will further be

explained to produce a powerful project cost information system.


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Figure 1-2 Work Flow Diagram showing MS Access and MS Project interface

MS Access is a software database tools while MS Project is a software

planning tools which is both developed from Microsoft. MS Access is a powerful

database and can be used to store data, perform data query, keeping files,

sorting data, calculations and many other function. It is equivalent to the likes of

Oracle system, SQL and other big database name. MS Project has the ability to

store activities, predecessor successor links, fragments, draw bar charts, gantt

charts, PERTs, cash flow analysis, resource allocation and many others.

However MS Project is not fully fledged project management software and could

not perform powerful function and is limited to basic scheduling.

The journal further explained its research in developing a project cost information system using general and advanced features which is available in

MS Project and MS Access and exploiting MS Access database power linking it to MS Project and developing the project cost information software which will

assist cost management of the project. The interface points as explained in

Figure 1-2 is self explainatory as MS Access and MS Project integration will allow


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scheduling, cash flow, resource forecast (manpower and machine), indirect and

direct labor requirement. The project cost information system will then digest the

basic data and information to initiate cost tracking and control in the MS

Project. The system has six functional areas as illustrated in Figure 1-2. The

first step is the estimating process. Then from the BOQ, the data will be fed into

the system which will produce the cost budget. Schedule data will be input into

MS Access with cost. After all is completed, the data will be transferred to MS

Project where bar charts and cash forecast flows will be produced and even S-

curves. The project cost information system is powerful that it can separately

monitor resourcing for each materials, plant and labour as per the process

model.

The advantage of using the system is that it is an open and independent system where every project can use the concept over and over again. There is

also a room for modification as everything is not fixed and the system is built

from scratch. By using MS Access to manipulate the MS Project data user will

have a far etched more powerful system than most current project

management software in the market. It is also cheaper and is cost-effective for

the organization yet allows for modification and flexibility. A good project

management software could cost as high as RM 15,000 per license and

compared to MS Access and MS Project which comes at a minimal RM1,000 the

price different is big. Furthermore the software has to be purchased for all key personnel and special training for software familiarization. MS Office softwares

are the easiest as most employees are already familiar with the software.

This has also resulted in big companies like ExxonMobil, Talisman, Sime Darby

Engineering, MMHE, Petronas Carigali, Sunway Construction only have minimal project management software. Primavera is oftenly used but only in the

planning department and the licenses are kept at a minimal while everything else

is using MS Office softwares such as MS Excel, Ms Access and MS Project.

Sime Darby uses Primavera but the data would then be exported into MS Excel


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and manipulated for manpower resources, bar chart, progress monitoring and

also the s-curves. The progress monitoring then will be distributed to each

individual department for data entry. Upon receiving the data the planner would

then import it back to Primavera for scheduling activities. This is the same case

in other major fabrication yards in Malaysia. Sunway Construction uses MS Project for scheduling planning activities and MS Excel for other data entry

within the construction department. Talisman, ExxonMobil and CarigaliHESS is

using MS Project for the planning department too and for the costing department

they are using MS Excel. Petronas Carigali uses Crest for the project costing

estimates. During project development plan, the project controller will key in

the project general details and run the software. Crest will generate the project

rough estimate for each discipline and its major phases of the project. From

there the project controller will take all the figures and key into MS Excel and

monitor all Value of Work Done (VOWD) and prepare budget using MS Excel.

Simply said, it is proven that the construction and oil & gas industry in Malaysia

prefer to go for simple spreadsheet and database to manage project details

such as cost, planning, manpower and also administrative works. Major

fabricators and constructions companies that are involved in big construction

usually will have few Primavera licenses to manage its activities as the number of

activities usually is more than 2,000 activities. Clients like Talisman, ExxonMobil

and Shell only opts for MS Project as they are only monitoring from the surface.

However, every department is well conversant with MS Offices softwares.

Without the additional training and cost, good project management software

could be developed and implemented to assist day to day activities of the

projects.


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b. Discuss the importance of information flow with respect to project

coordination that can lead to faster-time-to-market of products.

Figure 2-1 Information Flow in the Supply Chain of the Consumer Goods Industry Figure 1 Figure 2-2 Information Flow in the Supply Chain showing project coordination that leads to faster time to market of products


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ANSWER William Pollard concluded that “Information is a source of learning but unless it

is organized, processed, and is made available to the right people in a format for

decision making, it is a burden, not a benefit. Pollard has succesfully

emphasized the importance of information flow with respect to project

coordination simply in one sentence. Without a proper organized information

flow that flows to the right people, the benefit of the information will fail to be

materialized or optimized but if the information is organized correctly it can lead

benefits to what it is intended to be, and in this case for a faster time market of

the products via a good project coordination.

According to the Oxford English Dictionary, the first known historical meaning of

the word information in English was the act of informing, or giving form or

shape to the mind, as in education, instruction or training while flow is a form of

movement.

Therefore, information flow is interpreted as how information or data is

transmitted from one source or more to one destination or more. Further along

the argument it will be proven that information flow is vital and key to the

success of project coordination in getting the best result and finally a faster time

to market of products.

Figure 2-1 depicts how information is flown from the supplier to the

manufacturer, retailer and the customer. The information that is transmitted

includes the orders, inventory, demand, sales data, and the customer’s need

and requirements. The diagram also showed the financial flows which include

the transfer of funds, cash or credit between the customer, retailer, manufaturer

and supplier which is facilitated by financial institution. The products and services information flow is showing how the logistic service provider is

ensuring that the products are transported safely from one point to another point

along the diagram.


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The diagram is a supply chain where the consumer goods industry involves

every party directly or indirectly in receiving and fullfiling a customer’s request.

It is a dynamic diagram which executes a constant flow of products, information

and finance between the different stages. The chain’s focal point in the

diagram is the retailer which is in charge of getting the products that the

customer wanted and getting the financial compensation for the products and

services given. The customer will visit the retailer either physically or online

and will place order or enquiry. If the product is available, which the retailer is

responsible to ensure stock up is maintained, a sale transaction will occur

where payment will either be direct or through a financial institution. A financial

institution will facilitate if the payment is made via cheque, credit or debit card.

The retailer will engage the logistic service provider to ensure delivery is made

safely to the customer. Having said this, the logistic & finance interacts

critically to service all parties involved. This helps to minimize redundant

resources where all the parties is sharing and tapping the same wealth of

resources.

The retailer is to ensure that there is an efficient stock up or replenishment

which ensures continuous flow of products which is based on the customer’s need and requirements. By having this, retailer is capable to ensure that a

quick response is achievable. The fundamental idea is to ensure that overall inventory at all stages of the supply chain is reduced which cut wastages and

lead to a faster time of product delivery and availability. This is achieved if the

number of overstocks and out of stocks is decreased. The information from the

customer is critical for the retailer to understand the trend and forecast to the

best of its ability and ensure that the products and goods are always available.

Drucker correctly states that the purpose of a business is to create and keep

customers. Heather Williams also emphasizes this point when he pointed that

“Revolve your world around the customer and more customers will revolve

around you.” In order to achieve this, it is important that customer’s need and


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requirement is captured thoroughly and analyzed based on the information that

is received via the information flow.

Logistic Service Provider plays an important role in supporting this. The more

efficient the logistic services are the faster it will assist and support in reducing

the lead time in marketing the product. They need to service and ensure that a

continuous product flows in the supply chain. Project coordination with the

support of information flow is vital to ensure that replenishment of products is

achieved where demand and supply is equalized. Project coordination will

increase sales forecast accuracy by having information from the customer side

and also the supplier and manufacturer planning side using all available data

from all parties. Based on this, better coordination is achieved and product

availability is optimized and a faster time to market of products is guaranteed.

Retailers will be able to anticipate customer demand and ensure that a product

is always available all the time based on the analyzed report from the marketing

department. Additionally, as information on customer behaviour is available

simultaneously to all participants, reaction to sudden, unanticipated, changes

in demand is possible (Kracklauer et al. 2004, p. 59)

It is self explanatory that the diagram has demonstrated that information

availability and the right movement of information is extremely important at all

stages of the supply chain. For example customers need to provide feedback

on the products. Retailers in exchange need sales forecast, product

specification, continuous customer’s loyalty and good supports from the

suppliers and manufacturers. Retailers also play pivotal role for the chain as

they interact directly to the customer which will represents the demand side of

the equation which the information will be flown to the supplier and

manufacturer that represent the supply side of the equation. Supplementing

both supply and demand and ensure that the equation is always balanced it will

enhance and increase the product availability in the market. The more efficient

this is complimented the faster the product will be in market. The diagram has


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successfully demonstrated how importance the information flows between the

different departments of the retailers such as logistic, finance and also marketing (which does the sales research). Without the information flow and

project coordination products offered could suffer serious impotent in terms of

availability and thus reduced its lead time for marketing.

Figure 2-2 further elaborates the argument where the importance of

transportation and logistics and also project coordination with regards to the

information flow to ensure that the market is delivered in time. It explains how

the information with regards to financial and instructions are transmitted via the

offices and also between the retailers, manufacturers and the suppliers. Instruction controls are issued by the head office to the regional office which

would then transmit the controls instructions to the retail outlets. This involves

two way communication where the retail outlets will provide data capture and

customer information to the regional office where a further data collection will be

done and then submitted to the head office where a sales study and forecast will

be conducted. A precise research is inherently conducted by the marketing

department which will be provided access to constant new information received

and ensure that products are readily available and on the shelf.

The retail outlets keep constant communication and reporting line to the head

office where the marketing, financial and the management personnel resides.

All orders and payments instruction are issued by the head office to the

suppliers. The suppliers would then issue the orders to the warehouse which

have the warehouse distribution, operations, administrative and transportation

departments. Invoices will be sending back to the head office for payment

requests and the head office will interact with the suppliers. Invoices plays

major role in documenting a transaction which will be complimented by a

receipt.


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Having suffices these requirements; the orders will proceed to the warehouse.

However long term agreement can be made through credit line where payment

is usually done after 30 to 90 days when product is delivered. Bank guarantees from the financial institution is usually required by the warehouse

and the suppliers in order for this to materialize. The warehouse would then

deliver the products to the retail outles with the delivery order or notes.

Efficient information processing is of central importance in a supply chain

management.

Looking at both diagrams, it is proven that information flow is imminent importance in ensuring that a project coordination can be achieved thus

proving a faster lead time to market of products and ensure products availability.

By knowing what the customer needs through proper coordination of information

management will helps to eliminate longer time of marketing a product.


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1c. The favoured organisation structure for managing projects is the matrix

organization. Provide an organisation chart of an existing project organisation (providing

actual details of the company profile) and clarify how this structure suits the way the

company aims to optimize its use of resources.

[20 marks]

Company Profile – Sime Darby Engineering Sdn Bhd

Sime Darby Engineering Sdn. Bhd (SDE), formerly known as Sime SembCorp

Engineering Sdn. Bhd. (SSE), is a subsidiary of Sime Darby Berhad, Malaysia's

leading multinational and one of the largest conglomerates in South east Asia.

SDE was incorporated on April 27, 1981 under the name of Sime Darby Services

Sdn. Bhd. In September 3rd 1983, the name was changed to Sime Sembawang

Sdn. Bhd. and subsequently changed to Sime SembCorp Engineering Sdn. Bhd.

on February 27th 1999. Sime SembCorp Engineering Sdn. Bhd. was then a joint

venture between Sime Darby Berhad and SembCorp Utilities Pte. Ltd of

Singapore.

Since January 2005, SDE is fully owned by Sime Darby Berhad and known as

Sime Darby Engineering Sdn. Bhd. (SDE). Its headquarters is in Pasir Gudang

and its second yard is in Teluk Ramunia Yard.

Fabrication of platforms and topsides are done in Pasir Gudang while the jackets

are fabricated in Teluk Ramunia.


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Figure 3-1 Overall Organisation Chart for the organisation’s operation in Teluk Ramunia

DATE : 17 FEB 2004DATE : 17 FEB 2004TITLE : ORGANISATION CHART FOR SSE TRTITLE : ORGANISATION CHART FOR SSE TR

PREPARED BY:PREPARED BY:

APPROVED BY:APPROVED BY:

NORMAN BUANGNORMAN BUANG

REVISION : 9REVISION : 9SIME SEMBCORP ENGINEERING SDN. BHDSIME SEMBCORP ENGINEERING SDN. BHD..

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AHMAD FAIZA ABD RASHIDAHMAD FAIZA ABD RASHID

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OPERATIONS MANAGEROPERATIONS MANAGER


PLANNING HEADPLANNING HEAD

KAMAL KAIRANIKAMAL KAIRANI

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IT TECHIT TECHMUHAMAD AIZAMMUHAMAD AIZAM

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SHAHRIZALSHAHRIZALFANNORZIANAFANNORZIANA

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MOHD PADILMOHD PADIL

SECRETARYSECRETARY

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PLANNING ENGINEERPLANNING ENGINEER

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HSE HEADHSE HEAD

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SAFETY ENGINEERSAFETY ENGINEER

TBATBA

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TBATBA

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PROCUREMENT/PROCUREMENT/CONTRACT HEADCONTRACT HEAD

SURINAH BASRISURINAH BASRI

FINANCE/ADMIN/FINANCE/ADMIN/HEADHEAD

VENKIDASIRUMVENKIDASIRUM

PROJECT MANAGERPROJECT MANAGERGUNTONG/IRONGGUNTONG/IRONG

NORRASHID AMATNORRASHID AMAT

PROJECT MANAGERPROJECT MANAGERAMENAMAMENAM


PROJECT MANAGERPROJECT MANAGERBONGKOTBONGKOT

ZULKIFLI IBRAHIMZULKIFLI IBRAHIM

PROJECT ENGINEERPROJECT ENGINEER

ANAS ALAM FAIZLIANAS ALAM FAIZLI

PROJECT SUPTPROJECT SUPT

KAMARUL ARIFFINKAMARUL ARIFFIN

STR SUPV.STR SUPV.

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PAINTING SUPVPAINTING SUPV

MAHSURI SOLBIMAHSURI SOLBI

ASST. PROJ MANAGERASST. PROJ MANAGER

ANUAR HANAFIAHANUAR HANAFIAH


LIM KOK SIEONGLIM KOK SIEONG

STR SUPV.STR SUPV.

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TBATBA

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AMAT RASIDIAMAT RASIDITBATBA

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LATIF AHMADLATIF AHMAD

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Note:** 3rd Party Staff

QA/QC ENGRQA/QC ENGR

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MD NORMD NOR

STORE KEEPERSTORE KEEPER

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TBATBA

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TBATBA

DCDC

RAHMAT ITHNAINRAHMAT ITHNAINHAIROL ANUARHAIROL ANUAR

PROJECTS


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Figure 3-2 Overall Organisation Chart for the organisation’s Amenam project in Teluk Ramunia

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AABBDD JJAAMMIILL


20

Figure 3-3 Matrix Organizational Chart of the Amenam Project in Teluk Ramunia

DATE : 17 FEB 2004DATE : 17 FEB 2004TITLE : ORGANISATION CHART FOR SSE TRTITLE : ORGANISATION CHART FOR SSE TR

PREPARED BY:PREPARED BY:

APPROVED BY:APPROVED BY:


REVISION : 9REVISION : 9SIM E SEM BCORP ENGINEERING SDN. BHDSIM E SEM BCORP ENGINEERING SDN. BHD..

GENERAL MANAGERGENERAL MANAGER


SIME SEMBCORP ENGINEERING SDN BHDSIME SEMBCORP ENGINEERING SDN BHDTELUK RAMUNIA YARDTELUK RAMUNIA YARD

OPERATIONS MANAGEROPERATIONS MANAGER


PLANNING HEADPLANNING HEAD

KAMAL KAIRANIKAMAL KAIRANI

FACILITIES HEADFACILITIES HEAD

ARVINTHANARVINTHAN

RIGGING SUPV.RIGGING SUPV.

CHE HUSIN NGAHCHE HUSIN NGAH(AMENA M)(AMENA M)

KHAIROL ANUARKHAIROL ANUAR(GUN TON G)(GUN TON G)

MA T ZANMA T ZAN(BONGKOT)(BONGKOT)

SCAFFOLDING SUPV.SCAFFOLDING SUPV.YAZID MOHA MADYAZID MOHA MAD

(POOL)(POOL)

ELECTRICAL SUPV.ELECTRICAL SUPV.

NORDIN YUSAKNORDIN YUSAKLEE KEE ONLEE KEE ON

(POOL)(POOL)

MECHANICAL SUPV.MECHANICAL SUPV.ZAINAL ABIDINZAINAL ABIDIN

(POOL)(POOL)

PLANNING TECHPLANNING TECHAHMAD KARNALISAHMAD KARNALIS

(GUNTONG)(GUNTONG)MOHD GHAZALI MOHD GHAZALI

(AMENAM)(AMENAM)MOHD ANUARMOHD ANUAR

(BONGKOT)(BONGKOT)

QA/QC HEADQA/QC HEAD

M ALI IBRAHIMM ALI IBRAHIM

QA/DOC. EXECQA/DOC. EXEC

HARLINA OTHMANHARLINA OTHMAN

ENGINEERING HEADENGINEERING HEAD

SHAMSHUL BAKHRISHAMSHUL BAKHRI

STRUCT. ENGINEERSTRUCT. ENGINEERJESUSITO JESUSITO

(GUN TON G)(GUN TON G)BRANDO GILBRANDO GIL

(AMENA M)(AMENA M)SHAHRIZALSHAHRIZAL

FANNORZIANAFANNORZIANA(BONGKOT)(BONGKOT)

DESIGNERDESIGNER

NOR RASHID SURADYNOR RASHID SURADY(BONGKOT/ GUNTONG)(BONGKOT/ GUNTONG)

MOHD PADILMOHD PADIL(AMENA M)(AMENA M)

SECRETARYSECRETARY

ROHIZAH MAJIDROHIZAH MAJID

PLANNING ENGINEERPLANNING ENGINEERADE WAHYUADE WAHYU

(POOL)(POOL)


HSE HEADHSE HEAD

RAZALI MAJIDRAZALI MAJID

SAFETY PROMOTERSAFETY PROMOTER

MD NAZAR AZIZMD NAZAR AZIZABD JAMILABD JAMIL

(POOL)(POOL)

PROC. EXECPROC. EXEC

MD NOR HADIMD NOR HADI(GUN TON G) (GUN TON G)

LENA SAMATLENA SAMAT(AMENA M)(AMENAM)

AHMAD YAZIDAHMAD YAZID(BONGKOT)(BONGKOT)

CONTRACTS ENGINEERCONTRACTS ENGINEER

HADIBAH MD SHARIFHADIBAH MD SHARIF(GUN TON G)(GUN TON G)

NATRAH MUS TAFFANATRAH MUS TAFFA(AMENA M)(AMENAM)

AZANAZAN(BONGKOT)(BONGKOT)

PROCUREMENT/PROCUREMENT/CONTRACT HEADCONTRACT HEADSURINAH BASRISURINAH BASRI

PROJECT MANAGERPROJECT MANAGERGUN TONG/IRONGGUN TONG/IRONG

NORRASHID AMA TNORRASHID AMA T

PROJECT MANAGERPROJECT MANA GERAMENAMAMENAM


PROJECT MANA GERPROJECT MANA GERBONGKOTBONGKOT

ZULKIFLI IBRAHIMZULKIFLI IBRAHIM

QC SUPVQC SUPV

OTHMAN MOHA MADOTHMAN MOHA MAD(AMENAM)(AMENAM)

HAZLI PATAHHAZLI PATAH(GUNTONG)(GUNTONG)SHAMSOLSHAMSOL

(BONGKOT)(BONGKOT)

WELDING ENGRWELDING ENGR

AMAT RASIDIAMA T RASIDI(POOL)(POOL)

SAFETY COORDSAFETY COORDADNAN MOHAMADADNAN MOHAMAD

GUNTONG)GUNTONG)MANSOR WAHABMANSOR WAHAB

(AMENAM)(AMENAM)JAMIL JAMIL

(BONGKOT)(BONGKOT)

DCDC

RAHMAT I THNAINRAHMAT I THNAINHAIROL ANUARHAIROL ANUAR

(POOL)(POOL)

PROJEC TS

FUNCTIONALRESPONSIBILITY

PROJECTRESPONSIBILITY

FUNCTIONALRESPONSIBILITY


21

ANSWER According to Harold Kerzner (2006), The matrix organizational form is a

combination of the advantages from a pure functional structure and the

product organizational structure. Project Managers report directly to the

General Manager and so does the department heads or the functional manager

as shown in Figure 3-1. Project manager is accountable for project success

while functional manager is to ensure technical excellence on the project. The

basis for the matrix approach is to create a synergy through shared

responsibility between project manager and functional manager as shown in

Figure 3-3. Employees in the interfacing position have two bosses, the project

manager and the functional manager.

Sime Darby Engineering Sdn Bhd (SDE) previously known as Sime Sembcorp

Engineering Sdn Bhd adapted the matrix organization chart as this proved to be

the most effective method in optimizing its resources. Figure 1-1 outlines the

overall organisation of SDE Teluk Ramunia Yard (SDE TR) while Figure 1-2

outlines one of the projects that are being implemented in SDE TR, namely

Amenam Project. As the discussion progresses, explanation on how SDE TR

optimize its resources will be detailed out.

The project manager is given maximum control over resources and is

responsible for all cost and personnel. This is done through the line manager.

Upon to the execution of the Amenam Project, the General Manager appointed

En Norman Buang as its Project Manager. The Project Manager then has a

meeting with all the functional managers to seek resources and support for the

project. Each functional manager will nominate its resources and negotiation

will commence until both side agrees to the nominated personnel. This is a

sharing of key personnel among the projects and the cost will be minimized.

The personnel will be exposed to variety of different problems in different areas

which will provide better personnel control. In some organizations line

departments are called as service departments and the project team as the


22

client. This is true that the functional manager always emphasize on its team

member to provide the project team the best services possible. Sime Darby TR

bread and butter is from the project sales. The higher the project sales, the

higher the profit is for the company. If the line department do not provide

excellent service to the project team, the performance and result of the project

will be hampered. Thus, a strong matrix organizational chart where the line

departments play its part as the servicing department is critical to the success

of the project implementation and the company as a whole.

Technical excellence can also be cultivated faster and rapid development of

specialist and generalist can occur. Generalist are usually born from the project

management team where they have to deal with various problems from various

discipline while specialist is developed from each functional department having

exposed to different problems from different projects. If the Project Manager is to

be stand alone he will have difficulty when encountering issues from Engineering

/ QA/QC / Contract / Facilities that he is not familiar with. In this case, he can

always refer back to the functional manager for the technical solutions and there

is always a departmental line that is a separate entity which improved on its

technical knowledge and know-how where as the Project Manager is only

concerned to complete the project. By having this, the development of specialist

and generalist is accelerated. Each personnel curriculum vitae will be submitted

to the client during bidding stage. If the personnel is lacking in project exposure

and technical knowledge the client will not accept the personnel that is

proposed. In a project environment where high skill manpower is limited,

technical cultivation from the line department and project exposure is crucial to

ensure continous development of personnel in the project and the technical

departments. Project experience and new learn knowledge will be accumulated

by the engineers and upon returning to their home department they will be able

to share it with their peers and generate faster technical improvement for the

whole organization.


23

Cost separation is separated through timesheet using cost codes. Every

personnel that are fully dedicated to the project will have their timesheets signed

by the respective project manager. There are cases that the personnel involved

in more than one project and he will need to get both project manager’s

signature. If he is not involved in any project his charges will be to the overhead

and the functional manager will sign his timesheet. This makes things easier for

the cost control department and the project manager have more control.

Charging to overhead will not look good for the departmental manager as the

management sees this as having excess manpower unless there is justifiable

non-project related works ongoing. Having this ensures that the project manager

and the functional managers to be in cooperative terms as much as possible in

maintaining both interests. The project manager will usually request for the best

personnel in the department and the department manager need to reflect if the

project’s requirement does require that level of expertise. Cost separation is

important as the management of the organization will need to see which project

that are using resources more than required and vice versa.

Figure 3-3 shows that at least eleven personnel are under pool resource. A

pool of resource means personnel that are shared by various different projects.

Usually, position that does not require special project expertise or the requirement is small will be under pool such as draughting, welding

engineering, scaffolding, electrical and also mechanical supervision. One person

or more will be openly working for all projects as per the requirement. The

functional department will supervise and ensure all project requirements are

satisfied. This will minimize cost like for an example rather than having 4

welding engineers and 20 draughtsmen serving four projects it will be more cost

effective to have only 1 or 2 welding engineers and 10 draughtsmen pooled to

serve 4 projects. However there are also positions which require dedicated personnel for each project such as structural, planning and contract engineer.

This is because this position requires full commitment as the workload is high

and is very project specific. There are also instances where the engineers could


24

take cares more than one project. If this separation of department is not done,

instead of having one engineer, the organization will need to hire two engineers

for the same amount of job.

Equipment and machines are also pooled. For example, if every project team

have their own engineering department, they will need to have their own

engineering softwares, high end printers, digital imaging softwares and technical libraries. This will be very costly to the company and the execution will not be

optimized. Data and knowledge sharing will also not be achieved. However by

having a dedicated engineering department that services the project team, a

pool of resources can be distributed accordingly in lieu with the workload

requirement of each project determined and assigned by the engineering

manager. The engineering manager will ensure that the resources assigned are

enough to cater for projects requirement.

Being a project driven company that aims for technical excellence, targets

completing project in time within budgeted cost and safety, the matrix

organizational chart is the best choice for Sime Darby TR in optimizing its resources.


25

PART B In their efforts to improve the quality of service and products, your organisation is

employing external consultants that promise increased productivity through the

introduction of new management ideas and techniques; and additionally by

obtaining ISO accreditation that the businesses can be more profitable. However,

the many ideas and techniques have often required the company huge

investments in training and consultancy with limited returns such as increased

market share. Additionally, in terms of ISO accreditation, the initial benefits have

gradually been reduced as more competitior companies are being ISO certified.

Hence, besides providing some benefits the annual accreditation process adds to

the cost of maintaining quality, and is often referred to as the “added cost of

qualtiy”.

Assuming that you are the Quality Manager of this public-listed electronics

factory dealing with producing electrical household appliances, provide a clear

description of a proposal for quality initiatives in order to improve the quality of

the service (maintenance) and products of your company that you would offer

your General Manager who is very reluctant to agree to proposals that incur

“additional” initial costs to your company. The arguments in the proposal should

point out the mainly existing externally-driven approach to improvement and

provide some more permanent approaches and solutions as well as the clear

ability to plan for higher productivity.

It is important that the proposal should describe the issues related to two existing

management ideas and techniques by initially introducing their key fundamentals

briefly, similarly with the ISO standards for products and services related to the

industry.

[40 marks]


26

ANSWER According to Boone, Louis E. & Kurtz, David L., (2006) the common element of

the business definitions to quality of a prodcut or service refers to the perception of the degree to which the product or service meets the customer’s expectation. Quality is a perceptual, conditional and somewhat subjective

attribute. Peter Drucker concluded that Quality in a product or service is not

what the supplier puts in. It is what the customer gets out and is willing to pay

for. Many academics agree to the fact that quality refers to the standard that

conforms to the customer’s requirement. However, Phillip B. Crosby does not

share the idea where he quoted saying that quality is “conformance to requirements. The requirements may not fully represent customer expectation

as this should be treated as a separate problem.”

Penagasonic is a public listed electronics factory which has been producing air-

conditioning units and has been around for over 15 years. The quality of the

services and products has been declining for the past few years. Ain Danish the

quality manager for Penagasonic, is proposing that external consultations is

required to introduce new management ideas and techniques and ISO accreditation is also required to be implemented. However the General

Manager is reluctant to agree to proposals that incur “additional” costs to the

company. According to Dr Edward Deming, the key to successful

implementation of quality starts at the top. Ain Danish will need to ensure that

the General Manager understands and agrres to the proposal prior to its

implementation.

Crosby further explained on Quality that Quality is free and the Cost of Quality is

divided into two main components, which is the cost of conformance and the

cost of non conformance.

The cost of conformance is the total cost of ensuring that a product is of good

Quality, which includes Quality Assurance (QA) activities such as training,


27

standardization, and procedures while Quality Control (CQ) on activities such as

inspections, reviews, audit and testings. This cost represent an organization’s

investment in the quality of its products which is either an ongoing operating

costs or capital initial costs.

The cost of non conformance is the total cost spent for remedial or corrective

works as a result of quality failure and repetitive reworks. This cost can

significantly explodes tremendously and also can contribute to the possible loss

of business, possible legal redress and other potential cost exposures.

For example, Guntong F jacket installation had a major setback, the structure

plunges into the sea due to technical error which could have been evaded if

higher quality control was in place. As a result of this, the jacket had to be

recovered from sea, send onshore, repaired and then send back for offshore

installation. This mistake has dearly cost Sime Darby and ExxonMobil more than

RM10 million. If a better quality control had been in place despite higher cost of

conformance, the far more expensive cost of non conformance would have been

minimized.

The external consultants proposed that Penagasonic needs to enhance the

existing QA/QC department and ensure that the six quality management

techniques are well implemented in Penagasonic. The six quality management

techniques that should be executed during every phases of the air conditioning

manufacturing is such as the Quality policy, objectives, assurance, control, audit

and program plan. By having this, the level of quality that has been declining in

Penagasonic for the past few years will be improved.

Quality Policy is usually proposed by experts and is supported by top

management. This will include statements and directives by the top

management. This will be vital in achieving total quality for the company.

However, a policy that is not implemented is nonetheless has no value, a good


28

policy will need strong support from the top management for its execution. In the

case of Penagasonic, a good quality policy will be a policy that exemplifies the

principles of the company and spesific instruction for quality matters and also

explanation to outsiders on how strict Penagasonic views quality. One of the

policies that Penagasonic can use is zero defects where every employee that

has no involvement with defect for a week will be rewarded with an incentives or

rewards. The proposed Quality Policy for Penagasonic is:

1. Customer Satisfaction and Loyalty

2. Product Competitiveness

3. Superior Quality Empoyee

Quality Objective is a set of targets that complies with the policy. A good

objective is easily explained as spesific, measurable, achievable, and realistic

and is time based (SMART). Penagasonic will need to focus on objectives that

can reflect the how serious that the company upholds quality and use objectives

such as minimum reworks or zero defect for every 100 products and also

place a target for services post purchase if a defect report is made. A 24 hours response time will reflect Penagasonic commitment to quality services and

products. Both of this will be the foundation of Penagasonic’s Quality Objective.

Figure 4-1 Penagasonic QA/QC department reporting line

GENERAL MANAGER

QA/QC MANAGER

FACTORY MANAGER

QA/QC DEPT.


29

Quality Assurance is the management section of quality management. In short,

the QA is the one responsible in outlining how all method of works is defined,

outlined and executed. This is usually outlined in the Inspection Test Plan (ITP)

where a simple flowchart will show how the entire process flow is executed.

Penagasonic will ensure that QA exhibits clearly the process flow and procedures for the QC to execute. Having a procedure will ensure that the work

is executed in a standardized manner as Aristotle would put it that Quality is not

an act, it is a habit. To ensure the ability for Penagasonic to implement the

Quality Assurance and Quality Control the Quality Manager will have a direct

reporting line to the General Manager and only serves functional reporting to the

factory manager as opposed to previously where the Quality Manager reports

directly to the Factory Manager. With this, the Factory Manager cannot over-

rules quality decision made by the QA/QC department. Refer Figure 4-1 for

further explanation.

Quality Control is the execution of the quality assurance. This includes

monitoring of the process, identification and eliminating the problems and

certifies that the quality objectives are met. Penagasonic will have the QC

department to examine, test and commissioned every step of the assembly line

of the products from the beginning to the end. A third party QC will be

employed to ensure that the QC inspectors does not give leeway or accept non

conformance. The QC inspectors will be independent and report directly to the

QA/QC manager. This will be executed efficiently with the assistance of QA.

Peter Drucker rightly quotes that “There is nothing so useless as doing efficiently

that which should not be done at all”. All QC inspection will be based from the

Inspection Test Plan. An example for factory installation for an air-conditioning

system is as Figure 4-2 which is self explanatory. It dictates step by step of what

installation needs to be conducted and the inspection method which needs to

follow suit.


30

Figure 4-2 Example of an Inspection Test Plan flowchart for air-conditioning

Quality Audit is an independent evaluation and check on how the work

implementation is according to the procedure. If there is a variation, the auditors

will produce a report to explain the non conformance where the factory manager

needs to action. This will ensure that all the procedure and system in place is in

good order. Penagasonic will have an annual audit conducted by Lloyds or

Bureas Veritas (BV) and this will also ensure the ISO certification remains intact

which will be explained further in the ISO certification proposal.

Quality Plan is breaking down the quality objectives into small work break down structure (WBS). By breaking down the quality objectives, a more

spesific set of objective which is relevant to the particular spesific work will be

identified. This will make it easier for the employees to understand what needs to

be done. Penagasonic will have every aspect of its execution together with the

quality plan. For example, welding of the capasitor to the compressor will have a

Material receiving storage

FLOW CHART FOR AIR-CONDITIONING SYSTEM

Receiving inspection

Storage

Record

(1)Deliver for fabricationWelder

qualification

Record

Application of

insulation

Fabrication of ducting equipment

Fabrication of ducting

accessories

Deliver to factory for assembly

Ducting/equipment receiving

(1)Installationof support & penetration

Record

Installat ion of ducting/Dampers/

accessories

Ductingleak test

Record

Installat ion of Accu/AHU/

Fans/motors

Installation of electrical/Instrument equipment

Instrument calibration

Record

(2)

Installat ion of piping for aircond flow

(2)Piping

leak test

Record

Meggercheck on cabling

Record

Final inspection

Record

Punchlist ing

Record

Preservation

Application of

insulation

Material receiving storage

FLOW CHART FOR AIR-CONDITIONING SYSTEM

Receiving inspection

Storage

Record

(1)Deliver for fabricationWelder

qualification

Record

Application of

insulation

Fabrication of ducting equipment

Fabrication of ducting

accessories

Deliver to factory for assembly

Ducting/equipment receiving

(1)Installationof support & penetration

Record

Installat ion of ducting/Dampers/

accessories

Ductingleak test

Record

Installat ion of Accu/AHU/

Fans/motors

Installation of electrical/Instrument equipment

Instrument calibration

Record

(2)

Installat ion of piping for aircond flow

(2)Piping

leak test

Record

Meggercheck on cabling

Record

Final inspection

Record

Punchlist ing

Record

Preservation

Application of

insulation


31

target of 0.5% repair rate for each 1000 capasitors and for the glanding of the

cables will have its target of minimum 2 rolls for each 20 rolls of heating cable

and so on. This assists individual employees in knowing what to achieve for their

particular job execution. The quality plan will also be incorporated into the

employee’s job description.

With the six quality management techniques introduced by the consultant,

Penagasonic will surely improves on its quality easily and will minimize the

currently high cost of non conformance. The next step will be to introduce the

certification to support and become the foundation for the existing six quality

management techniques.

The International Organization for Standardization (ISO) is based in Geneva,

Switzerland. It is a consortium of more than 100 of the world’s industrial nations.

Looking at other competitors in the aircond industries, ie - LG, Panasonic, Haier,

Tatung, Daikin and other renowed aircond brands, Penagasonic needs to be

certified with ISO 9001 and ISO 14001 in order to remain competitives.

Furthermore the cost is insignificant compared to the cost of non conformance.

Customers will find it appealing to see the ISO stickers on the products and have

higher confident to purchase Penagasonic products.

ISO 9001 is an international measurement of the way where a company

addresses its customer’s quality requirements, applicable legal regalutory

requirements with a goal to satisfy the customer and continous improvement in

quality. ISO 14001 is an internationally accepted global framework for

ebstablishing applicable management system process and highlights the

important of prioritising and managing environmental risk as part of business

practices. The paperwork introduces with the ISO certification is not as tedious

and ridicolous as many seems to believe, but the magnitude is very much less.

However, it does not guarantee that the quality of the services and product but


32

will provide the platform to facilitate improvement of quality where appropriate

systems are in order and is in place.

By having the ISO certification, better planning, control and documentation

are achieved thus improving the quality of Penagasonic. Planning execution will involves work methods identification to ensure that the objective, goals,

authority, scope of works and responsibility is properly defined for execution. Control will be achieved through continous quality controls method as explained

before. Documentation is necessary to ensure that the quality management is properly documented and from time to time can be evaluated and contionous

improvement can be made. With ISO certification, Penagasonic will be at par

with its competitors in the air conditioning world and will have easier international

access. ISO certification is recognized throughout the world and this will make

Penagasonic to be more acceptable to the market. With the current market that

emphasizes environmental friendly product the certification will show how

committed Penagasonic is to the environment. Customers will also have more

confident as a proper system is in place in ensuring that all Penagasonic

products go through proper inspection and testing of the quality. Penagasonic

needs to continously improve on the lesson learned achieved from the

documentation in order to retain existing customers, regain lost ones and also

win new customers.

Now Penagasonic can easily turns the day to day scope of work in the factory

into a precise and procedurized method of works. All the day to day operations

in the factory from receiving of materials, inspection, tagging, assembling,

welding, circuit boards, workshops, packaging and distributing methods will be

documented into a procedure. The QA department will ensure that this is

executed smoothly and the QC department will assists in terms of inspection

and testing to ensure the products are in high quality. A good documented

Inspection Test Plan (ITP) for every production aspect will be dictated. A good

self explanatory as Figure 4-2 refers. Post services in terms of products warranty


33

will also be monitored by the QA/QC department to ensure that all products

which is under warranty will be attended to in fast response time and served the

highest quality of services.

This proposal will assist Penagasonic in improving the quality services and

products of its air conditioning units. This will also reduce to the minimum the

high cost of the non conformance. Norman Augustine in his Augustine’s 12th

Laws (1986), concluded that it costs a lot to build bad products. Ain Danish had

easily pursuaded the General Manager to accept the proposal and the quality of

Penagasonic increases towards the year and is easily accepted into the

neighbouring markets in the Asia Pacific and is now also able to compete with its

European competitors.


34

REFERENCE

1. Harold Kerzner (2006) Project Management: A Systems Approach to

Planning, Scheduling, and Controlling, John Wiley & Sons Inc. 2. Boone, Louis E. & Kurtz, David L., (2006) Contemporary Business,

Thomson South-Western. 3. Joseph R Jablonski (1990) Implementing Total Quality Management:

Competing in the 1990s, Technical Management Consortium 4. Philip B Crosby (1984) Quality Without Tears, McGraw-Hill Book

Company 5. Seifert, D. (2004) Collaborative Planning, Forecasting and

Replenishment – Bonn. 6. Page, G. William (1989), Using Project Management Software in

Planning, Journal of the American Planning Association, 55:4 7. Perera, A. A. D. A. J. And Imriyas, K. (2004), An Integrated

Construction Project Cost Information System using MS Access and MS Project, Construction Management and Economics, 22:2

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