MBA G523 PROJECT MANAGEMENT

1 March 2013

DEMAND FORECAST

Income Elasticity of Demand

Bass Diffusion Model

FACETS OF PROJECT ANALYSIS

Market analysis Example question: what would be the market share of

the project under appraisal?

Some data required for answer Past consumption trends and present consumption

Production possibilities and constraints

Cost structure

Legal constraints

Key issues Potential market

Market share

TECHNICAL ANALYSIS

Key issues

Technical viability

Sensible choices

TECHNICAL ANALYSIS

Ensure technical feasibility

Facilitate optimal project formulation:

technology, size, location

MANUFACTURING PROCESS/TECHNOLOGY

Steel: Bessemer process or open hearth process

Does Dubal manufacture in UAE?

Is there any steel manufacturing in UAE to support construction industry?

Cement: wet or dry process – Ras Al Khaimah

Any other manufacturing process decisions in

Construction + Oil and Gas

?? + ???

CHOICE OF TECHNOLOGY

Only a certain technology can perhaps meet a

given plant capacity

Investment outlay and production cost over a

period of time

Product mix generated: saleable byproducts

Refineries (e.g., Takreer)

APPROPRIATENESS OF TECHNOLOGY

Whether the technology

utilizes local raw materials?

utilizes local manpower?

protects ecological balance?

What about UAE?

TECHNICAL ARRANGEMENTS

Obtaining technical knowhow needed for manufacturing process

Nature of support to be provided by collaborators during

Design, selection, procurement of equipment

Installation and erection of plant, O&M of plant

Training of project personnel

Process and performance guarantees (plant capacity, product quality)

Price of technology: one-time licensing fee, period royalty

MATERIAL INPUTS AND UTILITIES

Raw materials

Construction industry

Oil and Gas

Industrial materials and components (base metals, manufactured parts, sub-assemblies) – Dubal?

Auxiliary materials and factory supplies (e.g., paint, oils, greases, cleaning materials)

Welding industry

Utilities: power, water, steam, fuel

Key factors: quantities, sources, local availability, cost

PRODUCT MIX

EIGC product mix classifications: examples

Industrial Gases

Medical Gases

High Purity Gases

EIGC product mix specifics: Nitrogen, Oxygen,

Argon, Acetylene, etc.

PRODUCT MIX

Oil refinery

Slides 15 and 16 from 01_Introduction.pdf

PLANT CAPACITY

Some factors that have an impact

Manufacturing method

Power, raw material availability, foreign exchange

constraints

Inversely proportional to Investment Cost per Unit

LOCATION AND SITE

Proximity to raw materials and markets Limestone cement plant

Iron-ore steel plant

Imported material location near port

Perishable product close to center of consumption

Oil refineries = does not matter

UAE and most European countries are small – the above may not impact

Availability of infrastructure: power, transportation, water, communications – may not be a major issue although SHJ had problems before

Labor situation: availability, labor rates, strikes – not an

LOCATION AND SITE …

Climate conditions … temperature, humidity, …

Cost of living, children schooling

Site selection

MACHINERIES AND EQUIPMENTS

Constraints in selecting machineries and

equipments

Electric furnace – power requirement

CNC machines – technical skills required

Import policy

Procurement of Plant and Machinery

Single supplier (core machinery in Oil platform)

Multiple suppliers (e.g., telecom world)

STRUCTURES AND CIVIL WORKS

Name some aspects …

ENVIRONMENTAL ASPECTS

Name some industries that could damage the

environment

PROJECT CHARTS AND LAYOUTS

Material flow diagram

Plant layout diagram

Utility consumption layout

Communication layout: wireless sensor network

SCHEDULE OF PROJECT IMPLEMENTATION

relates to the plan of work concerning installation and initial operation

Work schedule aims at:

Anticipating problems likely to arise during the installation phase and suggest possible means for coping with them;

Establishing the phasing of investments taking into account the availability of finances; and

Developing a plan of operations covering the initial period.

ALTERNATIVE PATHS

Depending on the

nature of project: end-to-end manufacture to assembling parts

production process

quality of products: thermometer, clothes, footwear, mobile phones, coca cola

SOME KEY PROJECT LINKAGES

Selling price

Demand

Production costs

Profitability

Production costs

Selling price

Size

technology

profitability

CASE STUDY: MAXIMUM MEGAHERTZ PROJECT