Critical Analysis Of Project Initiation Management: The Bamínica Power Plant Project Case Study

Overview of The Bamínica Power Plant Project Case Study

As stated by Chen (2015), different kinds of projects had become an integral part of the contemporary business landscape and it is seen that the diverse corporations are increasingly taking up various projects for the enhancement of their profitability. Harris et al. (2018) are of the viewpoint that the framework of projects becomes more important in the particular context of the construction, energy and other sectors rather than the business corporations because of the magnitude or the scope of the projects that they usually deal with. More importantly, it had been seen that the corporations in order to ensure the success of the projects that they have undertaken or for that matter intend to complete need to take into account the different precepts of project management (Hoda and Murugesan 2016). Furthermore, the project initiation techniques or strategies that are being used by the corporations are an important determinant of the success of the entire project itself. Thus, it becomes important for the corporations to take the help of adequate project initiation techniques or for that matter the project initiation strategies which in turn would substantially contribute towards the success attained by the concerned project. The purpose of this essay is to undertake a critical analysis of the concept of project initiation management in the particular context of the case study “The Bamínica Power Plant Project: What Went Wrong and What Can Be Learned” written by Andrew Inkpen.

The case study under discussion here reveals the fact that PowerGen and Jones International (JI) formed a joint venture for the “Bamínica Project”. The concerned project was intended to produce the required amount of power or for that matter the energy which would help the nation of Bamínica, located in the Caribbean Island, to cope up its power crisis. PowerGen, established in the year 1987 had adequate amount of expertise in handling different kinds of energy-related projects and had global presence in the majority of the nation of the world. Furthermore, in the initial years of the 21^st century it was looking for different host nations wherein it could expand its business and the nation of Baminica with its exponential economic growth as well as the power crisis that it was facing at that particular point of time emerged as one of the preferred choices of the concerned corporation. However, at the same time it needs to be said that despite the project being a profitable one for both of the corporations involved in the process of joint venture, there were significant loopholes within the same which in turn adversely affected the success of the same. For instance, a critical analysis of the project under discussion here as revealed by the case study clearly indicates that the project was doomed to fail from the very starting because of the inherent faults or for that matter the strategic errors within the same. The most important loopholes or for that matter the strategic errors of the project under discussion here as indicated by the case study are discussed below-

Importance of Market Research and Feasibility Analysis in Project Initiation Management

Wibowo et al. (2019) are of the viewpoint that the different corporations before the initiation or for that matter the formulation of the blueprint on the basis of which the entire project would be conducted needs to undertake an effective market research or a feasibility analysis. Adding to this, Aarikka-Stenroos et al. (2018) have noted that undertaking a market research helps the corporations to identify the business ideas or for that matter the business concepts on the basis of which the corporations can formulate their business projects. Furthermore, as discussed by Binder (2016), the adequate usage of the framework of the feasibility analysis helps the corporations to not only assess the feasibility of the projects that they intend to undertake, the resources that would be needed for the completion of the same, the detailed timeline, the activities that needs to be undertaken and others. More importantly, the construct of feasibility analysis also informs the corporations about the likely risks that they might incur on the score of the project that they intend to undertake and thereby helps them to formulate adequate risk mitigation strategies to ensure the success of the same (Heagney 2016). However, in the particular context of the case study under discussion here it is seen that no effective market research or for that matter feasibility analysis was being conducted by PowerGen or JI. For instance, PowerGen drafted Don Williams, an engineer, to visit Braminica and thereby finalize the nature of the project and also the location at which the concerned project would be established. Furthermore, it was seen that rather than conducting a market research or for that matter a feasibility analysis of the project he merely strolled in the concerned nation in his car and came forward with the idea that the corporation would benefit through the establishment of “a diesel-powered plant of about 150 MW on the north coast”. Needless to say, this flawed the project under discussion here right from the very beginning and despite the initial success attained by the same it was doomed to failure.

Ziek and Anderson (2015) are of the viewpoint that the primary objective of the different corporations behind the usage of the strategy of joint venture is to facilitate the sharing of resources and also accountability which in turn helps in the effective completion of diverse projects. Adding to this, Økland, Johansen and Olsson (2018) have noted that the joint venture approach undertaken by the corporations enables them to effectively attain the objectives or the goals with which they have formed the joint venture. Furthermore, it had been seen that for the joint ventures to be successful the corporation which are involved in the same needs to belong to the same industry, have almost similar organizational structure and culture and others (Kerzner 2018). However, in the particular context of the case study under discussion here it is seen that the joint venture formed by PowerGen with JI is a compulsion rather than a choice. More importantly, it is seen that whereas PowerGen had extensive experience in handling different kinds of energy projects, JI is a one-man business corporation whose “only previous development was a 200 MW cogeneration facility running on natural gas in Texas”. Thus, it can be said that there is a substantial amount of difference between the experience of the corporations or for that matter the nature of projects that these two corporations have handled in the past. Furthermore, the formation of the venture was also influenced by the fact that JI was initially given the contract for the establishment of the power plant in the nation under discussion here and having failed to deliver the project within the stipulated time period Corporación Bamínica de Electricidad (CBE) was forced to enter into negotiation with PowerGen. In addition to these, it had been seen that in the subsequent years JI played lesser important role within the project and this becomes apparent from the fact that “Originally, each partner had a 50% ownership interest. In 2011, JI’s ownership was 15% and PowerGen’s share was 85%”. Therefore, it can be said that the formation of the joint venture between the two corporations under discussion here was not in the best interests of the concerned project.

Effectiveness of Joint Venture Approach in Project Initiation Management

The same faulty judgment also becomes perceptible from the manner in which the site that would be used for the project under discussion here was selected. For instance, the CBE originally recommended a site for the development of the project at Puerto Salinas which was disputed by the local government of the concerned nation since it would require the “tearing down an old bodega on the waterfront”. Furthermore, the same thing happened with the other sites which were being recommended by the CBE and thus it was seen that in order to meet the deadline with which the project under discussion here was undertaken the corporations randomly selected a site without conducting an effective analysis of the same. Kock and Georg Gemünden (2016) are of the viewpoint that the different corporations undertaking a particular project are required to ensure the fact that the constructions, equipment and other things used by them are in congruency with the stipulations of the national government of the nation of their nation and should be intended to help in the effective completion of the project. Adding to this, Hatsu and Ngassam (2015) have noted that enables the corporations to fulfill the objectives with which they started the project and ensure the safety as well as the wellbeing of their workers as well. However, the case study reveals the fact that the construction site of the concerned project was not constructed as per the requirements of the projects. For instance, there were no centrifuges in the energy generating equipment used by the project and also there were numerous faults in the entire construction site itself. These in turn adversely affected the output given by the concerned project which in turn substantially contributed towards the failure of the project under discussion here.

As discussed by Rowe (2015), the corporations are required to conduct test or for that matter trail runs of the different projects that they are undertaking so as to ensure the fact that the output of the same would be as per the desired expectations and also in synchronicity with the stipulations of the national government of their operation. Cullen and Parker (2015) are of the viewpoint that this is also being done by the corporations to ensure the fact that the projects established by them is an adequate working condition and also ready to offer the desired level of production. It is true that testing was done at the power plant established by PowerGen and JI however it was seen that the plant failed to meet the desired standards. More importantly, the results of the testing also revealed the fact that there were major faults in the plant and also the fact that it was not at all ready for a full-fledged production of energy. This in turn adversely affected the success of the project under discussion here and thereby contributed significantly towards its failure.

Site Selection and Construction Compliance Issues in Project Initiation Management

Abdul-Malak and Abdulhai (2017) are of the viewpoint that the corporations need to have adequate amount of financial resources so as to complete the projects that they have undertaken within the stipulated time period. Adding to this, Weninger and Huemann )2015) have noted that having adequate amount of financial resources ensures the fact that the corporations would be able to purchase the raw materials, procure the amount of human resources and others that would be needed for the adequate completion of the projects. In the particular context of the project under discussion here it was seen that the project was supposed to be “designed with 25% equity and 75% debt”. More importantly, the initial capital that was required for the establishment of the project was invested by PowerGen itself and no substantial amount of investment was being made by JI. In addition to these, it was seen that although the national government initially agreed to offer the required capital as loans and also the World Bank’s International Finance Corporation (IFC) agreed to enhance the funding of the concerned project by more than $75 million yet it was seen that no such things were being done by the same. This shortage of financial resources greatly limited the scope of the project under discussion here and thereby contributed to its failure.

According to Russell, Pferdehirt and Nelson (2018), the different corporations for the effective management of the operations of their plants are required to have a constant supply of different kinds of equipment, machineries and others that are needed for the effective working of the plant. Meredith et al. (2017) are of the viewpoint that the corporations for the effective attainment of this particular goal or objective are required to establish relationship with their suppliers as well as the lenders which are associated with them. However, the case study under discussion here clearly reveals the fact that the plant failed to develop effective relationship with the different lenders as well as the suppliers which were associated with the same for the regular supply of the diverse equipment, machineries and others resources that were needed for the production of energy or power by the concerned plant. Furthermore, it was seen that right from the inauguration of the plant under discussion here it started to show different faults related to the machineries or the equipments which were being used by it. More importantly, various settlement proposals were being formulated by PowerGen and JI however they failed to come to any sort of settlement with the suppliers or the lenders that were associated with the plant. Needless to say, this adversely affected the operations of the concerned plant and thereby substantially contributed towards the lack of success of the same.

Importance of Test Runs in Project Initiation Management

Nicholas and Steyn (2017) are of the viewpoint that the management approaches that are being used by the corporations for the effective management of their different projects also substantially affect the success attained by the same. Adding to this, Kock and Georg Gemünden (2016) have noted that the corporations need to have effective management professionals at the top of their organizational chart so as to ensure the fact that the different aspects of the project are being adequately managed or for that matter looked after. However, in the particular context of the project under discussion here it was seen that the individuals who were being hired for the management of the concerned plant were not capable of managing thee different affairs of the plant. For instance, the “first executive director” hired by the plant was highly inefficient and was not capable of establishing effective relations with the government or for that matter with the members of the local community as well. The subsequent management professionals of the concerned plant were also being characterized by the same inefficiency and also lack of management expertise.

To conclude, the construct of project management had become an integral part of the management process used by the different business corporations. The adequate usage of this particular construct of project management enables the corporations to effectively complete their different projects. However, at the same time it needs to be said that the corporations are required to take the help of project management techniques or for that matter project management strategies for the effective of projects. Furthermore, the usage of adequate project management strategies ensures the success of the projects that are being undertaken by the corporations. For instance, they are required to take into account the aspects of market research, feasibility analysis, risk assessment, financing, effective management practices and others to ensure the success of the different projects that they undertake. These aspects of the construct of project management become apparent from the above analysis of the same in the particular context of the case study “The Bamínica Power Plant Project: What Went Wrong and What Can Be Learned” written by Andrew Inkpen.

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