There is need to maintain storage facilities up to the required standards, while the normal operations of the project continue. Project management plays a critical role in managing project’s deliverables with the aim of producing the desired output. Innovation relies on project management (Walker, 2015, p. 30). The project management office (PMO) determines which projects to undertake, the scope, and goals of each project along with the terms and conditions of contracts with contractors for works completion. Managerial operations must offer revenue streams and continuity of supply so as to fuel outlets. Multinational oil companies operate with numerous facilities such as tank firms in the market to supply the domestic market with automobile fuels (Fewings, 2013, p. 6). The reduction of environmental fines and visibility optimization enables the company to offer substantial services to the market.
The multinational oil company is located around Western Australia (WA). The oil company’s unleaded petrol (ULP) storage capacity is on the verge to collapse. The main reasons behind the ULP’s storage capacity bordering on collapse are its old age of 50 years, poor condition of the tanks, and the associated infrastructure. The outdated design of the old complex tank makes the company incurred $20,000 every month charged as environmental pollution fines by the government. Prior appointments for project manager positions has been coupled with personal issues. Appointment as a third project manager creates a challenge since the relationship with the HSE manager has already been damaged due to consistent disagreement with the in-house HSE manager. The following study provides a report to the client’s program manager in the project management office (PMO) in Melbourne. The report shows the role of a project manager in the planning and management of a project to bring the Western Australian facility up to the required standard, while normal operations continue.
The Western Australia oil company is faced by various managerial issues which have contributed to the current undesired conditioning of its projects. The design of the complex tanks and its associated infrastructure is outdated. The use of outdated ULP storage capacity has been costly to the company through the imposition of environmental fines by the Australian government due to petroleum products leakages into the surrounding soil. Implementation of project plans requires cooperation, excellent communication, and innovativeness from the project team (Conforto and Amaral, 2010, p. 80). Poor management structures, work styles and cultures, and group attributes hinder project success. The conditions surrounding the case study project are as discussed below:
From the case study, there have been personal issues that affect project managerial roles appointment in the multinational oil companies, and this has contributed to the selection of three project managers by the firm. Currently, the newly appointed project manager is the third, and this is caused by personal issues. The existence of personal matters in project manager appointment within the company shows a lack of ethics and professional standards by the business (David, 2011, p. 50). Personal issues bring in corruption, unfairness, and unethical operations while recruiting project managers. As a result, the company hires unskilled and unqualified project managers who cannot invent or invest in new plant facilities technology.
Also, the fact that a new project manager has been appointed, there is still a bad relationship between him and the health, safety, and environment (HSE) manager. The poor relationship exists from a disagreement that the newly appointed project manager held with the HSE manager while working for the company. The HSE’s inability to communicate well with the project manager leads to environmental pollution since no one is ready to follow the instructions of the other (Fewings, 2013, p. 5). The administration of the old company needs to spell out the right authority levels to alienate the problems caused by order of command conflicts. By this doing, the project manager would relate well with the HSE manager and hence control environmental pollution, as a result, avoid environmental pollution fines.
The multinational oil company has a poor governance structure. There are conflicts of goals and functions existing between the project manager, HSE manager, and the terminal manager. In the last four months, the terminal manager works at both the director of operations as well as the logistics role. This shows how the company’s management structure is weak. The company needs to provide revenue streams to the terminal manager to ensure supply continuity to fuel outlets as well as recruiting a logistics manager (Finnerty, 2013, p. 30). The lack of precise goals definition has lead to confidence for fuels deliveries in the aged tanks with the planned completion of works.
The company’s poor style and work culture have contributed to the currently 30 percent UPL storage capacity border on collapse. The company’s inability to replace the complex tank over the last 50 years shows its lack of innovativeness culture and failure to adjust to technology. With sound management styles and culture, the administration is highly concerned with the machine and facility efficiency (Hwang and Ng, 2013, p. 280). There have been poor approaches to environmental protection and conservation by the company. The HSE manager’s inability to advise the project manager to acquire new efficient complex tanks has an ultimate effect to incuring $20,000 environmental fees. The management of the company should invest in new technology and replace the outdated, complex tanks to avoid environmental pollution and imposition of fines.
A project team needs to show teamwork, respect and communicate effectively with one another. However, this is not the case as per the company. There are poor interpersonal relations between the three key managers of the enterprise. The Health, Safety, and Environment (HSE) manager’s tenure in the company has been full of disrespect between him and the newly appointed project manager. Lack of communication between the two is directly attributable to the present state of collapse of the complex ULP storage tank (Larson and Gray, 2011, p. 44). The fact that the newly appointed manager is the third one, this shows the other two project managers have resigned probably due to lack of cooperation between the project team. Consistent disagreement between the key managers makes the management dull, and fail to invest in new efficient storage machines.
Grounded in the project implementation plan issues, the administration of the multinational oil company needs to document how these project management issues will get managed. The below is the blueprint build up on the implementation plan managerial issues in the business.
The management needs to spell out a clear outline of the project’s schedule in aspects of the number of years a storage facility should get replaced, the range of durations under which the managers meet, and the anticipation of the project’s outcomes. Maintenance of the storage tank for 50 years has subjected the WA ULP’s storage capacity to the verge of collapse (Eadie, et al., 2013, p. 147). Poor management and lack of communication have led to poor tank replacement decisions, resulting in reduced storage capacity efficiency and increasing management costs. The storage tank will be replaced after every one year with a new one to enhance efficiency.
The existence of disagreements between the company’s managers shows the management’s inability to delineate intermediate goals. This report suggests that the executive committee should meet twice a week to review the anticipated project’s outcomes. The replacement of the three tanks should be done at different times to help the management assess the new tank’s efficiency, determine its maintenance costs, and the housing of the equipment (Richardson and Johnson, 2015, p. 20). The acquisition and maintenance of the storage tanks should be undertaken by highly skilled technical and financial staff who can access the technical feasibility and economic viability of the new tank as compared to the old one.
From the case, the company has been incurring unnecessary costs due to poor management. For example, the current monthly environmental penalty of $20,000 due to detected petroleum products leakage to the surrounding soil. Further, operating using an outdated design of the company’s largest storage ULP tank makes the company uncured excess maintenance costs. The project manager, in collaboration with the terminal and the HSE manager, should replace the storage tank with a new design tank whose infrastructure is designed using modern technologies (Shen et al., 2015, p. 230). As a result, the company will avoid an environmental penalty of $20,000 charged by the government since the new ULP storage tanks efficiency will operate at 100 percent efficiency.
In the next six months, the project cost should be minimized through investment into efficient storage tanks. The management needs to eliminate the extended periods involved in logistics department when it comes to the continuity supply of oil to the company’s fuel outlets. The fuel deliverables for the three tanks will be undertaken in respect to the reschedules for the planned work completion (Turner, 2016, p. 90). Also, since the terminal manager has been multitasking in the last four months, he faces logistical challenges of the WA site. The management needs to design funding sources and come up with appropriate policies of ensuring that sources of financing assess the laid master plan.
To achieve the objectives of WA site, financial and human resources are required for the project success. Currently, the technical and economic feasibility of the three tanks, especially the largest one whose age is 50 years, are under question. The cost of maintaining the ULP storage capacities in WA has been high than the expected benefits the firm reaps from the business. Annually, the WA site and the oil company incur approximately $120,000 as environmental fines something which is highly costly for the company. The fact that the newly appointed project manager is the third one shows that the company has been incurring high retrenchment costs and recruitment expenses to cater for this (Nasir, Nawi, and Radzuan, 2016, p. 105).
In future, the management needs to undertake financial feasibility tests and always fight against personal issues when recruiting and managing the firm’s operations. The company should hire permanent staff whose skills and qualifications meet the requirements and match the job profile (Memon, Rahman, Abdullah, and Azis, 2014, p. 30). The acquisition of new storage tanks should be financed by the disposal of the existing outdated storage facilities. The sale of old and inefficient tanks reduces environmental pollution by leakage of petroleum products and hence avoidance of environmental fines.
The current three storage tanks need to get disposed or sold. The acquisition of new storage tanks requires planning quality, quality assurance, and quality control. The finance department of the company needs to highly inspect the financial feasibility of the tanks before their acquisition to ensure that their desirable benefit is greater than the project cost (Nasir, Nawi, and Radzuan, 2016, p. 100). The cost of quality for the new tanks will include the funds utilized in the project course to eliminate failures as well as money consumed during and after the project in the event of its failure. This would involve the cost of conformity and nonconformance as shown below:
|
Conformance costs |
Conformance costs |
|
Include prevention costs such as: i. Training ii. Documentation processes iii. Equipment efficiency |
Internal failure expenditures: i. Scrap ii. Reworks by the technical team |
|
Appraisal costs: i. Testing efficiency of the new storage tanks ii. Inspection iii. Destructive testing losses |
External failure expenses: i. Loss of business to competitors ii. Environmental costs by government iii. Warranty works |
The costs of preventing the project’s mistakes are less compared to the errors correction costs. The management needs to undertake the continuous improvement of the WA site safety. There is need to perform quality assurance to verify project processes and ascertain that the project time and cost deliverables get adhered to.
The required works for the WA site to improve storage capacity efficiency are shown below in the table:
|
Tank/ Required works at WA site |
Tank 1 |
Tank 2 |
Tank 3 |
|
Capacity |
1 million liters ULP |
3 million liters unleaded petrol |
7 million liters unleaded petrol |
|
Steel patches |
4 Steel Patches averaging 2m2 in size. |
7 Steel Patches averaging 3m2 in size. |
6 Steel Patches averaging 1.5m2 in size. |
|
Stee anchors |
4 Steel anchors required on top of tank for working at heights |
4 Steel anchors required on top of tank for working at heights |
6 Steel Patches averaging 1.5m2 in size. |
This part identifies the methods, tools, and techniques the management will use to determine whether the case study project goals have been achieved. These methods, tools, and techniques include:
After the replacement of the old outdated storage tanks, the financial management needs to evaluate the economic feasibility for the decision. The benefits of the new tank should be more than the costs associated with its acquisition, installation, and storage by the WA site. The application of CBA project evaluation technique helps the company determine whether the benefits and costs of the project to both the business and the community are worthwhile.
Economic accounting at the company should get based on the impetus that improvements need to be made on the current state of affairs by the firm since the total benefit is less than the total costs. The use of CBA will assist the engineers of the company to obtain financial advice from the financial management on the most feasible project to undertake. This is because all projects cannot get commenced at one time due to limited resources.
This is a discounted cash flow method of project evaluation whose aim is equating the net present value of the project with zero. Before deciding on what storage tank to purchase so as to replace the outdated tanks, the management needs to calculate the IRR of the each tank based on its cash flows so as to undertake the most viable project. The opportunity costs, acquisition costs, and capital outlays for each alternative are put into consideration, the project with the highest IRR is commenced. The engineers of the oil company and the ones located at the WA site have a broader knowledge on the technical feasibility of undertaking each project, but they lack financial knowledge, and they should consult the financial analysts.
Although this method may not be correct, it helps the management avoid unnecessary costs. This is because the reinvestment costs and investment base are not the same with the company’s opportunity costs. While some project has no IRR, others may have more than 100 percent IRR while they have a negative NPV.
PERT is a planning and control tool used by the management in the definition and control of the tasks undertaken for project completion. The use of PERT and critical path method (CPM) charts will be useful to the management of the company in the evaluation of projects success and tasks completion. The specific activities of this project are the replacement of old tanks and the estimation of the required resources to complete the project.
The PERT project evaluation method goes hand in hand with Gantt charts. The management can evaluate the number and amount of resources that the entire new project will consume when undertaken. The graphical presentation of some months, employees, and amount of funds needed to complete a project stage helps the management plan effectively to avoid risks. Also, the control determines the right options of undertaking the project with minimum resources.
Investment in the new project requires present worth analysis of the project. Given that the company has various sources of reliable investments, the engineers are indifferent between the cash flows of the company in the current situation (Mir and Pinnington, 2014, p. 217). The indifference arises since the finance team has the financial feasibility of the project and are sure of the methods possible to convert the project’s goals with little or no expense.
The financial feasibility of the identified storage tank options from the suppliers by the logistics team, when discounted to the present value of the project, will assist the management in determining the most viable storage tank to buy. The option with the highest present value will be selected by the WA site’s engineers as advice from the financial feasibility report.
This part of the project report presents the required steps of closing off the case study project and the post-project activities the management of the oil company should place under each stage. The steps to be followed are shown in the template below:
|
Step |
Estimated completion time |
|
Decide to finish |
3 days |
|
Make a plan |
2 weeks |
|
1 week |
|
|
10 days |
|
|
Don’t jus finish, complete |
3 months |
The above steps are as explained below:
1). Deciding to finish the project
The first step to completing this project is to the project manager deciding to finish and ensure that the project will linger no longer. The most critical activity here is designing a project deliverable with the right time to complete the project (Kerzner, 2013, p. 88). This would help the three managers namely project manager, HSE manager, and the terminal manager collaborates to complete the project within the set timeframe.
2). Make a plan
Completion of project goal, i.e.,) replacement of the three old storage tanks requires the right plan measures. The financial analysists and the engineers of WA site have to break down their activities into doable and daily action steps into a back to back completion plan (Burke, 2013, p. 22). The ability of understanding the project plan and sticking to the plan helps in getting things completed in the desired timeframe.
3). Start acting
After making the investment, reinvestment, and replacement plan, the project manager needs to take actional steps that can attack and complete the project as planned. The right thing after deciding what investment proposal to commence is starting it immediately. This will help the concerned stakeholders tackle any upcoming risks at the right time and enhance project success and feasibility both technically and financially (Budayan, Dikmen, and Birgonul, 2015, p. 100).
4). Design project deadlines
The project completion plan is guided by time limits, lack of deadlines prolongs project duration hence delays. The project manager should commit the company’s efforts to the set deadlines and avoid unnecessary excuses (Bryde, 2003, p. 780). It is recommended that the project managers work overtime to push for project completion in the set dates. The managerial decision to finish in time, keeps the oil company moving forward and getting socially responsible.
5). Don’t jus finish, complete
Project managers should always finish all the projects they started. The collapse of storage capacity tank of the company is coupled with existence of personal issues within the management, and this leads to sacking or resigning of project managers before they complete their commenced investment projects (Alzahrani and Emsley, 2013, p. 320). The company should ensure that when a project manager starts a project, it must get to completion stage so as to measure its efficiency and success or failure.
Alzahrani, J.I., and Emsley, M.W., 2013. The impact of contractors’ attributes on construction project success: A post construction evaluation. International Journal of Project Management, 31(2), pp.313-322.
Bryde, D.J., 2003. Project management concepts, methods and application. International Journal of Operations & Production Management, 23(7), pp.775-793.
Budayan, C., Dikmen, I. and Birgonul, M.T., 2015. Alignment of project management with business strategy in construction: Evidence from the Turkish contractors. Journal of Civil Engineering and Management, 21(1), pp.94-106.
Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.
Conforto, E.C., and Amaral, D.C., 2010. Evaluating an agile method for planning and controlling innovative projects. Project Management Journal, 41(2), pp.73-80.
David, F.R., 2011. Strategic Management: Concepts and cases. Pearson/Prentice Hall.
Eadie, R., Browne, M., Odeyinka, H., McKeown, C., and McNiff, S., 2013. BIM implementation throughout the UK construction project lifecycle: An analysis. Automation in Construction, 36, pp.145-151.
Fewings, P., 2013. Construction project management: an integrated approach. Routledge.
Finnerty, J.D., 2013. Project financing: Asset-based financial engineering. John Wiley & Sons.
Hwang, B.G. and Ng, W.J., 2013. Project management knowledge and skills for green construction: Overcoming challenges. International Journal of Project Management, 31(2), pp.272-284.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Larson, E.W., and Gray, C.F., 2011. Project Management: The managerial process.
Memon, A.H., Rahman, I.A., Abdullah, M.R. and Aziz, A.A.A., 2014. Factors affecting construction cost performance in project management projects: Case of MARA large projects. International Journal of Civil Engineering and Built Environment, 1(1), pp.30-35.
Mir, F.A. and Pennington, A.H., 2014. Exploring the value of project management: linking project management performance and project success. International Journal of Project Management, 32(2), pp.202-217.
Nasir, N., Nawi, M.N.M. and Radzuan, K., 2016, August. The relationship between time management in construction industry and project management performance. In F.A.A. Nifa, M.N.M. Nawi and A. Hussain eds., AIP Conference Proceedings (Vol. 1761, No. 1, p. 020079). AIP Publishing.
Richardson, J.W. and Johnson, M.D., 2015. Financial feasibility analysis of NAABB developed technologies. Algal Research, 10, pp.16-24.
Shen, Y., Tuuli, M.M., Xia, B., Koh, T.Y. and Rowlinson, S., 2015. Toward a model for forming psychological safety climate in construction project management. International Journal of Project Management, 33(1), pp.223-235.
Turner, R., 2016. Gower handbook of project management. Routledge.
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