We are about to commence a 500,000 Man hour fast – track Engineering project which will run for 6 months. In line with the Nigerian local content law, the client has insisted that 250,000 Man hour be executed in Nigeria and by Nigerians. 250,000 Man hours will be executed by our technical partners in the UK.
We carried out an analysis to determine the number of Nigerian personnel required assuming all personnel are to work only straight time from Monday to Friday with no overtime.
1 Engineer will work for a maximum of 960 Man hours in 6 months. Therefore, it will take about 261 personnel to execute the project in 6 months on full time basis. With a staff strength of 150 engineers, we decided it was not a good decision to engage all of them on the project as that is not the only project at hand. It was therefore concluded that we would be placing 100 engineers on the project while we source for 161 engineers to complete the number.
We were asked to work out modalities for sourcing the 161 engineers and make recommendations to management. We came up with 3 options:
1. Recruit 161 engineers on a 6 month contract basis.
2. Recruit 161 engineers on full time basis.
3. Second 161 engineers from other engineering companies
Analyzing the options
1. Recruit 161 engineers on a 6 month contract basis – From experience, hiring personnel on short term contract basis is more expensive for the company. Also, it is not very easy getting 161 engineers in this competitive industry that will be willing to be on contract for only 6 months not knowing whether or not the contract will be extended afterwards. My company isn’t sure as well if the contract duration will be extended and so cannot make any commitment to contract staff of a possibility of extension or absorption after the project ends.
2. Recruit 161 engineers on full time basis - The Company may consider this option, hoping that at the end of this project, another project will commence. The chances of another project commencing are 50 – 50. Should another project not be won at the completion of this project, the company runs a risk of being over-staffed and the company may opt for downsizing. It will be unfair to pick personnel out of their “comfort zones” only to later downsize them.
3. Second 161 engineers from other engineering companies – the company may consider seconding personnel from other companies and pay their employers an agreed rate per hour. This may be more expensive for our company but it leaves us with no fears as to what to do with the extra 161 engineers after the project ends.
Conclusion and Recommendation
Based on the above analysis, it can be seen that the 1st option makes it difficult to source the required personnel as the contract duration is very short. The 2nd option will put the company under a lot of pressure if there are no other jobs immediately after the current project ends. The 3rd option releases the company from commitments and risks related to hiring on a short term contract and hiring on full time with fears of projects not coming instantly.
Therefore, we will recommend the 3rd option to management.
References:
Employee Recruiting Strategy - Your Secret Weapon (online) - http://www.employee-hiring-explained.com/employee-recruiting-strategy.html
Hmmmmm..... John.......
ReplyDeleteI see your problem statement (Step 1) and I see you have identified some feasible alternatives (Step 2) although I am not sure those are the only ones, as I didn't see any root cause analysis. What I don't see is Step 3 where you actually "ran the numbers" to back up your decision. If I were your boss, I don't want to see you GUESSING with the companies money. As a Certified Cost Engineer, I expect that you will be making sound business decisions based on the FACTS, not hunches or gut feel.
I also don't see any evidence of Step 4. What is the Criteria you are going to be using? Cost? Productivity? Value for Money? Cmon, John.....
I also am not really comfortable with how you calculated the 161 people. Are all engineers equally as productive? 960/6 months/4.3 weeks/month = 37 hours per week on average? GIMME A BREAK!!! No holidays in 6 months? Sick time? What is the EFFECTIVE productivity of an Engineer?
Sorry John, but while you have selected a VERY real problem for this weeks case study, your treatment of it is not up to the standards I am expecting my graduates to produce. Revise this as your W8.1 posting and if you have already gone to management with this proposal, I would RUN to them and ask for it back. To go with those numbers is to risk embarrassing yourself.....
And I also need to see you telling me how you are going to track and monitor these 161+ engineers to know if they are going to finish on time or not?
Lastly, I expect to see not less than three references, preferably from the Skills and Knowledge, Engineering Economy, GAO, TCMF or the AACE RP's....... You only listed 1 and it CLEARLY missed a lot of important considerations.
BR,
Dr. PDG, Jakarta
W3_Okiemute Odudu_INCREASED INVESTMENT IN OIL AND GAS IN THE NIGER DELTA RAISES EMPHASIS ON EFFECTIVE PROJECT DELIVERY
ReplyDeleteThe oil and gas industry is facing unprecedented increased investment in capital projects in recent years as a result of increasing energy demand worldwide. A lot of capital projects are being line up in the portfolios of national, international and private indigenous oil companies, resulting in huge capital spending on investments.
This has lead to increase in the number of very large projects with increasing project complexities especially in demanding environment s and new frontier areas, changing industry competition and changing political and regulatory requirement of host countries.
These increasing expenditure and attendant risks applicable to these projects have made effective project delivery a common topic of interest among top executives in both national and privately own companies. This is because most projects executed today do not meet good performance in terms of project delivery.
In Nigeria, only few indigenous companies have effective project management competency, and poor in terms of project delivery. Most companies operating in the Niger Delta, Nigeria vast oil and gas region, have serious challenges meeting their project performance. This is because effective project delivery has been a serious concern to both local and foreign companies operations in the area.
This is not as a result of a dearth of knowledge in project management and its application, but owing to certain prevailing constraints that are known but improperly captured in the execution strategy of most of these experience and even competent foreign firms.
This constraints makes project executed in the region less competitive and more expensive compared to elsewhere in the world, and as such, a comprehensive understanding of this constraints to effective project delivery and the right analysis and incorporation into the project execution strategy is what would guaranty successful project performance.
REFERENCE:
Capital Project Execution in the Oil and Gas Industry by Matthew G. Mckenna, Herve Wilczynski and David VanderShee