Ltd: Delivering Large Infrastructure Projects on Time
Larson & Toubro
|MR. ANANT BAJAJ|
Joint Managing Director, Bajaj Electricals LTD.
|MR. SANJAY BAGHAT|
VP Transformation Line Division Bajaj Electricals LTD.
September 8, 2015
Electricals Ltd. established in 1938, is a pioneer in electrical home
appliances, lighting and luminaires business with an annual turnover of Rs
3,500 Cr ($600 mn). Over the last 75 years, it has progressively diversified
into turnkey project contracts involving Power Distribution and Transmission
Line Towers (TLT) by establishing a new SBU for Engineering and Projects (EnP).
While the power distribution projects are working on rural electrification, the
TLT projects cater to connecting power transmission grids across India –
connecting power generating plants or sub-stations.
CHALLENGES AND ITS IMPACT
Most of the transmission tower
projects and power distribution projects in India are grossly delayed. This was
true for Bajaj Electricals Ltd. as well. The
industry ascribes the cause of these delays to the necessity of extensive
coordination and cooperation between various stakeholders like state owned
companies, individual landowners and contractors. This leads to stand-offs on
critical issues like ROW (right of way), design, land acquisition,
environmental approvals etc. and consequently to unpredictable time overruns.
Once projects are delayed, more working capital is needed, increasing the cost
of the project. Therefore Bajaj Electricals had to contend with cost over runs, erosion of profit
margin, and late delivery penalties for nearly every project.
objective of TOC implementation was to identify the wastages of time and
capacity under the control of the company and plug these wastages and help the company complete projects within
budget, and on time.
IMPLEMENTING THE TOC APPROACH
Core Conflict: The conflict for the company in
both TLT and Power Distribution projects was choosing whether it should
maximize billing (or tonnage) or meet immediate site requirements. Since focus
was on maximizing billing/tonnage, major items of high value was manufactured
or sourced and dumped on site while minor items required for completing the
projects were lost from the company’s focus. This mismatch of items meant that
while the company was able to book sales, the sites could not be closed without
considerable delay and cost overruns.
WIP control: The number of work fronts was
restricted. In the case of TLT projects "string-able lots” or cluster of small
stretches that need to be stringed in a sequence are identified. The focus was
to complete each stretch before the next is opened. In the case of power
distribution, one village was completed at a time.
Full kit: Before start of the project, it is
ensured that all clearances for the part of the project being undertaken are in
place. Further, the projects are now supplied complete assortments required in
the immediate future as opposed to supplying material to get tonnage. This
ensures uninterrupted work, faster project completion and thereby maximum
Norm management: Norm management was undertaken
for control over inventory at site -from LOA to billing. Norms were set and
items are made available at site based on priorities assigned in the Buffer
Penetration Report (BPR) which indicates the extent to which inventory has been
consumed. Billing is also as per full kit defined in BPR i.e. once all the
items needed to start work have reached the site.
Flow meeting: Flow meetings are held daily to
enable issue resolution and thereby faster financial and operational closure of
implementation the following results were achieved:
to complete & handover old projects, which were open for a very long time.
projects are all running either ahead of schedule or on schedule.
times for project completion reduced by as much as 50% compared to the original
lead times (before TOC implementation) and as compared to existing lead times
of most of the competition.
new industry benchmarks by completing most projects ahead of contractual dates.
company became the first in the industry to claim incentive (for early
completion) from the customer in power distribution projects.
increased dramatically (as much as 236% in power distribution projects)
all the new projects where the solution has been deployed the working capital
turns have improved to 2.1 from previous turns of less than 0.8.
management using BPR: For the first time a distribution solution has
been implemented along with CCPM in a project environment. Material was controlled by setting norms and putting the work
sites on continuous replenishment.
joined Larson and Toubro, an Engineering Conglomerate, as Graduate Trainee
Engineer. With L&T’s structured training programme for GETs, he got
exposure to various functions e.g. Tendering, Marketing, Engineering,
Procurement & Erection + Commissioning during his tenure of 13 years. He
got recognition as a member of "Top Talent Pool” from the L&T Management
has the experience of handling wide spectrum of projects including EHV
Transmission Lines & Sub-stations, Power Distribution Projects, Thermal
Power Plant & Cement Plant - up to 7500 Tons / Day capacity on turnkey
has international exposure in Middle East & New Zealand for Power
Generation & Transmission.
his career journey of last 21 years, he has held various positions including: President,
Bajaj Electricals – EnP BU; CEO,
ERA Group – Power EPC; CEO,
EPC – KEI; and CEO,
Projects – EMCO.
Details of Education:
- BE Electrical
Distinction – Bhopal University
- PG in Management
System – BITS PILANI
- PG in General
Management – IIM Bangalor3
- In 2008 he was
designated as youngest CEO of Power Infra group while working with EMCO.
- Implemented improvement programs e.g. six
sigma, TQM, Quality Management, ISO etc. Got recognition for an effective
implementation of six sigma in a Bangalore based firm.
- In 2009, he was recognized by Times Of India
with a "Young Achiever Award”