Petron Case study

Petron was incorporated as Petron Civil Engineering Private Limited in 1980. It engages itself as a
constructor industrial civil works as well as infrastructure. Its clients are mainly Refineries, Fertilizers,
Cement, Power plants, Petrochemicals, Steel Plants, Water Systems, Roads and Bridges and RCC frame
structures. The company is going strong on with a number of projects in pieline. At present the turnover
of the company is around 68 million dollars (US dollar) and has already bagged projects worth of 350
million US dollar in the order book.

The Mission and the Vision of the company are

To remain in the forefront of Industrial construction management through a continuous

deployment of knowledge backed civil engineering skills and human resources in the form of
other functional expertise and new talent breeding techniques. 

Superior Quality focus, state-of-art Technology, Safety and Leadership will be the pillars of
growth and profitability. 

There will be a steady effort towards setting benchmarks in construction project management
and contribute significantly to the ever growing need of infrastructure creation that touches
human life.

Our customers will be our partners in this endeavour and every achievement of goal towards
inorganic as well as organic growth will exhibit the operational and cost efficiencies aimed to
benefit our partners and the environment at large.

To be a result oriented organization with special focus and emphasis on:

 Health and Safety of All Our Employees

 Transparency
 Communication
 Speed
 Team Work
 Training and Skill Up gradation
 Acquisition of New Technology
 Equal Opportunity to All
 Deliver Quality Product & Services to All Our Clients.
 Ensure Success of Our Partners and Subcontractors.

The growth of the company over the years has been shown in the graph below

(C) Sanjay Mohapatra, Xavier Institute of Management, Bhubaneswar

However, of late it has run into different problems during execution of the projects. In one of the
projects, where it started civil construction for cement plant, the scope of the project included
constructing conveyor belt from mines to cement plant. The total length of the conveyor belts to be
built was 20 to 30 KMs and it was supposed to be over in a period of three years. The project ran into
problem as that a portion of space over which the conveyor belt was to be built belonged to public. The
environmentalists as well as opposition parties used this as an opportunity to stage dharna against
government. The result was that the work was stalled, effort required to complete the project was
higher. The project thus ran into cost and time overrun and it affected morale of site engineers. In
addition to that the equipment used for the construction were old and no preventive maintenance was
done. This resulted in lower efficiency of the equipment and cost of operation was higher. Since these
equipment were hired, during the agitation period, they were lying idle which added to the cost of the
operations.

In similar projects elsewhere, the problems faced during execution were different. Sometimes
specifications and drawings were not available on time. This delayed the execution and the company
had ti pay the penalty for that. Standards available for construction were not followed by the customers.
As a result, the approved drawings contained non-standard specifications. This not only delayed the
construction, also increased the cost of operations. The site-in-charge discussed these issues with the
customer and negotiated such that standard materials could be used. However, because of paucity of
time, he went ahead with the construction with verbal agreement form the customer. During the final
hand over, this was pointed out by customer representative (who has been newly appointed) and
demanded penalty to be paid by Petron.

Some sites experienced shortage of labour as well as non-availability of standard construction and
fabricating equipment. These equipment had to be procured from other place and moved over to the
site adding cost to the entire operation. The workers were not trained on the safety measures and many
a times accidents occurred because of lack of safety precautions.

There were working capital problems as the bills presented to the customers were not followed up
properly. There was a huge pile up of receivables and that led to shortage of fund for execution of
projects.

What kind of Information System will design for these situations?

(C) Sanjay Mohapatra, Xavier Institute of Management, Bhubaneswar