Indian Institute of Management Rohtak

Operations Management 1
Term End Assignment

By- Group 1
Anu Bharti PGP12074
Chanchal Priya PGP12099
D.N. Chandhini PGP12070
Deeksha Gabra PGP12108
Kajal Meena PGP12096
Parth Gupta PGP12118
Riya Nagpal PGP12089
DRC PACK Construction Ltd: A case on constructing
Critical Pathway
DRC PACK Construction Ltd, a start-up company, formed in 2017 recently got one of their biggest
construction contracts from KCD Groups Ltd. KCD Groups Ltd. wanted to construct a building in Noida
for their new branch office.

DRC PACK Construction

DRC PACK Construction is a start-up construction company formed in 2017. They were growing
significantly since 2017 and wanted to be a leader in the construction space. They were getting
recognized in the industry and among clients for their ability to deliver what was promised, that is, they
completed the projects with the target time and cost and aimed at maximum client satisfaction. They had
done various small and medium-sized construction projects by now and wanted to venture into more
complex projects.

KCD Groups Ltd. collaborated with DRC for the construction of their new branch office and by this DRC
got the awaited opportunity to venture into complex projects. The scale of this project was higher than
any of the projects taken up by DRC earlier. Hence, this project was significantly important for them.

With the help of prior experience, Ravi, the Operations Manager of DRC jotted down the activities
involved, along with their costs, and their chronological order. Since the project was very complex and
involved a lot of activities, he was perplexed regarding how to go about the project. He prepared a
blueprint of the project but to his surprise, the estimated time and cost were beyond the target time and
cost. Ravi was concerned and decided to talk to Daulat Ram, founder of DRC, about the same.

Daulat Ram was enthusiastic about the new project but after having this conversation with Ravi he got
anxious and started thinking of the possible solution. He knew the criticality of the project and didn’t
want any hiccups in the project. So, he got in touch with his friend Ashfaq Abdulla who was a specialist
in Operations Management and had completed his post-graduation management program from MII
Ramgarh, a premium institute for management and now working there as Operations management
professor.

Daulat Ram narrated the situation to Ashfaq and asked for his assistance with the problem. He also
mailed all the available data to Ashfaq (Exhibit 1 to 3), so that he could analyze the same. He sent him
data regarding the activities involved in construction along with their pathway, costs and time required for
each activity both in normal situations and even in crash course situations. The cost constraint for Daulat
Ram was of Rs 580 Lakh and he estimated the project duration as 50 days, he wanted Ashfaq to find the
critical pathway and minimize the project duration under normal situations. He also wanted to find out the
potential of the project without a cost constraint.
After hearing the problem and examining the data provided, Ashfaq thought of devising a critical path
that would carve out the critical activities among all activities. These activities were critical in order to
complete the project in time.

Ashfaq had to quickly assess the problem at hand, guide Daulat Ram as to, how to go about the project,
and provide a viable solution, keeping in mind the principal objective of DRC that is the maximum client
satisfaction by completing the project in target time and cost.

Industry Analysis

The construction industry in India is full of untapped opportunities which consist of the Real estate as
well as the Urban development segment. The Real estate segment covers residential, office, retail, hotels
and leisure parks, among others. The Urban development segment broadly consists of sub-segments such
as Water supply, Sanitation, Urban transport, Schools, and Healthcare. Only 24% of the National
Highway network in India is four-lane, therefore presents immense scope for improvement. The Regional
Connectivity Scheme (RCS) allows the development of airports.

The Construction Industry is expected to reach $1.4 Tn by 2025. It received the 2nd highest FDI in the
period 2000-2017. The Construction Industry works across 250 sub-sectors with linkages across sectors.
Broadly, it can be divided into real estate and infrastructure construction. The Real Estate Industry in
India is expected to reach $1 Tn by 2030 and contributes to 13% of GDP. Under NIP, India has an
investment budget of $1.4 Tn on infrastructure - 24% on renewable energy, 19% on roads & highways,
16% on urban infrastructure, and 13% on railways. Huge investments in infrastructure (e.g. Reliance
Digital Fibre Infrastructure Trust Investment of US$ 1billion) have provided momentum to overall
PE/VC investments in India.

The outlook of the construction sector in India in the future points towards a robust demand as India is
expected to become the world’s largest construction market by 2022. India will require investment worth
Rs 50 trillion across infrastructure by 2022 for sustainable development in the country.

About MII Ramgarh

MII was a prestigious management institute in Ramgarh. MII 's principal aim was to develop policy
managers with a sense of excellence and a dedication to the value system. The overarching goal was to
produce and transfer knowledge through research, which included high-quality publications and
consistent support to industry in and around Ramgarh, hence having a specific relevance and social
obligation to the region as a whole. It provided both postgraduate and doctoral management studies.

Among the numerous specialties available, the institute had a strong faculty presence in Operations
Management and Retail Analytics. As a result, several small- to medium-sized businesses approached the
institution for assistance with operational challenges ranging from business process re-engineering,
process optimization, truck routing issues, enhancing market share, and so on.

The institute has built a reputation for producing efficient managers over the years, and it intends to carry
on this legacy by recruiting and attracting innovative and competent faculty members, thereby creating an
active environment and encouraging increased participation from all corners of the institute.

The questions which Ashfaq needed to find solution to were-

1. What is the network diagram of the project?
2. What was the expected time and variance of each activity
 3. What was the slack time of each activity and what was the critical path?
4. What is the probability of completing the project in 47 days?
5. With the cost constraint of Rs. 580L what will be the minimum duration of the project?
6. If there was no cost constraint, what would be the minimum duration of the project?

Exhibit 1- Description of activities involved for the construction process

Activity Code Activity Description Normal Cost Predecessor

(Rs. ‘00)

A Clearing of Site 1800 -

B Foundation 1200 A

C Layering Block 5200 B

D Roofing 4100 C

E Plumbing 5000 C

F Electrical work 5200 E

G Plastering 6300 D

H Windows and Doors 3500 E,G

Fixation

I Ceiling 4000 C

J Flooring 4200 F,I

K Internal Fixations 4700 J

L External Fixations 3300 J

M Painting 4100 H

N Landscaping 3600 K,L

Exhibit 2 - Optimistic estimate, most likely estimate and pessimistic estimates

 Activity Code Optimistic Estimate Most Likely Estimate Pessimistic Estimate

A 1 2 3

B 2 3.5 8

C 6 9 18

D 4 5.5 10

E 1 4.5 5

F 4 4 10

G 5 6.5 11

H 5 8 17

I 3 7.5 9

J 3 9 9

K 4 4 4

L 1 5.5 7

M 1 2 3

N 5 5.5 9

Exhibit 3- Cost and time for each activity in case of crash course
 Activity Code Crash Time Normal Time Crash Cost

A 1 2 2400

B 2 4 2100

C 7 10 7000

D 4 6 5000

E 3 4 5500

F 3 5 6900

G 4 7 8200

H 6 9 5300

I 5 7 4900

J 6 8 5300

K 3 4 5000

L 3 5 4700

M 1 2 4700

N 3 6 4900

Learning objectives:
 1. To use techniques such as PERT and CPM for planning and scheduling large scale projects.PERT
and CPM are techniques of project management useful in the basic managerial functions of
planning, scheduling and control. PERT stands for “Programme Evaluation & Review
Technique” and CPM are the abbreviation for “Critical Path Method”. These days the projects
undertaken by business houses are very large and take a number of years before commercial
production can start.
2. Constructing Project network diagram.The network diagram allows you to visually construct and
link the tasks the way they should be worked.
3. Computing algorithms for forward and backward pass. This helps in finding : Expected project
duration, Slack time and The critical path.
4. Schematic of a work breakdown structure which helps in establishment of a logical framework
for identifying the required activities for the project.
5. Time cost trade offs: crashing.The goal in evaluating time–cost trade-offs is to identify activities
that will reduce the sum of the project costs.

References

https://www.ibef.org/industry/infrastructure-presentation
http://angelpropertiesghana.com/about/
https://www.statista.com/statistics/878482/india-growth-rate-of-construction-industry/
Book: OPERATIONS MANAGEMENT WILLIAM STEVENSON, 14TH ED.