Proposed Business Proposal for COE

Unit- Building Services

 Introduction
At present, Electrical & Mechanical services are done by individual bases
by individual Technical staff.

Therefore that service is limited to a narrow scope of work. Most of

CESL ‘M & E’ services are outsourced, and are not at a satisfactory level.

Considering above weaknesses, CESL management decided to make a

COE unit dedicated to Electrical & Mechanical works.

All ‘M & E’ related works are to be handled by this unit, and thereby it
proposes to stop the sub-contracting of such services.

The units have divided into two main SOE – units as SOE- Mechanical
Services & SOE- Electrical Services.
SCOPE OF SERVICES
There are mainly two categories of services in unit:

• Mechanical Services
• Electrical Services
 Mechanical Services – Sub Categories

• Central Air – Conditioning Systems

• Split/Unitary Air – Conditioning Systems
• Fire Protection System
• Lift Installations
• Medical Gas Systems
• LP gas systems
• Installation of Kitchen Equipment’s
• BMS system
 Staff Allocation
Attached From CECB
1.Mechanical Engineers – 01 Nos.

CESL – Permanent Basis & Contract Basis

1. Mechanical Engineers - 01 Nos.

2. TA – Mechanical - 02 Nos.
3. Draftsmen - 01 Nos.
4. Trainees - 01 Nos.
 Mechanical – Main Systems
• Central Air Conditioning Systems
• Split / Unitary Air Conditioning Systems
• Fire Protection & Detection Systems
• Lift Installation Systems
• Medical Gas Systems
• LP Gas Systems
• Supply & Installation of Kitchen Equipment
 MEP Works From SOE- MS Unit

Mechanical Works

• Design Works for Mechanical Services

• All the Procurement Works for Mechanical Works
• All the Contract Administration Works related to
Mechanical Installation Works
• Supervision & Testing & Commissioning Works
• Direct Construction works of Fire Protection &
A/C System initially & Expanded to other systems.
 Proposed Costing for E&M Works
1. Direct Construction Works
For New Projects
 MS unit Value is 90% (Ninety Percent) from certified and
approved contract sum. Initially Mobilization Advance – 20%
can be request. As per the equipment upto 80% Purchase
Advance request.

 Interim Payments according to the work done

 Civil maincontractor shall provide Stores facility,

Security,Water, Electricity,ect.
Proposed Costing for E&M Works
2. For Construction Works – By Sub contracting

 E&M Fee – 1.5 % from awarding value.

(Service included Procurement works, Contract
Administration)

 Supervision Charge as per the number of site

inspections.
Proposed Costing for E&M Works
3. For Design Works – Design & Build Projects

 Mechanical Design Fee – 4% Estimate

Value

4. Tendering Works

This services will be free of charge as job

promotion works.
 ACTIVITIES UNDER
CONTRACT
• Project planning, Design and Implementation according to the Client's
requirement
• Attending to the meetings, preparation of coordinated drawings, variation
bills etc.
• Preparation of Tender Documents, TECs, and Payment Certificates.
• Assist to QS unit to preparation of Interim statements, Final bills, Inventories.
• Preparation of Shop Drawings with specifications, Material Requests and As
Built Drawings.
• Carrying installation works through labour contractors under the supervision
of Engineer’s & TAs.
• Provide Maintenance works after handing over the site through Defect &
Liability Period (One Year)
• Under take Maintenance works after one year as per the agreement with client
if they prefer.
 Overall Picture
• Values of On going Projects SOE-Mechanical
Services Unit
Project Name Value
Maternity Ward Complex -
For SOE – MS unit-Rs.10,922,059.00 (AC Balance
Kurunegala - AC Installation
Work as BOQ -40,799,550.00)
works
Accident & Emergency 82,700,000.00
Treatment Unit-Base Hospital
Jaffna
NDT – Unit- Karapitiya - Fire 31,500,000.00
Protection & Detection Work

NDT – Unit- Karapitiya – AC 60,000,000.00

Installation Works.
Court Complex- Matara – AC & 14,503,282.00
Fire Systems
Head Office Building for 891,043,700.00
Ministry of Health – AC & Fire
 Major Mechanical Works Proposed Fire System
Supply of Equipments

• Fire Protection Equipment's Auxiliaries

1. Fire Pumps
2. Fire Hose Reels, Landing Valves,
Sprinklers , Breeching Inlet, Pillar Hydrant
3. Strainers, Flexible Coupling, Gate Valves ,
Non Return Valves, etc.
 Supply of Equipments
• Material
1. Heavy Duty GI Pipes & Fittings
2. PVC Drain Pipes & Fittings
 Supply of Equipments
• Follow National competitive bidding
procedure for purchasing equipment through
Local Authorized Agents in Sri Lanka
 Installation
• Installation will be carried out by Local Labor
Contractors and Entire Project will be
supervised by Site Mechanical Engineer and
Mechanical Forman.

• Installation and Maintenance manual for

respective equipment, Technical Specification
from Consultant will be followed for
installation of Equipments
 Balancing, Testing & Commissioning
• Fire Protection Equipment's, Auxiliary
Equipment's & GI Pipes & Valves will be
carried out by Labor contractor and supervised
by CESL Engineers & Technical Assistants.

• It will form a installation team further

improvements.
 Maintenance
• How are we going to execute Maintenance
Works?
– In Defect Liability Period
SOE- MS unit will recruit Mechanical and
Electrical Technician, who can maintain Fire
Equipment's (Pumps, Valves, Landing Valves,
Hose Reels ect. Further Mechanical Supervisor can
be supervise the technicians according to the
instructions given by Mechanical Engineer
 Maintenance
• How are we going to execute Maintenance Works?
– In Defect Liability Period;
Maintenance of Equipment will be carried out according to the
Fire Equipment Bidding Document ( One year warranty
request for the equipment after Testing & Commissioning)

After Defect Liability Period;

1. Calling bids for 5 years Normal Maintenance agreement for
Entire Fire Protection System and Purchase Spares from
respective Equipment suppliers.
2. Develop the maintenance team such as to carried out
maintenance works.
 A/C System

Supply of Equipments

• Air Conditioning Equipments

1. Water Cooled Screw Type Chillers
2. Cross Flow Cooling Towers
3. Air Handling Unit
4. Fan Coil Unit
 Supply of Equipment's For
 Auxiliary Equipments
1. Chilled Water Pumps/ Condenser Water
Pump
2. 03 Way Motorized Valves, shutoff Valves,
balancing Valves
3. Chemical Dosing Unit
4. Pressure Tanks
 Supply of Equipments
• Material
1. Insulation for Pipes & Ducts
2. GI Sheets
3. Air Terminals, Dampers & etc..
4. PVC, Black Iron Pipes and Fittings
 Supply of Equipments
• Follow National competitive bidding
procedure for purchasing equipment through
Local Authorized Agents in Sri Lanka
Table 1.1: Air Conditioning Equipments
Brand Authorized Agent
Trane/ Messan Abans Engineering
Carrier Tudawa Engineering
Dunham-Bush GTA Engineering/
York Metropolitan Engineering
LG Abans PLC
Hitachi/ King Sun ACMA Engineering
Daikin/ Ocean Civi-Mech/ Access
International
 Supply of Equipments
• Bidding of Air Conditioning Equipments

Example: Chillers –
• In order to be a eligible supplier:
• The bidder shall be a reputed local Authorized Agent having
experience in planning, engineering, supplying, testing and
commissioning of similar type of Chillers at least for last five (05)
years.
• The manufacturer of the Chillers shall have at least ten (10) years
experience in the design and manufacture of similar type Chillers.
• The make of Chillers offered shall have satisfactory service record
in Sri Lanka at least for last five (05) years
 Installation
• Installation will be carried out by Local Labor Contractors
and Entire Project will be supervised by Site Mechanical
Engineer and Mechanical Forman.

• Following Standards for Installation

1. DW 144 – Ducting
2. Carrier Hand Book – Chilled Water Piping

• Installation and Maintenance manual for respective

equipment, Technical Specification from Consultant will be
followed for installation of Equipments
 Balancing, Testing & Commissioning
• Air Conditioning Equipments, Auxiliary
Equipments will be carried out by respective
supplier and Supervised by CESL Engineers.

• Chilled water pipes, Ducting system will be

carried out by Labor contractor and
Supervised by CESL Engineers.
 Maintenance
• Big Issue?
– Yes, Chillers

Any Solution?
Refer the BOQ item 02 & Specifications
 Maintenance
• How are we going to execute Maintenance
Works?
– In Defect Liability Period
Mechanical Services unit will recruit Mechanical
and Electrical Technician, who can maintain
FCUs, AHUs, Cooling Towers, Auxiliary
Equipments. Further Air Conditioning Supervisor
will be recruited in the beginning of the
Maintenace Phase according to requirement of
maintenance team.
 Maintenance
• How are we going to execute Maintenance Works?
– In Defect Liability Period;
Maintenance of Chillers will be carried out according to the
Chillers Bidding Document

After Defect Liability Period;

1. Calling bids for 5 years Normal Maintenance agreement for
Entire Air Conditioning System and Purchase Spares from
respective Equipment suppliers.
2. Develop the maintenance team such as to carried out
maintenance works.
Benefit of Mechanical Works done through
SOE- MS
• We can claim 27 % Overhead & Profit Margin
for direct Installation works instead of 5 %
existing Value
• All the Mechanical Installation Works under
control
Maternity Wardof CESL.
Kurunegala - AC Installation Works

Previous Sub Contract Value (KS Trading) = Rs. 60,124,912.00

Profit & Overhead can achieve by Sub Contracting
(5% from Awarded Value) = Rs. 3,006,245.60

Direct Installation Cost = Rs. 56,553,543.31

Overhead & Profit from direct installation (upto 27 %
can be request) = Rs. 15,269,456.69
Mechanical Services-Overall CESL
• At present there are approximately Rs 3 billion worth of Mechanical works
being handled by CESL.

• All Mech. Services are done through sub-contracting method. Hence, only
5% of the mechanical estimate is received by CESL.

• The ‘overhead and profit margin’ can be increased up to 27% (in absence
of preliminaries), through direct supply and installation method.

• ICTAD – EM – 1 for electrical and mechanical works for CESL, which has
opened the possibility to tender external ‘M & E’ works.
 Electrical Services – Sub Categories

• Low Voltage Installations (50V-1000V)

– Building Electrical Installations, Underground Cable laying, Street Lighting Solutions
etc.
• Medium Voltage Installations (1000V – 33kV)
• Extra Low Voltage Installations (0V – 50V)
– Data Networking
– Telecommunications (PABX and Internal Telephone Networks)
– Security Systems, Access Control
– Public Address Systems (PA)
– Master Antenna Television Systems (MATV)
– Closed Circuit Television System (CCTV)
• Solar Power Systems (PV Array, Net Metering, etc.)
• Lightning Protection Systems (LPS)
ANALYSIS OF JOB
POSSIBILITIES
 Electrical Services
• Presently, COE – Central has approximately Rs 700 Million worth of
ongoing electrical works while CESL having over 2.2 Bn.

• Apart from major components such as generators and high capacity power
feeding panels, CESL electrical staff in COE – Central handles all other
electrical works.

• Since there is no significant overhead component compared to other

divisions, profit is in the comparative higher range of the 27% profit and
overhead margin.
CENTRAL ENGINEERING SERVICES (PVT)LTD.
ELECTRO MECHANICAL WORKS
VALUE FROM ALL BASES
ELECTRICAL WORK VALUE MECHANICAL WORK VALUE
BASE
(RS) (Rs)
1
SOUTH 165,666,121.00 250,000,000.00
2
SOUTH EAST 218,000,000.00 237,000,000.00
3
WP2 410,500,000.00 574,500,000.00
4
SABARAGAMUWA 46,737,366.00 22,094,880.00
5
NORTH 101,995,586.00 108,514,390.00
6
POLONNARUWA 433,116,661.95 656,057,325.00
7
CENTRAL 482,953,350.00 720,809,338.00
8
UVA 76,173,743.00 91,744,920.00
9
WP1 129,270,222.00 235,255,760.00
10
ANURADHAPURA 172,398,401.00 45,621,367.00
TOTAL 2,236,811,450.95 2,941,597,980.00

TOTAL (E&M works) 5,178,409,430.95

BUSINESS DEVELOPMENT
STRATEGY
 SWOT analysis
There are mainly four topics discussed through a SWOT analysis. These are
Strengths, Opportunities, Weaknesses and Threats.

‘Strengths & Weaknesses’ are concerned with internal parties while

‘Opportunities & Threats’ are external factors.
 Strengths
• Availability of chartered mechanical engineer with 10 years experience &
chartered electrical engineer with 7 years experience, from within the ranks
of CESL itself to lead the SOE units.

• Availability of experienced staff for ‘M & E’ works within CESL, who are
already distributed conveniently across different bases, and attached to
ongoing ‘M & E’ works.

• Initial capital availability through at CESL- IT unit (which is to join the

proposed ‘M & E’ COE unit in the future).

• Certain tools and equipment for testing and commissioning works already
available at SOE – Electrical (Digana), and E & M – South unit.
 Strengths (Continued).

• Availability of approved labor rates for electrical & mechanical Installation

works

• Availability of planning manuals for Installation & Testing &

Commissioning works
 Weaknesses
• Lack of initial capital for project operations/ rolling fund

• Insufficient construction equipment and high cost of hiring such equipment

• Insufficient technical support staff required for the operation of all Electro
Mechanical works

• Lack of storage facilities both at SOE- Electrical Digana and E&M -South
units

• Lack of transport facilities & other resources at these units.

• Lack of actual financial records for ‘M & E’ works

 Opportunities
• Increasing demand for construction of Electrical & Mechanical works

• CESL has approximately 5 billion rupees worth of ongoing ‘M & E’ works

• Direct construction will increase the profit & Overhead margin from 5% to
27%

• Other COE- Sections have well operating individual Electrical &

Mechanical units at present

• Other COE - units have well operating stores & some Tools for Electrical
& Mechanical works
 Opportunities (Continued).
• Obtaining of CIDA- EM-1 for Electrical & Mechanical works already in
progress

• Close relationship with ‘M & E’ sub contractors and labor contactors

• Close relationship with Fire Department & other authorities.

• ‘M & E’ component is high in ongoing construction projects.

 Threats

• Centralization of ‘M & E’ works can cause disputes with existing systems

at other COE units

• Disputes may arise when sharing site resources of other COE units

• Cost sharing for using site resources at other COE units will be difficult to
identify

• Existing ‘M & E’ sections at COE units have close links with sub-
contractors

• Poor cash flow at present civil construction sites

 Threats (Continued).

• Less attention for ‘M & E’ works within the main construction program

• Higher competition due to significant number of small contractors

• Higher demand for skilled workers in the market

 Strategic Theme and Future Development

• Develop the organization structure without the idling of any resource

personnel. (Refer the Organization structure)

• Initially identify the priority list for the providing of ‘M & E’ from the
unit.

• Update the labor rates for ‘M & E’ works at suitable time periods.

• Update the ‘M & E’ Rates so as to compete with external parties.

• Arrange knowledge sharing programs to update technical, financial &

procurement skills of the staff.

• Maintain a detailed Invoice register to focus on outstanding payments &

billing processes.
 Strategic Theme and Future Development

• Make a procurement schedules for each and every ‘M & E’ installation work

• Make quality plans for ‘M & E’ works

• Labor contractors and their tools and machinery to be used for installation
works at the initial stage. Gradually an installation & maintenance team with
own instruments to be set up.

• Gradually form centralized stores & procurement concept for material &
equipment purchasing

• Maintain the quality management system.

• Introduce the Man-hour basis costing method to evaluate works of staff of

other COE units.
 Formalization of Management Team

Chief Operations Engineer for Electro mechanical works will be the governing
person who shall undertake the overall management of the unit (Initially under
Chief Executive Officer).

Under the COE – Building Services there will be two major SOE units for
operation works which are:

– SOE – Mechanical Services

– SOE – Electrical Services
SOE – Mechanical & Electrical Services Units

• These units will handle all of the ‘Mechanical related building services
works’ and all the Electrical installations & its Services. Relevant SOE is
the governing position to manage the overall control of the each
• All site supervision, materials handling and stores management will be
done by the OEEs.
• Material & equipment purchasing, quantity surveying, quality management
& planning will be done by the Procurement Engineering division.
SOE – Mechanical & Electrical Services Units

• SOE- Mechanical services and SOE –Electrical services units will run as a
separate cost centers & separate accounts will be maintained. The accounts
unit will handle all accounting works.
• Initially this service will be borrowed from the COE – south accounts &
COE- Central accounts for which the cost will be reimbursed by calculated
on the Man-hour basis method.
UNIT SPECIFICATIONS
This area will discuss the terms and objectives & how objectives will be
achieved with milestones.
 Commencement of the Procurement works for the Electrical & Mechanical works for all
OBJECTIVE 1 the CESL projects

Se. no. Action Responsibility Target Date

1.1 Nominate the Procurement team SOE Stage I

1.2 Identification and list out the existing projects to start the procurement SOE/PE
works with the time of completion of projects Stage I
1.3 Make a priority list for the procurement works SOE/PE Stage I
1.4 Make the procurement schedules PE Stage I
1.5 Establish monitoring mechanism until Awarding the work SOE/PE Stage I

Commencement of the Contract Administration works for the Electrical & Mechanical
OBJECTIVE 2 works for all the CESL projects

Se. no. Action Responsibility Target Date

2.1 Assign of the Contract administration work team SOE Stage I

2.2 Make the templates for contract administration works PE Stage I

Make a register for the Monitoring of Bank Guarantee's (Advance

2.3 Bond, Performance Bond, Bid Bind, etc.…) PE Stage I
SOE/PE
2.4 Establish monitoring mechanis until completion of the work Stage I
 Commencement of the Supervision & Testing & Commissioning works for
OBJECTIVE 3 the Electrical & Mechanical works for all the CESL projects
Se.
Action Responsibility Target Date
no.
3.1 Assign of the Skilled Supervision & Testing & SOE
Commissioning team Stage I
3.2Prepare the Work programs for each projects OE Stage I
3.3
Prepare the check lists for the installation supervision works OE Stage I
Make the Testing & Commisioning templates for each
3.4 systems OE Stage I
3.5
Establish monitoring mechanis until completion of the work SOE/OE Stage I
 OBJECTIVE 4 Introduce a 'Direct construction' mechanism for E&M Works

Se. no. Action Responsibility Target Date

SOE
4.1Assign of the Skilled Installation Team for MEP works Stage I

Identification and list out the existing projects to start the MEP SOE/OE
4.2 Installation works with the time of completion of projects Stage I
Identify of the Major Projects initiate the Mechanical& SOE/OE
4.3 Electrical Installation works by unit Stage I
Recruited of the Technical Staff as appropriate to commence SOE/OE
4.3 the installation works. Stage I
Make a mechanism until award the Installation job from SOE/OE
4.4 relevant COE - Sections to new unit Stage I
Preparation of action plans for Air - Conditioning & Fire SOE/OE
4.5 Protection system initially Stage I
Preparation of Planning Manuals for Air-Conditioning System OE
4.6 & Fire Protection system Stage I
Updating of Lobour Rates for AC & Fire Protection Systems SOE/OE
4.7 Installation works Stage I
 OBJECTIVE 4 Introduce a 'Direct construction' mechanism for E&M Works
Se.
Action Responsibility Target Date
no.

Make a mechanism of communication with 'CECB-Design

4.8 unit', 'Procurement unit', Relevant COE - Units & Client to SOE/OE
collect the details of scope of the MEP work & comments
from that parties regarding the work. Stage I
4.9 OE
Introduce monthly project overhead measuring system Stage I
4.10 Establish stores/ workshop and implement plants, tools & SOE/OE
equipment costing system Stage I
Prepare of the Mechanism to improving the AC & Fire
4.11 Protection system Installation works to much more COE- SOE/OE
Units Stage II
Prepare of the Mechanism to improving the MEP works for
4.12 other services except to the AC & Fire Protection system SOE/OE
(Medical Gas, LP gas, etc.. Stage II
Prepare of the Mechanism to take EM-1 Certificate for
4.13 Electrical & Mechanical Works & take outer institutional SOE/OE
E&M jobs through bidding Stage II
4.14 Establish monitoring mechanis until completion of the SOE/OE Stage I / Stage
Installation work II
 OBJECTIVE 5 Implement of the Maintenance works for MEP works
Se.
Action Responsibility Target Date
no.

SOE
5.1Assign of the Skilled Team for Maintenance works Stage I
Preparation of Maintenance agreements templates for
5.2 different systems OE Stage I
5.3Preperation of Spare parts registry OE Stage I
Make a mechanism to develop a own maintenance team for SOE/OE
5.4 MEP works Stage II
Make a mechanism to take the 'Maintenance works' from SOE/OE
5.5 outer departments Stage II
 OBJECTIVE 6 Implement of the Efficient Tendering system for MEP works
Se.
Action Responsibility Target Date
no.

SOE/OE
6.1Update the MEP rates to compete with the outer parties Stage I
Make a mechanism for communicate with 'CECB-Design
unit', 'Procurement unit', Relevant COE - Units & Client to SOE/OE
6.2 collect the details of the tender Stage I
Establish monitoring mechanism until completion of the SOE/OE/PE
6.3 Tendering work Stage I
Introduce monthly overhead measuring system for SOE/OE
6.4 Tendering works Stage I

Stage I – Start from Unit Initiation

Stage II – Start when the system runs smoothly. Most probably after one year from
initiation
Already Implemented Method for ongoing projects in CESL-CP

• Internal Circular
• Formal Agreement
• Internal Fund Transfer
• Interim Statements
• Project Closing Documentation
BUDGET AND FINANCES
• According to the proposed organization structure SOE –
Mechanical Services & SOE- Electrical Services will
operate as separate cost centers.

• Overhead to be similar for both units.

SOE - Mechanical Services/ Electrical Unit

EXPENDITURE BUDGET - For 6 months

ACCOUNTS DESCRIPTION CATEGORY OF EXPENSE TOTAL
Direct Construc. Indirect Construc. Rs

Total Cost
477,000.00 8,009,681.50 8,486,681.50

- 0
Transport 438,000.00
hire of Machinery External 39,000.00
-
8,009,681.50 8,009,681.50
Salary All Staff 5,357,835.00
Extra Hours & Over Time All Staff
1,530,196.50
Medical Expenses All Staff 414,000.00
Travelling & Sub All Staff 231,000.00
Telephone / Internet 23,400.00
Telephone (mobile for staff)
120,000.00
Postage / Stationery 130,800.00
Water Charges 9,700.00
Welfare 42,000.00
House Rent 90,000.00
Electricity 30,750.00
Miscellaneous Expenses 30,000.00
• Normally one major Installation work will take 6 months to complete for
‘M&E’ work. In view of this, the budget has been taken for 6 months.

• Approximately Rs 8.49 million of overhead value have to be born by one

unit for six months.

• Normally overhead component for a well operating unit will take 10% of
the contract value (site & Office overhead).

• Therefore Rs 84.9 million worth of Mechanical work & Electrical work

has to be achieved from one unit to sustain a six month period.

• Hence, approximately Rs 170 million worth of Electrical & Mechanical

works have to be handled by the COE- Building services unit for a 6
month period.
THANK YOU
CESL – Galle
CESL – Central