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Project Management

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LESSON 13
PROJECT PROPOSAL
Broad Contents
Characteristics of a Project Proposal
Preparation for Future Proposal
Proposal Effort for Specific Proposals
Proposal Efforts
Typical Engineering, Procurement and Construction (EPC) Proposal Contents
Modifications to the Standard Proposal
13.1
Characteristics of a Project Proposal:
The more important characteristics of a project proposal are:
1. Proposal projects are high priority, short duration efforts. They must be completed to the
owners schedule requirement regardless of the work load and other demands on the
contracting organizations.
2. The owner's specifications for the preferred payment method must be adhered to, at least in
the basic proposal. Alternates which offer benefits to both parties may be suggested for the
owner's consideration.
3. The owner frequently will specify a particular format for the proposal and for presentation
of the requested information.
4. The owner may express a clear preference as to the location where the project work will be
done. The engineering company may suggest alternate arrangements that give the owner a
more cost effective project without sacrificing the required contract. The base proposal
however, must be as responsive as possible.
5. The owner may have a preference, openly expressed or merely implied, for the construction
labor arrangement. If this preference has not been made clear in the Request for Proposal
(RFP) or in the discussions with the owner, it should be determined at the earliest possible
time in the proposal effort so that the proper construction program may be planned.
6. A proposal project requires forming a team of the representatives for sales, project
management, technical and support functions. Many of these have responsibilities over and
above the proposal project. These work loads must be considered and respected insofar as is
possible.
7. Proposal projects are normally costed against corporate overhead and therefore will be
tightly budgeted and be closely monitored by senior management.
13.2
Preparation for Future Proposal:
Because of the price restraints and the repetitive nature of much of the data used in proposals, it
is helpful to collect as much as possible of the proposal information in advance. This is
especially true for the following areas:
Proposal project manager should be identified in advance. In a company with a significant
continuing proposals load, a group may be formed consisting of former project managers
with verbal skills and the proper personality to allow them to function in the pressure
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cooking environment of proposal preparation. These individuals must have a high tolerance
for working under tight schedules, stringent budgets, with borrowed personnel, and being
the object of continual criticism which is not always constructive.
A proposal publication staff should be in place to be fully effective. These individuals
should have skills in editing, use of word processing and reproducing equipment, as well as
graphic art capability. They should be able to work effectively with the masses of material
in various stages of progress to assure that all of it comes together according to the
schedule.
A technical information data base including the full range of the type of projects offered by
the company, including feasibility studies, engineering projects, as well as full scope
projects for various types of facilities.
Standard scope of services should be developed that can be readily customized for the
particular project on word processing system. Much of the particular information of various
projects is quiet similar and only requires bringing it into conformance with owner's
requirements or with those of particular facility of location.
The company should have developed comprehensive definitions for the various levels of
efforts associated with producing cost estimates of various accuracies. This is particularly
important for developing proposals for feasibility studies.
Work plans should also be developed for the various basic types of projects. These can be
of general information which can then be modified to conform to the plans for the specified
project under consideration.
A data bank is helpful to standardize commercial terms and conditions together with listing
that define those costs included in overhead and those which are not. This is particularly
important in reimbursable contracts to control charges to the standard check list and the
resultant changes in the reimbursable unit cost.
Qualification material should be updated frequently in several different standard formats
such as:
Project performance data, schedule and cost
o
Descriptions of past projects
o
Resumes of key personnel
o
Write ups on support areas such as:
o
Project Controls
Procurement Procedures
Material Management
Quality Assurance Practices
Typical write ups should be prepared in advance for various other parts of the proposal.
These will be modified to suit the Request for Proposal (RFP) or inquiry document. Among
other these writings include:
o  Introduction
o  Project Organization
o  Schedule
o  Project Controls
o  Compensation
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13.3
Proposal Effort for Specific Proposals:
Preparation of the proposal may start as soon as there has been a positive indication that the
company will be included in the bid list and preliminary information is available on the project.
Early efforts would include:
Preliminary assignments for the anticipated proposals would be made based upon the
schedule for the Request for Proposal (RFP) release and the due date of the proposal. These
assignments would include the proposal project manager, the project manager proposed to
head the project, and the proposal publication and technical support personnel. In addition,
the lead estimator, the lead scheduler, technical personnel, procurement and construction
representatives as indicated by the nature of the effort would be selected.
The preliminary proposal plan schedule and budget should be blocked out. The proposal
plan would define the outline of the proposal and the preliminary assignment of the work.
The schedule would indicate dates for completion of the preliminary draft, job hours and
cost estimates, the final draft dates, the necessary dates for approval, and the publication
and delivery dates.
A rigorous assessment should be made of the technical aspects of the project to identify the
company's strengths and weaknesses. Immediate and specific actions should be planned to
boost capability where this is required and to develop the personnel and background
information to cover these critical areas.
When Request for Proposal (RFP) is received, it is reviewed and a bid/no bid decision is made.
13.4
Proposal Effort:
1.
Assignment of Proposal to Team Members:
As soon as decision to bid has been confirmed, the assignment of team members is
finalized.
2.
Kick-Off Meeting:
The project manager calls a kick-off meeting, at which the time task assignments and
the corresponding schedules are made.  At this meeting, technical, legal and
compensation considerations are reviewed and assignments of responsibilities are made.
3.
Preliminary Review of the Proposal Text:
All material is typed on word processor, with margins for easier editing. Typed drafts
should be checked carefully against the original draft to assure that nothing has been
inadvertently omitted.
4.
Final Review:
When text is essentially in final form and all changes have been incorporated, it is
submitted for review of operations management and for final legal review. All major
changes from this last text review should be flagged so that the signoff should be
obtained quickly.
5.
Publication and Signoff
6.
Delivery of the Proposal
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13.5
Typical Engineering Procurement and Construction (epc) Proposal Contents:
Following is the summary of the typical contents of cost reimbursable proposal for Engineering,
Procurement and Construction services.
1.
Introduction and Summary:
The Request for Proposal (RFP) conditions are summarized and general approach to the
work by the contractor is indicated.
2.
Project Description:
This material is largely taken from the Request for Proposal (RFP). It may also include
information that has been obtained by site visits, during pre-bid conference, and in other
contacts with the owner of other knowledgeable sources.
3.
Scope of Services:
This section details the services the owner will provide. It includes the services that will
be performed and the documents that will be produced. All services should be well
defined, not opened, even in reimbursable proposals. All of the documents that are to
be furnished as part of the services of the contractor should be listed in detail. A brief
description of what each will include should also be provided.
4.
Work Plan and Schedule:
The project work plan is developed in response to the stated objectives of the owner or
as defined by the sales representatives and the objectives of the contracting firm for the
specific proposal. It may be presented in graphic form for showing the interrelationship
between various activities.
5.
Project Organization:
This describes the proposed project organization, and details the responsibilities of each
of the key member of the project team. An organization chart depicting the proposed
project team will be drawn. The interface with the supplier of technology should be
carefully defined, and the technical review responsibilities should be carefully defined.
6.
Estimates, Hours, Costs:
All of the information presented in the previous sections of the proposal must be taken
into account in preparing the estimates of work. The cost estimates will include salaries
of all technical and non ­ technical personnel, as well as indirect costs such as travel,
communication, computer use and reproduction.
7.
Compensation:
After the estimates have been reviewed, the commercial terms are finalized by adding
those discretionary figures such as burdens, contingencies, overlays and fees required
by the format of the bid. This information is presented in the compensation section of
the bid.
8.
Qualifications:
The qualification section of the proposal contains all relevant material arranged in
proper manner to strengthen confidence as to the contractor's capability in the mind of
the owner's management. It must always be reviewed to ensure that the information
presented is accurate, pertinent and forceful.
13.6
Modifications to the Standard Proposal:
Many owners have a very specific format which requires that the contractor depart from a
standard proposal format. It is best to follow the specified format as it will help to simplify the
proposal evaluation process in the owner's office.
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Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  3. CONCEPTS OF PROJECT MANAGEMENT:THE PROJECT MANAGEMENT SYSTEM, Managerial Skills
  4. PROJECT MANAGEMENT METHODOLOGIES AND ORGANIZATIONAL STRUCTURES:Systems, Programs, and Projects
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  8. PROJECT CONCEPTION AND PROJECT FEASIBILITY:Feasibility Analysis
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  23. WORK BREAKDOWN STRUCTURE:Why Do Plans Fail?
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  30. NETWORK SCHEDULING TECHNIQUES:Total PERT/CPM Planning, PERT/CPM Problem Areas
  31. PRICING AND ESTIMATION:GLOBAL PRICING STRATEGIES, TYPES OF ESTIMATES
  32. PRICING AND ESTIMATION (CONTD.):LABOR DISTRIBUTIONS, OVERHEAD RATES
  33. PRICING AND ESTIMATION (CONTD.):MATERIALS/SUPPORT COSTS, PRICING OUT THE WORK
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  36. PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY
  37. CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  41. COST MANAGEMENT AND CONTROL IN PROJECTS:Variance, Depreciation
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  43. COMMUNICATION IN THE PROJECT MANAGEMENT:Cost of Correspondence, CHANNEL
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning
  45. PROJECT PROCUREMENT, CONTRACT MANAGEMENT, AND ETHICS IN PROJECT MANAGEMENT:Procurement Cycles