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Financial Control in Project Management

Financial Control in Project Management. Airport Development Projects. PPP Projects Re structuring of Brownfield Airports (Delhi & Mumbai Airports) Greenfield Airports (Hyderabad & Bangalore Airports) AAI Projects Kolkata & Chennai Airports Non Metro Airport Projects

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Financial Control in Project Management

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  1. Financial Control in Project Management

  2. Airport Development Projects • PPP Projects • Re structuring of Brownfield Airports (Delhi & Mumbai Airports) • Greenfield Airports (Hyderabad & Bangalore Airports) • AAI Projects • Kolkata & Chennai Airports • Non Metro Airport Projects • Greenfield Airports (NER Region – Pekyong, Itanagar, Chietu Apts)

  3. Formulation of proposal • Projection of requirement • History of the project • Preliminary Estimate for in principle approval • Preparation of detailed project report • Availability of Budget provision • Formulating a proposal of AA/ES

  4. Financial viability of the Project • Freezing of capital expenditure • Forecast of Annual cash flows for computation of IRR/ERR • Financial evaluation of the proposal based on IRR/ERR • Adequacy of IRR

  5. Financially unviable Projects • Projects not meeting the desired IRR • Requirements for taking up such projects due to socio-economic rationale • Plan outlay funding of such projects through govt grants • Levy of UDF/reimbursement of operating cost to cover the viability gap

  6. Funding of the Project • Internal Resources • Govt. Budgetary Support • Govt. Grant • Borrowings (incl. External Commercial Borrowings)

  7. Sanction of the Project • Financial concurrence on the proposal • Approval of administrative authority as per DOP. • Project costing upto Rs.30 cr. are approved by various authorities upto Chairman. • The projects costing more than Rs.30 cr but upto Rs.500 cr require approval of AAI Board. • Projects costing more than Rs.500 cr require govt. approval. • Projects involving GBS/Grant require approval of the Govt/Planning Commission.

  8. Award of Work • Preparation/approval of NIT • Publication of NIT • E-tendering

  9. Formulation of NIT • Pre-qualification criterion is fixed considering specific AAI requirements. • The PQ criterion should ensure not only good quality of work but competition in bids. • It needs to be ensured that PQ criterion is not tailor made to suit specific party. • PQ criterion normally entails the turnover of the party in the past, the size of works executed, credentials and experience of the executing engineers etc. • Specification for the work proposed to be executed should be such that the competition is ensured. • NIT being a public document should be carefully drafted to ensure interest of AAI.

  10. Tender Processing • Publication of NIT • E-tendering in accordance with CVC guidelines • Freezing of Justified Cost • Evaluation of Technical Bids strictly in accordance with NIT • In case of delay in finalization of technical bids the justified cost to be updated before opening of the financial bids • Evaluation of Financial Bids • Acceptance of tender and award

  11. Execution of Work • Measurement of work done – quantity / quality • Preparation of bill – amounts payable with respect to SOQ and recoveries • Scrutiny of the running bills by Finance officer with reference to contract • Payment of bills in time to avoid interest payments

  12. Deviations and Extra items • Only those deviations/extra items which are essential for the completion of the works but not provided in the SOQ • In case the deviation/extra items involves execution of works which results in increase in the AA/ES amount beyond the permissible limits, the prior approval of the competent authority needs to be obtained. • The deviation/extra items should not be on account of works which are not part of the approved AA/ES. • Time and cost over-run needs to be monitored on regular basis to avoid the same.

  13. Substitution of Items • The items/specification in the original NIT should not be allowed to be substituted which tantamount undue benefits to contractor. • The substitution should not result in dilution of quality of work.

  14. Execution of Project in Time • The availability of site and the required drawings needs to be ensured to avoid delay. • The progress of the work needs to be monitored with reference to time line drawn for completion of the project • Any delay foreseen in completion of the project, the matter needs to be taken up at higher levels for resolution of the issues. • Payment on account of escalation needs to be avoided.

  15. Completion of Work • Certification of completion with respect to SOQ • Quality of work completed • Requisite warranties/guarantees to be obtained from contractor • Finalization of bill

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