1 GROUP INCENTIVE SCHEME AT RCF KAPURTHALA z

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GROUP INCENTIVE SCHEME AT RCF, KAPURTHALA z PART-III z PART-IV z PART-VI - HISTORY SALIENT FEATURES CONVERSION FACTOR CALCULATION MANPOWER CALCULATION INCENTIVE PERFORMANCE DURING 2005 -06 & 2006 -07 - REDUCTION IN MANPOWER DEPLOYED PER EQ. GS UNIT 2

PART-I HISTORY OF INCENTIVE SCHEME INVOGUE AT RCF 3

HISTORY OF INCENTIVE SCHEME INVOGUE AT RCF 1. AWARDING OF CONTRACT TO RITES FORMULATING INCENTIVE SCHEME APR’ 92 2. SUBMISSION OF STUDY REPORT BY RITES AUG’ 93 3. INTERNAL EXAMINATION AND INTERACTION WITH RITES SEPT’ 93 TO NOV’ 94 4. SUBMISSION OF PROPOSAL TO RAILWAY BOARD NOV’ 94 5. SUBMISSION OF CORRECTED PROPOSAL TO RAILWAY BOARD MAR’ 95 6. CLEARANCE RECEIVED FROM RAILWAY BOARD JULY’ 95 7. TRIAL RUN WITH PAYMENT AUG’ 95 TO NOV’ 95 8. ACTUAL IMPLEMENTATION OF INCENTIVE SCHEME DEC’ 95 4

FIRST REVIEW OF INCENTIVE SCHEME 1. FIRST REVIEW BECAME DUE ON DEC’ 96 2. AWARDING OF CONTRACT TO RITES FOR REVIEW OF INCENTIVE SCHEME MAY’ 97 3. STUDY FOR REVIEW BY RITES JUL’ 97 TO MAY’ 98 4. SUBMISSION OF REVISED STUDY REPORT BY RITES MAR’ 99 5. INTERNAL ANALYSIS BY RCF MANAGEMENT APR’ 99 TO MAY’ 99 6. DISCUSSION WITH STAFF COUNCIL JUN’ 99 TO AUG’ 99 7. RCF PROPOSAL SENT TO RAILWAY BOARD 21. 08. 99 8. BOARD’S APPROVAL OF REVISED SCHEME ALONGWITH REVISED CALCULATION FORMULAE 17. 12. 99 9. REVISED SCHEME IMPLEMENTED W. E. F. SEPT’ 99 5

PART-II SALIENT FEATURES 6

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z PRODUCTION SHOPS HAVE BEEN DIVIDED INTO FIVE PRODUTCTION GROUPS: GROUP-I GROUOP-II GROUP-IV GROUP-V z z z - SMS, FSAS & ASSOCIATED PROGRESS PAINT SHOP & ITS PROGRESS FURNISHING, CARPENTRY, FRP & FINISHING AND ITS PROGRESS. BOGIE SHOP AND ITS PROGRESS THE INCENTIVE EARNING PRECENTAGE FOR EVERY ONE IN A PARTICULAR GROUP IS SAME. INCENTIVE OUT TURN IS BASED ON THE FINAL OUTPUT IN COMPLETE COACH SETS FROM THAT GROUP IN THE CONCERNED MONTH. OUTPUTS OF GROUPS ARE MEASURED IN EQ. GS UNITS COMPUTED BY USING THE CONVERSION FACTORS FOR DIFFERENT COACH TYPES. 7

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) (CONVERSION FACTOR OF A COACH IN A GROUP = AUTHORIZED DIRECT MAN HRS FOR THAT COACH / AUTHORISED DIRECT MAN HRS FOR A GS COACH IN THAT GROUP) z THE SCHEME IS DESIGNED AT AN ASSUMED INCENTIVE PERFORMANCE OF 120 R FOR STATISTICAL PURPOSES. ON THIS SCALE, 100 R IS THE ZERO INCENTIVE LEVEL. z THE INCENTIVE EARNING CONSISTS OF TWO PORTIONS: - BASED ON GROUP'S OWN PERFORMANCE, WHICH IS GIVEN 70% WEIGHTAGE. - BASED ON RCF'S OVERALL PERFORMANCE DEPENDING ON THE PHYSICAL DESPATCH OF COACHES, WHICH IS GIVEN 30% WEIGHTAGE. 8

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z SUPPORT SHOPS COVERED UNDER INCENTIVE ARE : a) b) c) d) e) f) TOOL ROOM MILL WRIGHT TRANSPORT SHOP MATERIAL HANDLING SECTION ELECTRICAL & ELECTRONIC MAINTENANCE SECTIONS MACHINE SHOP z SUPPORT SHOPS EARN INCENTIVE EQUAL TO THE WEIGHTED AVERAGE OF THE INCENTIVE EARNINGS OF THE FIVE PROD. GROUPS. z SUPPORT DEPTS GIVEN BELOW ARE COVERED BY PCO ALLOWANCE, (15% OF BASIC PAY), a) b) c) d) PROCESS PLANNING MATERIAL PLANNING INDUSTRIAL ENGINEERING DEPT. INSPECTION & QUALITY CONTROL 9

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z Quality of the product is ensured by individual groups through self-inspection & acceptance by receiving group apart from the inspection carried by QC. z Any item needing rectification is to be rectified by the concerned incentive prod. Group and rectification hours are added to their available man-hours. It lowers the incentive earning. Further, double the overtime is also added to available Man-hours with a similar effect to discourage the same. However there is no overtime booking in RCF. z No idle time booking is permitted except for power shut down exceeding 60 min. at a stretch. z Normal requirements for preventive maintenance and breakdown maintenance of M&P have been catered for in assessment of cycle time and auth. manpower. 10

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z The actual clocked in duty time in the allocated work center of the individual worker only is counted towards calculating the individual's incentive earning. Any time spent away from RCF Shops by staff under incentive, whether on duty or other wise is not counted. The only exception is in case of TA camps, in which case the individual gets an amount based on that individual's rate of earning in the last twelve months, for the duration he was away. z The staff is given incentive based on clocked- in man hrs recorded through the computerized time attendance system. If clocked-in man hrs of an individual are equal to maximum possible attendance during the incentive period, he becomes entitled for payment of full incentive and as such the scheme encourages staff to improve their absenteeism performance. 11

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z Payment of incentive amount is based on bonus factors for each grade. Bonus factors have been defined for each grade by Rly. Board and incentive payment made is a %age of the bonus factor and not the basic pay. The bonus factors incidentally are 30% more than the bottom of the scale of pay for each category. z The inclusion of SSE's & SE's in the incentive though recommended by RITES was not accepted by Railway Board, hence supervisors up-to the level of J. E. -I only are covered by the incentive scheme. The SSEs and SEs on the shop floor get a fixed 15% of the basic pay and those in PCO get a fixed 7. 5% of basic pay. z The authorized manpower is calculated as follows. 1000 GS unit in one year. 12

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) - The annual load for each group in GS units is calculated using the conversion factors. - The authorized manpower is then calculated for this load. - This manpower is at a rating of 120 R and 16% absenteeism. z - The Group Performance Efficiency (GPE) is calculated as follows. Actual out-turn from the group in GSUs GPE = 1. 2 x -------------------------Target outturn of the group Where TARGET OUT TURN OF THE GROUP= STANDARD OUTPUT OF GROUP ACTUAL MP -------------------- X W. D. OF MONTH AUTHORISED MP OF GROUP 25 13

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z The RCF performance factor is calculated as follows. CUMM. RCF ELIGIBLE INCENTIVE OUTPUT UPTO THE END OF INCENTIVE PERIOD = 1. 2 X----------------------------------------------------CUMM. RCF MANAGEMENT DECLARED TARGET OUTPUT UPTO END OF INCENTIVE PERIOD IN EQ. GS UNITS - The monthly target out turn from RCF = Annual load Actual W. Days in the month Actual strength off all groups in GSUs for x ------------------ x -----------------RCF as a whole 300 total auth. strength of all production groups 14

GROUP INCENTIVE SCHEME AT RCF (SALIENT FEATURES) z The incentive to be paid is calculated as below. - Incentive %age of the group = [70 x (GPE-1) + 30 x (RCF. perf. fac. -1)] x A, where A=(GPE/1. 2)2 x(RCF perf. fac. /1. 2). `A’ can not have a value<1. z Incentive amount of an individual = Employee's clocked in attendance hrs. Inc. %age x bonus factor x -----------------------Hours in the month z The incentive of the support shops is calculated as below. - Incentive % = Weighted Avg. of Act. MP on roll (100 -Act. Absenteeism) incentive earnings x ------------------------ x [{(Annual prod plan load in five prod. groups Auth. MP 84 GSUs/1000– 1) x 1/4} + 1] 15

EXAMPLE FOR CONVERSION FACTOR CALCULATION Group GS SCN DSLR RA VP VPU RA AC ACCN I 1326. 34 1337. 23 1334. 74 1529. 98 1321. 21 1578. 02 1866. 69 C. F. 1. 00 1. 01 1. 15 1. 00 1. 191 1. 41 II 620. 22 631. 03 754. 04 712. 33 580. 64 714. 43 566. 52 C. F. 1. 00 1. 02 1. 22 1. 15 0. 94 1. 15 0. 91 III 246. 48 250. 30 252. 48 242. 66 230. 38 216. 13 242. 66 254. 13 C. F. 1. 00 1. 02 0. 98 0. 93 0. 88 0. 98 1. 03 IV 1921. 28 2218. 93 1822. 81 2997. 78 1025. 15 4349. 57 5158. 77 C. F. 1. 0 1. 15 0. 95 1. 56 0. 53 2. 26 2. 69 V 356. 12 356. 98 356. 80 353. 28 404. 99 C. F. 1. 00 - 1. 00 0. 99 1. 14 Total 4470. 44 4793. 61 4521. 05 5839. 55 3510. 66 3496. 41 7289. 67 8251. 10 C. F. 1. 00 1. 07 1. 01 1. 31 0. 79 0. 78 1. 63 1. 85 16

EXAMPLE FOR MANPOWER CALCULATION ANNUAL LOAD COACH TYPE NO. CF 1 CF 2 CF 3 CF 4 CF 5 CF EQ 1 EQ 2 EQ 3 EQ 4 EQ 5 EQ GS 307 1. 00 307. 0 DSLR 150 1. 01 1. 22 1. 02 0. 95 1. 00 1. 01 151. 50 183. 00 153. 00 142. 50 150. 00 151. 50 SCN 142 1. 01 1. 02 1. 15 1. 07 143. 42 144. 84 163. 30 142. 00 151. 94 VPH 50 1. 00 0. 94 0. 93 0. 53 0. 99 0. 79 50. 00 47. 00 46. 50 26. 50 49. 50 39. 50 ACCN/S 300 1. 41 0. 91 1. 03 2. 69 1. 14 1. 85 423. 0 273. 0 309. 0 807. 0 342. 0 555. 00 MEMU/T 54 1. 05 1. 00 1. 07 0. 98 1. 05 56. 70 54. 00 57. 78 52. 92 56. 70 LHB FAC 2 2. 0 1. 26 1. 90 3. 91 2. 38 2. 74 12. 00 7. 56 11. 40 23. 46 14. 28 5. 48 TOTAL 1359 1693. 57 1422. 69 1521. 74 2398. 49 1640. 21 1945. 31 17

MANPOWER CALCULATION FOR 1000 GS UNITS PROD. GROUP MANHRS FOR GS COACH AS ON 01. 04. 05 1326. 34 AS ON 01. 04. 06 1326. 34 I 621. 22 II CATEGORY 620. 22 MANPOWER FOR 1000 GS COACH AS ON 01. 04. 05 REVISED ON 01. 04. 06 FIX VAR TOTAL SUP 55 45 100 TECH. 57 514 571 UNSKD 49 72 121 TOTAL 161 631 792 SUP 21 17 38 TECH. 48 246 294 UNSKD 32 33 65 TOTAL 101 296 397 …. . and so on for other groups 18

MANPOWER CALCULATION FOR ANNUAL LOAD PROD. LOAD GROUP 1359 C/S CATEGO RY I 1422. 69 II Notional variable (FIX*4/4. 5 + VAR New Manpower / LOAD MP for load TOTAL >1500 GS MANPOWER - C*L/1000 [A*(L/1500 - 1)*0. 3] M 2 FIX VAR A B C M 1 SUP 55 45 94 159 TECH. 57 514 565 957 UNSKD 49 72 116 196 TOTAL 161 631 775 1312 SUP 21 17 36 51 51 TECH. 48 246 289 411 UNSKD 32 33 61 87 87 TOTAL 101 296 386 549 L 1693. 57 MP 1000 GS M=M 1+M 2 …. . and so on for other groups 19

MONTHWISE INCENTIVE PERFORMANCE (2005 -2006) MONTH APR’ 05 MAY’ 05 JUNE’ 05 JULY’ 05 I II IV V GPE 1. 4317 1. 1392 1. 2100 1. 0858 1. 3764 RPF 1. 5241 % INC 83. 05 29. 14 39. 28 22. 59 70. 29 GPE 1. 2692 1. 1988 1. 0653 1. 2694 1. 3388 RPF 1. 3569 % INC 37. 38 27. 79 15. 28 37. 41 48. 46 GPE 1. 1061 0. 9631 1. 0711 1. 2875 1. 0455 RPF 1. 2199 % INC 14. 03 6. 60 11. 58 31. 28 9. 79 GPE 1. 3218 1. 2662 1. 5246 1. 5530 1. 0439 RPF 1. 3195 % INC 42. 85 34. 55 82. 20 88. 95 12. 66 20

MONTHWISE INCENTIVE PERFORMANCE (2005 -2006) MONTH I II IV V GPE 1. 3853 1. 1833 1. 5131 1. 3327 1. 2593 RPF 1. 3211 % INC 53. 70 24. 04 79. 73 44. 70 33. 68 GPE 1. 3696 1. 2786 1. 1979 1. 5123 1. 1945 SEPT’ 05 RPF 1. 3114 % INC 50. 12 35. 78 25. 25 78. 45 24. 86 GPE 1. 4506 1. 3002 1. 2080 1. 5098 1. 2658 RPF 1. 3024 % INC 64. 41 38. 33 25. 99 76. 90 33. 42 GPE 1. 4743 1. 3253 1. 4278 1. 2498 1. 3377 RPF 1. 3467 % INC 73. 85 45. 40 64. 11 33. 95 47. 47 AUG’ 05 OCT’ 05 NOV’ 05 21

MONTHWISE INCENTIVE PERFORMANCE (2005 -2006) MONTH DEC’ 05 JAN’ 06 FEB’ 06 MAR’ 06 I II IV V GPE 1. 4715 1. 3446 1. 3925 1. 2201 1. 3722 RPF 1. 3480 % INC 73. 39 48. 74 57. 36 30. 02 53. 60 GPE 1. 4432 1. 3472 1. 4924 1. 3091 1. 3376 RPF 1. 3155 % INC 64. 20 46. 66 74. 50 40. 59 45. 09 GPE 1. 468 1. 3521 1. 3520 1. 2437 1. 3191 RPF 1. 2978 % INC 67. 54 46. 11 46. 08 30. 19 40. 86 GPE 1. 4341 1. 2422 1. 2226 1. 2895 1. 3483 RPF 1. 3782 % INC 68. 47 34. 83 32. 11 41. 93 51. 86 22

MONTHWISE INCENTIVE PERFORMANCE (2006 -2007) MONTH I II IV GPE 1. 2172 1. 0538 0. 9726 0. 9411 0. 9948 RPF 0. 6280 % INC 15. 20 3. 77 0. 00 GPE 1. 2498 1. 1712 1. 4798 1. 3015 1. 2644 RPF 0. 9708 % INC 17. 49 11. 98 41. 32 21. 11 18. 51 GPE 1. 2916 1. 2847 1. 4380 1. 3100 1. 3026 JUNE’ 06 RPF 1. 2209 % INC 31. 87 30. 97 54. 48 34. 35 33. 34 GPE 1. 4392 1. 3494 1. 3969 1. 2873 1. 2139 JULY’ 06 RPF 1. 2539 42. 35 42. 29 50. 13 33. 35 24. 16 APR’ 06 MAY’ 06 % INC V 23

REDUCTION IN MANPOWER DEPLOYED PER GS UNIT YEAR COACH OUTTURN NONAC AC EQ. GS UNITS NO. OF MEN ON ROLL (APR) PROD. +PLANT NO. OF MEN ON ROLL PER GS UNIT TOTAL 1995 -96 540 150 690 876. 80 4745 5. 41 1996 -97 746 174 920 1142. 20 4606 4. 03 1997 -98 831 200 1031 1270. 80 4557 3. 59 1998 -99 857 230 1087 1382. 19 4525 3. 27 1999 -00 950 232 1182 1459. 79 4490 3. 08 2000 -01 970 220 1190 1436. 07 4453 3. 10 2001 -02 913 291 1204 1526. 04 4419 2. 90 2002 -03 722 222 944 1171. 74 4391 3. 75 24

REDUCTION IN MANPOWER DEPLOYED PER GS UNIT YEAR COACH OUTTURN NONAC AC EQ. GS UNITS NO. OF MEN ON NO. OF MEN ROLL (APR) ON ROLL PROD. +PLANT PER GS UNIT TOTAL 2003 -04 953 248 1201 1516. 68 4324 2. 85 2004 -05 879 322 1201 1602. 04 4287 2. 68 2005 -06 923 340 1263 1657. 53 4375 2. 64 2006 -07 319 93 412 510. 85 4240 2. 77 (APR-JULY) 25

Advantages of group incentive scheme over Chitranjan Scheme z No concept of indirect worker in this incentive scheme i. e. All workers are treated as direct & get 100% incentive. z Less paper work due to absence of individual job cards & Item wise rate fixing, resulting less administrative over heads z The sectional output is always geared towards increasing the overall, final output of the workshop. No imbalances in production of different sections/Shops. z More adaptable for Multi skilling. z Greater flexibility for efficient utilization of work force at different locations as per requirement. 26

Advantages of group incentive scheme over Chitranjan Scheme z No upper limit of incentive earning. z Absenteeism % affects incentive earnings of each group, hence scheme discourages absenteeism. z Relaxation allowances are given based on ILO guidelines, which are more scientific. z All allowances like inspection, fatigue etc. are already included into the direct man-hours, based on the actual observations during the time of study. 27

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