Business Process Management JournalProject cost control: a new method to plan and control costs in large projectsR. Jayaraman,

Article information:To cite this document:R. Jayaraman, (2016) "Project cost control: a new method to plan and control costs in large projects",Business Process Management Journal, Vol. 22 Issue: 6, pp.1247-1268, https://doi.org/10.1108/BPMJ-10-2014-0102Permanent link to this document:https://doi.org/10.1108/BPMJ-10-2014-0102

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Project cost control: a newmethod to plan and control costs

in large projectsR. Jayaraman

Department of Operations Management,SP Jain Institute of Management and Research, Mumbai, India

AbstractPurpose – The purpose of this paper is to reengineer the process of cost management in large projects.Design/methodology/approach – Considering the fact most large projects overrun their budgetsbecause of the long time period needed to completion, it was decided to reengineer the cost management.Accordingly costs allocated to packages were reviewed and changed on a dynamic basis. Different types ofcontingencies were provided. Concepts of package contingency and project contingency were introduced.These were based on the project buffer and feeding buffer concepts popularised by Eliyahu Goldratt.Findings – The re-engineered method of cost control worked well and yielded better than expectedresults, leading to the setting up of a new world record in the completion time for setting up a milliontonnes per annum continuous, tandem cold rolling mill to roll steel sheets.Research limitations/implications – In view of the total success of the reengineered approach,which was tested out on a large project over three years, it is felt that other projects could also try outthis technique, especially since it is along the lines proposed by Eliyahu Goldratt who is an authorityon project management. However the success can be better understood if the results of the testingbecome available. To that extent the contents of the present paper have limitations.Practical implications – Large projects can deploy the methodology and complete their projects ontime and under budget.Social implications – The reengineering of the cost management was done primarily with a view tocomplete projects under budget. Since many governments spend many billions of dollars on publiclyfunded projects for the welfare of citizens, the use of this technique could have a salutary effect on the cost.Originality/value – The method was innovated in the company by the author’s team and deployed ina live project over four years for the first time to achieve world-class results.Keywords Project management, Collaboration, Coordination, Project teams, Contracts,Project managers, Business process re-engineering, Project cost control, Project contingency,Package contingency, Project cost control systemPaper type Research paper

Purpose of this researchIn the year 1993, Tata Steel, at that time the lowest cost producer of steel in the world,was looking at ways to re-engineer its methods to design and implement projects. In theprior years – 1985-1993, the company had spent a very large sum of money inmodernising the steel plant facilities. The whole exercise would cost more than a billionUSD (at the forex rates prevailing then) and the facilities so created would lead thecompany to greater heights of iron and steel production (www.scribd.com/doc/27866020/Project-report-on-TATA-Steel, Tata Steel, Annual Report, 1999-2000). However, oneaspect that needed urgent attention was the company’s methods for project management

Business Process ManagementJournal

Vol. 22 No. 6, 2016pp. 1247-1268

©Emerald Group Publishing Limited1463-7154

DOI 10.1108/BPMJ-10-2014-0102

Received 27 October 2014Revised 2 January 2015

Accepted 18 February 2015

The current issue and full text archive of this journal is available on Emerald Insight at:www.emeraldinsight.com/1463-7154.htm

The work for this paper was done under the guidance and encouragement from B. Muthuraman,Vice President, Gopalpur Project (he went on to become the Director as well as Vice Chairman ofthe company in subsequent years) and R.P. Singh, the then General Manager of the CRM Project,and who is currently Advisor to the Managing Director of Tata Steel.

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which came into sharp relief in those years. Much cost and time overruns convinced thecompany to re-engineer the processes.

The Cold Rolling Mill Project (CRMP) provided the right opportunity for doing so,an opportunity to “learn while doing”. A systematic effort designed and implementedover the next six years or so would result in the construction of a world-class CRMP,a project costing around Rs 2,000 crores and executed over a period of 26 months(not including the time spent on preparatory, planning and preliminary activities).

A review of the literature prevalent at that time revealed that many projects failed in theirobjectives because of poor design, defective planning and lack of disciplined execution, apartfrom lack of control over external factors. The company’s own experience showed that thekey factors responsible for project failures in the projects implemented in Tata Steel were thelack of co-ordination between project managers, lack of leadership to seek out a co-operativeand collaborative culture amongst the various project managers in the project, lack ofappropriate management of vendors and a lack of understanding of how to manage projectson a continuing basis. For example, large projects get done over two or three years duringwhich the ground realities change quite significantly leading to project cost and timeoverruns. In order to find out how to manage project costs better, the company set up aspecial CRMP team which was tasked with benchmarking with the best in the business –companies like Bechtel, Toyo, Larsen and Toubro and Fluor Daniel. After visits to studytheir practices, the team also studied the literature, especially the PMI booklet PMBOK.Various discussions and reading of the literature confirmed our belief that we need to workout a new system tomanage the project managers better and develop a collaborative and co-operative culture which will lead to project cost control. This coupling of the two major,different domains – one, essentially a people behaviour one, and the other, essentially one ofcosts and budgets – held the key to the new method to be developed.

Literature surveyControlling costs of projects is an important aspect of project management, especiallyso in the case of large projects where the costs could run into several millions of dollars,and any delay in completion or cost escalations may lead to overruns in millions.Project management literature is full of articles on how to control costs (e.g. Lavingia,2003; Emhjellen et al., 2003; Dell’Isola, 2002; Longworth, 2002; Zhan, 1998; Behrendt andWulke, 2004) and control project schedules and quality (Hormozi and Dube, 1999; Dengand Hung, 1998). In fact, several dimensions of project costs and schedules have beendealt with in great detail, mainly due to the criticality of these elements in the startingup of new ventures and new investments. A project which is delayed can become a bigburden on the investor, for example, the case of projects in the public sector domain.Government projects routinely lag behind schedules; one can witness the severalrailway and road projects in many parts of the world, (the Boston Big Dig is an extremeexample) which get delayed mainly due to land acquisition and compensation issues.Many projects are unable to start in time because the land needed could not beacquired, especially for large dams, public buildings such as railway stations andpublic utilities. Cost overruns in government projects are endemic. Since in manycountries, both developing and developed, governments contribute a very large chunkof funding and undertaking large projects, it is important to study the factors thatgovern project cost control in such large efforts.

Eden et al. (2005) have described the experiences in delays in large projects, howsuch delays were well beyond what “normal delays” could be and what lessons couldbe learnt. Uncertainties in estimating the time required for key activities in important

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tasks, the difficulties in estimating the resource requirements and making themavailable to the project at the right time and affordable cost are some of the factorswhich the authors point out as coming in the way of accurate project cost estimates.Similarly, Larry Leach (2003) has listed the various “biases” that can affect theproject cost. According to Leach, biases can emerge due to merging of project paths inunpredictable ways, omissions of activities such as documentation, storage of drawingswhich consume time and efforts but do not seem important to project managers,overconfidence, errors, queuing, multi-tasking and so on. All these factors either individuallyor collectively lead to delays or slippages in schedules leading to cost overruns. Emhjellenet al. (2003, pp. 26 and 27) have quantified the cost overruns in the off-shore oil fieldstructures in Norway and suggest that even the methods adopted to estimate capex (e.g.using the 50/50 expected value with uniform distribution) could lead to overstatement ofcost escalations when the underlying nature of the capex costs follows a non-symmetricdistribution such as beta, where the 50/50 expected value of the cost is shifted away from themidpoint to the right. Robert Tichacek (2006) has updated the understanding of the costaspects of a project and has renewed focus on the underlying tasks and structure of theproject in the determination of the cost to completion. Other authors – Ciccarelli (2004),Cigolini and Costellano (2002) and Raz and Globerson (1998) – have all attempted to providedifferent, specific solutions to control project costs. Rozenes et al. (2006) have covered all theabove topics and more in their review paper, which provides a birds eye view of thedevelopments that have taken place in the field of project management.

Literature on project controls – current developments and state of the artCurrent literature is replete with references to work being done on understanding theunderlying causes of project cost and time control. Even today, although the causes havebeen identified, it is still a struggle to develop a holistic approach in practice for a foolproofmethodologywhich will give a reasonable chance that the project will be done as per plan. Intheir review paper, Rozenes et al. (2006) have repeatedly found that teamwork amongstproject managers is an important dimension. For example, they cite the works of Jiang andKlein (2000) and Jiang et al. (2001) which bring out the key role played by project managersin the success of a project. Citing the work of Turner (2004), they mention that a“collaborative working relationship should be maintained between the owner and projectmanager”. The methods used for cost control include the shareholder value analysis (SVA),the line of balance (LOB) methodology adopted by the US Department of Defence and theearned value (EV) methodology described in the PMI’s PMBOK (see e.g. Hanna, 2012;Abdomerovic, 2004, used the EVM in project control). All these form the contents of the twobroad types of project control methodologies in use – the single point and the multiple pointcontrol systems (MPCS). Eliyahu Goldratt’s (2008) TOC approach is also being used forproject control. While recognising the need for a holistic approach to project managementwhich will include the collaborative and co-operative behaviours of project managers inproject success, and that MPCS is the need of the hour, Rozenes’ paper does not include anyreferences which address the human behavioural aspects of project managers.

In his book, Lewis (2007) says that “ultimately, the only way to control a project isfor every member of the project team to be in control of his or her own work”. He hasenunciated the conditions under which project managers can function in a collaborativeway. While Lewis has emphasised many factors that affect the project, and which werepracticed in the CRMP, he has not mentioned about the details of the contingency-sharing method that was innovated in the CRMP. In a way one can say that the CRMPused many of the points made by Lewis but also took them a few steps further to devise

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a system to practice what is held as “ideal”. Mehta (2008) has, like Lewis, emphasisedthe human aspects of project cost control. However, he has not proposed a specificapproach for project cost control.

Olawale and Sun (2013) have developed a Project Control ManagementModel (PCIM) forthe construction industry. They report a survey conducted by Iyer and Jha (2005) whichshowed that the co-ordination among participants was the key for projects’ success. Afterexamining several project control models developed by researchers, they prefer the process-based models using Dr Deming’s principle of PDCA. Using the PDCA and a questionnairesurvey, they developed the PCIM as a “practice grounded research process as underlinedby the contingent philosophy of developing a theory of explanation to a phenomenon”.Their survey identified 20 most important factors for project cost control amongst whichthe sixth most important one was “conflict between project parties”. The success of thePCIM in individual situations depends on how well the “project inhibitors” are identifiedand dealt with. Thus, the PCIM has limited applicability, as it is largely “general” in nature.

Barazza and Bueno (2007) have proposed a probabilistic model for project controls;however, this is more of a theoretical approach and is limited by its applicability only toconstruction projects. Following is the summary of the latest developments in projectcost control.

There are many practices and aspects of project management which have been welldocumented through research and experiences.

It is evident that there are still some areas of project control, especially project cost,where there are no standardised practices to suit all types of projects. It may, therefore,be advisable to study and propose methods for small, medium and large projects.

While there has been a lot of development in the quantitative depiction of costcontrols in projects, the human angle has found mention that “it is important”. There isno literature available on how to integrate the human angle with the project cost controlangle, and this is the gap that this paper addresses. This paper describes thedevelopment of a Project Cost Control System (PCCS) which integrates the human sidewith project cost control.

Project cost controlApproaches to project cost control took a turn for the better with the advent of theWBS-based project management techniques, using the PERT and CPM methods.Developments in computer softwares have made the tracking and monitoring ofprojects possible in granular details. For example, the softwares like MS Projectand Primavera have made the task of monitoring projects from remote locationspossible. Project communications, updations, speedy modifications anddocumentation have all become integrated and simpler than before (see e.g.Jayaraman et al., 1999; Muthuraman et al., 2000a, b, c; Singh et al., 2001 and haveimproved the planning, designing, executing, commissioning and running incommercial production of large projects.

In spite of the many developments that have taken place in project control and havebeen documented (see e.g. Jayaraman et al., 2000), there is still no unanimity orconsensus on methods for managing costs in a project. This is primarily due to thenature of the subject itself – every project is typically a one-off effort, and theuncertainties involved make it uniquely unsuitable for standardisation. Hence, in everyproject, one has to improvise and innovate to suit the unique conditions. In largetechnology-driven projects, the different areas which are amenable for standardisationand not are listed in Table I.

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Development of a unique and innovative approach to cost control in alarge, technology-driven projectTata Steel is the flagship company of the Tata Group. It has had a unique historypioneering the iron and steel industry in India (see e.g. Jayaraman et al., 2003). TheCRMP was a vehicle used by the company to reengineer its project managementprocesses. Detailed descriptions as to how this was successfully done are available(see e.g. Muthuraman et al., 2000a, b, c). One of the many innovations which werewell executed to yield results as desired was the design and execution of a PCCS.This system was unique in many respects, although integrating, innovating andbuilding on many already prevalent concepts in the field of project management.

This paper describes the methodology adopted, the design features of the PCCS, theimplementation in the CRMP and the results achieved. The experience suggests thatthe PCCS can be a powerful tool for cost management in such projects. It has been usedin some other projects in Tata Steel also with success. Whether it can be used in alltypes of projects is a moot point. There are certain conditions which may have to befulfilled for this system to succeed. However, the principles used can be emulated andadopted in other projects as well.

Project management and cost controlThe CRMP was approved by the top management of the company after a series ofdebates on the layout features, equipment list, capacity and methodology to be adoptedfor PM. As has been described by Lavingia (2003), the project management process forthe CRMP closely resembled his model (Table II).

While the above figure encompasses all that was done during the project design andimplementation, there were many other things done to get a good idea of the cost of theproject. These included the following.

Capital cost estimation (also see Jayaraman et al., 1998)For large projects, capital cost of the facilities will have to be obtained throughbudgetary offers, discussions with suppliers and consultants, scanning industry dataand other sources. It is advantageous to seek the services of a “technology consultant”or “technology advisor” for assistance. Tata Steel appointed M/s Nippon SteelCorporation (NSC) of Japan as a technology advisor. With its extensive knowledge and

Areas in technology-driven project which areamenable for standardisation, typical

Areas in technology-driven project which are notamenable for standardisation, typical

Civil EquipmentStructural LayoutPiping Electrical circuitry and connections, voltages and

power requirementsWater circulation systems Skills sets like technology management, dealing with

consultantsSCADA Design and implementation of project milestonesDrawings and storage Design of project work packagesProject planning, monitoring and schedulecontrol

Design of WBS

Selection of vendors, dealing with them Compliances of various types – import/export, taxes,environment and government clearances

Table I.Areas in technology-

driven projectswhich can be

standardised andthose that are not

amenable forstandardisation

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experience in setting up and operating cold rolling mill complexes (CRMCs), NSC couldadvise Tata Steel in all aspects of technology choice and capital costs. This is one of theunique features of this project – the consultant is expected to furnish benchmark dataon the latest cost estimates of comparable facilities without violating the confidentialityof other clients. The expertise and contacts of the consultant were also used to arrangemeetings with potential bidders and equipment suppliers and visits to installations ofpast clients from whom operating and cost data were obtained.

Cost of operations can be calculated by obtaining information on consumptionnorms from potential equipment suppliers, discussing with industry specialists andconsultants and studying the annual reports of operating companies, goingthrough appropriate literature available in the public domain and undertakingtechnical calculations in-house. Tata Steel, through its extensive industry contacts,could obtain indicative figures from manufacturers abroad. Using all these means, afairly good idea of the cost of operations was obtained. Needless to say, the cost ofoperations will depend on the facilities installed, and for each configuration of theCRMC, the operating cost would vary as also would the capital cost. Assumptionsregarding funding of the project cost, commercial terms and conditions for loans andexchange rate (parity between the Indian Rupee and the US Dollar, Japanese Yen andthe German DM) were then used to derive the profit and loss accounts and theIRR. Cross checking was done with data available from industry reports issued byreputable agencies like the World Steel Dynamics, Steel Times International andother public sources by culling out select data from publications in the publicdomain or else obtained on payment. Discussions with Nippon Steel, the technologypartner, were also very useful in obtaining the cost data. Overall, severalbenchmarking exercises were used to arrive at various cost estimates – both capitaland operating – from which life cycle cost analyses were done for several alternativeconfigurations of the CRMP. Sensitivity analyses were done, and the following resultswere obtained (Figure 1).

The above were the project preliminaries which were successfully done toensure that the final cost estimate would be as per the management requirement.The vision for the CRMP was to establish a globally competitive CRM at global speed

Phase I Phase II Phase III Phase IV Phase VIdentify and assessopportunities

Select formalternatives

Develop preferredalternative

Execute (detailEPC)

Operate andevaluate

Clearly frame goal Generatealternatives

Fully define scope Implementexecution plan

Operate assets

Test for strategicfit

Preliminarydevelopment ofalternatives

Develop detailedexecution plans

Min changes Monitor andevaluateperformance

Preliminary overallplan

Develop expectedvalue

Refine estimate Finalisingoperating plan

Identify newopportunities

Preliminaryassessment

Identify preferredalternative

Submit funding forapproval

Business plan forPhase V

1% engineering Class 2 estimate 25% engineering Project reviewClass 1 estimate Class 3 estimate ( +

or − 10% accurate )Source: Adapted from Lavingia (2003)

Table II.The projectmanagement process

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and cost. Translated into the context of the CRMP, the vision became “to establish aworld-class CRM at the lowest cost and the fastest implementation time anywhere inthe world”. The target cost was USD 450 million, and the target time to completionwas 26(½) months.

PCCSThe PCCS was designed based on the project implementation philosophy. Being anIndian project designed and built to address global requirements, the emphasis wasalways on global competitiveness. Hence, all cost calculations were usually checkedwith the international costs and prices of hot rolled and cold rolled steel sheets and thedifference between the two costs (margin), which usually fluctuated based oninternational demand and supply (Figure 2).

If any project involves a large amount of foreign exchange outgo, and the output isto be sold in the international markets (or, alternatively, will have to compete with

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% increase in NR of CR

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% increase in capital cost

% reduction in coated products

Notes: NR, net realisation; CR, cold rolled steel stripsSources: Reproduced from Jayaraman et al. (1998, 2000)

Figure 1.Sensitivity analyses:effect of changing

project costparameters on theoverall IRR of the

project

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WSD Price Track History - Antwerp Spot Prices

Notes: WSD, world steel dynamicsSources: Reproduced from Jayaraman et al. (1998, 2000)

Figure 2.Margin – difference

between the prices ofHR and CR coils in

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imports from international markets), then it is imperative that the project cost is alsocalculated in the dominant currency; the IRR also ascertained this based on suchcalculations. The evaluation of IRR based on this method will give the owner an idea ofthe competitiveness of the project. In order to minimise the adverse effects of forex,many project owners try to minimise forex content by manufacturing indigenously orcontracting for payments in either the local currency or one dominant currency.Banks have realised the need for such “cost pegging”measures and introduced suitablefinancial instruments like interest swaps, currency swaps, exchange rate pegged forexloans and so on.

The CRMP involved a forex outgo of about 25 per cent of the total project cost, and itwas a challenge to manage the currency risks. On the financing side, the forex loanswere pegged at one level through either interest swaps or constant currency rate loans.This methodology helps in pegging the costs to a known value but may not always bein favour of the project owner. Chosen foreign vendors were also asked to either sourcetheir supplies from indigenously manufactured goods, or accept payments, at least inpart, in Indian currency free of the exchange rate risks. However, for the bulk ofsupplies sourced indigenously, there was still a need to control costs and keep theCRMP under a challenging budget target.

Nature of project costsIn large projects, the total project cost is a summation of several “packages”.These “packages” are typically identified at the planning stage of the project whenthe WBS is being worked out. The packages either constitute the full cost or alarge part of the cost of a WBS element. Each package is a well-defined set of workneeded to be done in a physical area of the project and is connected with otherpackages either directly or indirectly.

Usually it is a good idea to include all project costs in one package or another andassign a project manager to be in charge of the work contained in that package. In thisway, the project administration can ensure at the project design stage that all areas ofwork in a project are entrusted to authority figures who also hold the responsibility andaccountability for that/those packages. The next step is to prepare a complete listing ofall such packages and the work contents of these. The complete breakdown of the workcontent in a package emerges fully over a period of time and is evolutionary in nature.The methodology includes initial guess estimate of the cost, then preparation of a grosslevel Bill of Materials (BOM) and then using past data arrive at an internal estimate,then improve work definition and then ask for budgetary quotes followed by two orthree rounds of detailed quotes and discussions with vendors. Also included are pre-bidconferences where a group of vendors are invited by the project owner, andpresentations based on prior information supplied by the owner are made by thevendors to enable estimation of the work involved and the cost. Such conferences alsohelp the owner and vendors to understand each other’s requirements better.

Over a period of time, the costs of packages get finalised. At the project planningstage, the owner/consultant starts with a broad estimate and then works out an overallcost estimate based on the different types of work to be done. For example, in the caseof the CRMP, the initial WBS showed the following (Table III).

At this stage, the project cost estimate varied from Rs 2,000 to 2,500 crores. Theseestimates were far too above the target fixed by the top management for the project,which was around Rs 1,500 crores. Apart from this, the other main concern was that evenif the estimated cost is brought down to this level through appropriate engineering and

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vendor discussions, it was still necessary to hold the costs down to the levels plannedover the entire length of the project which was a little over two years. This was thechallenge which made the design of a new PCCS imperative for large projects.

Design of a new PCCSThe cost of a project is the summation of the cost of all packages or project cost (PC)¼ΣCPi,i¼ 1 to n, where CPi is the cost of a package and n is the number of packages in the project.

PC can be controlled through two main actions: short-run actions and long-runactions. The short run is defined as the time when the packages’ costs are firmed up,which usually happens over a three- to five-month period. The cost of the majorpackages is fixed first, and then for the minor ones. It is important to control the costsof the major packages in a different way than the minor ones. When designing the newsystem for PCCS, the following principles were accepted:

(1) The cost of a major package is to be firmed up first. All major packages must befirmed up in the shortest possible time, with those that are most independentbeing given the topmost priority.

(2) In any project, there are “independent” packages and “dependent” packages.The independent ones are those that can be ordered out irrespective of otherpackages. Typically major equipments, civil, structural and main electrical supplycentre will form a part of such packages. Dependent packages are those that haveto be finalised after the independent packages are done with, since the compositionandwork content of dependent packages will be significantly affected by the natureof facilities in the independent packages. Typically piping, SCADA, electricalwiring, water supply, internal transportation and flooring belong to this category.

No Description Package name Area

(A) Land development Land dev. and grading 5.4 lac m3 Civil(B) Civil and

structuralZone 1Zone 2Zone 3Zone 4

CivilCivilCivilCivil

(C) Equipment aserected

PLTCM (main equipment)Roll shoprepair shopBAFSPMCGL – 1CGL – 2COG and hydrogen gen plantNitrogen plantcompressed air systemSump pumpsCooling tower (including Cvl)MPDS (including 132 KV Bay)LBSS, LBDS, LCSS, etc.Interplant cabling, RD and YD LtgRecoiling and inspection lineCoil packaging line

Pickling line and tandem cold millPickling line and tandem cold millPickling line and tandem cold millBatch annealing furnaceSkin pass millContinuous galvanising line – 1Continuous galvanising line – 2UtilitiesUtilitiesUtilitiesWaterWaterElectrical, electronics andinstrumentation(EEI)Finished product and storage

Source: Reproduced from Jayaraman et al. (2000)

Table III.Initial WBS for

CRMP

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(3) Since orders will be placed sequentially or in bunches, it is possible to update thetotal cost of the project in stages and rework, if needed, the cost of the packagesfor which the orders are to be negotiated. In this way, through an iterativeprocess, backed up by a strong engineering ability, teamwork and mission-drivenproject management using best practices, the PCCS endeavours to keep theproject cost under the budget. Since project managers (PMs) work in unison tomake a project happen, the PCCSmust take advantage of this fact. The PCCS alsoconsiders the fact that each PM can be held responsible for the cost of his/herpackages and can be rewarded/incentivised to bring down his/her packages costto the extent possible and “surrender” the balance surplus to a common PC fund.

(4) In practice, this system was devised as follows: first, the total PC is set at thetarget with a “project contingency” amount which is the difference between thetarget cost for the project set by top management less an amount which is kept asa contingency to be allocated to individual PMs based on how they are able tofinalise their packages costs; then the costs of the packages is estimated, and eachpackage is given a target, which includes a “package contingency”. A singleagency – called the “project cost control and progress monitoring cell” (PMC) –was formed and charged with the task of ensuring that the cost to completion ofthe project is evaluated continuously and actions are initiated to keep the costwithin the sanctioned budget. This group was authorised to liaise with all thePMs and discuss their package costs and devise systems and methods by whichthe PC will be controlled . The methodology is shown in Table IV.

In terms of controls:

ProCos ¼X

CPi; i ¼ 1 to nþProCon;

PacCon ¼X

Ci; i ¼ 1 to n included in CCPið Þ;

Total cost of packages ¼ PacCos ¼X

CPi; i ¼ 1 to n;

ProCon ¼ ProCos–PacCos ¼ ProCos�X

CPi; i ¼ 1 to n:

Overall project cost to completion (ProCost ) Rs 1,800 crores (target cost approved by the Board of thecompany)

Package number P1 P2 P3 PnPackage cost, including packagecontingency

CP1 CP2 CP3 CPn

Total package cost (PacCos) ΣCPi,i¼ 1 to n

Rs 1,700 croresincluding a PacCon ofRs 170 crores

Package contingency C1 C2 C3 CnTotal packages contingency (PacCon) ΣCi,

i¼ 1 to nRs 170 crores

Project contingency ProCon¼ProCos– ΣCPi, i¼ 1 to n

Rs 100 crores

Notes: Amounts shown in the table are only illustrative, these are to be determined by the PMC andthe owner/project consultantSource: Author’s research

Table IV.The structure ofPCCS – a newsystem for projectcost control

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The PMC will keep a watch on the discussions and placement of orders by each PM.It will supply him with the targets at the package level. Of the three variablesmentioned above, the Ci’s and the CCPi’s will vary as the project progresses. This is thecrux of the PCCS. The dynamic nature of the contingencies makes the task of keepingthe project completion cost on target easier and more reassuring than any othermethodology. This methodology is superior due to the following reasons:

(1) To begin with, the estimation of the total packages cost takes into account theProCon requirement . Hence, the costs are thoroughly scrutinised, and anestimate is prepared keeping an amount roughly 10 per cent of the approvedamount. This provides the necessary cushion to take care of escalations due torate changes, scope changes, new requirements, etc.

(2) Second, each package is allocated a package contingency which is typically5-10 per cent of the package cost. The estimates are prepared using the lowercost numbers, which is a second-level safeguard against over-engineering,keeping the safety factors within reasonable limits, enabling bare knuckle costnumbers for the package.

(3) The third significant factor is that not all packages are allocated the samepercentage amount of package contingency (see e.g. Table V). Allocation ofcontingency then becomes a measured and deliberate exercise taking intoaccount the possible escalation in the package costs due to the earlier mentionedfactors. For example, if the package happens to include a higher amount offorex, then a higher percentage of contingency to cover the forex risks in thelong run is included. However, if the package is indigenously procured and theengineering requirements are well known, then the contingency may even be setat zero. In cases of fixed price contracts, the package contingency is obviouslyzero. Thus, the very process of deciding the PacCon instils a discipline in theestimation with a salutary effect on project cost.

(4) Another important aspect of the PCCS is the dynamic review of the costs. To beginwith, as already mentioned before, a complete preliminary cost picture, package-wise, is prepared and discussed and finalised in consultation with all PMs. Then theprocess of order placement begins. Large, independent packages are finalised onpriority, and the cost data are updated. Costs are updated as soon as each order forthe packages are finalised and checked against the targets set. The targetsthemselves evolve dynamically, for example, let us say that, at the beginning of theproject, when no orders have been placed, the cost of P1 is estimated as CP1 and thePacCon for this package is C1. When the order is placed, let us say, at Px, which isless than P1, then the entire PacCon C1 is “surrendered” and taken to the “projectcontingency” (ProCon) pool, and the amount P1−Px is also added to the ProCon.This swells the ProCon amount and makes more money available for the ensuingorders. The PMwhomade this possible is given due credit for the savings. The newProCon and the revised cost estimates of the balance packages is then discussedwith all PMs and changes made in the PacCons as required. If more amounts haveto be allocated, and for this a part of the ProCon is to be drawn down, then this isdone with the full knowledge and approval of the project in charge and theconcerned PMs. In the next tranche of orders, the revised estimates are used aspackage cost targets for order placement. Once again, the process is gone through,and at regular, fixed intervals, the PMC issues a note regarding the “cost to

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Areaof

project

managem

ent

PCCS

method

Non-PCC

Smethod

Adv

antagesof

PCCS

over

non-PC

CS

Cost

estim

ation

Use

ofProC

onmakes

theestim

ates

tighter

Use

ofPa

cCon

makes

thesameeven

tighter

Sinceonly

anoverallcontin

gencyisallocated,

estim

ationof

cost

isnotsubjectedto

tight

norm

s,therebygiving

way

tohigh

erproject

cost

estim

ates

Use

ofPC

CScanresultin

alower

PCestim

ate,giving

anadvantagewhich

can

drivethePC

tolower

levels

Use

ofdy

namiccost

evaluatio

nandre-

allocatio

nof

ProC

onandPa

cCon

further

refin

estheprocessof

cost

estim

ation

Use

ofdy

namiccost

evaluatio

nmay

bepresentb

utisnotintrinsicto

theprocess.Also

re-allocatio

nisnotpracticed

asthereisno

valid

basis

Refinem

entin

cost

estim

ationandthe

dynamicattentionto

packages

cost

isan

advantage

Involvem

entof

PMsin

cost

decision

making

PMsareinvolved

continuously

inmakingcost

estim

ates.Incentiv

isation,togetherwith

ateam

working

atmosph

eremakes

theprocessof

re-allocatio

nmeaning

fula

ndsynergistic

PMsarenotinv

olvedin

aco-operativ

eway,in

anexplicitmanner,sup

ported

bybu

ildingan

atmosph

ereof

collaboratio

n

Synergiesbetw

eenPM

shave

theeffectof

controlling

PCon

acontinuous

basis

Concepts

ofProC

onand

PacCon

Whereas

ProC

onisused

asacommon

pool,

PacCon

isaPM

-orientedtool.T

hese

two

conceptswhenused

intand

emgive

thechiefo

ftheprojectthepower

tobalanceindividu

alinitiativewith

team

work

Noexplicitmechanism

availableforbalancing

individu

aleffortwith

team

effort,h

ence

working

atcrosspu

rposes

ordisjointed

working

isnotun

common

PCCS

isatool

which

balances

the

qualita

tiveandthequ

antitativeaspects

ofprojectmanagem

ent

Action

orientation

Due

tothedy

namicnature

oftheordering

processcoup

ledwith

astrong

engineeringand

vend

ormanagem

entbase

theproject

implem

entatio

nison

asoun

dfooting

The

processof

projectmanagem

entisnot

oriented

tocollective,supp

ortiv

eand

collaborativ

eworking

.Due

tothemissing

alignm

entsynergydevelopm

entishampered

Actionorientation,especially

ofthe

collaborativ

evarietyisessentialfor

good

PCmanagem

ent.PC

CSisasystem

atic

way

toachievethis

Sou

rce:

Author’s

research

Table V.Reasons why thePCCS is superior toother methods ofproject cost control

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completion” of the project as on date. PacCons re-allocation is a continuous process.While those PMs who achieve savings are given due credit, those who need extraamounts are given the same without any loss of credit, provided they are able tojustify the escalation. Usually in the first 40 per cent of the project time period, suchjustifications are admissible as the project costs take time to shape up.

(5) PMs can also ask for a review of their PacCon due to arising of someeventuality. The same is discussed with the PMC, and a decision is arrived atregarding the new allocation.

(6) At all times, the PMC must ensure that the distributed amounts are such that thetotal project cost is kept within the target, and the ProCon is not brought downbelow the starting ProCon amount. However, this cannot be guaranteed, and inthe course of the project, the ProCon amount will usually go down close to zero. Ifit exceeds this amount, then the likelihood of the PC exceeding the target is high.

(7) At all stages, the chief of the project and the top management are kept informedof the ProCon, the ProCos and the cost to completion. Appropriate actions aretaken by the chief if such is warranted at any point of time in the project.

(8) When a package cost exceeds the amount allocated – P – then the extra amount hasto be allocated from the ProCon amount. This has the effect of reducing the PacConsfor further orders. The more this happens in a project, the top management must bealerted that the possibility of the project cost exceeding the target is high. Actionsmust therefore be set in motion which will prevent this from happening. Suchmethods include re-engineering of the balance packages, changes in scope(typically, reduction), using lower cost materials in place of higher cost ones, etc.

The use of the PCCS in the CRMP led to the development of a culture of projectmanagement wherein PMs worked continuously to find out innovative methods to keepcosts under control. The synergy brought about made the PM’s work a collaborativeeffort to share and discuss ideas about each others packages due to which several costreduction/rationalisation efforts were undertaken which led to a close control on the ProCos.Some of these practices are as follows (reproduced from Singh and Jayaraman, 2001):

• Preparing civil and structural drawings as per BOQ, decided at the time theproject was conceived. No increase in either concreting quantity or size ofstructures has been permitted.

• Keeping a close tab on actual quantities at site and checking whether these werein line with what were provided for at the time of design’s preparation.

• Rerouting existing railway lines, water lines and sewer lines instead of layingnew ones.

• Reducing the number of piles required. In this activity, the nature of the soilplays a vital part.

• Using appropriate backfilling techniques.

• Reducing the scope of work in some of the packages by using better alternativesto obtain the same processing capacity.

• Redesigning process flow charts and sizes of equipment. For example, it wasdecided to go in for two larger sized compressors instead of three smaller ones.

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• Rerouting pipelines carrying coke-oven gas.

• Fixing target cost of each package within the overall budget and placing orderswithin the target costs.

• Obtaining lower costs from contractors than what was envisaged at the time ofbudget through tough negotiations, increasing quantum of work, proper choiceof contractors, payment of advance judiciously, making stage paymentscommensurate with work progress, tax planning, etc.

• Adopting a rigorous process of checking contract prices especially with respectto the taxes and duties to be paid by the client and the contractor and seekingreductions from the contractor/supplier.

• By completing several value engineering projects to prepare a compact layout, tominimise equipment size, to design an efficient process flow, etc.

• By undertaking a simulation exercise to optimise the number of EOT cranes.

• By conducting benchmarking studies to reduce tonnes of structural steel usedper unit area, closing contracts within a stipulated period to avoid costescalations, and undertaking quality improvement projects to speed up theprocesses of releasing purchase orders and preparing sanction requests forplacement of purchase orders – all of which helped in reducing cost of structuresand the cost of concluding commercial transactions.

• Opting for clearing imported capital goods for the tandem cold mill under theEPCG route, which resulted in “zero duty” for these goods, thus bringing downthe capital cost substantially.

In order to better understand how the PCCS works, we will now examine two situationsin large projects – one, in which the PCCS is not used and the other in which the PCCS isused. Table VI shows the same.

Based on the strengths of the PCCS and the weaknesses of the non-PCCS, we nowexamine the two opposite situations that develop in project cost control.

Example based on the Table VITake a large project for which the board of the company has sanctioned Rs 1,800 croresas the total cost. The project team – consisting of the owner and the projectchief – works out the cost of the packages based on the target. The calculations of thefive packages appear as follows (Table VII).

Packages CP C

1 500 502 400 403 300 304 300 305 300 30Total 1,800 180Source: Author’s research

Table VI.Initial estimate of theproject cost of fivepackages, withPacCon¼Rs 180crores

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Over five periods, the costs of the packages keep getting finalised one by one,beginning with the first package, in that order. Since there is no ProCon, PMs haveto manage only with their PacCons. Hence if any one package overruns, thereis no incentive for the other PMs to compensate. Thus, typically the escalationcontinues to build over the five periods. The position after five periods appears asshown in Table VIII.

The graph of how the changes in cost move is shown in Figure 3.As can be seen, the PacCon keeps increasing in order to accommodate the cost

escalations leading to an increasing ProCos. Overall, the projects cost ends up muchhigher than the sanctioned amount, not because the PMs do not know how to run theproject, but simply because they lack the necessary tools and the mechanisms to keepthe project cost under control. On the other hand, if PCCS is used, the situations shownin Figures 4 and 5 can be encountered.

Figures 3-5 are illustrative. The action orientation, the building in of tools andmechanisms to control project cost control through synergy, developing a collaborativespirit between the PMs, a mission-driven project organisation and a best practices-oriented approach to project management can make all the difference. The PCCS wasinnovated, designed and used in a large, brown field CRMP in Tata Steel, Jamshedpur,India, which project established several milestones in project management. These havebeen published elsewhere extensively, and the practices used in this project have beenused in other projects as well. The contingency calculations used were elaborate andcomprehensive, taking into account all the possible variations which could affect the

Packages CP C

1 520 702 450 903 350 804 400 1305 380 110Total 2,100 480Source: Author’s research

Table VII.Final project cost,after five periods,

cost of fivepackages, with

PacCon¼Rs 480crores, an increase of

Rs 300 crores

Contingencyfactors Coverage

Forex fluctuation Exchange rate variationScope changes Unforeseen items which change equipment cost, changes in quantum of work, for

example, civil and structural work, utilities and infrastructure, etc.Inflation rate Government levies, such as, corporate taxes, customs and excise duties, CVD, etc.

The Wholesale Price Index is the composite indicator of changes in all these itemsincluding changes in wage rates, cost of stores items, etc.

Interest rates(domestic)

Bank rates for long- and short-term loans, cash credit, market borrowings,inter-corporate funds and unsecured loans

Interest rates(forex)

Foreign bank rates, LIBOR, FIBOR, other inter-bank rates, Exim bank loans,ECGC credits, Govt to Govt funds, etc.

Source: Author’s research

Table VIII.Details of

contingency factorsin the CRMP

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project cost. Given below is an example of the way in which contingency was calculatedfrom time to time – Tables IX and V.

Some key results of the CRMP, especially with respect to the world-class resultsachieved in cost control and time management, are shown below in Figures 6-10.

Behaviour of Project Cost and Package Contingency when the Projectcost exceeds the Budget - a case where the newly designed PCCS is

not used120

80

60

40

20

110

100 101 112 115

Period

115 117

11 14 17 22 27Package Contingency

Estimated Project Cost ToCompletion

Package Contingency Estimated Project Cost To Completion

2 3 4 5 6–

100

Source: Author’s research

Figure 3.The PacConincreases (as apercentage of theProCost, as shown inthe graph) with timeand the cost tocomplete alsoescalates over time,indexed with respectto the board-approved number ofRs 1,800 crores

1 2 3 4 5 6

Package Contingency 170 190 210 230 250 270

Project Cost Overrun –100 –60 –50 –20 –10 –

Estimated Project Cost ToCompletion 94 97 97 99 99 100

–100

100

300

Expected Behaviour of Project Cost, Package Contingency andProject Contingency when the Project Cost is controlled by PCCS

Package Contingency Project Cost Overrun Estimated Project Cost To Completion

Source: Author’s research

Figure 4.How the ProCos canbe controlled usingthe PCCS throughallocations of PacConand ProCon

0

20

40

60

80

100

120

1 2 3 4 5 6

Project Cost Contingency Allocation when project cost iscontrolled by the PCCS

Project Cost Contingency Allocation

Source: Author’s research

Figure 5.How the ProCon canbe utilised to ensurethat the ProCos doesnot exceed thebudget

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Correlation with contingency factors

Item of capital cost Forex Scope Inflation IRD IRF

Weightedaveragefactor

Contingency amount(Rs crores/year)

Imported equipment 0.05 0.02 0.05 −0.05 0.001.00 0.00 0.00 0.00 1.00 0.05

430 21.50 0.00 0.00 0.00 0.00 21.50Indigenous equipment 0.05 0.02 0.05 −0.05 0.00

0.00 0.50 0.50 0.00 0.00 0.04812 0.00 8.12 20.30 0.00 0.00 28.42Civil and structural 0.05 0.02 0.05 −0.05 0.00

0.00 1.00 0.50 0.00 0.00 0.05217 0.00 4.34 5.43 0.00 0.00 9.77Infrastructure 0.05 0.02 0.05 −0.05 0.00

0.00 0.50 0.50 0.00 0.00 0.0457 0.00 0.57 1.43 0.00 0.00 2.00Land 0.05 0.02 0.05 −0.05 0.00

0.00 0.50 0.00 0.00 0.00 0.0156 0.00 0.56 0.00 0.00 0.00 0.56Administration duringconstruction 0.05 0.02 0.05 −0.05 0.00

0.50 0.00 1.00 0.00 0.00 0.08121 3.03 0.00 6.05 0.00 0.00 9.08Construction facilities 0.05 0.02 0.05 −0.05 0.00

0.00 0.00 0.50 0.00 0.00 0.0310 0.00 0.00 0.25 0.00 0.00 0.25Bank interest rates – domestic 0.05 0.02 0.05 −0.05 0.00

0.00 0.00 0.00 1.00 0.00 −0.05110 0.00 0.00 0.00 −5.50 0.00 −5.50Bank interest rates – forex 0.05 0.02 0.05 −0.05 0.00

1.00 0.00 0.00 0.00 1.00 0.0555 2.75 0.00 0.00 0.00 0.00 2.751,868.00 27.28 13.59 33.45 −5.50 0.00 3.68% 68.82Notes: IRD, interest rate, domestic; IRF, interest rate, forex loans. All cost figures in Rs CroresSource: Author’s proprietary

Table IX.An example ofcalculation and

allocation ofcontingency for

the CRMP

COLD ROLLING MILL COMPLEX S-CURVE ON PROJECT COST

90100

80

% C

OM

PLE

TIO

N

70605040302010

Cum. Plan Cum. Achievement

0

Mar

ch-1

998

Mar

ch-1

999

Mar

ch-2

000

Mar

ch-2

001

Mar

ch-2

002

Sep

tem

ber-

1998

Sep

tem

ber-

2000

Sep

tem

ber-

2001

Sep

tem

ber-

1999

Dec

embe

r-19

98

Dec

embe

r-19

99

Dec

embe

r-20

00

Dec

embe

r-20

01

June

-199

8

June

-199

9

June

-200

0

June

-200

1

Source: Reproduced from Jayaraman et al. (2000)

Figure 6.Comparison of the

projected and actualproject cost mid-waythrough the CRMP

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Summarising the CRMP modelThe CRMP model can be summarised as shown in Figure 11.

Limitations of the PCCS methodologyThe methodology is best suited for large projects preferably brown field ones with ahigh engineering content in terms of civil and structural activities, equipment erectionand commissioning and installation of support facilities which are engineeringintensive. The forex content should also be reasonably low, say, less than 25 per centfor the methodology to deliver successful results. This is because the ProCon can bestretched only so far, and boards of companies may not be very willing to allow highercontingencies fearing loss of control. The project management must use many or all ofthe “best practices of project management” described in one of the references cited(Singh et al., 2001). The skills set needed, the competencies required and the training of

COLD ROLLING MILL COMPLEX S-CURVE ON PROJECT TIME100

80

60

40

20

0

% C

OM

PLE

TIO

N

Mar

ch-1

998

Mar

ch-1

999

Mar

ch-2

000

Sep

tem

ber-

1997

Sep

tem

ber-

1999

Sep

tem

ber-

1998

Dec

embe

r-19

97

Dec

embe

r-19

98

Dec

embe

r-19

99

June

-199

8

June

-199

9

June

-200

0

Cum. Plan Cum. Achievement

Source: Reproduced from Jayaraman et al. (2000)

Figure 7.Comparison of theprojected time tocompletion andactual progressmid-way throughthe CRMP

10.00

MO

NT

HLY

PR

OG

RE

SS

(%

)

TATA STEELCOLD ROLLING MILL PROJECT AT JAM SHEDPUR

PROGRESS - ENGINEERING (OVERALL)

MONTHS

CU

MU

LAT

IVE

PR

OG

RE

SS

(%

)

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

100.00

90.00

80.00

70.00

60.00

50.00

40.00

30.00

20.00

10.00

0.00

Sep

tem

ber-

1997

Sep

tem

ber-

1998

Sep

tem

ber-

1999

Nov

embe

r-19

97

Nov

embe

r-19

98

Janu

ary-

1998

Janu

ary-

1999

Mar

ch-1

998

Mar

ch-1

999

May

-199

8

May

-199

9

July

-199

8

July

-199

9

Pan % Achievement % Cum. Pan % Cum. Achievement %

Source: Reproduced from Singh et al. (2001)

Figure 8.Comparison ofplanned vs actualprogress ofproject engineeringfor CRMP

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PMs all indicate that a well-moulded, high-calibre, trained and experienced group ofPMs who are capable of working as a team by subsuming their individual goals is apre-requisite – and these are not easy to find in all projects.

ConclusionsThe PCCS is an innovation which was demanded by the desire of the Tata Steel companymanagement to reengineer project management practices in the company. One of the mainobjectives was to bring down cost of projects using scientific management techniques.

Source: Reproduced from Singh et al. (2001)

Pan % Achievement % Cum Plan % Cum Achievement %

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

MO

NT

HLY

PR

OG

RE

SS

(%

) 90.00

100.00

80.00

70.00

60.00

50.00

40.00

30.00

20.00

10.00

0.00

CU

MU

LAT

IVE

PR

OG

RE

SS

(%

)

TATA STEELCOLD ROLLING MILL PROJECT AT JAM SHEDPUR

PROGRESS - CONSTRUCTION (OVERALL)

MONTHS

Sep

tem

ber-

1997

Sep

tem

ber-

1998

Sep

tem

ber-

1999

Nov

embe

r-19

99

Janu

ary-

2000

Nov

embe

r-19

97

Nov

embe

r-19

98

Janu

ary-

1998

Janu

ary-

1999

Mar

ch-1

998

Mar

ch-1

999

Mar

ch-2

000

May

-199

8

May

-199

9

May

-200

0

July

-199

8

July

-199

9

Figure 9.Comparison of

planned vs actual:Construction

progress CRMP

Pan % Achievement % Cum Plan % Cum Achievement %

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

MO

NT

HLY

PR

OG

RE

SS

(%

) 90.00

100.00

80.00

70.00

60.00

50.00

40.00

30.00

20.0010.00

0.00

CU

MU

LAT

IVE

PR

OG

RE

SS

(%

)

TATA STEELCOLD ROLLING MILL PROJECT AT JAM SHEDPUR

PROGRESS - PROJECT (OVERALL)

MONTHS

Sep

tem

ber-

1997

Sep

tem

ber-

1998

Sep

tem

ber-

1999

Nov

embe

r-19

99

Janu

ary-

2000

Nov

embe

r-19

97

Nov

embe

r-19

98

Janu

ary-

1998

Janu

ary-

1999

Mar

ch-1

998

Mar

ch-1

999

Mar

ch-2

000

May

-199

8

May

-199

9

May

-200

0

July

-199

8

July

-199

9

Source: Reproduced from Singh et al. (2001)

Figure 10.Comparison of the

overall projectimplementation

CRMP with plan

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It was also desired to create new benchmarks in project management, and towards thatgoal, the concerned project managers were encouraged to experiment with new systemsand procedures. The PCCS was evolved after considerable study of the existing methodsfor cost control – which were not many. PCCS is a systematic method which evolved oversome six months much influenced by the thought processes which were supported andencouraged in Tata Steel under the Tata Business Excellence Model (TBEM). The PCCSwas designed by the PMC team in consultation with PMs, a process document was createdand circulated, the system was implemented over a period of five years and yieldedoutstanding results. Project management literature does not indicate that suchdevelopments have taken place since, and hence this paper. It is hoped that the projectmanagement community will make the best use of the contents and work towardsreducing cost escalations in projects in a holistic way.

Project Managers

• Finalise contracts for works as per sanctioned costs• Surrender excess package contingency to the packages contingency fund• Receive extra funding from the package contingency fund (and, if needed, from the project contingency fund) as per need

Pro

ject

Exe

cutio

n

Project Monitoring and Controls group

• Provide guidance on allocation of contingencies and modify package costs

Project Head

• Project vision

• Project Masterminding

• Provide guidance and approvals

• Project Planning, Cost estimationPro

ject

Pla

nnin

g an

d D

esig

n

Managing Director

• Goals setting

• Target approvals

• Large scale revisions or course corrections

Cor

pora

te in

terf

ace

and

stak

ehol

ders

Company’s Board of Directors

Reg

ular

and

per

iodi

cC

orpo

rate

inte

rfac

e an

d st

akeh

olde

rsC

ontin

uous

and

ong

oing

• Place orders

• Monitor cost of project continuously

• (Project Managers and Project team)

Source: Author

Figure 11.Conceptual diagramof the PCCS modelfor control of cost inlarge projects

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Further workThe CRMP model was developed and practiced in Tata Steel in the late 1990s. It wasfound to be of great use in major projects. However, project environments change, withconsequences on project cost control . Thus, it is possible to improve the PCCS practicesby applying them to more situations in projects. It is also possible to come up with an“ideal” project management organisation and functions document which will enable theCRMP model to be applied in other situations.

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About the authorR. Jayaraman is a product of UBC, Vancouver, Canada (where he did his MS in MetallurgicalEngineering with distinction), IIMA and IIT B. He joined Tata Steel in 1983 and rose to be itsChief of Business Excellence in 2001 after traversing through many positions of importance.He was the EA to the Vice Chairman of Tata Steel, EA, to the then MD and worked closely withsenior leaders. He worked as the chief of planning, monitoring and cost control of the cold rollingmill project of Tata Steel, headed by B. Muthuraman, which set several world records in projectmanagement. He also served as a VP of Quality in Tata Communications and as a Senior VP(Technology) and as Chief Safety Officer of Tata Teleservices. Currently he is serving as aProfessor, Operations Management in the SP Jain Institute of Management, Mumbai, which hejoined in 2011 after retirement from the Tata Group. He has published more than 40 papers andtwo books. R. Jayaraman can be contacted at: rjay_jsr@yahoo.com

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