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EVOLUTION OF PROJECT MONITORING AND CONTROL AT


DESCON
In December 1996, M azhar-ud-Din Ansari, Executive Director, DESCON Engineering, was
sitting in his office after a m eeting with two o f liis departm ent heads. The meeting, with Ayaz
Sharif, GM and Head, Project M onitoring, Analysis & Control (PM AC), and A sif
M oham m ad Ali (GM and Head, Project and Construction Services (P and CS), had been a
long one. Ansari was now wondering why the working relationship between the two crucial
departments had deteriorated to such an extent that it had started to affect the com panys
operations.
Ansari had asked for this meeting with the two departmental heads after his visit to the
Q adirpur Oil Field project site. In his words:
I had been hearing reports about the two departments being at daggers-drawn. I finally
realized something had to be done, when I visited the Qadirpur project. I was quite
worried about the performance o f the project. At the site the PM AC Incharge, who
seemed very happy at my visit, remarked, N ow they (P and CS ) will know w hats
w hat!

COMPANY BACKGROUND
In early 1975, Dawood Hercules Chem icals Ltd., a fertilizer plant located near Lahore, started
a new division with the m andate to carry out long-term developm ent and planning work for
Dawood Hercules (such as workflow de-bottlenecking, m odernization and expansion o f its
fertilizer plant) and to provide sim ilar technical services to clients outside o f Dawood
Hercules. In the spring o f 1977 it was felt that these types o f services could best be provided
under the cover o f a separate and independent company. Consequently a new company,
Design Engineering Services and Construction (DESCON) Ltd was formed. The company
was formally registered on December 15, 1977, with four engineers as its employees.

T his case w as w ritten by K ew an K haw aja, and M u stap h a B hatti under the superv isio n o f Dr A rif Iqbal Rana at
Lahore U niversity o f M anagem ent Sciences to serve as a basis for class discussion rather than to illustrate either
effective or ineffective handling o f an ad m inistrative situation. T his m aterial m ay not be quoted, photocopied or
reproduced in any form w ithout p rior w ritten consent o f the L ahore U niversity o f M anagem ent Sciences.

@ 2004 Lahore University of Management Sciences

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The first project carried out by the company was worth Rs 1.9 million for insulation work at
Pak Arab Fertilizer plant in Multan. Over the next five years, projects carried out by
DESCON included: Rs 3.7 million mechanical erection job o f Gojra Sumundary Sugar Mills,
and a Rs 120 m illion complete electro-m echanical installation for the National Refinery Ltd
(NRL) expansion in Karachi. In 1983 DESCON established its first office outside Pakistan, in
Abu Dhabi, UAE, and the company carried out its first overseas project in Saudia Arabia o f
shut-down o f SAFCO. The company executed its first Engineering, Procurem ent and
Construction (EPC turnkey project) in 1990 with 1C1 at Khcwra, Pakistan.
In 1996, D E SC O N s three m ajor business units were: Engineering Services, M anufacturing
and Project and Contruction Services (see Exhibit 1). Engineering Services offered process
design, equipm ent specifications, detailed mechanical design, plant layout, piping design,
electrical instrumentation and civil design. Services were also provided to carry out project
evaluations and the preparation o f proposals for the supply o f plants on a turnkey basis to
chemical, petrochem ical, oil and gas processing and agro-based industries. DESCON
provided com prehensive services for the operation and m aintenance o f such plants as well.
M anufacturing consisted o f DESCON Engineering W orks (DEW ), DESCON M echanical
Products (DM P) and DESCON Electro Systems (DES). DEW was equipped with m odem
facilities to undertake jobs that involved medium to heavy fabrication and m achining. The
equipm ent m anufactured included industrial boilers, pressure vessels, cement plants, heat
exchangers and w ater dem ineralization plants. DM P developed construction equipm ent,
machine tools and agricultural machinery. It also undertook the design and manufacture o f
special equipm ent against orders. DES designed, m anufactured and integrated specialized
electronic, electrical and autom ation equipm ent for industrial and professional applications.
Construction activities w ere the biggest source o f revenue for DESCON. D E SC O N s
construction team, supported by its own fleet o f mobile cranes o f different capacities and a
large inventory o f construction equipm ent, lad the capability to handle several projects o f
different m agnitude and complexity. The civil construction work consisted m ainly o f building
industrial complexes. The mechanical erection works prim arily comprised m anufacturing of
gas and steam turbines, boilers, furnaces, heat exchangers, storage tanks and plant piping
networks. DESCON also installed electrical and instrumentation units that involved
generators, motors, transform ers and lighting systems. DESCO N also offered Project
M anagem ent Services to m onitor and control a project through the various stages o f execution
till completion.
The company in 1996 employed 1000 employees. Total revenues stood at Rs 1.2 billion. The
company had over six hundred engineers (civil, chemical, mechanical, electrical and
metallurgical). The total num ber o f workers could fluctuate greatly, based on the num ber o f
projects under construction. In the recent past there were over 8,000 workers at the firm.
Headquartered in Lahore Pakistan, DESCO N had a regional office in Karachi with overseas
offices in Saudi Arabia, and Abu Dhabi. Additionally, the com pany had Engineering Design
offices at Lahore and Karachi and it operated two manufacturing facilities in Lahore.

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PROJECT MANAGEMENT IN THE EARLY YEARS
Project Organization and Reporting
Project Organization at DESCON underwent a lot o f changes over the years. In the early
years the marketing division at DESCON was responsible for getting DESCON on the list of
authorized bidders for prospective projects. Once DESCON was pre-qualified, a Request for
Quotation was obtained from the client and a Tender Review Committee was constituted to
form ulate a bid. This comm ittee typically consisted o f the Senior M anager Business
Development, M anager Proposals and the top person in the project-related area, e.g. General
M anager Construction Operations. For larger projects, the Division Head or the M anaging
D irector might also be involved (Exhibit 2 shows a partial organizational chart o f DESCON
in 1991). A synopsis was prepared by the comm ittee and was circulated at the divisional level.
This synopsis was a com prehensive docum ent containing the relevant task information and an
estimate o f the resources required to complete the project. After incorporating the feedback
from all divisional heads, a detailed cost estim ate o f the whole project was prepared by a
committee. This process was m ostly manual. It was here that business profit targets were
established and a final price quote decided. After the price had been frozen, a detailed
proposal was prepared and submitted to the client.
On the award o f a contract, a project coordinator, a project m anager and a project team were
identified to work on the project (Exhibit 3 shows a typical site organization set-up in 1991).
The project m anager prepared a detailed budget for the job. The budget was broken down into
cost centres. A cost centre represented a collection o f functionally sim ilar activities, e.g., all
wages paid to workers on a site were lumped under a cost centre titled Direct Labour.
Furthermore, all tasks were assigned accom plishm ent values in arbitrary units using the
budget data, e.g., each Rs 10,000 o f the budget was assigned one unit o f accom plishm ent
value. Apart from cost, the degree o f value added, or the degree o f difficulty to attain a task
were also assigned values o f equivalency, e.g. piping layout being a complicated job was
usually assigned a higher unit value than a sim ple task like the erection o f a boiler frame even
though the latter was more expensive. These budget figures were fed into the computer under
a new project account. The information was then passed on to an integrated accounting
system that maintained a break-up o f budget costs according to the cost centres. Like
conventional accounting systems, it provided a lange o f utilities to manage accounts, e.g.,
depreciation for various types o f equipm ent could be charged on the basis o f a formula that
had been fed into the computer.
For DESCON, only half o f the total cost o f a project was due to direct expenses such as
labour or materials. The rest o f the expenses were indirect or fixcd-cost overheads. These
included the cost o f the entire site m anagem ent, the tem porary site facility, housing and
transportation arrangements for the staff, power, comm unications and other m iscellaneous
utilities. Because o f num erous overheads, any delays in project com pletion meant tremendous
increase in costs. These occurred due to internal and external factors. Internally influenced
delays could be corrected by m anagem ent action within DESCON. It was the external delays,
unexpectedly thrust upon the DESCON staff, which greatly increased overheads. In one
instance, material expected to arrive at a site by a certain date never showed up due to a public
transport strike. Virtually all DESCO N contracts had the provision that the client would
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reim burse DESCON for unforeseen expenses. Every project had
prim ary role was to understand the legal contract, file claims
externally influenced expense overruns and keep the project
progress in such matters. The Project Coordinator stationed
responsible for resolving project-related issues by coordinating
A dm inistration and Procurem ent departm ents at the Head Office.

a Contract M anager, whose


for reim bursem ent against
coordinator updated about
at the Head Office was
with the Accounts, Stores,

During the execution o f a project, all material received at the site stores were reported to the
Head Office via a document called the Accepted Material Report (AM R). W henever material
was issued by a site store for utilization on the project, an Issue Requisition (IR) was filled out
and sent prom ptly to the Head Office. A Transfer Note was used to indicate the specifics o f an
item that was transferred from another site. W hen an item was returned to the store after being
used, a Store Return Note was generated. An Equipment Deploym ent Card was used to list
the m achine-hour usage for different types o f equipment employed on the project. For
reporting labour costs, a Tim e-sum m ary Sheet was prepared that listed the utilization o f manhours for different activities and the corresponding wages paid to the workers. Every week, a
progress report was prepared by the Site Incharge and submitted to the Head Office. This was
a detailed report containing inform ation about the units o f work for various activities that had
been completed during that week. It also listed the cum ulative progress for the week. (Exhibit
4 shows a portion o f this report.)
Using a set o f such docum ents, the store departm ent at the Head Office then prepared a
m onthly report and sent it to the Project M anager and the Project Coordinator. These reports
were reviewed by top executives at m onthly or quarterly m eetings. At this juncture, corrective
decisions could be taken for a project where expenses were getting out o f hand.

Inventory and Accounting System


DESCON's MIS department had acquired in-house computing facilities in 1981. Prior to this,
the com panys data processing needs were fulfilled by the Com puter Centre o f United Bank
Limited. In 1981, a chemical engineer employed by DESCON initiated the purchase o f
DESCON's first Apple computers. Using BASIC, he developed program m es to manage
Accounts and Inventory levels. Later, in 1986, DESCON purchased VAX com puters from
Jafar Brothers, the local dealers for computers m anufactured by the USA based Digital
Equipment Corporation (DEC). Since then, the Inventory and Accounts systems was modified
many times but the overall design rem ained unchanged.
The reporting forms sent from the site to the Head Office form ed the input to the Inventory
and Accounts systems. The site personnel m ade sure that all transactions for the month were
dispatched to the Head Office Stores (HOS) before the last day o f each month. Here the forms
were thoroughly checked and the m issing information filled in. The forms were then sent in
batches to the MIS department for data entry into the computer. Several thousand forms were
processed every month reporting on an average 50,000 transactions. This data entry continued
till the 26th of every month. The generation o f the inventory reports took nearly ten days and
the accounting reports took another five.

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W hen data was entered into the computer, the systems generated a list o f error messages. This
list and the batch o f original docum ents vere handed back to the HOS. These errors were
rectified and the corrected inform ation sent back to the key punch operators in the MIS
departm ent. M ost errors w ere due to incorrectly entered cost centers, item codes and item
descriptions. Sometimes a relevant piece o f information was m issing altogether. Document
cross-references and inventory balance checks were verified in the data processing phase.
References to m issing documents resulted in exceptions detected by the inventory system.
M ost o f these exceptions were due to IRs, for which the corresponding AM Rs had not yet
been received at the HOS. Such exceptions were reconciled by withholding the relevant IRs,
until the next m onths posting, in anticipation of receiving the delayed AMRs.
The reports generated by the Inventory System were used by the HOS to m onitor inventory
levels, and to make decisions to transfer material between different site stores (including CBS,
the Central Base Store). The Accounts department used the m onthly reports to balance
accounts, assist in cost centre and expense head classification, and to highlight discrepancies
in input data. The Project Cost Analysis Report (PCAR) presented a detailed com parison o f
the budgeted expenses versus those actually incurred in the preceding month. It also listed the
expenses accrued till that m onth (Exhibit 5 shows a part o f such a report.) The figures given
in the PCAR were based on the physical progress o f work done on the project. Thus, for a
certain material, the reported expense was calculated on the quantity that had actually been
consumed.

Rapid Cost Monitoring System


Rapid Cost M onitoring System (RCM S) was designed in 1987 in an attempt to control the
costs occurring at the project site more effectively, and to judge the progress o f the project. At
that time Ansari was given the additional responsibility o f improving the existing MIS setup
at DESCON. He had received num erous complaints from top m anagem ent executives about
the time lag betw een actual occurrence o f costs on projects and their appearance on
computerized cost analysis reports. This delay had resulted in severe cash flow problem s on
m any projects, as top m anagers were unable to spot over-spending until it was too late to
affect a timely solution. Ansari had instructed the Senior Finance M anager, M Y Khokhar,
who was also in charge o f the MIS department, to suggest ways to reduce this delay. In
response, Khokhar had designed an innovative Rapid Cost M onitoring System.
Khokhar felt strongly that over-spending could be controlled without using the detailed but
accurate cost reporting channels. He believed that a faster way to capture cost information
from its source was required. He suggested that at the time o f budget preparation, a special
budget be made for the RCM S consisting o f the following components:
1. Direct materials: These were materials that formed part o f the finished structure
erected for the client. For reporting costs, only 6 - 8 items that constituted 80% by
value o f the total material cost were considered. (Exhibit 6 shows a sample budget
form.)
2. Direct labour: This constituted wages paid to workers at the project site. A monthly
allocation o f man-hours was budgeted.

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3.
4.
5.
6.
7.
8.
9.
10.

11.

Subcontract/work order: This constituted a list o f activities (with estim ated costs) that
were to be completed by sub-contractors hired by DESCON.
Direct consumables: These were materials that were consumed but did not form part
o f the finished product, for example, gas cylinders and welding electrodes.
Company equipm ent/internal rental: This com prised a list o f the different types o f
equipm ent to be deployed with their corresponding m achine-m onth utilization.
Outside equipm ent / vehicle rental
Petroleum and oil lubricants (construction equipment)
Indirect salaries and wages: A monthly allocation o f m an-hours for supervisory staff
Capital expenditure (fresh purchase): Cost allocation for purchase o f new equipment
required during the project
Cash flow: This was an estimate o f monetary inflows and outflows during the project.
Inflow included items such as the m obilization advance, secured advance, progress
billing, and retention m oney, while the outflow was basically rem ittances or
expenditure through the Head Office.
Progress: This was an estim ate o f the monthly and cum ulative progress based on the
completed accom plishm ent units o f work, defined in the project budget.

Khokhar had assigned the responsibility o f supervising the preparation o f the RCMS to A sif
Nazeer o f the Systems and Control Division at the Head Office. A sif N azeer was assigned to
filling out the data collection forms near the end o f every month. He carefully checked the
figures provided by the Stores and Accounts departm ents fir com pleteness and accuracy.
Once the data collection forms were finalized, A sif Nazeer used this data and the data in the
budget forms to com pile the final output o f the rapid cost m onitoring study. There were forms
for each component o f the rapid study which presented a com parison o f the budgeted costs
with those actually incurred till that month. In Exhibit 7, one can see the variance in rates and
total expenditure that had taken place in the purchase o f Direct M aterials for the M angla
Penstock Lining Project. A sif N azeer's aim was to have this rapid study, which would account
for the expenses o f the previous month, com pleted by the 10th of each month.
A sif Nazeer was often exasperated with his job. He once told a colleague:

Data collection fo r the RCMS is not an easy task. Many times the person to be requested for
data is senior to me. So I have to request Mr Khokhar to exercise his influence and get the jo b
done. On a recent visit to a site, the project manager refused point blank to Jill out the data
collection form s fo r reporting internal equipment rental. I had to complete the DCFs m yself
from the equipment deployment cards. Similarly, the accounts people at the sites, instead o f
filling out the corresponding DCFs, sent me the time-summary sheets directly. For other
missing pieces o f information, I have to run around the Accounts and Stores departments and
often have to nag project coordinators.
The data collection forms were filled out m anually while the forms for the budget and the
final report o f the RCMS were generated by using L otus-123 independently o f the data entry
into the Inventory and Accounts Systems. This report was reviewed by Khokhar and was
presented at monthly or quarterly project review meetings. Khokhar planned to integrate
RCM S into the existing systems at a later stage, in such a way that the necessary data could be
autom atically extracted without manual re-entry.
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According to Khokhar;
There are basically three ways that one can m onitor a project. The most obvious one is to
com pare physical progress (actual completion o f work measured in equivalent units) with the
budgeted one. This is reflected in our Project Cost Analysis Report (Exhibit 5). Another way
to gauge progress is to measure it with respect to the invoices that have been rendered to the
client for payment i.e., billing progress. And lastly, one can compare the cost that has been
actually incurred versus the budgeted cost. This approach was used in the RCMS. Here, the
physical progress o f work was not as im portant as the financial com m itm ents that had been
made by DESCON.
Com m enting on RCM S, a project manager said:
I believed that RCMS would not be a panacea for all our information processing problems. A
large part o f the delays occurred because o f errors comm itted by the sem i-literate store people
at the sites. They had to be thoroughly trained to fill out the necessary paperw ork correctly.
Also, the planning personnel and the store staff would be able to counter-check each other. I
think there were too many people filling out reports. Many are content to sign partially

correct IRs and AMRs.


Talking about his views at the time, Ansari said:
In order to fully exploit the benefits o f the RCM S, I felt that some structural changes had to be
made in site management procedures. Basically, there were three major types o f service
personnel represented at site: Stores, Personnel Adm inistration and Finance. These people
were the key elements for the success o f the rapid study: stores through tim ely submission o f
AMRs; Personnel Adm inistration through correct preparation o f payroll and good
timekeeping practices; Finance through controlling expenses so that incurred expenses did not
fall out o f the mandate o f site management. Hence we decided that these people should now
functionally report to their service heads at the Head Office. This would ensure that an
employee would follow the orders o f the site or project manager only if these orders were in
accordance with company rules. I expected that the m ajor challenge in the RCMS would be
peoples resistance to accountability. I feared that people at the site or, in some cases, project
managers might resent it.
M azhar also felt that in the system prior to RCM S, there was no effective way to com pare the
bid with the budget, and similarly, the budget with the actual performance. In line with the
concept o f the RCM S, the Proposals Departm ent had been instructed to create a new post
called the Cost Coordinator. This person would report to the M anager Proposals. His primary
occupation would be to travel from site to site and verify whether the costs incurred and the
progress reported tallied with those proposed. Ansari thought that this m easure would be
useful in fine-tuning the preparation o f the initial price quotation and the budget.

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Post-RCMS
According to Ansari:
Before RCM S, we at D ESCO N faced the problem o f delays in reporting o f overall progress
and perform ance on projects, w hich left us with very little ability to exercise tim ely corrective
actions. With RCMS, the top m anagement clearly saw the advantage o f quick performance
feedback. Our immediate reaction was, We want more o f it and at all levels . We wanted
m onitoring reports not just at the top but also for the project managers. We wanted to m onitor
not just the costs, but also resources utilized, revenues earned and progress on the projects.
According to A sif M oham m ad Ali:
W hat RCMS told us was the amount o f material used at different areas onsite. It failed to tell
us where and for what purpose the material was used. For exam ple, if on a site there was
piping activity going on, what RCMS told us was the quantity o f pipes that had been issued
from the site store and used, but it failed to tell us the extent to which the whole piping job
had been completed. Like with RCMS we could get to know that 70% o f the piping material
required to do the job had been used, giving us the impression that only 30% o f the job
remained to be done. In reality that 30% could actually be constituting more than 60% o f the
physical work at the particular site area.

Project Monitoring, Analysis and Control (PMAC)


In 1990, DESCON undertook its first EPC project with ICI at Khew ra that required detailed
design, procurem ent, warehousing and inventory control, construction (civil, m echanical,
electrical and instrumentation) and project M anagem ent. In the past, the detailed design and
planning was done by the client whereas the construction responsibility was given to the
concerned department o f Project and Construction Services (P and CS). To provide a one window operation to the client for the services required, the Project M anagem ent Departm ent
(PM D) was set up at the Head Office under Shakoor Shahecn, who was responsible for the
whole project. Shaheen was am ongst the pioneers o f the organization and had earned great
professional respect within it. The departm ent was given the overall responsibility o f the
project and o f coordinating betw een different disciplines o f the project.

According to Ansari:
With PMD we executed the ICI project exceptionally well, as we experienced better control
over our costs and schedules. It was the first time that the organization was undertaking a
project o f such a scale, and the results were impressive. The results that we achieved with
PM D at Khewra convinced us that we could use formal project m anagem ent techniques in all
our projects and benefit from them across the organization. Ayaz Sharif, who had joined us
ju st before the project, had exposure to the use o f project m onitoring and control systems
along with IT for project m onitoring during his experience abroad. He was very result
oriented and a strong believer in systems. He had brought with him two decades o f
experience, and had also performed very well in his assignm ent at Khewra. Hence, he

mzw.

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became my obvious choice for the responsibility o f developm ent and implementation of
formal systems within the organization.
In 1993, PMD was reorganized into the Project M onitoring, Analysis and Control D epartm ent
(PM AC) under Ayaz Sharif and was given the mandate to:
1.
2.
3.
4.
5.

Develop reliable m onitoring systems


Implement these systems at construction sites
Gather data from sites and analyze it to evaluate project performance
Comment on the projects financial health and suggest corrective actions
Establish and provide construction norms to the proposal department

Com m enting on the form alization o f PM AC into the organization, Ansari said:
The idea behind the creation o f PM AC was to assist P and CS in planning and monitoring o f
their projects. It was conceived as the support departm ent, which would help the project
m anagers at the site by providing them with critical inform ation as to the progress on the
projects with the data gathered at the site.
Prior to PMAC, the project manager (PM) bore the overall responsibility o f the project at a
project site. Depending upon the size, complexity and importance o f the project, the PM was
cither site based or H ead Office based. Reporting to him directly was the site m anager who
was essentially site based and under him were the incharges or construction managers o f the
different engineering disciplines. The designing, procurem ent and planning sections also
reported to the project manager.
W ith the establishment o f PM AC, planning and monitoring responsibilities were re-assigned
to PMAC personnel. Ayaz Sharif built the department mostly by hiring fresh engineers and
business graduates from foreign and local universities. These engineers were then assigned to
project sites and were given the responsibility to gather data for the systems developed by
PM AC and implement the developed systems on the sites. For their functional responsibilities
they reported to the project coordinator assigned to the project at PM AC (see Exhibit 8) and
received instructions regarding data gathering and report generation from him. Their
adm inistrative reporting, however, was to the site manager.
Commenting on the hiring o f young engineers in PMAC, A sif M ohammad Ali s a id :
The construction industry lacked professional people in general. We wanted to break away
from the traditional norms and bring professionalism to this industry. So far the industry was
dom inated by thaikedars' (illiterate contractors), but when you want an organization to be
known internationally you need well groomed, professional people. We wanted people with
relevant educational and technological backgrounds.
The information gathered and reports generated were related to different aspects o f project
performance including costs, resources and revenues. These reports were sent on daily and
weekly basis to the Head Office, where the information was assimilated with the help o f
com puter applications developed by PM AC. This data was then checked, analyzed and
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presented to the Executive Director, Head P and CS and project managers along with
comm ents regarding the perform ance o f specific and overall projects by PM AC.
The system s developed by PM AC included: DESCON Progress M onitoring System (DPM S)
to m onitor the progress on different projects; the W arehousing System , which controlled the
inventory records; and F H Update, an interface program me which linked DPMS with
Prim avera software used for project planning. Com m enting on the system s developed by
PM AC, one o f its engineers said:
The information that was generated at the sites could be fed into the applications that we had
built and the progress plan revisions that used to take weeks could be done in days. The
details o f the plans at the lowest level o f the project could be m ade available to the project
managers.
Over the years PM AC's size, responsibilities and power at DESCON continued to grow. At its
peak in 1996 PMAC employed more than 50 engineers and its expense stood at Rs 7 to 8
million per year, m ainly representing salaries. According to one o f the PMAC employees:
M r Sharif always stood by us w hatever the circumstances were, and no m atter how strong the
opposition was. He asked us to be aggressive and forceful in front o f the site m anagement
since we were there to m onitor them and thus resistance was to be expected. The people at the
site did not know how to m anage a project professionally and knew only the brick and m ortar
story. W e were wanted there to make up for that.
In 1996, PMAC was responsible for: M IS, Financial Costing and Control, Subcontracting and
Project Proposal Divisions in the organization. The departm ent occupied the second floor o f
the DESCON Head Office and was given an excellent working environm ent envied by the
rest o f the organization.

Inter-functional Conflict
According to one o f the founding m em bers o f the PMAC team:
The project people never liked us. One day one we heard com m ents like "who are you to
control us". We were viewed as spies o f the Head Office. They thought we were trying to
make their lives m iserable. W hatever suggestions we made were m et with resistance from the
people at the site who thought that we knew nothing o f construction work. One o f them
rem arked, W hat do people at the Head Office know about w hat goes on at the site?
Construction is not just a m atter o f adding figures and analyzing data. You must have handson experience in order to understand the business.
One o f the site managers, recollecting the events, said:
M ost o f the people in PM AC were young, inexperienced graduates who could not be judges
o f our performance. An often-quoted joke about PM AC people was about a silo fabrication
job being carried out at DEW. The project progress was monitored in equivalent tons. For an
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80 ton silo, 60 tons were assigned to it before the first coat o f paint. After the first coat 15
more tons were added and the last five tons were added after the second coat. During the
progress review m eeting the PM AC coordinator for the project started interrogating the
Project Incharge at DEW as to why only 60 (out o f 80) tons o f progress had been made. The
Project Incharge felt intimidated and kept giving excuses and apologizing for the delay. After
a few minutes o f this dialogue, the PM AC coordinator said, OK, at least ship the 60 tons
now and the 20 rem aining tons later!
The tension between the personnel o f P and CS and PM AC continued to mount. At the
Qadirpur oilfield project the ongoing tussle between the two departm ents was jeopardizing the
successful completion o f the assignment. During the meeting with Ansari, the two GMs kept
blam ing each other for different problems.
As the two General M anagers left his office, M azhar wondered where he had gone wrong and,
m ore importantly, what he should do now.

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Exhibit 1
EVOLUTION OF PROJECT M O NITO R ING AND C O N TRO L AT DESCON
Organisation C hart in 1996
MANAGING D IRECTOR

I ^ B U S IN E S S U N T H B U
BUSINESS SU PPO RT UNIT (BSD)

BUSINESS D EPARTM ENT


(BD)

's m ir r p - f n m n a n v R p m r d s

BUSINESS SU PPO RT
D EPARTM ENT (BSD)

Exhibit 2
EVOLUTION OF PROJECT MONITORING AND CONTROL AT DESCON
Partial Organisation C hart in January, 1991

M an a g in g D irecto r
R a z a k S. D a w o o d

G M /D irector
E ngineering D ivision
M a z h a r- u d -d in A n s a ri

G eneral M anager
B usiness D evelopm ent

G eneral M anager
Plant S ervices/O verseas

G eneral M anager
Engineering S ervices
Unit

G eneral M anager
C onstruction

M anager
P ersonnel

M anager
C on tra c ts

Source: Company Records

Exhibit 3
EVOLUTION OF PROJECT MONITORING AND CONTROL AT DESCON
Partial Site O rganisation Chart

Project M anager/
Site liyharge

Senior Engineer
P lan/Equipm ent

S enior E ngineer
Plant

Q uantity
S urveyor

Incharge
S ite S tore

S ite A ccountant

Inchargc
A dm inistration

Incharge
S afety/S ecurity

Incharge
P rocurem ent

P roject M anager/
S ite Incharge

P roject M anager/
S ite Incharge

Source: Company Records

S enior E ngineer
E xecution

A ssistant E ngineer
Fabrication

Exhibit 4
EVOLUTION OF PROJECT MONITORING AND CONTROL AT DESCON
W eekly Progress Report
PR O JE C T #: 1044
Page # 5
DISCIPLIN E: CIVIL
REPO R T DATE:
COST
CEN TRE
21111
21115
21141
21143
21145
21146
21147
21149
21150
21221
21225
21226
21310
21410
21420
21430
21500
21710
21740
21760
21800
22110
22120

400 TPD LC L PLANT AT PEZU

A C TIV ITIES

PLANNED
(L.F)

EXCAVATION & DISPOSAL


BACKFILLING
CONCRETE PRODUCTION
LEAN CONCRETE (1:4:8)
CONCRETE IN SUBSTRUCTURE R.C.C.
CONCRETE IN SUPER STR.
CONCRETE IN SILOS
EMBEDDED ITEMS
PILING
FORMWORK REPAIR
FORMWORK ERECTION (SUB STRUCTURE)
FORMWORK ERECTION (SUBSTRUCTURE
STEEL REINFORCEMENT BARS
BRICK MASONRY
CEMENT PLASTER
DEEP CUT POINTING
TILING/FLOORING
ROOF TREATMENT
PAINTING
NON SHRINK GROUTING
MISC. CIVIL WORKS
FABRICATION OF STEEL STRUCTURE
ERECTION OF STEEL STR.

2.966
4.963
1.874
2.543
2.116
2.701
4.013
3.481
0
2.317
2.088
2.382
2.314
1.620
0.219
0.264
0.577
0.109
0
7.357
1.804
0.395
0.279

W EEKLY PRO G RESS (% )


ACTUAL
VARIANCE
(L.F)

SUMMARY
A. EARNED MAN-HOURS THIS WEEK................ : 149541.09
B. PLANNED MAN-HOURS THIS WEEK................ : 157405.23
C. OVERALL PROGRESS THIS WEEK................:
D. PLANNED PROGRESS THIS WEEK................ :

2.17777%
2.2923%

E. ORIGINAL PLANNED PROGRESS THIS WEEK: 3.4154%


F. PROGRESS
VARIANCE (C-D)................
G. ORIGINAL PROGRESS VARIANCE (C-E) :

* ORG

ORIGINAL

Source: Company Records

-0.1145
-1.2377

L.F.

LATEST FORECAST

0.000
0.000
2.257
0.558
0.780
4.899
1.985
0.000
0.000
3.482
0.780
4.899
1.565
0.601
0
0
2.542
0
0
0.000
0.000
0
0.000

-2.966
-4.963
0.382
-1.986
-1.335
2.198
-2.027
-3.481
0.000
I.Ill
-1.307
2.518
-0.749
-1.029
-0.219
-0.264
1.965
-0.109
0.000
-7.357
-1.804
-0.395
-0.279

PLANNED
(ORG)
99.290
86.376
77.736
99.908
93.681
50.410
72.282
75.269
100.000
81.375
93.483
51.826
76.900
19.390
17.322
17.971
5.769
5.942
7.619
60.469
35.564
73.993
82.477

W EE K # 56
R E PO R T FROM :
P R O JE C T TO DATE PROGRESS (% )
PLANNED
ACTUAL
V A RIANCE
VARIANCE
(L.F)
(O R G )
(ORG)
88.108
19.021
75.253
83.263
89.452
46.130
96.707
71.796
100.000
60.996
89.705
45.744
70.339
2.781
0.219
0.264
0.577
0.109
0
18.520
4.259
0.395
0.340

88.397
14.392
74.767
81.871
89.107
43.703
93.333
70.664
100.000
59.905
89.105
43.704
69.291
2.674
0
0
7.439
0
0
12.510
3.498
0
0.128

0.289
-4.629
-0.487
-1.392
-0.345
-2.427
-3.373
-1.131
0.000
-1.081
-0.600
-2.040
-1.048
-0.107
-0.217
-0.264
6.862
-0.109
0.0
-6.010
-0.761
-0.395
-0.212

-11.523
-71.984
-2.610
-18.038
-4.574
-6.706
21.051
-4.6-4
0.000
-21.470
-4.378
-8.122
-7.609
-16.716
-17.322
-17.071
1.669
-5.942
-7.619
-47.958
-32.066
-73.993
-82.349

Exhibit 5
EVOLUTION OF PROJECT MONITORING AND CONTROL AT DESCON
DESCON ENGINEERING (PVT) LIMITED
PROJECT COST ANALYSIS REPORT FOR
PROJECT
:
1:44 LUCKY CEMENT
PROJECT M ANAGER :
CONTRACT VALUE: RS.
OVERALL PROGRESS :
EXP HEAD __________________________
(CURRENT MONTH)__________
(PROJECT TO DATE)
CCETN
002

DESPATCH
DIRECT LABOUR

21110
001
002
003
004

EARTH WORK
DIRECT MATERIALS
DIRECT LABOUR
SUB-CONTRACTOR
DIRECT CONSUMABLE

21111
002

EXCAVATION IN SOFT SOIL


DIRECT LABOUR

21112
001
002
003
004

EXCAVATION IN HARD SOIL


DIRECT MATERIALS
DIRECT LABOUR
SUBCONTRACTOR
DIRECT CONSUMABLE

18130

-18130

5521

21115

SAND FILL

21110
002

EARTH WORK
DIRECT LABOUR

21125

PR O G %

ACTUAL

BUDGET

VARIANCE

ACTUAL
3867

BUDGET

VARIANCE
-3867

4867
352022
681642
7663242
193098

-3867
-352022
-681642
-7663242
-193098

8890004
1556

-8890004
-1556

-5521

1556
16500
839590
742547
16169

-1556
-16500
-839590
-742547
-16169

23651

-23651

1614806

-1614806

399973
2667

-399973
-2667

10510233
2667

-10510233
-2667

2667

-2667

2667

-2667

2667
70420350
344112
1341744
1172207

-2667
-70420350
-344112
-1341744
-1172207

72378413
1126376
364165
41082

-72378413
-1126376
-364165
-41082

94572
281750

-94572
-281750

376322

-376322

21120
001
002
003
004

LEAN CONCRETE
DIRECT MATERIALS
DIRECT LABOUR
SUB-CONTRACTOR
DIRECT CONSUMABLE

2667
4554156

-2667
-4554156

89107
75354

-89107
-75354

21141
001
002
003

FOUNDATIONS/FLINTH BEAMS
DIRECT MATERIALS
DIRECT LABOUR
SUB-CONTRACTOR

4718617

-4718617

Source: Company Records

PR O G %

Exhibit 6
EVOLUTION OF PROJECT MONITORING AND CONTROL AT DESCON
Sample Budget Form
DESCON ENGINEERING (PVT) LIMITED
DATE:

DIRECT MATERIALS

PROJECT

DIRECT COST CENTRE: XXXXXX

BUDGET

EXPENSE HEAD: 001

PROJECT DES.: MANGLA PENSTOCK LINING AND E & M ERECTION UNIT


SR
NO.
1

DESCRIPTION

UNIT

ANNEXURE: BJT-A

TOTAL BUDGET
QTY

RATE
(RS)
19899.7

MONTHLY ALLOCATION

AMT
(000)
5359

MONTH

M.S. PLATES &


PROFILES
MISC. ELECTRICAL
DISTRIBUTION
PANELS
TURBINE OIL T-68

TONS

LTRS

56800.0

13.9

787

3-NOV

LTRS

2500.0

170.0

42.5

TONS

65.0

6153.8

NOS

2.0

7.

COAL TAR EPOXY


PAINT
RAIL EMBANKMENT
I/S TUNNEL WITH
ANCHORS
CENTRIFUGAL
PUMPS WITH
MOTORS
ENAMEL PAINT

LTRS

2315.0

8.

MISC. MATERIALS

3
4
5

6.

TOTAL

Source: Company Records

269.3

MONTH

RS.
000

MONTH

14-OCT

420

27-NOV

10

15-NOV

337

28-DEC

10

--

16-DEC

975

55

4-DEC

--

953

65

400

1990
5-JAN

433

1991
17-JAN
18-FEB

1992
29-JAN
30-I-EB

883

31-MAR

60

129500.0

259

6-FEB

553

19-MAR

138

32-APR

90

95.0

220

7-MAR

596

20-APR

138

33-MAY

27!

1612

8-APR

500

21-MAY

18

34-JUN

59.'

9-MAY

429

22-JUN

16

35-JUL

711

10-JUN

133

23-JUL

16

36-AUG

52-

1815

1989
1-SEP
2-OCT

RS.
000
--

10877.0

il-JU L

160

24-AUG

15

37-SEP

33(

12-AUG

247

25-SEP

15

38-OCT

601

13-SEP

367

26-OCT

10

39-NOV

17'

Exhibit 7
EVOLUTION OF PROJECT MONITORING AND CONTROL AT DESCON
Final RCMS Report for Direct Materials
DESCON EN GINEERING (PVT) LIM ITED
DATE:
PROJECT

RAPID JOB MONITORING STUDY

10-01-01
1006

DIRECT COST CENTRE: XXXXXX


EXPENSE HEAD
: 001
ANNEX
:A
MONTH
: DEC., 90

DIRECT MATERIAL
PROJECT DES.: MANGLA PENSTOCK LINING AND E & M ERECTION UNIT
SR
NO.

QTY
1

M.S. PLATES & PROFILES

TONS

2
3

MISC. ELECTRICAL
DISTRIBU TION PANELS
TURBINE OIL T-68

LTRS

COAL TAR EPOXY PAINT

7.

RAIL EMBANKMENT I/S


TUNNEL WITH ANCHORS
CENTRIFUGAL PUMPS
WITH MOTORS
ENAMEL PAIN T

8.

MISC. MATERIALS

269.3

RATE
(RS)
19899.
7

AM T
(000)
5359

QTY
91.3

RATE
(RS)
17200.44

AM T
(000)
1570.4

1815
13.86

787

LTRS

56800.
0
2500.0

170.0

425

IONS

65.0

6153.8

400

NOS

2.0

259

LTRS

2315.0

12950
0.0
95.03

TOTAL
BUDGET ALLOWANCE TO DATE
2060.0

N ote: A ctu al fig u res are b a se d on receip ts.

Source: Company Records

M ONTHLY ALLOCATION

TO TA L BUDGET

UNIT

DESCRIPTIO N

ANNEXURE: BJT-A

220

RATE
VARIANCE
(RS.)
RS.
000
2699.30

UNDER/COVER
ED RATE
QTY
178.0

1815.0

56800.0
2500.0

425.0

-2735.04

0.0

0.0

2.0

259.0

2315.0

29.4

45.0

8088.89

400.0
-

10.3

54.95

1612

0.6

45.03

8014.0

2665
ACTUAL TO DATE

2663.0

787.0

910.0

694.0

10877

AMT
(000)
3788.6

VARIANCE

195.0

Exhibit 8
EVOLUTION OF PROJECT M O NITORING AND CONTRO L AT DESCON
Project Organisation after PMAC

Source: Company Records