Business Process Management Journal

Project cost control: a new method to plan and control costs in large projects
Jayaraman R
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Jayaraman R , (2016),"Project cost control: a new method to plan and control costs in large projects", Business Process
Management Journal, Vol. 22 Iss 6 pp. -
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 Project Cost Control : a new method to plan and control costs in large projects

Purpose of this research :

In 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 the
prior years – 1985 to 1993, the company had spent a very large sum of money in
modernising the steel plant facilities . The whole exercise cost more than a billion USD
(at the forex rates prevailing then) and the facilities so created would lead the company to
greater heights of iron and steel production
(https://www.scribd.com/doc/27866020/Project-report-on-TATA-Steel, Tata Steel,
Annual Report, 1999 – 2000) . However one aspect that needed urgent attention was the
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company’s methods for project management which came into sharp relief in those years.
Much cost and time overruns convinced the company 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 implemented over
the next six years or so, resulting in a 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 their
objectives because of poor design, defective planning, lack of disciplined execution,
apart from lack of control over external factors . The company’s own experience showed
that the key factors responsible for project failures in the projects implemented in Tata
Steel was the lack of co-ordination between project managers, lack of leadership to seek
out a co-operative and collaborative culture amongst the various project managers in the
project, lack of appropriate management of vendors and a lack of understanding of how
to manage projects on a continuing basis. For example, large projects get done over two
or three years during which the ground realities change quite significantly leading to
project cost and time overruns. In order to find out how to manage project costs better the
company set up a special CRMP team which was tasked with benchmarking with the best
in the business – companies like Bechtel, Toyo, Larsen and Toubro, Fluor Daniel . After
visits to study their practices the team also studied the literature, especially the PMI
booklet PMBOK. Various discussions and reading the literature confirmed our belief that
we need to work out a new system to manage the project managers better, 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 of costs, budgets – held the key to the new method to be
developed .

Literature survey:

1
 Controlling costs of projects is an important aspect of project management. Especially so
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 ( for example , Lavingia
( 2003) , Emhjellen et al (2003) , Dell ‘Isola ( 2002) , Longworth ( 2002) , Zhan ,Jim
(1998), Valerie et al (2004) ) , control project schedules and quality ( Hormozi (1999) ,
Deng et al (1998) ) . In fact the several dimensions of project costs and schedules have
been dealt with in great detail , mainly due to the criticality of these elements in the
starting up of new ventures and new investments .A project which is delayed can become
a big burden on the investor. As an example, take the case of projects in the public sector
domain . government projects routinely lag behind schedules , witness the several
railway and road projects in many parts of the world , ( the Boston Big Dig is an extreme
example ) which get delayed mainly due to land acquisition and compensation issues .
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Many projects are unable to start in time because the land needed could not be acquired ,
especially for large dams , public buildings such as Railway Stations and public utilities .
Cost overruns in government projects are endemic .Since in many countries , both
developing and developed , governments contribute a very large chunk of funding and
undertaking large projects , it is important to study the factors that govern project cost
control in such large efforts .

Eden et al (2005 ) have described the experiences in delays in large projects , how such
delays were well beyond what “normal delays “ could be and what lessons could be
learnt . Uncertainties in estimating the time required for key activities in important tasks ,
the difficulties in estimating the resource requirements and making them available to the
project at the right time and affordable cost are some the factors which 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 the project cost . According to
Leach biases can emerge due to merging of project paths in unpredictable ways ,
omissions of activities such as documentation , storage of drawings which consume time
and efforts but do not seem important to project managers, overconfidence, errors,
queuing, multi tasking and so on. All these factors either individually or collectively lead
to delays or slippages in schedules leading to cost overruns . Emhjellen et al (op cit ,
pages 26 and 27 ) have quantified the cost overruns in the off- shore oil field structures in
Norway and suggest that even the methods adopted to estimate capex ( for example ,
using the 50/50 expected value with uniform distribution ) could lead to overstatement of
cost escalations when the underlying nature of the capex costs follow a non – symmetric
distribution such as beta , where the 50/50 expected value of the cost is shifted away
from the mid point to the right . Robert Tichacek (2006 ) has updated the understanding
of the cost aspects of a project and has renewed focus on the underlying tasks and
structure of the project in the determination of the cost to completion . Other authors –
Ciccarelli ( 2004) , Cigolini et al (2002) , Tzvi ( 1998) - have all attempted to provide
different , specific solutions to control project costs . Rozenes et al ( 2006 ) have covered
all the above topics and more in their review paper , which provides a birds eye view of
the developments that have taken place in the field of project management .

2
 Literature on Project Controls – current developments and state-of-the-art

Current literature is replete with references to work being done on understanding the
underlying causes of project cost and time control . Even today although the causes have
been identified it is still a struggle to develop a holistic approach in practice for a
foolproof methodology which will give a reasonable chance that the project will be done
as per plan . In their review paper Rozenes ( Op Cit ) have repeatedly found that team
work amongst project managers is an important dimension . For example , they cite the
works of Jiang and Klein ( 2000 ) and Jiang , Klein and Chen ( 2001) which bring out
the key role played by project managers in 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 project manager “ . The methods used for cost control
include the SVA- Shareholder Value Analysis , the LOB ( Line of Balance )
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methodology adopted by the US Department of Defence , the EV ( Earned Value )

methodology described in the PMI’s PMBOK ( for example , see Hanna , 2012 and
Muhamed Abdomerovic , 2004 for using the EVM in project control ) . All these form
the contents of the two broad types of project control methodologies in use – the single
point and the multiple point control systems ( MPCS) . Eliyahu Goldratt’s TOC
approach is also being used . ( Goldratt , 2008) for project control . While recognising the
need for a holistic approach to project management which will include the collaborative
and co-operative behaviours of project managers in project success , and that MPCS is
the need of the hour , however the Rozenes paper does not include any references which
address the human behaviour aspects of project managers .

In his book Lewis ( Lewis , 2007 , Chapter 8 ) says that “ ultimately , the only way to
control a project is for every member of the project team to be in control of his or her
own work “ . He has enunciated the conditions under which project managers can
function in a collaborative way . While Lewis has emphasised may factors that affect the
project , and which were practiced 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 CRMP used many of the points made by Lewis , but also took them a few
steps further , to devise a system to practice what is held as “ideal” . Mehta ( Mehta ,
2008 ) has , like Lewis , emphasised the human aspects of project cost control . However
he has not proposed a specific approach for project cost control .

Olawale and Sun (Olawale et al , 2013) have developed a PCIM ( Project Control
Management Model) for the construction industry . They report a survey conducted by
Iyer and Jha ( 2005 ) which showed that the co-ordination among participants was the
key for projects success . After examining 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 questionnaire survey they developed the PCIM as a “practice
grounded research process as underlined by the contingent philosophy of developing a
theory of explanation to a phenomenon “ . Their survey identified 20 most important
factors for project cost control amongst which the 6 th most important was “ conflict
between project parties” . The success of the PCIM in individual situations depends on

3
 how well the “ project inhibitors “ are identified and dealt with . Thus the PCIM hss
limited applicability as it is largely “general” in nature .

Barraza and Bueno ( Barraza , et al , 2007 ) have proposed a probabilistic model for
project controls , however this is more of a theoretical approach and is limited by its
applicability only to construction projects . Summarising the latest developments in
project cost control :

There are many practices and aspects of project management which have been well
documented 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 .
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While there has been a lot of development in the quantitative depiction of cost controls in
projects , the human angle has found mention that “ it is important “ . There is no
literature available on how to integrate the human angle with the project cost control
angle , and this is the gap that this paper addresses . This paper describes the
development of a PCCS ( project cost control system ) which integrates the human side
with project cost control .

Project Cost Control :

Approaches to project cost control took a turn for the better with the advent of the WBS
based project management techniques, using the PERT and CPM methods .
Developments in computer softwares have made the tracking and monitoring of projects
possible in granular details. For example the softwares like MS Project and Primavera
have made the task of monitoring projects from remote locations possible . Project
communications , updations , speedy modifications , documentation have all become
integrated and simpler than before ( see , for example , R.Jayaraman et al (1999)
,B.Muthuraman et al ( 2000) , B.Muthuraman et al ( 2000) and R.P.Singh et al ( 2001) )
and have improved the planning , designing , executing , commissioning and running in
commercial production of large projects .

In spite of the many developments that have taken place in project control and
documented , (for example, see R.Jayaraman et al (2000)) , there is still no unanimity or
consensus on methods for managing costs in a project . This is primarily due to the nature
of the subject itself – every project is typically a one-off effort and the uncertainties
involved make it uniquely unsuitable for standardisation . Hence in every project one has
to improvise and innovate to suit the unique conditions . In large technology driven
projects the different areas which are amenable for standardisation and not are listed in
Table 1 :

4
 Insert Table I here

Development of a unique and innovative approach to cost control in a large,

technology driven project:

Tata Steel is the flagship company of the Tata Group. It has had a unique history
pioneering the iron and steel industry in India ( see, for example, R.Jayaraman et al
(2003) ). The cold rolling mill project (CRMP ) was a vehicle used by the company to
reengineer its project management processes . Detailed descriptions as to how this was
successfully done are available ( for example , see B.Muthuraman et al (2000) ). One of
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the many innovations which was well executed to yield results as desired was the design
and execution of a Project Cost Control system (PCCS) . This system was unique in
many respects , although integrating , innovating and building on many already
prevalent concepts in the field of project management (PM) .

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

Project Management and Cost Control:

The CRMP was approved by the top management of the company after a series of
debates on the layout features , equipment list , capacity and methodology to be adopted
for PM . As has been described by Lavingia ( Op cit ) the project management process
for the CRMP closely resembled his model ( Figure 1 ) .

Insert Figure 1 here

While the above figure encompasses all that was done during the project design and
implementation there were many other things done to get a good idea of the cost of the
project . These included :

Capital cost estimation ( also see R.Jayaraman et al 1998)

For large projects capital cost of the facilities will have to be obtained through budgetary
offers , discussions with suppliers , consultants , scanning industry data and other
sources . It is advantageous to seek the services of a ‘Technology Consultant’ or
“Tecthnology Advisor” for assistance. Tata Steel appointed M/s Nippon Steel

5
 Corporation (NSC) of Japan as a Technology Advisor . With its extensive knowledge
and experience in setting up and operating cold rolling mill complexes (CRMC’s), NSC
could advise Tata Steel in all aspects of technology choice and capital costs . This is one
of the unique features of this project – the consultant is expected to furnish benchmark
data on the latest cost estimates of comparable facilities without violating the
confidentiality of other clients . The expertise and contacts of the consultant was also
used to arrange meetings with potential bidders , equipment suppliers , visits to
installations of past clients from whom operating and cost data were obtained.

Cost of operations can be calculated by obtaining information on consumption norms

from potential equipment suppliers , discussing with industry specialists , consultants ,
studying the Annual Reports of operating companies , going through appropriate
literature available in the public domain and undertaking technical calculations in-
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house. Tata Steel, through its extensive industry contacts, could obtain indicative figures
from manufacturers abroad. Using all these means a fairly good idea of the cost of
operations was obtained. Needless to say, the cost of operations will depend on the
facilities installed and for each configuration of the CRMC, the operating cost would
vary as also the capital cost. Assumptions regarding funding of the project cost,
commercial terms and conditions for loans , exchange rate (parity between the Indian
Rupee and the US Dollar , Japanese Yen and the German DM) were then used to derive
the Profit and Loss accounts and the IRR. Cross checking was done with data available
from industry reports issued by reputable agencies like the World Steel Dynamics , Steel
Times International and other public sources by culling out select data from publications
in the public domain or else obtained on payment . Discussions with Nippon Steel , the
technology partner , were also very useful in obtaining the cost data. Overall several
benchmarking exercises were used to arrive at various cost estimates – both capital and
operating – from which life cycle cost analyses were done for several alternative
configurations of the CRMP . Sensitivity analyses were done and the following results
obtained (figure 2)

Insert Figure 2 here :

The above were the project preliminaries which were successfully done to ensure 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 and cost .
Translated into the context of the CRMP , the vision became : to establish a world class
CRM at the lowest cost and the fastest implementation time anywhere in the world . The
target cost was USD 450 million and the target time to completion was 26 ½ months .

Project Cost Control System (PCCS) :

6
 The PCCS was designed based on the project implementation philosophy . Being an
Indian project designed and built to address global requirements the emphasis was
always on global competitiveness . Hence all cost calculations were usually checked with
the international costs and prices of hot rolled and cold rolled steel sheets , and the
difference between the two costs (margin ) which usually fluctuated based on
international demand and supply (Figure 3)

Insert Figure 3 here

If any project involves a large amount of foreign exchange outgo , and the output is to be
sold in the international markets ( or , alternatively , will have to compete with imports
from international markets ) then it is imperative that the project cost is also calculated
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in the dominant currency , the IRR ascertained based on such calculations also . The
evaluation of IRR based on this method will give the owner an idea of the
competitiveness of the project . In order to minimise the adverse effects of forex many
project owners try to minimise forex content by manufacturing indigenously or
contracting for payments in either the local currency or ONE dominant currency . Banks
have realised the need for such “ cost pegging “ measures and introduced suitable
financial instruments like interest swaps , currency swaps , exchange rate pegged forex
loans and so on .

THE CRMP involved a forex outgo of about 25 % of the total project cost and it was a
challenge to manage the currency risks . On the financing side the forex loans were
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 be in
favour of the project owner . Chosen foreign vendors were also asked to either source
their supplies from indigenously manufactured goods , or accept payments , at least in
part , in Indian currency free of the exchange rate risks . However for the bulk of supplies
sourced indigenously there was still a need to control costs and keep the CRMP under a
challenging budget target .

Nature of Project Costs :

In large projects the total project cost is a summation of several “packages “ . These
“packages “ are typically identified at the planning stage of the project when the WBS is
being worked out . The packages either constitute the full cost or a large part of the cost
of a WBS element . Each package is a well defined set of work needed to be done in a
physical area of the project and is connected with other packages either directly or
indirectly .

7
 Usually it is a good idea to include all project costs in one package or another and assign
a project manager to be in charge of the work contained in that package . In this way the
project administration can ensure at the project design stage that all areas of work in a
project are entrusted to authority figures who also hold the responsibility and
accountability for that / those packages . The next step is to prepare a complete listing of
all such packages and the work contents of these . The complete breakdown of the work
content in a package emerges fully over a period of time and is evolutionary in nature .
The methodology includes initial guesstimate of cost , then preparation of a gross level
BOM ( Bill of Materials ) and then using past data arrive at an internal estimate , then
improve work definition and ask for budgetary quotes followed by two or three rounds of
detailed quotes and discussions with vendors . Also included are pre-bid conferences
where a group of vendors are invited by the project owner , and presentations based on
prior information supplied by the owner are made by the vendors to enable estimation of
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the work involved and the cost . Such conferences also help 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 planning stage
the owner / consultant ( O/C) start with a broad estimate and then work out an overall
cost estimate based on the different types of work to be done . For example , in the case
of the CRMP , the initial WBS showed the following (Figure 4) :

Insert Figure 4 here

At this stage the project cost estimate varied from Rs 2,000 crores to 2,500 crores . These
estimates 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 even
if the estimated cost is brought down to this level through appropriate engineering and
vendor discussions , it was still necessary to hold the costs down to the levels planned
over the entire length of the project which was a little over 2 years . This was the
challenge which made the design of a new “Project Cost Control System “ (PCCS)
imperative for large projects .

Design of a new Project Cost Control System (PCCS) :

The cost of a project is the summation of the cost of all packages . Or :

Project Cost (PC) = Σ CPi , i = 1 to n , where CP i 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 run actions .
The short run is defined as the time when the packages costs are firmed up which usually
happens over a three to five months period . The cost of the major packages are fixed
first , and then the minor ones . It is important to control the costs of the major packages
in a different way than the minor ones . When designing the new system for PCCS the
following principles were accepted :

8
 1. The cost of a major package is to be firmed up first . All major packages must be
firmed up in the shortest possible time , with those that are most independent
being 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 other packages.
Typically major equipment , civil , structural , main electrical supply centre will
form a part of such packages . Dependent packages are those that have to be
finalised after the independent packages are done with , since the composition and
work content of dependent packages will be significantly affected by the nature of
facilities in the independent packages . Typically piping , SCADA , electrical
wiring , water supply , internal transportation , flooring belong to this category .
3. Since orders will be placed sequentially or in bunches it is possible to update the
total cost of the project in stages and rework , if needed , the cost of the packages
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for which the orders are to be negotiated . In this way , through an iterative
process , backed up by a strong engineering ability , team work and mission
driven project management using best practices , the PCCS endeavours to keep
the project cost under the budget . Since project managers (PM) work in unison
to make a project happen the PCCS must take advantage of this fact . The PCCS
also considers the fact that each PM can be held responsible for the cost of his
packages and can be rewarded / incentivised to bring down his packages cost to
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 the
target with a “Project Contingency “ amount which is the difference between the
target cost for the project set by top management less an amount which is kept as
a contingency to be allocated to individual PM’s based on how they are able to
finalise their packages costs ; then the costs of the packages is estimated and each
package is given a target which includes a “package contingency “. A single
agency – called the “Project Cost Control and Progress Monitoring Cell “ (PMC)
– was formed and charged with the task of ensuring that the cost to completion of
the project is evaluated continuously and actions initiated to keep the cost within
the sanctioned budget . This group was authorised to liaise with all the PM’s and
discuss their package costs and devise systems and methods by which the PC will
be controlled . The methodology is shown in Figure 5 below :
Insert Figure 5 here

In terms of controls :

ProCos = ΣCP i , i = 1 to n + ProCon

PacCon = ΣC i , i = 1 to n ( included in CCP i )

Total Cost of packages = PacCos = ΣCP i , i = 1 to n

ProCon = ProCos – PacCos = ProCos - ΣCP i , i = 1 to n

9
 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 variables mentioned above , the
Ci’s and the CCPi’s will vary as the project progresses . This is the crux of the PCCS . The
dynamic nature of the contingencies makes the task of keeping the project completion cost on
target easier and more reassuring than any other methodology . This methodology is superior due
to the following reasons :

1. To begin with the estimation of the total packages cost takes into account the ProCon
requirement . Hence the costs are thoroughly scrutinised and an estimate is prepared
keeping an amount roughly 10 % of the approved amount . This provides the necessary
cushion to take care of escalations due to rate changes , scope changes , new
requirements etc .
2. Second , each package is allocated a package contingency which is typically 5 to 10 % of
the package cost . The estimates are prepared using the lower cost numbers , which is a
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second level safeguard against over-engineering , keeping the safety factors within
reasonable limits , enabling bare knuckle cost numbers for the package .
3. The third significant factor is that not all packages are allocated the same percentage
amount of package contingency . ( for example , see figure 12 ) . Allocation of
contingency then becomes a measured and deliberate exercise taking into account the
possible escalation in the package costs due to the earlier mentioned factors . For
example , if the package happens to include a higher amount of forex , then a higher
percentage of contingency to cover the forex risks in the long run is included . However
if the package is indigenously procured and the engineering requirements are well
known , then the contingency may even be set at zero. In cases of fixed price contracts
the package contingency is obviously zero . Thus the very process of deciding the
PacCon instils a discipline in the estimation with a salutary effect on project cost .
4. Another important aspect of the PCCS is the dynamic review of the costs . To begin
with, as already mentioned before , a complete preliminary cost picture , package –wise ,
is prepared and discussed and finalised in consultation with all PM’s . Then the process
of order placement begins .Large , independent packages are finalised on priority , and
the cost data is updated . Costs are updated as soon as each order for the packages are
finalised and checked against the targets set . The targets themselves evolve dynamically
, for example , let us say that , at the beginning of the project when no orders have been
placed the cost of P1 is estimated as CP1 and the PacCon for this package is C1 . When the
order is placed , let us as say , at Px , which is less than P1 , then the entire PacCon C1 is
“surrendered “ and taken to the “Project Contingency “ (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 ensuing orders . The PM who made this possible is given due
credit for the savings . The new ProCon and the revised cost estimates of the balance
packages is then discussed with all PM’s and changes made in the PacCons as required .
If more amounts have to be allocated and for this a part of the ProCon is to be drawn
down , then this is done with the full knowledge and approval of the project in charge
and the concerned PM’s . In the next tranche of orders the revised estimates are used as
package 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 Completion “ of
the project as on date . PacCons re-allocation is a continuous process . While those PM’s
who achieve savings are given due credit , those who need extra amounts are given the
same without any loss of credit , provided they are able to justify the escalation . Usually

10
 in the first 40 % of the project time period such justifications are admissible as the
project costs take time to shape up .
5. PM’s can also ask for a review of their Paccon due to some eventuality arising . The
same is discussed with the PMC and a decision arrived at regarding the new allocation .
6. At all times the PMC must ensure that the distributed amounts are such that the total
project cost is kept within the target and the ProCon is not brought down below the
starting ProCon amount . However this cannot be guaranteed , and in the course of the
project the ProCon amount will usually go down close to zero . If it 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 is kept informed of the
ProCon and the ProCos and the cost to completion . Appropriate actions are taken 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 has to be
allocated from the ProCon amount . This has the effect of reducing the PacCons for
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further orders . The more this happens in a project the top management must be alerted
that the possibility of the project cost exceeding the target is high . Actions must
therefore be set in motion which will prevent this from happening . Such methods 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 project
management wherein PM’s worked continuously to find out innovative methods to keep cost
under control . The synergy brought about made the PM’s work in collaboration to share and
discuss ideas about each others packages due to which several cost reduction / rationalisation
efforts were undertaken which led to a close control on the ProCos . Some of these practices
are listed below :

Preparing civil and structural drawings as per BOQ decided at the time the project was
conceived . No increase in either concreting quantity or size of structures have been
permitted.

Keeping a close tab on actual quantities at site and checking whether these were in line with
what were provided for at the time of designs preparation .

Rerouting existing railway lines , water lines and sewer lines instead of laying new ones.

Reducing the number of piles required . In this activity the nature of the soil plays a vital part

Using appropriate backfilling techniques.

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

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

Rerouting pipelines carrying coke oven gas .

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

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

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

By completing several Value Engineering projects to prepare a compact layout , to minimise
equipment size , to design an efficient process flow , etc.

11

By undertaking a simulation exercise to optimise the number of EOT cranes .

By conducting Benchmarking studies to reduce tonnes of structural steel used per unit area ,
closing contracts within a stipulated period to avoid cost escalations , and undertaking
Quality Improvement Projects to speed up the processes of releasing Purchase Orders and
preparing Sanction Requests for placement of purchase orders – all of which helped in
reducing cost of structures and the cost of concluding commercial transactions .

Opting for clearing imported capital goods for the Tandem Cold Mill under the EPCG route ,
which resulted in “zero duty “ for these goods , thus bringing down the capital cost
substantially.

(The above points are reproduced from the reference R.Jayaraman et al , 2001 )

In order to better understand how the PCCS works we will now examine two situations in
large projects – one , in which the PCCS is not used and the other in which the PCCS is
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used. The Table 2 below shows the same :

Insert Table 2 here

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

Example based on the Table 2 :

Take a large project for which the Board of the company has sanctioned Rs 1,800 crores as
the total cost . The project team – consisting of the owner and the project chief – work out
the cost of the packages based on the target . The calculations of the FIVE packages appear
as follows ( Figure 6 ) :

Insert Figure 6 here

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 PM’s have to
manage only with their PacCons . Hence if any one package overruns there is no
incentive for the other PM’s to compensate . Thus typically the escalation continues to
build over the five periods . The position after five periods appears as shown in figure 7 :

Insert Figure 7 here

12
 The graph of how the changes in cost move are shown in Figure 8 below :

Insert Figure 8 here

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 much higher than the
sanctioned amount , not because the PM’s don’t know how to run the project , but simply
because they lack the necessary tools and the mechanisms to keep the project cost under
control . On the other hand if PCCS is used the situations shown in figures 9 and 10 can
be encountered .

Insert Figures 9 and 10 here

Figures 8 ,9 and 10 are illustrative . The action orientation , the building in of tools and
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mechanisms to control project cost control through synergy , developing a collaborative

spirit between the PM’s , a mission driven project organisation and a best practices
oriented approach to project management can make all the difference . The PCCS was
innovated , designed and used in a large , brown field cold rolling mill project in Tata
Steel , Jamshedpur , India which project established several milestones in project
management . These have been published elsewhere extensively and the practices used in
this project have been used in other projects as well . The contingency calculations used
were elaborate and comprehensive , taking into account all the possible variations which
could affect the project cost . Given below is an example of the way in which
contingency was calculated from time to time – figures 11 and 12 :

Insert Figures 11 and 12 here

Some key results of the CRMP , especially with respect to the world class results
achieved in cost control and time management , are shown below , in figures 13 to 17 .

Insert Figures 13 to 17 here

Summarising the CRMP Model

The CRMP model can be summarised as shown in figure 18 below :

Insert Figure 18 here

13
 Limitations of the PCCS methodology :

The methodology is best suited for large projects preferably brown field ones with a high
engineering content in terms of civil and structural activities , equipment erection and
commissioning , installation of support facilities which are engineering intensive . The
forex content should also be reasonably low , say , less than 25 % for the methodology to
deliver successful results . This is because the ProCon can be stretched only so far , and
Boards of companies may not be very willing to allow higher contingencies fearing loss
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of control . The project management must use many or all of the “ best practices of
project management “ described in one of the references cited ( R.P.Singh et al , 2001) .
The skills set needed , the competencies required , the training of PM’s all indicate that a
well moulded , high calibre , trained and experienced group of PM’s who are capable of
working as a team by subsuming their individual goals is a pre-requisite – and these are
not easy to find in all projects .

Conclusions :

The PCCS is an innovation which was demanded by the desire of the Tata Steel company
management to reengineer project management practices in the company . One of the
main objectives was to bring down cost of projects using scientific management
techniques . It was also desired to create new benchmarks in project management , and
towards that goal the concerned project managers were encouraged to experiment with
new systems and procedures . The PCCS was evolved after considerable study of the
existing methods for cost control – which were not many . PCCS is a systematic method
which evolved over some six months much influenced by the thought processes which
were supported and encouraged in Tata Steel under the Tata Business Excellence Model
( or TBEM ) . The PCCS was designed by the PMC team in consultation with PMs , a
process document was created and circulated , the system was implemented over a
period of FIVE years and yielded outstanding results . Project Management literature
does not indicate that such developments have taken place since , and hence this paper .
It is hoped that the project management community will make the best use of the
contents and work towards reducing cost escalations in projects in a holistic way .

Further work :

The CRMP model was developed and practiced in Tata Steel in the late 1990s . It was
found to be of great use in major projects . However project environments change , with
consequences on project cost control . Thus it is possible to improve the PCCS practices
by 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 the
CRMP model to be applied in other situations .

14
 Acknowledgment

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

References :

1. Lavingia , Dr Nick , J , “ Improve profitability through effective project

management and total cost management “ , Cost Engineering , Volume 45 ,
Number 11 , November 2003 , pp 22-25
2. Emhjellen, Magne , Emjhellen , Kjetl and Osmundsen , Petter ; “ Cost estimation
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overruns in the North Sea” , Project Management Journal , March 2003 , Vol 34 ,
Number 1 , pp 23 - 29
3. Dell’Isola , Micheal D, “Impact of delivery systems on cost management “ ,
AACE Transactions , 2002 , PM.03 , pp 1- 8
4. Longworth , Scott , R. , “Evolving project control practices “ ,AACE
International Transactions , 2002 , CSC.09 , pp 1-9
5. Zhan ,Jim , “A project cost control model “ , Cost Engineering , Volume 40 ,
Number 12 , December 1998 , pp 31-34
6. Behrendt , Valerie and Wulke, Rita ; Cost Engineering , Volume 46 , Number 9 ,
September 2004 , pp 13 - 16
7. Hormozi , Amir M and Dube , Leon F; “ Establishing project control : schedule ,
cost and quality “ , SAM Advanced Management Journal , Autumn 1999 , pp 31-
38
8. Deng , Michael ZM and Hung , YF ; “ Integrated cost and schedule control :
Hong Kong perspective “ , Project Management Journal , Vol 29 , Number 4 ,
December 1998 , pp 43-49
9. Eden , Colin , Ackerman , Fran and Williams , Terry ; “The amoebic growth of
project costs “ , Project Management Journal , June 2005 , Volume 36 , Number 1
, pp 15-27
10. Leach, Larry ; “ Schedule and cost buffer sizing : how to account for the bias
between project performance and your model “ , Project Management Journal ,
Volume 34 , June 2003 , Number 2 , pp 34 to 47
11. Tichacek , Robert L;” Effective cost management :back to basics “ , Cost
Engineering , Volume48 , Number 3 , March 2006 , pp 27-33
12. Ciccarelli , John J; “Cost Control Systems : Benefits provided to claims analysis“,
AACE International Transactions , 2004 , CDR.12, pp 1-9
13. Cigolini, Roberto and Costellano , Antonio ; “ Using modularisation to manage
onshore process plants : a theoretical approach and a case study “ , Project
Management Journal , Volume 33 , Number 2 , 2002 , pp 29-40

15
 14. Raz , Tzvi and Globerson , Shlomo ; “ Effective sizing and content definition of
work packages “ , Project Management Journal , December 1998 , Vol 29 ,
Number 4 , pp 17 to 23
15. Rozenes , Shai , Vitner,Gad and Spraggett , Stuart ; “ Project Control “ Literature
Review “ , Project Management Journal , Volume 37 , Number 4 , September
2006 , pp 5-14
16. Hanna , Awad S; “ Using the Earned Value management system to improve
electrical project control “ , Journal of construction engineering and management
, March , 2012 , pp 449 – 457
17. Abdomerovic , Muhamed ; Chapter 10 , “ The AMA Handbook of Project
Management “ , Second Edition
18. Goldratt , Eliyahu ; “ Critical Chain “ , Reprint , 2008 , Productivity and Quality
Publishing Private Limited , India
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19. Lewis , James P; “ Fundamentals of Project Management “ , 2007 , pp 100 – 112 ,

Chapter 8
20. Mehta , Pradip , M; “ Effective implementation of a project control system “ ,
Cost Engineering , Vol 50 , No. 1 , 2008 , pp 34-37
21. Olawale , Yakubu ; Sun , Ming ; “ PCIM : Project controls and inhibiting-factors
management model “ ; Journal of Management in Engineering , January , 2013 ,
pp 60 – 70
22. Barazza,Gabriel A and Bueno , Rafael A ; “ Probabilistic control of project
performance using control limit curves “ , Journal of construction engineering and
management , December , 2007 , pp 957-964
23. R.Jayaraman , Y.M.Rao , A.Chatterji , Ramesh Babu , A.K. Ghosh , K. Das ;
Project planning , monitoring and control – cold rolling mill experience , Tata
Search , 1999 , pp 223 – 232
24. B Muthuraman , Amit Chatterjee and R Jayaraman ; The Lotus and the
Chrysanthemum ; Book published in May , 2000 by Tata Steel , pp 178
25. B Muthuraman , RP Singh , Amit Chatterjee and R Jayaraman , The cold rolling
mill of Tata Steel at Jamshedpur - an experiment with excellence , Paper
published in the Iron and Steel Review , June , 2000 , pp 7
26. R.P.Singh and R . Jayaraman , Best practices in project management , Tata
Search , 2001 , pp 26 to 35
27. R Jayaraman, RG Darji , D Chakravarty , N Rammurty and S Dasgupta , Project
cost control – the cold rolling mill experience , Tata Search , 2000 , pp 183 – 191
28. R Jayaraman, R Agarwal and Dr Amit Chatterjee , The Transformation of Tata
Steel , Tata Search , 2003 , pp 33 – 40
29. B Muthuraman , RP Singh , R Jayaraman, S Dasgupta and Sanjay Deb ,
Construction of a cold rolling mill complex at the Jamshedpur Works of Tata
Steel , AISE Annual Conference Proceedings , Chicago , September 10 – 13 ,
2000
30. R.Jayaraman , S.Dasgupta , B.Muthuraman , Investment analysis for a cold
rolling mill complex , Tata Search ,1998 , pp 96 – 101

16
 About the Author

R.Jayaraman is a product of UBC , Vancouver , Canada ( where he did his MS in

Metallurgical Engg with distinction ) , IIMA and IIT B . He joined Tata Steel in 1983
and rose to be its Chief 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 with senior leaders . He worked as the chief of
planning , monitoring and cost control of the cold rolling mill project of Tata Steel ,
headed by Mr. B.Muthuraman , which set several world records in project
management . He also served as VP of Quality in Tata Communications and as Sr VP
(Technology ) and Chief Safety Officer of Tata Teleservices . Currently he is serving
as Professor , Operations Management in the SP Jain Institute of Management ,
Mumbai , which he joined in 2011 after retirement from the Tata Group . He has
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published more than 40 papers and 2 books .

17
 Paper : Project Cost Control : a new method to plan and control costs in large projects

Tables and figures

Areas in technology driven project which Areas in technology driven project

are amenable for standardisation , typical which are NOT amenable for
standardisation , typical
Civil Equipment
Structural Layout
Piping Electrical circuitry and connections ,
voltages and power requirements
Water circulation systems Skills Sets like technology management ,
dealing with consultants
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SCADA Design and implementation of project

milestones
Drawings and storage Design of project work packages
Project Planning , Monitoring and Schedule Design of WBS
Control
Selection of vendors , dealing with them Compliances of various types – import /
export , taxes , environment , government
clearances ,
Table I : Areas in technology driven projects which can be standardised and those that are
NOT amenable for standardisation

Phase I Phase II Phase III Phase IV Phase V

Identify and Develop

Select form Execute ( detail Operate and
assess preferred
alternatives EPC) Evaluate
opportuinities alternative

Clearly frame Generate Fully define Implement

Operate assets
goal alternatives scope execution plan

Preliminary Develop Monitor and

Test for
development of detailed Min changes evaluate
strategic fit
akternatives execution plans performance

Preliminary Develop Finalising Identify new

Refine estimate
overall plan expected value operating plan opportunities

Identify
Preliminary Submit funding Business plan
preferred
assessment for approval for Phase 5
alternative
25%
1% rngineering Class 2 estimate Project review
engineering
 Class 3 estimate
Class 1 estimate ( + or - 10 %
accurate )

Figure 1 : The project management process ( adapted from Lavingia- 2003)

Effect of change in key project cost variables on IRR

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1.5

1.3

1.1

0.9
% increase in NR of CR
IRR Index

% reduction in manufacturing cost

0.7
% increase in capital cost
% reduction in coated products
0.5

0.3

0.1

-0.1 0 5 10

Figure 2 : Sensitivity analyses : effect of changing project cost parameters on the overall IRR
of the project ( reproduced from : R.Jayaraman et al -1998 op cit ) ( NR = Net Realisation ,
CR – Cold Rolled Steel Strips )
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Figure 3 : Margin – difference between the prices of HR and CR coils in international

markets ( Reproduced from R.Jayaraman et al , 2000 ,op cit )

( Note : WSD – World Steel Dynamics)

No Description Package Name Area

3
A) Land Land Dev. & Grading. 5.4 lac m Civil
Development
B) Civil & Zone 1 Civil
Structural Zone 2 Civil
Zone 3 Civil
Zone 4 Civil
C) Equipment PLTCM (Main Equipment) Pickling Line & Tandem Cold Mill
as Erected Roll Shop Pickling Line & Tandem Cold Mill
Repair Shop Pickling Line & Tandem Cold Mill
BAF Batch Annealing Furnace
SPM Skin Pass Mill
CGL – 1 Continuous Galvanising Line – 1
CGL – 2 Continuous Galvanising Line – 2
COG & Hydrogen Gen Plant Utilities
Nitrogen Plant Utilities
 Compressed Air System Utilities
Sump Pumps Water
Cooling Tower (including Cvl) Water
MPDS (Including 132 KV Bay) Electrical, Electronics &
LBSS, LBDS, LCSS etc. Instrumentation(EEI)
Interplant Cabling, RD & YD Ltg
Recoiling & Inspection Line Finished Product and Storage
Coil Packaging Line
Figure 4 : Initial WBS for CRMP ( reproduced from R.Jayaraman et al (2000)
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Overall project cost

Rs 1,800 crores ( target cost approved by the Board of the
to completion
company )
(ProCost )
Package Number P1 P2 P3 Pn
Package cost ,
Including Package CP1 CP2 CP3 CPn
Contingency
Total package cost (PacCos)
Rs 1,700 crores including a PacCon of Rs 170
ΣCP i , i = 1 crores
to n
Package
C1 C2 C3 Cn
Contingency
Total packages (PacCon)
contingency
Rs 170 crores
ΣC i , i = 1
to n
Project contingency ProCon =
ProCos –
Rs 100 crores
ΣCP i , i = 1
to n
 Figure 5 :The structure of PCCS - A New System for Project Cost Control
( Note : Amounts shown in the table are only illustrative , these are to be determined by
the PMC and the Owner / Project Consultant ) ( Source : Authors Research)
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Area of PCCS method Non PCCS method Advantages of

project
management
• Use of ProCon makes the
estimates tighter .
• Use of PacCon makes the
same even tighter
Cost
estimation
Use of dynamic cost
evaluation and reallocation
of ProCon and PacCon
further refines the process of
cost estimation
Involvement PM’s are involved
of PM’s in continuously in making cost
cost decision estimates . Incentivisation ,
making together with a team working
atmosphere makes the
Since only an overall
contingency is allocated
estimation of cost is not
subjected to tight norms ,
thereby giving way to
higher project cost
estimates
Use of dynamic cost
evaluation may be present
but is not intrinsic to the
process . Also reallocation
is not practiced as there is
no valid basis .
PM’s are not involved in a
co-operative way , in an
explicit manner , supported
by building an atmosphere
of collaboration .
PCCS over non-
PCCS
Use of PCCS can
result in a lower PC
estimate, giving an
advantage which can
drive the PC to lower
levels
Refinement in cost
estimation and the
dynamic attention to
packages cost is an
advantage
Synergies between
PM’s has the effect
of controlling PC on
a continuous basis
 process of reallocation
meaningful and synergistic .
Concepts of Whereas ProCon is used as a
ProCon and common pool , PacCon is a
PacCon PM oriented tool . These two
concepts when used in
tandem gives the Chief of the
project the power to balance
individual initiative with
teamwork .
Action Due to the dynamic nature of
orientation the ordering process coupled
with a strong engineering and to collective , supportive
vendor management base the
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No explicit mechanism PCCS is a tool which
available for balancing balances the
individual effort with team qualitative and the
effort . hence working at quantitative aspects
cross purposes or disjointed of project
working is not uncommon . management .
The process of Project Action orientation ,
Management is not oriented especially of the
collaborative variety
and collaborative working . is essential for good

project implementation is on Due to the missing PC management .

a sound footing . alignment synergy PCCS is a systematic
development is hampered . way to achieve this .
Table 2 : Reasons why the PCCS is superior to other methods of project cost control ( Source :
Authors Research)

Packages CP C
1 500 50
2 400 40
3 300 30
4 300 30
5 300 30
Total 1800 180
Figure 6 : Initial estimate of the project cost of FIVE packages , with
PacCon = Rs 180 crores ( Source : Authors Research)
 Packages CP C
1 520 70
2 450 90
3 350 80
4 400 130
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5 380 110
Total 2100 480
Figure 7 : Final project cost , after five periods , cost of FIVE
packages , with PacCon = Rs 480 crores , an increase of Rs 300
crores ( Source : Authors Research)

Figure 8 : The PacCon increases ( as a percentage of the ProCost , as shown in the graph )
with time and the Cost to Complete also escalates over time , indexed with respect to the
Board approved number of Rs 1,800 crores ( Source : Authors Research)
 Expected Behaviour of Project Cost , Package Contingency and
Project Contingency when the Project Cost is controlled by PCCS
300
100
-100
1 2 3 4 5 6
Package Contingency 170 190 210 230 250 270
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Project Cost Overrun -100 -60 -50 -20 -10 -

Estimated Project Cost To
94 97 97 99 99 100
Completion

Package Contingency Project Cost Overrun

Estimated Project Cost To Completion

Figure 9 : How the ProCos can be controlled using the PCCS through allocations of
PacCon and ProCon . ( Source : Authors Research)

Project Cost Contingency Allocation when project cost is

controlled by the PCCS
120

100

80

60 Project Cost Contingency

Allocation
40

20

0
1 2 3 4 5 6

Figure 10 : How the Procon can be utilised to ensure that the Procos does not exceed
the budget ( Source : Authors Research)
 Contingency Factors Coverage

Forex fluctuation Exchange rate variation

Scope changes Unforeseen items which change eqpt cost,
changes in quantum of work , for
example , civil and structural work ,
utilities , 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 items including changes
in wage rates , cost of stores items , etc.
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Interest rates (domestic)
Interest rates (forex)
Bank rates for long and short term
loans , cash credit , market borrowings ,
inter- corporate funds , unsecured loans
Foreign bank rates , LIBOR, FIBOR ,
other inter-bank rates , Exim bank loans ,
ECGC credits , Govt to Govt funds , etc.

Figure 11 : Details of contingency factors in the CRMP ( Source : Authors Research)

 Item of Correlation with Contingency Factors
Capital W eighted Contingency
Cost Forex Scope Inflation IRD IRF average amount
Factor (Rs Crores / year)
Imported 0.05 0.02 0.05 -0.05 0.00
equipment 1.00 0.00 0.00 0.00 1.00 0.05
430 21.50 0.00 0.00 0.00 0.00 21.50
Indigenous 0.05 0.02 0.05 -0.05 0.00
equipment 0.00 0.50 0.50 0.00 0.00 0.04
812 0.00 8.12 20.30 0.00 0.00 28.42
Civil and 0.05 0.02 0.05 -0.05 0.00
Structural 0.00 1.00 0.50 0.00 0.00 0.05
217 0.00 4.34 5.43 0.00 0.00 9.77
Infrastructure 0.05 0.02 0.05 -0.05 0.00
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0.00 0.50 0.50 0.00 0.00 0.04

57 0.00 0.57 1.43 0.00 0.00 2.00
Land 0.05 0.02 0.05 -0.05 0.00
0.00 0.50 0.00 0.00 0.00 0.01
56 0.00 0.56 0.00 0.00 0.00 0.56
Administration
during 0.05 0.02 0.05 -0.05 0.00
construction 0.50 0.00 1.00 0.00 0.00 0.08
121 3.03 0.00 6.05 0.00 0.00 9.08
Construction 0.05 0.02 0.05 -0.05 0.00
facilities 0.00 0.00 0.50 0.00 0.00 0.03
10 0.00 0.00 0.25 0.00 0.00 0.25
Bank interest 0.05 0.02 0.05 -0.05 0.00
rates - domestic 0.00 0.00 0.00 1.00 0.00 -0.05
110 0.00 0.00 0.00 -5.50 0.00 -5.50
Bank interest 0.05 0.02 0.05 -0.05 0.00
raets - forex 1.00 0.00 0.00 0.00 1.00 0.05
55 2.75 0.00 0.00 0.00 0.00 2.75
1,868.00 27.28 13.59 33.45 -5.50 0.00 3.68% 68.82

Figure 12 : An example of calculation and allocation of contingency for the CRMP

( Source : Authors Proprietary ) . Note : IRD = Interest Rate , Domestic ; IRF –
Interest Rate , forex loans. All cost figures in Rs Crores
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Figure 13 : Comparison of the projected and actual project cost mid-way through the
CRMP (Source : Reproduced from R Jayaraman et. al. 2000 )
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Figure 14 : Comparison of the projected time to completion and actual progress mid-way
through the CRMP (Source : Reproduced from R Jayaraman et. al. 2000 )

Figure 15 : Comparison of planned versus actual progress of project engineering for CRMP (
Source : Reproduced from : R.P.Singh et al , 2001)
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Figure 16 : Comparison of planned versus actual : Construction progress CRMP ( Source :

Reproduced from : R.P.Singh et al , 2001)

Figure 17 : Comparison of the overall project implementation CRMP with plan ( Source :
Reproduced from R.P.Singh et al , 2001)
 Project Managers

• Place orders

Continuous and ongoing

• Finalise contracts for works as per sanctioned costs
• Surrender excess package contingency to the packages
Project Execution

contingency fund
• Receive extra funding from the package contingency fund
(and , if needed , from the project contingency fund) as per
need

Project Monitoring & Controls group

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• Monitor cost of project continuously

• Provide guidance on allocation of
contingencies and modify package costs
Project Planning & Design

Regular and periodic

Project Head

• ( Project Managers and Project team)

• Project vision
• Project Masterminding
• Provide guidance and approvals
• Project Planning , Cost estimation

Managing Director
Corporate interface and stakeholders

Corporate interface and stakeholders

• Goals setting
• Target approvals
• Large scale revisions or course
corrections

Company’s Board of Directors

Figure 18 : Conceptual diagram of the PCCS model for control of cost in large projects
( Source : Author)
 Author details for paper “ Project Cost Control : a new method to plan and control
costs in large projects “

R.Jayaraman is a product of UBC , Vancouver , Canada ( where he did his MS in

Metallurgical Engg with distinction ) , IIMA and IIT B . He joined Tata Steel in 1983 and
rose to be its Chief 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 with senior leaders . He worked as the chief of planning , monitoring and cost
control of the cold rolling mill project of Tata Steel , headed by Mr. B.Muthuraman , which
Downloaded by Cornell University Library At 00:01 04 October 2016 (PT)

set several world records in project management . He also served as VP of Quality in Tata
Communications and as Sr VP (Technology ) and Chief Safety Officer of Tata Teleservices .
Currently he is serving as Professor , Operations Management in the SP Jain Institute of
Management , Mumbai , which he joined in 2011 after retirement from the Tata Group . He
has published more than 40 papers and 2 books .

Professor R.Jayaraman is the author to whom all correspondence may be addressed . He can
be reached on the following :

rjay_jsr@yahoo.com

jayaraman@spjimr.org

Cell : 9819348759