Lesson for Project Managers - Projects delayed by 13 yrs! Billions lost

Development is the buzzword today in emerging India, even as the country resolves to build an economically stronger, more efficient set-up which is devoid of bureaucratic delays.

But that dream may seem Utopian.

What is commonly referred to as the 'sadak, bijli and pani' (roads, electricity and water) issue during election time is dubbed 'infrastructure projects' by babus during normal times in New Delhi.

Most voters, who voted out the previous National Democratic Alliance government over these very issues, have no clue as to what New Delhi is doing to tackle these vital matters.

Here are some facts for you.

The ministry of statistics and programme implementation has a division governed by it called the Infrastructure and Project Monitoring Division.

The latest notes prepared by the division highlighting the implementation status of projects and performance of 11 infrastructure sectors is a sad saga of government delays and colossal waste of public money.

The division has 605 projects worth Rs 267,815 crore (Rs 2,678.15 billion) on the monitoring system on which Rs 105,146 crore (Rs 1,051.46 billion) have already been spent.

Out of these 605 projects, around 248 projects are way behind schedule. Another 149 projects, though approved, have not even been commissioned, and 46 other projects are waiting for the updating of their completion schedule.

Merely 22 projects are ahead of schedule, while 14 are on schedule.

The overall cost overrun with respect to original cost is 21.5 per cent, mainly because of delays, which range from one month to 13 years!

Delays, delays and more delays

The ministry officials who have prepared the notes have listed the reasons for time overruns. These reasons suggest that at every turn there are holdups.

What tops the list of reasons for the delay in the implementation and completion of vital projects is the delay in acquiring land.

Forest and environment clearances are another crucial factor contributing to delays in huge projects.

Other roadblocks are in form of:

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      Lack of infrastructure support and linkages.
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      Delay in tie-ups for project financing.
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      Delays in finalisation of detailed engineering.
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      Change in scope.
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      Delay in tendering, ordering and supplying equipment.
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      Law and order problems.
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      Geological surprises.
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      Pre-commissioning teething troubles.

Indian government projects have been heavily criticised since decades for the cost escalation caused by procrastination. And matters have not changed even today.

The demon called 'cost overrun'

According to the government's own review, there is a plethora of causes for cost escalation:

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      Underestimation of original cost.
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      Changes in rate of foreign exchange and statutory duties.
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      High cost of environmental safeguards and rehabilitation measures.
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      Spiraling land acquisition costs.
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      Changes in project scope.
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      Monopolistic pricing by vendors of equipment and services.
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      General price rise.
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      Disturbed conditions.

At least 36 projects of the Indian Railways, and many other projects of the energy, civil aviation and highway ministries, have been delayed primarily due to the reasons listed above.

But it is not as if the government has even been putting off decisions to find a remedy for these delays. Empowered committees have been set up in all ministries. And a Standard Contract Management System has been adopted for the projects.

For any project worth above Rs 50 crore (Rs 500 million), a nodal officer for the project has been appointed. Apart from several other corrections in the administration, the antiquated Land Acquisition Act of 1894 has been amended. Also an online, computerised monitoring system has been set up.

Yet, despite this mechanism in place, delays continue and the nation keeps losing money and fails to build up infrastructure.

Scenario inside the ministries

The ministries have divided all central government projects under scrutiny in three categories: mega, major and medium.

There are 49 mega projects (each costing Rs 1,000 crore -- Rs 10 billion -- and above), totally worth Rs 171,929 crore (Rs 1,719.29 billion).

There are 261 major projects (each costing Rs 100 crore -- Rs 1 billion -- to Rs 1,000 crore), totally worth Rs 80,819 crore (Rs 808.19 billion).

There are 295 medium projects (each costing Rs 20 crore -- Rs 2 million -- to Rs 100 crore). These put together are worth Rs 15,067 crore (Rs 150.67 billion).

Here are some random cases of the delayed sarkari projects.

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      There are 10 projects, including five of mega size, under implementation related to nuclear power production. Cost overrun for some of the projects of atomic energy is 7.7 per cent compared to original cost.
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      In the civil aviation ministry, several mega projects are hanging fire or facing financial crunch. The cost for the Jaipur airport project of Rs 24 crore (Rs 240 million) has now been revised to Rs 28.87 crore (Rs 288.7 million).
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      The Mangalore airport new runway project is worth Rs 55 crore (Rs 550 million). It was approved in August 2003 but till June 2004, only 5 per cent work on it has been reported as having been completed.
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      In the coal sector, Pootkee Balihari Underground Project is suffering from time overrun of 156 months.
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      The monitoring agency is following the progress of 36 projects of the petroleum and natural gas department worth Rs 42,872 crore (Rs 428.72 billion). Some of them have been facing 'insurmountable constraints.'
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      The power ministry has 55 projects on hand. Their combined worth is a staggering Rs 89,201 crore (Rs 892.01 billion). This includes an escalated cost of 26.8 per cent, or Rs 23,905.688 crore!
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      There are four hydro projects in the power sector at Dulhasti, Dhauliganga, Tehri and Nathpa Jhakri which are under construction for more than a decade.
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      In the North-East, construction of the Indira Gandhi Regional Hospital was commissioned in May 1986 and has just been completed. Another hospital project in Imphal has also been delayed since 1986!
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      Indian Railways have 224 projects going on worth Rs 51,733 crore (Rs 517.33 billion). Its original cost was just Rs 35,200 crore (Rs 352 billion).

Some of the cost overrun is due to the addition of related projects along an earlier sanctioned route called material modification in the Railways vocabulary. These 224 projects are such where cost has increased by 47 per cent! The time overrun in the railway projects ranges from 2 months and 14 years months!

And what does the railway ministry have to say about these delays? It cites "thin dispersal of limited resources over a large number of projects" as the reason.

India's most prestigious government project was the Golden Quadrilateral project worth Rs 58,000 crore (Rs 580 billion) at 1999 price levels. The National Highway Development Project has awarded all contracts under these projects.

According to official reports '71 NHDP packages have reported slippage in their commissioning schedule in the range of 1 month to 1 year.' The delay is due to many factors, including the 'law and order situation in some states, non-availability of desired grade of stones, and the delay in clearance from railway overbridges.'

Out of the 38 projects of the shipping ministry, collectively worth Rs 3,290 crore (Rs 32.90 billion), 23 are facing problems.

In many cases the central monitoring agency does not have any data on commissioned projects!

And this litany of woes has for decades been common to almost everything that government departments are entrusted with. Now you know why India desperately needed liberalisation and privatisation.