India is one of the fastest growing markets for tunnel construction. With infrastructure development at the forefront, there is great scope for tunnelling in the country, especially for developing urban infrastructure, underground rail and road networks, transportation in mountainous regions, and so on.
In the early years, infrastructure development through private players and public-private partnerships was led by construction contractors-turned-developers creating assets in sectors such as transportation, power generation, ports, etc. These assets are changing hands with a number of investors acquiring them and adding operational and managerial expertise.
There are a number of issues plaguing the construction industry. Land acquisition continues to be a major cause of concern. Further, lack of trust between the government (owner) and contractors has also led to project delays.
There are four factors crucial for ensuring timely implementation of infrastructure projects – policymaking, firmness on project parameters, readiness to bear the risks, and swift decision-making during the currency of the contract.
Under policy making, the following steps must be taken:
- The regulatory and policy framework needs to be refined at the national level.
- All clearances need to be obtained prior to signing of the contract.
- A model contract needs to be formalised and implemented across the infrastructure sector.
- Implementation of the Rehabilitation and Resettlement Policy should be done prior to contract signing. For instance, in an irrigation project, the river diversion work was completed but due to non-acquisition of land at one of the riverbanks, the dam could not be constructed in time.
- The policy mechanism needs to be strengthened for risk sharing during project execution in order to help save time by taking immediate action during exigencies.
- There should be provision for incentives when projects are completed ahead of schedule.
In order to save time and costs, project par-ameters should be finalised at the preliminary stage of project execution. For instance, during execution of a metro project, the layout was redesigned to a 10-storey building instead of a station building. This affected the entire design process and caused a delay in the project. Changing a project’s layout is not an easy task as it requires environmental clearances, which in itself is a time-consuming process. Therefore, at the feasibility stage or prior to the award of a tender, it is important to finalise the layout. Proper assessment of technical and financial viability of projects will help in timely completion. Also, the contractor should not be held responsible for any error, inaccuracy or omission of any kind in the owner’s requirements.
The third and most important factor is decision-making during the currency of the contract instead of having to settle issues later or through arbitration, is vital for the successful completion of projects. The payment held up in arbitration affects the cash flow of contractors and leads to delays in projects. This also tarnishes contractors’ market value. Further, frequent changes in project leadership hinder project execution.
As underground tunnelling is subject to variations due to difficult geological/soil conditions, geological mapping should be done by an experienced geologist at every stage of construction. In case there is a design variation, the additional cost can be incorporated into the project cost, once the contractor agrees.
The International Federation of Consulting Engineers (FIDIC) contract, which is used internationally, is best known for its range of standard conditions of contract for the construction and engineering industry. FIDIC contracts cover all clauses relevant to both clients as well as contractors. It typically obviates the need for a separate contract. For the Indian construction industry, however, some of the conditions of FIDIC contracts must be relooked at, special classes should be made depending on the project type, and certain clauses could be added for addressing local issues.
Conclusion
The government should treat the contractor as a partner in project development and not assume that the contractor is minting money. Putting the entire onus of a project on the contractor is unfair. The contractor should not be deemed to have obtained all necessary information pertaining to risks, contingencies, etc. at the tender stage, rather a shared mechanism should be developed for contingencies. Risk sharing can be done through improved transparency between the contractor and the owner. The involvement of experts for sound advice and guidance is essential. The project planning and execution process needs to be based on technical parameters rather than political pressures.
Based on a presentation by Satish Kumar Sharma, CTO, Hindustan Construction Company, and remarks by C. Sankaralingam, Vice-President and Head, Special Projects, L&T Construction, at a recent India Infrastructure conference