Infrastructure is a key driver of economic
growth and development. Increasingly, India and other emerging market economies are realising this fact and are taking up numerous infrastructure projects. That said, properly planned and impeccably implemented infrastructure projects become even more beneficial to the economy as they minimise the socio-economic costs while maximising the benefits.
A project’s life cycle starts from the pre-planning stage. Timely execution of a project is dependent on a variety of factors such as preparation of a realistic detailed project report, accurate pre-qualification criteria for the selection of the contractor, and appropriate allocation of risks among stakeholders.
The project execution scenario in India has not been very encouraging. Timely efforts on the part of all the stakeholders are required to reach a stage where projects are executed in an efficient manner.
A panel discussion was hosted at the India Infrastructure Forum 2019 to discuss the biggest causes of time and cost overruns and the impact on project implementation, measures that the government can take to speed up the process, and the potential role of contractors in improving their own performance through better processes, practices, equipment and technology…
A number of controllable and uncontrollable variables such as planning, contract documentation, dispute resolution, and obtaining clearances determine the timeliness of the project implementation process.
The extent of a contractor’s involvement during project implementation is also a crucial element of the process. The contractor should be equipped to handle situations where the uncontrollable factors result in the derailment of project execution. Accuracy and exhaustiveness of the contract documents is a significant factor given the complexities involved. From a contractor’s perspective, there is a need for more balanced contracts as the risk is heavily biased against them. One-sided contract documents can create implementation hurdles. The contract documents should thus be modified and made equitable. Further, a good contract management team can ensure better handling of ambiguities related to project scope. This in turn leads to avoidance of disputes.
In case of a dispute, faster resolution can lead to smoother implementation of the project. Regardless of whether resolution is through mediation, conciliation or arbitration, the project gets held up.
An uninterrupted flow of funds is a necessary precondition for timely project execution. A regular fund flow is required not only for the project but also for the contractor. There have been cases where contractors have not been able to mobilise resources as banks are either unwilling to lend to them or charge high rates of interest. Hence, the problem of securing project finance needs to be tackled.
Therefore, the controllable variables should be tackled efficiently and lessons can be learnt from the success stories. Changes in legislations and tax structures fall under the category of uncontrollable variables. Neither the implementing agency nor the contractor has any control over these changes.
Risk management, technology utilisation and integrated project management are three crucial aspects which can ensure timely implementation of projects.
Technology has a big role to play in facilitating integrated project management. It can be used right at the pre-bid stage when a detailed survey is being carried out. For instance, drones can be deployed for conducting surveys. Building information modelling can be used to develop 4D and 5D models that can then be synchronised with the project’s execution schedule. Terrain and weather condition surprises can be minimised by using geospatial technology for developing a good understanding of the strata and soil conditions. This can also ensure enough time for preparation in terms of cost and time that is required to deal with those difficulties. Creation of a project’s digital twin is also an emerging technology that can aid timely delivery.
Technology can also be deployed for monitoring the level of labour productivity. This can help mitigate cost overruns that arise on account of efficiency losses or idling manpower. However, a mindset change is needed for the industry to embrace the emerging technologies to reap maximum benefits.
Further, risk management is also a key aspect. There is a need to get the risks managed by the respective parties and acknowledging the requirements of the contractors for smooth implementation of projects. This can be achieved in the form of a law or incorporation of an apex body.
While the pace of project execution has improved substantially over the past few years, there are some issues that still persist. Environmental clearances are consuming considerable amount of time and can be very expensive to deal with and could entail a lot of additional cost. In general, the pace of land acquisition has improved to a large extent; however, there is still a lot of scope for further improvement.
Skill shortage is another area that needs attention. There is a talent crunch on the management side as well. The government is taking initiatives but there is scope for the creation of more skill training institutes.
The bigger picture
It is not conceptually correct to look at infrastructure as a market commodity. Intrinsically, any infrastructure facility or service is a public good. That said, it is important to account for the cost on the economy of delays in implementation of an infrastructure project.
There is a need on the part of all the stakeholders including policymakers and implementing agencies to find solutions for the problems that cause delays. If this is not done, delays will continue to impact the authorities and citizens.
Ultimately, the responsibility of providing infrastructure in an economy lies with the government. However, since the government has limited fiscal strength, the private sector is being increasingly roped in. Infrastructure projects need to be seen as a collaborative effort between the government and the other parties involved.
It needs to be understood that quick decisions, swift implementation and timely completion of projects are fundamental to infrastructure development and thus to economic growth, in the absence of which the problems will continue.