Project Delays & Overruns Study - KPMG

INFRASTRUCTURE

Study on project schedule

and cost overruns

Expedite infrastructure projects

Foreword

Foreword from PMI India

Today, India is one of the leading outsourcing hubs in

the world. However, the world judges us not just by

the talent we have to offer, but also on the basis of our

infrastructure capabilities. India has set an ambitious

target of investing USD 1 trillion in infrastructure during

the Twelfth Five Year Plan period. Given this factor,

infrastructure development has been a key focus area

in every Indian state more so in the recent past. At the

center as well, big budgets have been allocated for

infrastructure development in every Five Year plan.

However, the country has consistently fallen short of

meeting such targets over the last few years. These

projects have been invariably riddled with issues of time

BOE�DPTU�PWFSSVOT��8JUI�UIF�PCKFDUJWF�PG�ěOEJOH�PVU�UIF�reasons for such schedule and cost overruns, Ministry

of Statistics and Programme implementation (MoSPI)

recommended PMI to conduct a Study, in consultation

with KPMG to highlight the major reasons for the time

and cost overruns across major sectors in infrastructure

projects. The projects surveyed in this report are from

nine sectors in the Infrastructure space viz. Power,

Petroleum, Coal, Steel, Railways, Roads & Highways,

Civil Aviation, Ports & Shipping, and Telecom.

It is a known fact that a large number of infrastructure

projects in India have been delayed due to regulatory

clearances, environmental issues and problems

pertaining to land acquisition. Also, there are challenges

in the tendering phase that affect viability of projects

thus delaying implementation, construction phase is

beset with over-runs and disputes and last but not the

least; provider skills are weak all across the value chain.

Given the critical role of infrastructure in ensuring a

sustained growth trajectory for India, it is imperative

that we identify the core issues affecting completion of

infrastructure projects in India and chalk out initiatives

that need to be acted upon in short term as well as long

term. This report attempts to identify these pertinent

issues and also brings out how professional project

management practices can bring about a positive

change in the completion of projects on time and within

budget.

Almost 79% of our respondents felt that the

infrastructure sector faces an acute shortage of skilled

project managers. This absence of project managers

with the requisite skill sets has emerged as the major

cause for time and cost overruns. Young graduates

today are being lured away be other seemingly lucrative

opportunities and project management education and

training is not yet getting the priority it requires.

Though organizations are realizing the growing need

for structured project management, many are looking

at short term training programs to enhance the skill sets

of their project teams. However, the situation warrants a

more serious approach. The survey reveals that by 2022

Indian infrastructure sector is likely to have a shortage of

around 3 million project professionals including project

managers, civil engineers, planners, surveyors, safety

professionals, etc.

The government too realizes the urgency of meeting

this skill dearth. In the Twelfth Five Year Plan, the

government has plans to focus on improving the project

management skills across country to get better returns

from public investment in infrastructure and also in

the social sectors. Project management, with a view to

deliver on time and within cost, is a learnable capability

that can be institutionalized in India. There is therefore,

a pressing need for industry and academia to realize

UIJT�HSPXJOH�OFFE��0SHBOJ[BUJPOT�UIBU�FNQMPZ�RVBMJěFE�project managers must encourage and support their

professional growth. In addition, organizations must

TUBSU�JOTJTUJOH�PO�IJSJOH�RVBMJěFE�QSPKFDU�NBOBHFST��5IJT�will provide academia the impetus required to introduce

project management into their curriculum.

Project management is the imperative for India’s growth

story and we believe, the way forward is for industry

and academia to work in tandem on this course to reach

the country’s goal of being ranked as an economic

superpower and a developed nation.

Raj Kalady

Managing Director

PMI India

Infrastructure plays a paramount role in the economic

growth of a country. Infrastructure investments in India

IBWF�CFFO�HSPXJOH�PO�B�DPOTJTUFOU�CBTJT��*O�FBDI�ěWF�year plan, the government sets an ambitious target

XIJDI�JT�IJHIFS�UIBO�UIF�QSFWJPVT�POF��5IF��UI�ěWF�ZFBS�QMBO�BMTP�QSPNJTFT�TJHOJěDBOU�JOWFTUNFOU�JO�infrastructure sector to bridge the huge infrastructure

EFěDJU��5IF�QMBO�JT�UP�EPVCMF�UIF�TQFOEJOH�UP�64%��trillion through 2016-17 with 50 percent of the funding

to be met by private sector. Although, the sector is

considered to be a key driver of economic growth, time

and cost overruns threaten to limit the sector’s potential

UP�IFMQ�BDIJFWF�UIF�EFTJSFE�HSPXUI�BOE�FOTVSF�FGěDJFOU�capital expenditure.

To understand the reasons for time and cost overruns

KPMG initiated the PMI-KPMG study on the request of

MoSPI to analyze the reasons for schedule and cost

overruns across various infrastructural projects running

across the country. The study was undertaken after

surveying key stakeholders in the infrastructure sector

and analyzing several key projects and comparing them

with best practices available globally.

It deliberates on both the external reasons for delays,

which are beyond the control of implementing agencies

and internal reasons, which can curtailed at the project

level with proper planning and project management.

The study also dwells on the proposed actions to be

taken for expediting infrastructure projects in India.

8F�IPQF�UIBU�BMM�TUBLFIPMEFST�ěOE�UIJT�SFQPSU�NFBOJOHGVM�in its bid to highlight the reasons for overrun in the

infrastructure projects and possible recommendations.

Neeraj Bansal

Partner, Real Estate and Constructions

KPMG in India

Foreword from KPMG in India

Table of ContentsExecutive Summary 01

Reasons for Schedule Overruns 07

Reasons for Cost Overruns 23

Sector-wise Impact of Factor on

Cost and Schedule Overruns 33

Mitigation Strategies -

&OTVSJOH�&GěDJFOU�1SPKFDU�%FMJWFSZ��

Project Management –

Proven Method for Successful Delivery 47

Resource Shortage –

Plaguing The Growth of the Sector 51

Recommendations – Next Steps 59

Case Studies – A Deep Dive Into Projects 69

Global Insights – Learning From Global Projects 93

Sectors Overview –

Understanding Infrastructure Sector in India 99

1BSUJDJQBOU�1SPěMF�BOE�4UVEZ�.FUIPEPMPHZ��

Appendix 123

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1 | Study on Project Schedule and Cost Overruns

Executive Summary

The KPMG in India - PMI study 2012 was initiated

on the request of MoSPI, highlights the major

reasons for schedule and cost overruns across

major sector’s infrastructure projects. While

some projects are impacted due to external

factors which are beyond the control of the

implementing agencies such as land acquisition,

regulatory approvals, etc., majority of projects

are delayed by factors which can be controlled

at the project level through proper planning and

project management. The study also highlights

the severe skill shortage and the growing

EFNBOE�TVQQMZ�HBQ�GPS�RVBMJěFE�DPOTUSVDUJPO�professionals affecting the infrastructure sector

in India. Project owners feel this is a long-

term issue which not only makes the projects

more expensive and risky, but also results in

compromise on quality as well as timelines.

Study on Project Schedule and Cost Overruns | 2

Infrastructure plays a paramount role

in the economic growth of a country.

Infrastructure investments in India have

been growing on a consistent basis. In

FBDI�ěWF�ZFBS�QMBO �UIF�(PWFSONFOU�TFUT�an ambitious target which is higher than

UIF�QSFWJPVT�POF��"MUIPVHI �UIF�TFDUPS�JT�considered to be a key driver of economic

HSPXUI �UJNF�BOE�DPTU�PWFSSVOT�UISFBUFO�to limit the sector’s potential to help

achieve the desired growth and ensure

FGěDJFOU�DBQJUBM�FYQFOEJUVSF��

Dearth of skilled project managers

IBT�UIF�HSFBUFTU�JOĜVFODF�PO�QSPKFDU�delivery

Shortage of skilled project managers

emerges as the root cause for time and

cost overruns in a project lifecycle. It has

CFFO�PCTFSWFE�UIBU�UIF�JOĜPX�PG�UBMFOU�in the infrastructure sector has been

declining – as resources are going for

BMUFSOBUJWF �NPSF�MVDSBUJWF�PQUJPOT��5IJT�concern is felt across various stages

of project lifecycle. 79 percent of the

respondents agree that the sector faces

shortage of skilled project managers with

UIF�QSFSFRVJTJUF�TLJMM�TFU �XIJDI�SFTVMUT�JO�time/schedule overruns.

0OF�PG�UIF�SFBTPOT�GPS�JOFGěDJFOU�QSPKFDU�delivery is the paucity of skilled project

managers in the infrastructure sector.

5IJT�EFDMJOF�JO�UIF�JOĜPX�PG�UBMFOU�JO�UIF�sector has emerged as the embryonic

cause for time and cost overruns in

the project life cycle. Resources are

CFJOH�TFFO�UP�EFĜFDU�BXBZ�GSPN�UIF�JOGSBTUSVDUVSF�TFDUPS�UPXBSET�BMUFSOBUJWF �more lucrative options.

5IJT�HSPXJOH�DPODFSO�XIJDI�IBT�CFFO�GFMU�across various stages of the project life

cycle has been supported by 79 percent

of the respondents that advocate the

same belief of managers lacking the

QFSRVJTJUF�TLJMM�TFU��5IJT�JOTVGěDJFODZ�further leads to issues such as prolonged

ěOBMJ[BUJPO�PG�EFTJHO �TDPQF�DSFFQ�BOE�contractual disputes.


Reasons for project time overruns across project lifecycle

Stages External issues Internal issues

Pre-planning y Delay in regulatory approvals y Unavailability/delayed availability of funds y Land/site handover

y Lack of project managers/commercial managers with adequate planning skills

y -BDL�PG�-JBTJPOJOH�0GěDFS�1MBOOJOH�&OHJOFFS y Lack of cost managers y -BDL�PG�TBGFUZ�PGěDFST�FOWJPSONFOUBM�QSBDUJUJPOFST

Planning and design y Lack of strong R&R policies y Ineffective procurement planning y Design/scope change y Delay in regulatory approvals y Delay in decision making

y Lack of planning engineer/commercial managers y -BDL�PG�MJBTJPO�PGěDFS�PS�QMBOOJOH�FOHJOFFS y -BDL�PG�.&1�FOHJOFFST

&YFDVUJPO�BOE�monitoring

y Weak/ineffective project planning & monitoring y Contractual disputes y Unavailability/delayed availabiilty of funds y Lack of strong R&R policies y Delay land/site handover

y Lack of project managers/site managers/planning engineers/quantity supervisors

y Lack of awareness modern equipment & technology

y -BDL�PG�MJBTPO�PGěDFS�BOE�DPNNFSDJBM�PGěDFST

Closure and handover

y Pre-commissioning teething troubles y Contractual disputes

y -BDL�PG�DPNNJTTJPOJOH �QSPKFDU�BOE�TJUF�NBOBHFST �audit and total quality management professionals

Lack of requisite skill set as a major

cause of concern is also supported by

,1.(�*OUFSOBUJPOBMĳT�(MPCBM�$POTUSVDUJPO�Survey 2012. About 45 percent of the

"TJB�1BDJěD�"41"$�SFTQPOEFOUT�XFSF�less apprehensive about unfavorable

economic prospects as compared

UP�UIF�TLJMMT�TIPSUBHFT�BOE�JOĜBUJPO�BT�B�DPOUJOVJOH�XPSSZ��5IF�TVSWFZ�highlighted that while emerging markets

like India represent a big opportunity

for engineering and construction

DPNQBOJFT �UIFTF�NBSLFUT�BSF�GSFRVFOUMZ�accompanied by a high degree of

VODFSUBJOUZ��"T�QFS�,1.(�*OUFSOBUJPOBMĳT�(MPCBM�$POTUSVDUJPO�4VSWFZ �BCPVU��percent of the respondents considered

UIBU�JO�"41"$ �BDDFTT�UP�BQQSPQSJBUF�skilled resources as the single biggest

DPODFSO �GPMMPXFE�CZ�QPMJUJDBM�SJTLT�BOE�cultural differences.

5IF�SFTQPOEFOUT�IBWF�BEPQUFE�SFTPVSDF�planning and monitoring strategies to

JNQSPWF�FGěDJFODZ�BOE�VUJMJ[BUJPO�PG�UIF�SFTPVSDFT��)PXFWFS �UIFSF�JT�TUJMM�B�transcendental need for improvements

in the quality of project management

USBJOJOH�CFJOH�PGGFSFE�CPUI�FYUFSOBMMZ�and internally. Structured and improved

USBJOJOH�QSPHSBNT�XFSF�JEFOUJěFE�CZ�respondents as a long term solution for

building professional capabilities and

enhancing skill sets.

About 72 percent of the respondents

consider internal training programs such

as developing in-house Project Academy

/ ‘Center of Project Management

&YDFMMFODFĳ�GPS�USBJOJOH�BOE�DFSUJGZJOH�project managers as the pertinent step

to enhance the quality of talent available

in the near future. Other factors such as

MBOE�TJUF�IBOEPWFS �EFMBZ�JO�SFHVMBUPSZ�BQQSPWBMT �GSFRVFOU�EFTJHO�DIBOHFT �TDPQF�DSFFQ �DPOUSBDUVBM�EJTQVUFT�FUD� �also result in schedule overruns.

Cost overruns are fuelled by frequent

changes in design and weak

procurement planning, which can be

mitigated by adequate training and

coaching of project managers

About 67 percent of the respondents

feel that weak procurement planning

and frequent changes in design have a

huge impact on project cost overruns.

5IFTF�JTTVFT�SFTVMU�JO�JOFGGFDUJWF�QSPKFDU�QMBOOJOH�BOE�EFTJHOJOH��5IF�TVSWFZ�respondents agreed that these issues

have a high impact on the project cost but

can be mitigated by effective training and

coaching of the project managers.

5IF�TVSWFZ�BMTP�JEFOUJěFE�UIBU�companies today have a high-level

of awareness towards the need for

QSPKFDU�NBOBHFNFOU�BT�BO�PSHBOJ[BUJPO�XJEF�QSPDFTT��)PXFWFS �FGGFDUJWF�implementation of project management

BT�BO�PSHBOJ[BUJPOBM�QSPDFTT�JT�ZFU�UP�CF�SFBMJ[FE�CZ�UIF�NBKPSJUZ�


Source: KPMG in India - PMI Survey on cost and schedule overrun, 2012

Lack of highly skilled professionals becomes critical to address

5IF�TVSWFZ�TVHHFTUT�UIBU�UIFSF�JT�B�EFBSUI�PG�NBOQPXFS�BDSPTT�DBUFHPSJFT��IPXFWFS �non-availability of highly-skilled professionals can have an adverse impact on the

QSPKFDU�EFMJWFSZ�BOE�DPTU��#Z�� *OEJBO�JOGSBTUSVDUVSF�TFDUPS�JT�FYQFDUFE�UP�IBWF�B�shortage of around three million1�QSPKFDU�QSPGFTTJPOBMT�JODMVEJOH�QSPKFDU�NBOBHFST �DJWJM�FOHJOFFST �QMBOOFST �TVSWFZPST �TBGFUZ�QSPGFTTJPOBMT �FUD��)FODF �JU�JT�JNQFSBUJWF�UP�increase investment in training and mentoring to develop the requisite skill set in the

QSPGFTTJPOBMT �EFQMPZFE�BDSPTT�WBSJPVT�EFQBSUNFOUT�

'VSUIFS �UP�NFFU�UIF�JODSFNFOUBM�EFNBOE�PG�QSPKFDU�QSPGFTTJPOBMT �JU�JT�JNQPSUBOU�to introduce project management in the

DVSSJDVMVN�PG�FOHJOFFSJOH �NBOBHFNFOU�BOE�PUIFS�UFDIOJDBM�JOTUJUVUFT��.PSFPWFS �UIF�(PWFSONFOU�TIPVME�QMBZ�B�NPSF�QSPBDUJWF�SPMF�CZ�SFDPHOJ[JOH�QSPKFDU�NBOBHFNFOU �WPDBUJPOBM�PS�TLJMM�USBJOJOH�institutes as a part of the main stream

education. In many of the advanced

JOEVTUSJBM�DPVOUSJFT �WPDBUJPOBM�USBJOJOH�is considered at par with university

FEVDBUJPO��)PXFWFS �UIJT�JT�OPU�UIF�DBTF�JO�*OEJB��"T�B�SFTVMU �WPDBUJPOBM�USBJOJOH�is not sought after by the bright and

ambitious students. One of the primary

reasons is that these institutes cannot

offer a ‘degree’ – which seems to be

a critical requirement for any further

formal education in India and across the

globe. It is important to understand the

manpower and skill requirements of the

industries before we begin our reforms

JO�UIF�WPDBUJPOBM�USBJOJOH�BSFB��5IF�SBQJEMZ�growing Indian needs trained manpower

OPX�NPSF�UIBO�FWFS��5IFSF�BSF�NVMUJQMF�TFDUPST �(PWFSONFOU�PSHBOJ[BUJPOT �support institutions that need manpower

to support them.

5IF�JOUSPEVDUJPO�PG�QSPKFDU�NBOBHFNFOU�curriculum in main stream education is

SBQJEMZ�CFDPNJOH�HMPCBM��*OEJB�JT�FYQFDUFE�UP�CFOFěU�JNNFOTFMZ�CZ�BEPQUJOH�HMPCBM�standards and allowing globally renowned

institutes to set up training centers in

*OEJB��*O�UIF�TIPSU�SVO �JU�XJMM�IFMQ�TPNF�PG�the best global construction companies

UP�XPSL�FGěDJFOUMZ�BOE�FGGFDUJWFMZ�JO�India and contribute to the richness of

XPSLGPSDF�JO�*OEJB��*O�UIF�MPOH�SVO �JU�XJMM�help the Indian labor to be world-class and

claim higher salaries and wages.


1 KPMG in India Analysis

1SPKFDU�NBOBHFNFOU�IFMQT�JO�FGěDJFOU�project delivery

5IF�JOEVTUSZ�IBT�TUBSUFE�BDDFQUJOH�UIF�1SPKFDU�.BOBHFNFOU�0GěDF�1.0�concept for independent reporting and

FOTVSJOH�QSPKFDU�NBOBHFNFOU�FYDFMMFODF��About 86 percent of the respondents

agree that PMO could be an effective way

of monitoring projects. Project teams that

have adopted PMO feel that it helps in

ensuring successful implementation of

projects through deployment of project

management best practices. PMO also

IFMQT�JO�QSPBDUJWF�SJTL�JEFOUJěDBUJPO�and provides adequate guidance and

information for timely decision-making.

5IF�(PWFSONFOU�IBT�BMTP�SFBMJ[FE�UIF�importance of project management

DBQBCJMJUJFT��*O�UIF�5XFMGUI�'JWF�:FBS�1MBO �UIF�(PWFSONFOU�IBT�QMBOT�UP�GPDVT�on improving the project management

skills across country to get better returns

from public investment in infrastructure

and also in the social sectors2. Project

NBOBHFNFOU �XJUI�B�WJFX�UP�EFMJWFS�PO�UJNF�BOE�XJUIJO�DPTU �JT�B�MFBSOBCMF�DBQBCJMJUZ�UIBU�DBO�CF�JOTUJUVUJPOBMJ[FE�JO�India.

Proposed action points for expediting

infrastructure projects in India

5IF�GPMMPXJOH�BDUJPOT�QPJOUT�once implemented could help in

debottlenecking infrastructure

projects and help ensure timely project

implementation within the stipulated

CVEHFUT��5IFTF�TUFQT�JODMVEF�

ľ� &TUBCMJTIJOH�B�UISFF�UJFS�QSPKFDU�QSPHSBN�NBOBHFNFOU�PGěDF�1.0�structure throughout the country to

monitor infrastructure projects

ľ� 0QUJNJ[JOH�UIF�QSPDFEVSFT�GPS�transparent bidding criteria

ľ� %FWFMPQJOH��BO�FGěDBDJPVT�EJTQVUF�settlement mechanism

ľ� 'PSNVMJ[JOH�QSPKFDU�NBOBHFNFOU�USBJOJOH�GPS�QSPGFTTJPOBMT�

- Further strengthening India’s

7PDBUJPOBM�&EVDBUJPO�BOE�5SBJOJOH�program to impart project

management knowledge to

XPSLJOH�PGěDJBMT�IBWJOH�WBSJFE�FYQFSJFODF�

- Foster collaboration and

cooperation with educational

institutes to counter the

JOTVGěDJFODZ�TIPSUBHF�QBVDJUZ�PG�professionals well equipped to

handle infrastructure projects

- &ODPVSBHJOH�GVSUIFS�EFWFMPQNFOU�of in-house academies and

structured training programs

ľ� Introducing a single window clearance

mechanism to make the regulatory

approval process more effective

ľ� "EPQUJOH�B�VOJěFE�VOBNCJHVPVT�transparent transport policy for

movement of project materials

FTQFDJBMMZ�UIF�0%$T�PWFSTJ[FE�EJNFOTJPOFE�DPOTJHONFOUT��'VSUIFS �EFTJHOJOH�BO�FGěDJFOU�USBOTQPSU�BOE�logistics system to enable faster

project implementation throughout

the country.

ľ� .BOBHJOH�BOE�TIBSJOH�UIF�FYIBVTUJWF�MJTU�PG�FNQBOFMMFE�WFOEPST�FRVJQQFE�XJUI�QSPKFDU�NBOBHFNFOU�EJTDJQMJOF�XJUI�HJBOU�(PWFSONFOU�PSHBOJ[BUJPOT�and PSUs on their respective internet

websites

ľ� Promoting balanced Public Private

1BSUOFSTIJQ�111�JO�*OGSBTUSVDUVSF�sector for faster implementation of

projects

ľ� Promoting joint evaluation of project

design by project owners and

contractors for value engineering.


2 “An approach to the 12th Five year plan”, Planning Commission, October 2011, p12

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Reasons for schedule overruns

Majority of infrastructure projects in India are

affected by time overruns. These overruns vary

GSPN�B�GFX�NPOUIT�UP�BT�IJHI�BT�ěWF�PS�NPSF�years, placing the project viability at risk. Survey

SFTQPOEFOUT�JEFOUJěFE�UIF�CPUUMFOFDLT�XIJDI�affect their projects and the challenges they

face in conquering them. These bottlenecks, as

enlisted below, are divided into two phases – (i)

pre-execution phase and (ii) execution and closing

phase.


Delays in land acquisition and site handover is the primary reason for schedule PWFSSVOT�JO�QSF�FYFDVUJPO�QIBTF"DDPSEJOH�UP�HMPCBM�MFBEJOH�QSBDUJDFT �MBOE�BDRVJTJUJPO�TIPVME�CF�DPNQMFUF�CFGPSF�B�QSPKFDU�JT�UFOEFSFE��*O�*OEJB �QSPKFDUT�BSF�PGUFO�BXBSEFE�XJUI�POMZ�QBSUJBM�BDRVJTJUJPO�PG�land by project owners. Delay in subsequent land acquisition and inadequacy in project

planning considering the impact of deferred land acquisition is possibly the single

MBSHFTU�GBDUPS�DBVTJOH�QSPKFDU�EFMBZT��5IJT�GBDU�JT�BMTP�DPNQMFNFOUFE�CZ�UIF�TVSWFZ�SFTVMUT �XIFSF��QFSDFOU�PG�UIF�SFTQPOEFOUT�BHSFF�UIBU�MBOE�TJUF�IBOEPWFS�JT�UIF�NBJO�reason for project delays.

Delays in land acquisition are driven by several factors. One of the prime factors for

UIFTF�EFMBZT�JT�UIF�SFTJTUBODF�CZ�UIF�MPDBM�DPNNVOJUZ��5IJT�SFTJTUBODF�JT�PO�BDDPVOU�of poor compensation and the undervalued market price of land – leading to many

EJTQVUFT�XJUI�UIF�MPDBM�DPNNVOJUZ��"DDPSEJOH�UP�UIF�FYJTUJOH�QPMJDZ �UIF�DPNQFOTBUJPO�PGGFSFE�JT�PO�UIF�CBTJT�PG�UIF�WBMVF�PG�BHSJDVMUVSBM�MBOE �XIFSFBT �QPTU�DPOTUSVDUJPO�UIF�project land value often appreciates considerably where in the incumbent owner does

not have any share.

Reasons for schedule overruns in the pre-execution phase

82%

respondents feel that delays in land acquisition lead to project schedule overruns.

Exhibit 1: Reason for project schedule delay in pre-execution phase

Source: KPMG in India - PMI Survey on cost and schedule overrun, 2012


In view of the projects being affected

by resistance from local community and

TPDJBM�PSHBOJ[BUJPOT �UIF�SJTL�PG�EFMBZT�IBT�HSPXO�NBOZ�GPMET�JO�QBTU�ZFBST��)PXFWFS �the survey observed that project planning

and mitigation strategies have not been

reengineered to accommodate the global

leading practices to undo the effect of

such initial delays during the course of

project.

*O�BEEJUJPO �MBDL�PG�DMBSJUZ�PO�3FTFUUMFNFOU��3FIBCJMJUBUJPO�3�3�SFMBUFE�JTTVFT�adversely affect the sentiments of people

about the project. Land acquisition leads

to displacement and unemployment.

'VSUIFSNPSF �MBOE�BDRVJTJUJPO�PGUFO�SFRVJSFT�DVUUJOH�PG�USFFT�EFGPSFTUBUJPO�GPS�TQBDF�DSFBUJPO �EFTUSVDUJPO�PG�XBUFS�CPEJFT �FUD��XIJDI�MFBET�UP�TPJM�FSPTJPO�and land degradation affecting the local

environment and the lifestyle of people.

"MTP �JG�UIF�BDRVJSFE�MBOE�GBMMT�VOEFS�UIF�DBUFHPSZ�PG�IFSJUBHF�TJUF �GPSFTU�SFTFSWF�PS�XJME�MJGF�TBODUVBSZ �JU�GBDFT�stiff resistance from social activists and

locals alike. Land acquisition issues are

TQSFBE�BDSPTT�TFDUPST��'PS�JOTUBODF �JO�TUFFM�TFDUPS �POF�PG�UIF�MBSHFTU�'PSFJHO�%JSFDU�*OWFTUNFOU�'%*�QSPKFDU�JO�0SJTTB�has been stalled due to people’s agitation

against the land acquisition1. Locals fear

UIBU�PODF�UIF�GPSFTU�MBOE�JT�BDRVJSFE �UIFZ�will lose their agro-based sustainable

livelihood.

5IF�MBOE�BDRVJTJUJPO�QSPCMFN�JT�NPSF�pronounced in transportation sector

such as Highway-Roads and Railway

QSPKFDUT �XJUI��QFSDFOU�SFTQPOEFOUT�PG�this sector agree that their projects are

BGGFDUFE�CZ�MBOE�BDRVJTJUJPO��'PS�FYBNQMF �for a new rail line project in the State of

"TTBN �MBOE�GPS�UIF�ěSTU�QIBTF�PG�UIF�project was to be acquired by October

��)PXFWFS �EVF�UP�EFMBZT�JO�JOJUJBUJOH�the land acquisition process and inter-

4UBUF�EJTQVUFT �UIF�MBOE�XBT�SF�TDIFEVMFE�UP�CF�BDRVJSFE�CZ�+BOVBSZ��4JNJMBSMZ �one of the most prestigious projects in

SPBE�TFDUPS�XBT�EFMBZFE�CZ�BSPVOE�TJY�years due to the land acquisition issues.

5IF�QSPKFDU�XIJDI�XBT�TUBSUFE�JO��with scheduled completion date of

December 20042 got completed only in

January 2012�.

In this particular project, 70 percent of the land was already acquired before the start of the project. Acquiring the remaining 30 percent took additional 6 months, leading to an overall project delay.

General Manager,Civil Aviation Sector

Transport & Logistics and Energy sector are the worst affected by land acquisition issues.

Exhibit 2: Sectors impacted by land acquisitions

Source: KPMG in India – PMI Survey on cost and schedule overrun, 2012


1 Posco’s Orissa project hangs in balance, The Hindu, 21 June 20122 Golden Quadrilateral project may miss deadline, The Hindu, January 07, 20033 Govt declares Golden Quadrilateral complete, Indian Express, dated January 7, 2012

*O�DBTF�PG�CSPXOěFME�PS�FYQBOTJPO�QSPKFDUT �JU�IBT�CFFO�PCTFSWFE�UIBU�MBOE�BDRVJTJUJPO�QSPCMFNT�BSF�MPX��)PXFWFS �JO�TPNF�DBTFT �JTTVFT�SFMBUFE�UP�NBLJOH�the site ready for handover to contractors

for construction without hampering the

FYJTUJOH�QMBOU�PQFSBUJPO�QPTFT�B�NBKPS�challenge for the owners. Creating space

for installing additional equipment within

UIF�FYJTUJOH�TJUF�SFRVJSFT�EFNPMJUJPO�PS�shifting of some units to other locations.

Considering that a majority of operational

TJUFT�BSF�DPOHFTUFE �JU�DPOTUSBJOUT�NPWFNFOU�PG�MBCPS �FRVJQNFOU�BOE�material within the construction site

thereby effecting the contractor

QSPEVDUJWJUZ��"MTP �XIJMF�VOEFSUBLJOH�FYQBOTJPO�QSPKFDUT �JU�JT�JNQPSUBOU�UP�FOTVSF�UIBU�FYJTUJOH�PQFSBUJPOT�PG�TJUF�BSF�OPU�EJTUVSCFE��5IJT�SFRVJSFT�BEEJUJPOBM�QMBOOJOH�FGGPSUT �BT�PWFSMPPLJOH�TVDI�activities in the planning phase may leads

to potential delays in project completion.

Considering the geographical and

environmental limitations associated

with projects and the resistance they

ESBX�GSPN�WBSJPVT�TUBLFIPMEFST �FGGFDUJWF�stakeholder management has come

up as the basic underlying requirement

of mitigation plans across the sectors.

5IF�TVSWFZ�PCTFSWFE�UIBU�POMZ�B�GFX�agencies had adopted stakeholder

assessment and periodic review of it as a

QBSU�PG�UIFJS�NJUJHBUJPO�TUSBUFHZ��(MPCBMMZ �IPXFWFS �TUBLFIPMEFS�NBOBHFNFOU�JT�BO�inseparable part of project management

and monitoring practices.

During the interaction with Projects

.BOBHFST�0XOFST �JU�XBT�OPUFE�UIBU�JO�NBKPSJUZ�QSPKFDUT �MBOE�BDRVJTJUJPO�and regulatory approvals do not have a

EFěOFE�UJNFMJOF��5IF�BCTFODF�PG�BOZ�EFěOFE�UJNF�GSBNF�GPS�UIFTF�BDUJWJUJFT�has an impact on subsequent project

plans resulting in unaccounted delays in

project delivery.

Manifold regulatory approvals from several agencies leading to delay in construction 5IF�DPNQMFYJUZ�BOE�TJ[F�PG�JOGSBTUSVDUVSF�projects being undertaken in India has

increased substantially during the last

EFDBEF��"T�B�SFTVMU �UIF�SFHVMBUPSZ�frameworks related to infrastructure

projects have also witnessed a

TJHOJěDBOU�USBOTGPSNBUJPO��"WFSBHF�JOGSBTUSVDUVSF�QSPKFDUT�CFJOH�FYFDVUFE�in the country cost to the tune of INR

600 crore with duration of eight to ten

years4. Considering such large scale

NBHOJUVEFT �UIFTF�JOGSBTUSVDUVSF�QSPKFDUT�SFRVJSF�BO�FYQMJDJU�DPOTJEFSBUJPO�PG�UIF�regulatory issues during the planning

stage to avoid any delays during the

JNQMFNFOUBUJPO�TUBHF��'PS�UJNFMZ�BDUJPO �project developers should ensure early

JEFOUJěDBUJPO�PG�UIF�SFRVJSFE�SFHVMBUPSZ�compliances and the corresponding

QSPDFEVSBM�EJGěDVMUJFT�BTTPDJBUFE�XJUI�JU��5IJT�DPVME�IFMQ�JO�EFUFDUJPO�BOE�prevention of cost and schedule overruns

with better control on projects.

While the regulatory approvals related

UP�QSPKFDU�ěOBODJOH �UFDIOPMPHZ�collaborations and foreign investments

have become fast track in the recent

ZFBST �UIF�TDFOBSJP�IBT�CFDPNF�USJDLJFS�for issues related to land acquisitions

BOE�FOWJSPONFOUBM�DMFBSBODFT��(FOFSBMMZ �FYUFOTJWF�FOWJSPONFOUBM�BQQSPWBMT�BSF�mandatory at the start of the project

JUTFMG��)PXFWFS �UIFTF�DMFBSBODFT�DBO�be challenged through public interest

litigations which could lead to project

FYFDVUJPO�EFMBZT��"U�UJNFT �OPO�(PWFSONFOU�PSHBOJ[BUJPOT�DIBMMFOHF�UIF�environment clearances through direct

BDUJWJTN�BOE�QSPUFTUT �DSFBUJOH�IVSEMFT�GPS�QSPKFDU�FYFDVUJPO��"�HMPCBM�TUFFM�major’s project in Orissa is a striking

FYBNQMF�PG�QSPKFDU�EFMBZ�PO�BDDPVOU�PG�FOWJSPONFOUBM�BQQSPWBMT��5IF�TUFFM�NBKPS�signed a Memorandum of Understanding

.P6�XJUI�UIF�0SJTTB�(PWFSONFOU�JO��UP�DPOTUSVDU�B��.51"�TUFFM�QMBOU�JO�UIF�4UBUF�XJUI�B�'%*�PG�*/3�� DSPSF��4JODF�UIFO �UIF�QSPKFDU�IBT�CFFO�entangled in legal and environmental

clearances. After a review of two and a

IBMG�ZFBST �UIF�.JOJTUSZ�PG�&OWJSPONFOU�BOE�'PSFTUT�HBWF�B�ěOBM�BQQSPWBM�UP�UIF�QSPKFDU�JO�+BOVBSZ��.FBOXIJMF �UIF�QSPKFDU�.P6�FYQJSFE�JO�+VOF��5IF�TUFFM�NJMM�DPOTUSVDUJPO�QSPKFDU �XIJDI�involves one of the largest FDI deal in

*OEJB �IBT�BMSFBEZ�XJUOFTTFE�B�EFMBZ�PG�seven years5.

62%

respondents feel that delay in regulatory approvals lead to project schedule overrun.


4 MoSPI, January 2012 Flash Report; KPMG in India Analysis5 Posco’s Orissa project hangs in balance, The Hindu, 21 June 2012

Another issue that leads to delays in

regulatory approvals is the multiplicity

PG�BQQSPWBM�SFRVJSFNFOUT�GSPN�$FOUSBM �4UBUF�BOE�MPDBM�(PWFSONFOU��0GUFO �UIF�regulatory authorities at the Central

and the State levels lack coordination

leading to standoffs on critical approvals.

'VSUIFSNPSF �JO�B�EJWFSTF�BOE�NVMUJ�(PWFSONFOU�DPVOUSZ�MJLF�*OEJB �UIFSF�JT�often a State-wise disparity in granting

BQQSPWBMT�QFSUBJOJOH�UP�MBOE�BDRVJTJUJPOT �3�3 �FUD��5IFTF�BSF�DPNQPVOEFE�CZ�other issues as inadequate support in

TIJGUJOH�PG�VUJMJUJFT�GPS�DPOTUSVDUJPO��5IFSF�is often a recurring delay in securing

regulatory approvals from governing

bodies and various ministries. For

FYBNQMF �JOBCJMJUZ�UP�TFDVSF�GPSFTU�approvals for tree cutting required for

B�IJHIXBZ�FYQBOTJPO�QSPKFDU�MFE�UP�TVCTUBOUJBM�QSPKFDU�EFMBZT��4JNJMBSMZ �B�major highway project faced a delay

of around one year due to delay in

FYFDVUJOH�UIF�4UBUF�TVQQPSU�BHSFFNFOU�towards shifting the utilities to make way

for construction. In many cases even

BGUFS�TFDVSJOH�DMFBSBODFT �JU�IBT�CFFO�observed the time taken for activities

such as tree cutting is often prolonged to

BT�NVDI�BT��NPOUIT �QSJNBSJMZ�EVF�UP�resistance from local communities.

"MUIPVHI �NBKPSJUZ�PG�BQQSPWBMT�BSF�consistent across all infrastructural

QSPKFDUT �TVDI�BT�BQQSPWBM�GSPN�.JOJTUSZ�PG�'PSFTU�BOE�&OWJSPONFOU �1VCMJD�*OWFTUNFOU�#PBSE �FUD� �UIFSF�BSF�DFSUBJO�TFDUPS�TQFDJěD�PS�QSPKFDU�TQFDJěD�requirements. Securing these approvals

PGUFO�SFRVJSFT�BEEJUJPOBM�UJNF��5IF�3PBE�sector is a case in point. In addition to

BCPWF�NFOUJPOFE�BQQSPWBMT �BEEJUJPOBM�clearances need to be obtained from

UIF�.JOJTUSZ�PG�3PBE�5SBOTQPSU�BOE�)JHIXBZT �1VCMJD�8PSLT�%FQBSUNFOU �$FOUSBM�1PMMVUJPO�$POUSPM�#PBSE �/BUJPOBM�Highways Authority of India etc. As most

PG�UIFTF�BQQSPWBMT�EPOĳU�IBWF�B�EFěOFE�UJNFMJOF �UIFZ�JNQBDU�PWFSBMM�QSPKFDU�schedule.

62 percent of respondents feel that delay

in regulatory approvals leads to project

schedule overruns. Our interaction

with the project owners suggests that

HSFFOěFME�QSPKFDUT�BSF�NPSF�QSPOF�UP�be delayed on account of regulatory

EFMBZT�JO�DPNQBSJTPO�UP�BO�FYQBOTJPO�QSPKFDU��"NPOH�UIF�CSPBE�TFDUPST �BT�QFS�UIF�TVSWFZ�SFTVMUT �NFUBMT�BOE�NJOJOH�JT�XPSTU�JNQBDUFE��QFSDFOU�PG�UIF�SFTQPOEFOUT�BHSFF�BOE�UFMFDPN�TFDUPS�JT�MFBTU�JNQBDUFE�OPOF�PG�UIF�SFTQPOEFOUT�BHSFF�EVF�UP�EFMBZ�JO�HFUUJOH�SFHVMBUPSZ�approvals.

80 percent of respondent opined that metals and mining is the worst affected sector due to delay in regulatory approvals.

Taking clearances from various authorities is a time consuming process; often there is lack of team work among different Government departments.

Managing Director, Power Transmission Company

Exhibit 3: Sectors impacted on account of delay in regulatory approvals

Source: : KPMG in India – PMI Survey on cost and schedule overrun, 2012


Poor program management resulting in ineffective co-ordination with other projects and schedule delay -BSHF�JOGSBTUSVDUVSF�QSPKFDUT �CFJOH�QBSU�PG�MBSHF�TDBMF�EFWFMPQNFOUBM�QSPHSBN �require co-ordination with several other

projects. Delay in either of the projects

DPVME�TJHOJěDBOUMZ�JNQBDU�UIF�QSPKFDU�delivery of other associated projects

and eventually the entire program. For

FYBNQMF �B�QPXFS�USBOTNJTTJPO�QSPKFDU�of around INR 600 crore is delayed by

almost two years due to delay in power

HFOFSBUJPO�QSPKFDU �GSPN�XIJDI�UIJT�transmission line is to source electricity6.

5IJT�GBDU�JT�BMTP�FNQIBTJ[FE�CZ�PVS�survey with around 41 percent of the

respondents agreeing that ineffective

program management results in schedule

overruns due to inter-dependencies

BNPOH�QSPKFDUT�GPSXBSE�BOE�CBDLXBSE�MJOLBHFT��

Inadequate co-ordination between

projects is primarily due to the lack

of detailed time and risk planning at

UIF�QSPKFDU�DPODFQUVBMJ[BUJPO�TUBHF��5IF�QSPKFDU�NBOBHFST�BSF�OPU�BCMF�UP�completely foresee the synergies and the

risks among various projects leading to

PWFSSVOT��5IVT�JU�JT�JNQPSUBOU�UP�JNQSPWF�the project management capabilities in

UIF�DPVOUSZ�GPS�FGěDJFOU�QSPKFDU�EFMJWFSZ��

41%

respondents feel that relationship with other projects lead to project schedule overrun.

KPMG in India’s point of view

5IF�QMBOOJOH�QIBTF�PG�QSPKFDUT�BQQFBST�to be largely affected by the factors

generating from land acquisition and

SFHVMBUPSZ�BQQSPWBMT��)PXFWFS �UIFTF�FYUFSOBM�GBDUPST�MFBEJOH�UP�MBQTFT�JO�project delivery are primarily due to

JOTVGěDJFOU�NJUJHBUJPOT�BEPQUFE�UP�PWFSDPNF�UIFN��5IF�QSPKFDU�UFBNT�NVTU�take these activities into account while

considering the time cycle for the project

completion.

(JWFO�UIF�USFOE�PG�HSPXJOH�TJ[F�BOE�DPNQMFYJUZ�PG�QSPKFDUT�XJUI�UJNF �UIF�increase in number of stakeholders

and affected sections is inevitable. Also

the growing concern and stronger

measures for protection and restoration

of environment have added to the

efforts required by project management

PSHBOJ[BUJPOT��5IFTF�FYUFSOBM�GBDUPST�can be mitigated by timely actions given

that the strong and periodic information

system is established to provide the

necessary information.

Although the factors affecting the

project timelines primarily appear to be

BTTPDJBUFE�XJUI�FYUFSOBM�GBDUPST �UIF�underlying reason behind them remains

UIF�EFMBZFE�PS�OPO�JEFOUJěDBUJPO�PG�QSF�requisites to overcome these factors. In

UIF�BCTFODF�PG�BEFRVBUF�JEFOUJěDBUJPO�PG�UIFTF�EFQFOEFODJFT �UIF�QSPKFDUT�VTVBMMZ�MBOE�JO�USPVCMF�BU�UIF�TUBSU�JUTFMG �XIJDI�in turn manifests into delayed project

delivery or higher cost at completion.


6 Based on one-to-one discussion with the survey respondent

Bridging the Urban Housing Shortage in India | 14

*OTVGěDJFOU�NBOBHFNFOU�PG�1SPKFDU�EFTJHO�TDPQF�DIBOHF�JT�XJEFMZ�QSFWBMFOU�JO�the infrastructure sector

Most infrastructure projects are victims of change in project design and scope which

often lead to project delays. Poor project planning coupled with lack of attention to

details leads to prolonged discussions between project owners and contractors/

WFOEPST��5IJT�PGUFO�MFBET�UP�QSPKFDU�EFMBZ�EFTQJUF�UIF�XFMM�JOUFOUJPOFE�FGGPSUT�UP�SFTUPSF�UP�PSJHJOBM�TDIFEVMF��5IF�DPOUSJCVUJPO�PG�UIF�NBSLFU�DPOEJUJPOT�SFRVJSJOH�B�SFWJTJPO�JO�UIF�project scope is generally low if a project has been planned well.

Reasons for schedule overrun in execution and closing phase

Exhibit 4: Reasons for project schedule delay in execution and closing phase



0GUFO �QSPKFDU�PXOFST��DPOTVMUBOUT�BWPJE�PS�EF�FNQIBTJ[F�DSJUJDBM�QSPKFDU�QMBOOJOH�SFRVJTJUFT�TVDI�BT�ěFME�investigation and topographical surveys.

Inappropriate assessment of geological

and topographical factors can lead to

VOFYQFDUFE�CBSSJFST�CPUI�OBUVSBM�BOE�NBO�NBEF�EVSJOH�UIF�QSPKFDU�FYFDVUJPO�TUBHF �XIJDI�JO�UVSO�NBZ�DBMM�GPS�DIBOHFT�JO�QSPKFDU�TDPQF��&WFO�B�TNBMM�DIBOHF�JO�UIF�QSPKFDU�TDPQF�EVSJOH�UIF�FYFDVUJPO�stage can lead to disputes related to

regulatory approvals and construction

DPOUSBDUT �XIJDI�DPVME�GVSUIFS�SFTVMU�JO�schedule overruns.

Schedule overruns on account of changes

in the project design and scope during

UIF�FYFDVUJPO�TUBHF�BSF�B�DPNNPO�feature in large public sector projects

JOWPMWJOH�TFHNFOUT�TVDI�BT�QFUSPMFVN �civil aviation and road construction.

'PS�JOTUBODF �JO�UIF�QFUSPMFVN�TFDUPS �B�(SFFOěFME�SFěOFSZ�JO�0SJTTB�JT�BO�FYBNQMF�PG�TDIFEVMF�PWFSSVOT�EVF�UP�DIBOHFT�JO�UIF�QSPKFDU�QMBO��5IF�PSJHJOBM�QMBO�JODMVEFE�DPOTUSVDUJPO�PG�B�SFěOFSZ�DVN�QFUSPDIFNJDBM�DPNQMFY�XJUI�B�DBQBDJUZ�PG��.51"�BU�BO�FTUJNBUFE�DPTU�PG�*/3�� DSPSF �XIJDI�XBT�projected for completion by 2010-11.

%VF�UP�QSPMPOHFE�EFMBZT �UIF�QSPKFDU�PXOFS �B�4UBUF�PXOFE�0JM�$PNQBOZ �

later decided to split the construction

JOUP�UXP�QIBTFT�XJUI�UIF�ěSTU�QIBTF�JOWPMWJOH�UIF�DPOTUSVDUJPO�PG�UIF�SFěOFSZ�BMPOF��5IF�QSPKFDU�DPTU�IBT�JODSFBTFE�UP�BCPVU�*/3�� DSPSF�XJUI�UIF�FYQFDUFE�DPNQMFUJPO�PG�UIF�ěSTU�QIBTF�JO��2��BT�BHBJOTU�UIF�PSJHJOBM�QMBO�PG�commissioning in 20107.

79%

respondents feel that change in project scope/design leads to project schedule overruns in the execution phase.

Respondents from the road construction

segment reported that very often the

original project scope is considerably

PWFSTJ[FE�BT�DPNQBSFE�UP�UIF�BDUVBM�requirement to support a probable

JODSFBTF�JO�UIF�USBGěD�WPMVNF��5FOEFST�ĜPBUFE�GPS�TVDI�PWFSTJ[F�QSPKFDUT�PGUFO�EP�OPU�ěOE�CJEEFST�MFBEJOH�UP�TDPQF�SFWJTJPOT��'VSUIFS �JOEVTUSZ�CPEZ�'*$$*�has suggested to reduce road sector

QSPKFDU�TJ[FT�UP�CFUXFFO�*/3��DSPSF�BOE�*/3�� DSPSF�TP�BT�UP�BUUSBDU�NPSF�bidders8��4NBMM�TJ[F�QSPKFDUT�XPVME�BUUSBDU�UIF�JOUFSFTU�PG�TNBMM�BOE�NFEJVN�TJ[F�companies in the bidding.

79 percent respondents agree that

change in project scope leads to schedule

PWFSSVOT��'VSUIFS �GSPN�RVBMJUBUJWF�EJTDVTTJPOT�JU�JT�BMTP�JEFOUJěFE�UIBU�TUFFM �civil aviation and telecom sectors are

more prone to delays because of scope

change vis-à-vis sectors such as ports and

TIJQQJOH �DPBM�FUD��

In view of the fast growing requirements

GPS�IJHIFS�DBQBDJUZ�QSPKFDUT �UIF�DIBOHFT�have turned out to be the necessary

FWJM�JO�QSPKFDU�NBOBHFNFOU��)PXFWFS �

UIF�DIBOHFT �JG�NBOBHFE�XFMM �DBO�CF�converted to advantage of the owners.

'VSUIFS�GSPN�UIF�TVSWFZ �JU�JT�FWJEFOU�UIBU�JO�NPTU�PSHBOJ[BUJPO�FGěDJFOU�BOE�effective implementation of change

NBOBHFNFOU�JT�NJTTJOH�JO�UIF�FYJTUJOH�project management frameworks in use

BU�WBSJPVT�JOGSBTUSVDUVSF�QSPKFDUT��4JODF �the scope change cannot be done away

XJUI �FGGFDUJWF�NBOBHFNFOU�PG�DIBOHF�should be adopted to overcome the

impact of these changes on time and cost

budget of the projects. Inclusion of change management is required for effectively managing changes in project scope.

Exhibit 5: Criticality of design/scope change across sectors



6 Based on one-to-one discussion with the survey respondent7 IOC’s Paradip refinery behind schedule; may complete in 2013 Q1, The Economic Times, 11 August 2011

8 NHAI urged to prune project sizes to attract more bidders, Business Line, 31 August 2012

(i) Inadequate supply of project

management professional

5IF�EFBSUI�PG�RVBMJěFE�XIJUF�DPMMBS�professionals in India is a key challenge

for the infrastructure industry. Alternative

career options in lucrative industries such

BT�JOGPSNBUJPO�UFDIOPMPHZ�BOE�ěOBODJBM�services have become a more attractive

proposition for the fresh engineering

UBMFOU�JO�UIF�DPVOUSZ��5IF�TJUVBUJPO�JT�FYQFDUFE�UP�BHHSBWBUF�GVSUIFS�BT�UIF�current education system is unable to

deliver the required number of specialists

across the project management value

DIBJO��*O�BEEJUJPO �UIFSF�JT�B�TIPSUBHF�PG�FYQFSJFODFE�FOHJOFFST�XJUI�UIF�EFTJSFE�project management skill sets to take

VQ�MBSHFS�SPMFT��'VSUIFSNPSF �*OEJBĳT�vocational training curriculum needs to be

further strengthened and based on global

standards9.

Survey respondents also agreed that

the sector is facing a severe shortage of

QSPGFTTJPOBMT��5IF�EFNBOE�GPS�QSPKFDU�BOE�TJUF�NBOBHFST �FOWJSPONFOUBM�QSBDUJUJPOFST �TBGFUZ�PGěDFST�FUD�FYDFFET�TVQQMZ �MFBEJOH�UP�TVC�PQUJNBM�MFWFM�PG�project management.

5P�NFFU�UIF�UBMFOU�DSVODI�GPS�IJHIMZ�DSJUJDBM�KPCT �NBOZ�DPNQBOJFT�BSF�OPX�IJSJOH�GPSFJHO�QSPGFTTJPOBMT��5IFTF�QSPGFTTJPOBM�IBWF�UP�GVMěMM�TFWFSBM�formalities before coming to India

which is a time consuming process and

generally comes at a higher cost.

Project managers, environmental QSBDUJUJPOFST�BOE�TBGFUZ�PGěDFST�BSF�top three resources – infrastructure

industry is facing a shortage.

Availability of resources for JOGSBTUSVDUVSF�TFDUPS�JT�JOTVGěDJFOU

Exhibit 6: Ranking of resources in terms of their shortage in the industry

Note: Percentage of respondents who felt that the industry is currently facing a shortages of these resources



9 Power Projects in India: Implementation Challenges and Opportunities, Focus 2015 by Raajeev B. Batra

(ii) Limited availability of skilled

labor

5IF�HSPXUI�PG�TLJMMFE�BOE�TFNJ�TLJMMFE�manpower in India has not kept pace

with the growth in infrastructure projects.

5IJT�GBDU�JT�TVQQPSUFE�CZ�8PSME�#BOLĳT�report according to which the Indian

SPBE�DPOTUSVDUJPO�JOEVTUSZ�JT�FYQFDUFE�UP�face a labor shortage of 18-28 percent if

the country grows at a medium rate and

a shortage of 55-60 percent if we see

high growth.10 6OBWBJMBCJMJUZ�PG�XFMEFST �DBSQFOUFST �NBTPOT �USBJOFE�XPSLFST�PGUFO�JNQBDU�QSPKFDU�QSPHSFTT��5IF�survey respondents also acknowledge

UIBU�DFOUSBM�BOE�4UBUF�(PWFSONFOU�SVO�employment schemes such as National

3VSBM�&NQMPZNFOU�(VBSBOUFF�"DU�/3&(" �+BXBIBSMBM�/FISV�/BUJPOBM�6SCBO�3FOFXBM�.JTTJPO�+//63. �etc have created enough employment

opportunities for laborers in their local

BSFBT �NJOJNJ[JOH�UIF�OFFE�GPS�UIFN�to travel to the project sites in search

PG�MJWFMJIPPE��5IJT�IBT�DPOTUSBJOFE�UIF�availability of skilled labor for some

projects/States.

Another issue impacting the progress of

infrastructure projects across industries

is the low productivity of labor due

to socio-cultural-political reasons. For

JOTUBODF �XPSL�JT�PGUFO�IBMUFE�JO�/BYBMJUF�BGGFDUFE�BSFBT��0UIFS�JTTVFT �TVDI�BT�FYUFOEFE�IPMJEBZ�TFBTPOT �VO�SFMJBCJMJUZ�PG�OPO�MPDBM�MBCPS�J�F��MBCPS�GSPN�PUIFS�4UBUFT �GSFRVFOU�TUSJLFT�CZ�XPSLFST �etc. adversely affect productivity at

construction sites and impact the project

TDIFEVMF��5IFTF�SJTLT�BSF�VTVBMMZ�OPU�QMBOOFE�EVSJOH�UIF�QMBOOJOH�QIBTF �CVU�have an impact on project delivery.

55 percent of respondents opine that

non-availability of skilled labor is a major

BSFB�PG�DPODFSO��"T�QFS�PVS�TVSWFZ �NFUBMT�and mining sector is worst affected by the

shortage of labor.

Lack of availability of skilled labor is an issue. Unresponsiveness, strikes and extended holidays further hamper the timely project execution.

General ManagerPower Generation Company

Exhibit 7: Criticality of lack of availability of skilled labor across sectors



10 World Bank; World Bank’s medium growth scenario is based on the vision documents of the states and the country; and High growth scenario incorporates the massive investments in national highways and rural roads announced by GOI.

(iii) Shortage of good equipment

suppliers and contractors

Infrastructure projects especially

in power sector are hampered due

to lack of good contractors and

FRVJQNFOU�TVQQMJFST�JO�UIF�DPVOUSZ��5IF�infrastructure projects in the country are

growing at a faster pace than the capacity

BEEJUJPOT�CZ�FRVJQNFOU�TVQQMJFST��5IJT�has created a wide gap between the

demand and supply leading to delays

in completion of projects due to non

availability of key project equipments. For

JOTUBODF �POF�PG�UIF�MBSHFTU�4UBUF�PXOFE�power generation company has rolled

out several new projects with equipment

supply orders to yet another State owned

and country’s one of the largest power

equipment manufacturer. Many of these

projects are facing potential delays on

account of inability of the equipment

manufacturer to meet the supply orders

as per schedule. India’s inability to meet

power generation capacity addition

UBSHFUT�GPS�UIF�5FOUI�'JWF�:FBS�1MBO�IBT�been mainly attributed to non availability

PG�DSJUJDBM�QPXFS�FRVJQNFOU��5IF�EFNBOE�GPS�DPSF�DPNQPOFOUT�PG�CPJMFST �UVSCJOFT�BOE�HFOFSBUPST�IBT�FYDFFEFE�UIF�TVQQMZ�JO�UIF�MBTU�GFX�ZFBST��"EEJUJPOBMMZ �WBSJPVT�projects in the power sector are also

facing shortage of balance of plant

equipment such as coal handling and ash

handling systems.

Apart from the manufactured

FRVJQNFOUT �JOGSBTUSVDUVSF�QSPKFDUT�BSF�also facing hurdles due to shortage of

DPOTUSVDUJPO�FRVJQNFOUT�DSBOFT �GPSLMJGU�USVDLT �MPSSZ�MPBEFST�FUD�BOE�DPOTUSVDUJPO�NBUFSJBM�TUFFM �DFNFOU�FUD��

5P�NBLF�VQ�GPS�QSPKFDU�EFMBZT�EVF�UP�MBDL�PG�SFMJBCMF�FRVJQNFOU�TVQQMJFST�JO�*OEJB �PXOFST�DPVME�FYQMPSF�UXP�PQUJPOT��5IF�ěSTU�POF�JT�UP�JNQPSU�FRVJQNFOU�GSPN�PUIFS�DPVOUSJFT �XIJDI�XPVME�ESJWF�VQ�QSPKFDU�DPTUT��"MUFSOBUJWFMZ �UIFZ�DPVME�TPVSDF�JOFYQFOTJWF�FRVJQNFOU�BOE�run the high risk of inferior quality of

equipment.

India is also facing a shortage of

good engineering procurement and

DPOTUSVDUJPO�&1$�DPOUSBDUPST�UIBU�BSF�DBQBCMF�PG�FYFDVUJOH�DPNQMFY�JOGSBTUSVDUVSF�QSPKFDUT��5IFSF�BSF�few companies in India with desired

FYQFSJFODF�PG�FYFDVUJOH�MBSHF�BOE�DPNQMFY�JOGSBTUSVDUVSF�QSPKFDUT��Availability of these contractors is a

challenge as their order books are already

PWFSCPPLFE��'PS�JOTUBODF �UIF�PSEFS�CPPL�PG�POF�PG�UIF�MBSHFTU�&1$�DPOUSBDUPS�JO�India is overbooked by four times its

current capacity11.

*OFGěDJFOU�DPOUSBDUT�NBOBHFNFOU�resulting in contractual disputes and

Industrial relation and law problems

slowing down project progress

A common bottleneck in project

FYFDVUJPO�JT�EJTQVUFT�CFUXFFO�QSPKFDU�owners and contractors. Contracts

management is a major area of

improvement for large infrastructure

projects in India. 55 percent of the

respondents opined that contractual

disputes between project owners and

contractors act as a major deterrent in

UJNFMZ�EFMJWFSZ�PG�QSPKFDUT��5IF�EJTQVUFT�arise on variety of reasons such as

RVBOUJUZ�WBSJBUJPOT �SBUFT�GPS�JODSFNFOUBM�XPSLT �VOEFSTUBOEJOH�PO�QBZNFOU�UFSNT�BOE�QBZNFOU�UJNFMJOFT �FUD��'PS�FYBNQMF �one of the prestigious road sector project

contracts encountered a high number

of legal issues. Of the total contracts

BXBSEFE �OFBSMZ��QFSDFOU�XFSF�VOEFS�dispute12��4JNJMBSMZ �SFTPMVUJPO�PG�JOEVTUSJBM�relation and law problems require

(PWFSONFOU�PS�DPVSU�JOUFSWFOUJPO�XIJDI�is a tedious and time consuming process.

*O�UIF�TVSWFZ �SFTQPOEFOUT�HBWF�FRVBM�XFJHIUBHF�UP�CPUI�UIFTF�GBDUPST �XJUI��percent of the respondents agreeing that

these factors impact project delivery.

Ineffective Project Monitoring

A key concern during the project initiation

BOE�FYFDVUJPO�QIBTF�JT�JOFGGFDUJWF�QSPKFDU�planning and monitoring practices and

techniques being employed by owner

BT�XFMM�BT�DPOUSBDUPS�PSHBOJ[BUJPOT��5IF�inadequate planning results in non-

JEFOUJěDBUJPO�PG�DSJUJDBM�BDUJWJUJFT�BOE�concerns while the result of ineffective

QSPKFDU�NPOJUPSJOH �NBOJGFTUT�JO�GPSN�PG�delay in decision making due to lack of

desirable information at the right time.

As per our discussion with various

QSPKFDU�PXOFST �TVC�TUBOEBSE�QSPKFDU�management is basically a result of

shortage in acquisition of talent who are

conversant with the latest information

technology tools and applications for

project management.

There is lack of good equipment manufacturers in the country leading to heavy dependence on few players.

Executive DirectorSteel Manufacturing Company


11 Based on one-to-one discussion with the survey respondent12 Report on Construction in India 2011, India Infrastructure

Lack of Integration Management

in project planning resulting in

coordination issues delaying the

projects

Large infrastructure projects by the virtue

of their impact and scale involve multiple

BHFODJFT�GPS�FYFDVUJPO�PG�UIF�QSPKFDU��*O�TVDI�B�TDFOBSJP �UIF�DPPSEJOBUJPO�between various agencies becomes

a critical factor for successful project

EFMJWFSZ��5IF�MBDL�PG�DPPSEJOBUJPO�JT�usually a resultant of poor integration

during the planning phase. 50 percent

of the respondents Stated coordination

issues with project team or vendors as

one of the primary reasons for delay in

projects.

Other factors

Other bottlenecks such as pre-

commissioning teething troubles are

HFOFSBMMZ�JEFOUJěFE�CZ�UIF�QSPKFDU�management teams and corrective

BDUJPOT�BSF�UBLFO��)PXFWFS �UIFSF�BSF�some factors whose probability of

PDDVSSFODF�JT�MFTT �CVU�JG�UIFZ�PDDVS�UIFZ�IBWF�TJHOJěDBOU�JNQBDU�PO�UIF�PWFSBMM�QSPKFDU�EFMJWFSZ��(FPMPHJDBM�TVSQSJTFT�tops this list with 76 percent of the

respondents feels that this has high to

moderate impact on schedule overruns.

Exhibit 8: Extent of impact on project schedule in execution and closing phase



5IF�TVSWFZ�SFTVMU�IJHIMJHIUT�UIF�EJGGFSFODF�CFUXFFO�DFOUSBM�(PWFSONFOU�projects managed by public sector units

146T�TVDI�BT�/51$�BOE�$*- �BOE�non-PSUs such as Railways and NHAI.

Although most factors—such as design/

TDPQF�DIBOHF �DPOUSBDUVBM�EJTQVUFT �JOEVTUSJBM�SFMBUJPOT �MBX�QSPCMFNT �FUD�Ĺhave more or less the same impact on

QSPKFDU�FYFDVUJPO�JSSFTQFDUJWF�PG�UIF�NBOBHJOH�BHFODZ �B�GFX�GBDUPST�DBO�BGGFDU�UIF�FYFDVUJPO�PUIFSXJTF��'PS�FYBNQMF �VOBWBJMBCJMJUZ�PG�GVOET�JT�B�NBKPS�bottleneck for non-PSU projects with 44

percent of respondents agreeing that

QSPKFDUT�BSF�EFMBZFE�EVF�UP�UIJT �XIFSFBT�POMZ�ěWF�QFSDFOU�PG�146�SFTQPOEFOUT�opined that this has an impact on project

EFMJWFSZ��5IF�SFBTPO�GPS�UIJT�WBSJBUJPO�could be that PSUs have internal funds

for their projects and they don’t depend

PO�UIF�(PWFSONFOU�HSBOU�GPS�GVOET��'VSUIFS �146T�BSF�FNQPXFSFE�UP�UBLF�investment decisions up to certain limit

EFQFOEJOH�VQPO�UIFJS�TUBUVT�.BIBSBUOB�/BWSBUOB�.JOJSBUOB�XJUIPVU�TFFLJOH�UIF�(PWFSONFOU�BQQSPWBM��5IF�MJNJU�JT�*/3��DSPSF�GPS�.BIBSBUOB �*/3��DSPSF�GPS�/BWSBUOB �BOE�*/3��DSPSF�GPS�.JOJSBUOB�DBUFHPSZ��BOE�*/3��crore for Miniratna category II status .

"EEJUJPOBMMZ �JU�IBT�CFFO�PCTFSWFE�UIBU�146T�IBWF�NPSF�ĜFYJCJMJUZ�BOE�BVUPOPNZ�in decision making as compared with

OPO�146T��0O�UIF�PUIFS�IBOE �JNQBDU�PG�inadequate availability of skilled resources

is more prominent for PSU’s projects.

"SPVOE��QFSDFOU�PG�146�SFTQPOEFOUT�agreeing that projects are delayed due

UP�TIPSUBHF�PG�TLJMMFE�MBCPVS �XIFSFBT�

only 44 percent of non-PSU respondents

opined that this has an impact on project

delivery. In the recent years PSU’s

IBWF�CFFO�FYQBOEJOH�UIFJS�PQFSBUJPOT�aggressively and competing with private

sector for talent.

Factors impacting PSU’s and non-PSU’s project schedule

Exhibit 9: Reasons for project schedule overrun for non-PSU and PSU projects




1SPKFDUT�JO�UIF�FYFDVUJPO�BOE�DMPTVSF�phase are affected by non availability of

GVOET �SFTPVSDFT�BOE�EFMBZ�JO�EFMJWFSZ�PG�QSFDFEJOH�BDUJWJUJFT��*O�BEEJUJPO �NVMUJQMF�changes in the scope and design of

projects push project delivery timelines.

)PXFWFS �UIFTF�GBDUPST�QPJOU�UP�UIF�JOTVGěDJFOU�NPOJUPSJOH�BOE�JOFGěDJFOU�project change management in case of

infrastructure projects in the country.

'VSUIFSNPSF �MBDL�PG�LOPXMFEHF�BOE�application of tools and techniques

for seamless integration of different

functions of project/program among the

project management professionals often

lead to delays.

"T�IJHIMJHIUFE�JO�UIF�TVSWFZ �UIF�DPVOUSZĳT�infrastructure sector lags behind

its foreign counterparts in terms of

knowledge and understanding of latest

technologies in engineering as well as

QSPKFDU�NBOBHFNFOU �XIJDI�SFTVMUT�JO�slow progress of infrastructure projects.


03SE

CT

ION


Reasons for cost overruns

Cost revisions and cost overruns are common

across infrastructure projects. According

to MoSPI, infrastructure projects in central

Government sector costing INR 150 crore and

above, are currently experiencing cumulative

cost overruns of 16.9 percent1 of their planned

cost. Our survey makes an attempt to identify

the key factors, experienced by project owners,

resulting in cost overruns in a project from the pre

execution stage until the close out phase.


1 MoSPI flash report, dated January 2012

4DPQF�DSFFQ�BOE�JOBEFRVBUF�%FUBJMFE�1SPKFDU�3FQPSU�%13�BSF�QSJNBSZ�GBDUPST�impacting cost overruns

*OGSBTUSVDUVSF�QSPKFDUT�FYFDVUFE�CZ�4UBUF�PXOFE�BHFODJFT�VTVBMMZ�JOWPMWF�B�MBSHF�OVNCFS�PG�TUBLFIPMEFST��*U�IBT�CFFO�PCTFSWFE�UIBU�JO�TFWFSBM�QSPKFDUT �BMM�GVODUJPOBM�UFBNT�XFSF�OPU�JOWPMWFE�JO�UIF�DPODFQUVBMJ[BUJPO�TUBHF��5IJT�SFTVMUT�JO�JOBEFRVBUF�assessment of the risks and mutual interdependencies that projects could face in the

FYFDVUJPO�TUBHF��5IF�EFTJSFE�MFWFM�PG�DPMMBCPSBUJPO�CFUXFFO�UIF�QSPKFDU�PXOFST�BOE�UIF�DPOUSBDUPST�BMTP�BQQFBST�UP�CF�MBDLJOH��$POTFRVFOUMZ �QSPKFDUT�GBDF�EFWJBUJPOT�JO�TDPQF �which affect the delivery both in terms of time schedule as well as budgeted cost.

.PSFPWFS �JO�DBTF�PG�(PWFSONFOU�JOGSBTUSVDUVSF�QSPKFDUT �UIF�JUFN�SBUF�DPOUSBDU�TZTUFN�JT�UIF�QSFWBMFOU�NPEFM�VTFE�GPS�BMMPUNFOU�PG�DPOUSBDUT��6OEFS�UIJT�NPEFM �EFUBJMFE�drawing and designing of the projects at the time of award of contract is not mandatory.

"T�B�SFTVMU �EJWFSHFODF�GSPN�UIF�PSJHJOBM�FTUJNBUJPO�JT�RVJUF�DPNNPO�EVSJOH�QSPKFDU�FYFDVUJPO��PGUFO�MFBEJOH�UP�DPTU�FTDBMBUJPOT�

*O�NBKPSJUZ�PG�QSPKFDUT �TDPQF�DSFFQ�BOE�JOBEFRVBUF�%13T�BSJTFT�EVF�UP�MBDL�PG�IPMJTUJD�QMBOOJOH�BOE�MJNJUFE�BCJMJUZ�PG�QSPKFDU�NBOBHFST�UP�BTTFTT�BMM�QPUFOUJBM�SJTLT��BOE�DPVME�be easily mitigated by putting an effective project management system in place and

providing training to project managers.

Reasons for Cost overruns in pre-execution phase

70%

respondents agree that scope creep leads to project cost overruns in the pre-execution phase.

67%

respondents agree that inadequate DPRs lead to project cost overruns in the pre-execution phase.

Exhibit 10: Reasons for cost overruns in pre-execution phase



71%

respondents feel high cost of environmental safeguards has high to medium probability of affecting the project cost.

Cost overrun due to inadequate DPRs is

QSFWBMFOU�BDSPTT�TFDUPST��QFSDFOU�PG�energy and transport and logistics sector

respondents agree that inadequate DPRs

lead to cost overruns in their respective

sectors.

With increasing importance of FOWJSPONFOUBM�TBGFHVBSET �QSPKFDUT�require additional budgets

As Indian regulatory agencies tighten

their noose by bringing in additional

FOWJSPONFOUBM�SFHVMBUJPOT �JOGSBTUSVDUVSF�project owners need to ensure project

compliance with stringent safety and

environment standards. Adhering to

the evolving environment and safety

standards leads to additional costs.

5IF�QSPBDUJWF�BQQSPBDI�PG�.JOJTUSZ�PG�&OWJSPONFOU�BOE�'PSFTU�.P&'�JO�recent years has forced project owners

to include environmental safeguards

JO�UIFJS�QSPKFDU�QMBOT��.PSFPWFS �BT�environmental policies in the country

BSF�DPOTUBOUMZ�FWPMWJOH �BO�VOEFS�construction project might need to

comply with these standards midway

UISPVHI�UIF�FYFDVUJPO�TUBHF��"T�B�SFTVMU �the project can face cost escalations in

PSEFS�UP�DPNQMZ�XJUI�UIF�BQQSPWFE�EFTJHO �UFDIOPMPHZ �NBUFSJBM�FUD�

8IJMF ��QFSDFOU�SFTQPOEFOUT�BHSFF�that the high cost of the environmental

TBGFHVBSET�MFBET�UP�QSPKFDU�DPTU�PWFSSVOT �71 percent assign a high to medium

probability of project cost overruns due to

this reason.

Exhibit 11: Criticality of inadequate DPR’s across sectors

Exhibit 12: Probability of reasons affecting project cost overruns in pre-execution phase

Telecom sector doesn’t experienced cost overruns for the surveyed projects




27 | Bridging the Urban Housing Shortage in India

Material price escalation beyond projections is the primary reason for cost PWFSSVOT�EVSJOH�FYFDVUJPO.BUFSJBM�QSJDF�FTDBMBUJPO�JT�B�CVTJOFTT�SJTL�GBDFE�CZ�BMM�DPOUSBDUPST��*O�SFDFOU�ZFBST �DPTUT�PG�LFZ�JOQVUT�TVDI�BT�JSPO�BOE�TUFFM �DFNFOU �CJUVNFO �DPODSFUF �DSVEF�PJM �FUD��IBWF�ĜVDUVBUFE�TIBSQMZ��5IF�SJTL�PG�NBUFSJBM�DPTU�ĜVDUVBUJPO�JT�JOIFSFOU�JO�JOGSBTUSVDUVSF�QSPKFDUT �BOE�UP�TPNF�FYUFOU�JT�UBLFO�JOUP�DPOTJEFSBUJPO�JO�PWFSBMM�QSPKFDU�DPTU�FTUJNBUFT��)PXFWFS �UIF�WPMBUJMJUZ�JO�NBUFSJBM�QSJDFT�NBLFT�GPSFDBTUJOH�B�DIBMMFOHJOH�FYFSDJTF�BOE�MFBET�UP�JOBDDVSBUF�GPSFDBTUT��'VSUIFSNPSF �UIF�DPTU�FTUJNBUF�BTTVNFT�UIF�QSPKFDU�DPNQMFUJPO�BT�QFS�UIF�TDIFEVMF�BOE�EPFT�OPU�BDDPVOU�GPS�JOĜBUJPO�CFZPOE�UIF�TDIFEVMF�EBUF��5IVT �BOZ�EFMBZ�JO�QSPKFDU�DPNQMFUJPO�NBLFT�UIF�JOJUJBM�DPTU�estimates obsolete leading to cost overruns.

Reasons for cost overruns in execution phase

Construction material prices have increased several folds in last few years, impacting the project cost estimates.

General Manager,Civil Aviation Sector

Exhibit 13: Reasons for project cost overruns in execution and closing phase



93%

respondents feel material price escalations beyond projections lead to cost overruns.

67%

respondents feel material costs are highly susceptible to escalations.

2VJUF�PGUFO �BO�JODSFBTF�JO�NBUFSJBM�DPTU�over the agreed percentage leads to

dispute between project owners and

DPOUSBDUPST��'PS�FYBNQMF �UIF�EJTQVUF�between one of the India’s largest State

owned power generation company and

its initial equipment supplier on price

FTDBMBUJPOT�PWFS��QFSDFOU�EFMBZFE�B�UISFF�VOJU�� .8�QSPKFDU�JO�#JIBS�CZ�two years2.

.BOZ�B�UJNFT �UIF�WBSJBCMFT�VTFE�GPS�DPTU�estimation during project cost scheduling

are not adequate to cover all aspects

PG�QSPKFDU�DPTUT��"T�B�SFTVMU �WBSJPVT�cost items that are necessary for the

project budget estimation remain either

VOJEFOUJěFE�PS�JOBEFRVBUFMZ�EFěOFE�at the planning stage and lead to cost

overruns at a later stage. Project teams

OFFE�UP�CF�FYUFOTJWFMZ�FYQFSJFODFE�TIPVME�IBWF�DPTUJOH�QFSTPOOFM�FOHJOFFST�BOE�BEFRVBUFMZ�FRVJQQFE�XJUI�TDJFOUJěD�UPPMT�BOE�UFDIOJRVFT�UP�EFWFMPQ�a realistic budget estimate for the project.

'VSUIFS �UIF�TVSWFZ�JEFOUJěFE�UIBU�CVJMEJOH�material cost is most susceptible to

escalation followed by labor or manpower

cost. 67 percent respondents feel that

input materials are most susceptible

to suffer an escalation. While only

19 percent respondents opine that

Contractor/sub contractor costs are highly

TVTDFQUJCMF ��QFSDFOU�PG�SFTQPOEFOUT�felt that manufactured equipment cost

have a high susceptibility for escalation.

Exhibit 14: Cost elements’ susceptibility to increase



2 “Contract disputes delay NTPC’s Barh project”, Livemint, 1 May 2008

Poor connectivity to project site

Infrastructure projects located in

remote locations have poor transport

DPOOFDUJWJUZ��-BDL�PG�FGěDJFOU�transportation and logistics infrastructure

BEET�UP�UIF�QSPKFDU�DPTU��'PS�FYBNQMF �B�project located in a hilly terrain with no

DPOOFDUJWJUZ�UP�SBJMXBZT �EFQFOET�IFBWJMZ�on roads for its raw material supplies.

5SBOTQPSUBUJPO�UISPVHI�SPBET�JT�NPSF�UJNF�consuming and costlier in comparison to

SBJMXBZT �MFBEJOH�UP�PWFSBMM�DPTU�PWFSSVOT�BOE�QSPKFDU�EFMBZT��5IJT�JT�TVQQPSUFE�CZ�UIF�TVSWFZ�SFTVMUT �BT��QFSDFOU�respondents felt that poor connectivity

to project site has high to medium

probability of impacting the project cost.

'VSUIFS �UIF�XFBUIFS�DPOEJUJPOT�BU�UIF�project site can also have an additional

impact on project schedule and cost. In

FYUSFNF�DPME�PS�IFBU �XPSLFST�DBOOPU�XPSL�PVUTJEF�GPS�FYUFOEFE�QFSJPET�PG�UJNF �BGGFDUJOH�UIFJS�QSPEVDUJWJUZ �MFBEJOH�to delays. Stormy weather can also affect

XPSL�TDIFEVMF�GPS�EBZT �EFQFOEJOH�PO�UIF�TFWFSJUZ�PG�UIF�TUPSNT��'PS�JOTUBODF �B�hydroelectric power project of a leading

hydro power company in Leh district

of Jammu & Kashmir has reported an

additional delay of 9 months due to highly

inclement weather conditions of Leh and

Ladhakh�.

.PSFPWFS �UIF�DPNQFOTBUJPO�GPS�XPSLJOH�under harsh conditions tends to be higher.

In an isolated region workers may face

QSPCMFNT�TVDI�BT�JOĜBUFE�DPTU�PG�MJWJOH �lack of after-work activities to take part in

BOE�MBDL�PG�CBTJD�GBDJMJUJFT�MJLF�SPBEXBZT �VUJMJUJFT �NFEJDBM�TUBGG �FEVDBUJPOBM�GBDJMJUJFT�BOE�TFSWJDFT��5P�PGGTFU�UIFTF�conditions workers demand higher

DPNQFOTBUJPO �MFBEJOH�UP�BEEJUJPOBM�DPTU�requirements.

Inadequate availability of skilled resources

"T�EJTDVTTFE�JO�UIF�QSFWJPVT�TFDUJPO �adequate availability of skilled resources

BU�BMM�MFWFMT�PG�B�QSPKFDU�PSHBOJ[BUJPO�appeared as critical factor for success

of project. Owing to the additional

employment support schemes

JOUSPEVDFE�CZ�UIF�(PWFSONFOU�BOE�the locally available employment

PQQPSUVOJUJFT �BWBJMBCJMJUZ�PG�TLJMMFE�workforce for construction works has

CFDPNF�FWFO�NPSF�EJGěDVMU�

Apart from the direct manpower required

GPS�DPOTUSVDUJPO �TLJMMFE�BOE�FYQFSJFODFE�project management personnel are

SBSF�BTTFUT�GPS�BO�PSHBOJ[BUJPO��5IVT �UP�SFUBJO�FYJTUJOH�XPSL�GPSDF�BOE�BUUSBDU�OFX�UBMFOU �DPNQBOJFT�OFFE�UP�QBZ�IJHI�compensations leading to cost overruns.

74%

respondents feel that location and connectivity of project site has high to medium probability of affecting the project cost.

Exhibit 15: Probability of reasons affecting project cost overruns in execution and closing phase



3 306 Flash report on central sector projects, MoSPI, April 2011

Other factors impacting project costs

Other factors such as weak procurement

QMBOOJOH �XSPOH�PS�QPPS�TFMFDUJPO�PG�technology etc. adversely impacts the

project costs. During procurement

QMBOOJOH �DPNQBOJFT�EPOĳU�QBZ�TVGěDJFOU�heed to the elements of material cost

DPNQPOFOUT�TVDI�BT�MPHJTUJDT �TUPSBHF�BOE�FDPOPNJFT�PG�TDBMF��5IJT�MFBET�UP�JOFGěDJFOU�NBUFSJBM�QSPDVSFNFOU��'VSUIFS �tenders are placed on a need basis.

)FODF �DPNQBOJFT�BSF�VOBCMF�UP�MFWFSBHF�on the quantitative advantages of low cost

or building long-term relationship with

suppliers by placing bulk orders.

*O�DFSUBJO�DBTFT �JOBEFRVBUF�BTTFTTNFOU�of the suitability of the procured

equipments and materials to the work

site results in repetition of the entire

procurement process resulting in further

UJNF�BOE�DPTU�FTDBMBUJPOT��5IF�FOEFBWPS�to adopt the best available technology

also results in frequent changes in

the procurement process leading to

increased cost and time.

5IPVHI�UIFTF�GBDUPST�IBWF�TVCTUBOUJBM�JNQBDU�PO�PWFSBMM�QSPKFDU�DPTU �UIFTF�could be easily controllable with well

established project management

techniques.

5IF�PXOFSTIJQ�PG�UIF�QSPKFDU�FYFDVUJOH�BHFODZ�IBT�TPNF�impact on the schedule overrun and the cost overrun.

*ODSFNFOUBM�ěOBODJBM�DPTU�JT�BO�JNQPSUBOU�GBDUPS �DPOUSJCVUJOH�to project cost overrun. It has been observed that PSUs borrow

money from bank/lenders at market-determined interest rates

to fund their projects whereas non-PSU projects are primarily

GVOEFE�CZ�UIF�(PWFSONFOU��5IJT�IBT�BO�JNQBDU�PO�UIFJS�DPTU�PG�delivering the project. 88 percent of PSU respondents agree

UIBU�JODSFNFOUBM�ěOBODJBM�DPTU�JT�B�SFBTPO�GPS�DPTU�PWFSSVO�whereas only 56 percent of non-PSU respondents echoed the

TFOUJNFOU��'VSUIFS �XFBL�QSPDVSFNFOU�IBT�NPSF�JNQBDU�PO�146�QSPKFDUT�WJT�½�WJT�OPO�146�QSPKFDUT �IJHIMJHIUJOH�UIF�OFFE�for better procurement management of PSU projects. Other

GBDUPST�TVDI�BT�NBUFSJBM�QSJDF�FTDBMBUJPO�CFZPOE�QSPKFDUJPOT �JOBEFRVBUF�BWBJMBCJMJUZ�PG�TLJMMFE�SFTPVSDFT �DPOUSBDUVBM�EJTQVUF�FUD� �IBWF�NPSF�PS�MFTT�UIF�TBNF�JNQBDU�PO�QSPKFDU�DPTU�PWFSSVO��

Factors impacting PSU’s and non-PSU’s project cost

Exhibit 16: Reasons for project cost overrun for non-PSU and PSU projects




5IF�HSPXJOH�EFNBOE�GPS�JOGSBTUSVDUVSF�JO�the country has been consuming a major

QJF�PG�UIF�VOJPO�CVEHFU��'PS�B�MPOH�QFSJPE �project funding had been in the domain

PG�UIF�QVCMJD�TFDUPS�CVU�JO�SFDFOU�UJNFT �private players have also ventured into

UIF�JOGSBTUSVDUVSF�TFDUPS��5IF�TJ[F�PG�UIF�DBQJUBM�FYQFOEJUVSF�JO�QSPKFDUT�IBT�HSPXO�CZ�MFBQT�BOE�CPVOE �XIJDI�IBT�NBEF�the need for cost control even more

DSJUJDBM��)PXFWFS �DVSSFOUMZ�QSPKFDUT�BSF�facing huge cost overruns due to multiple

reasons ranging from delayed approvals

to scope creep and shortage of project

professionals to price escalations and

contractual disputes.

Although uncontrollable factors such

BT�ěOBODJOH�DPTU �GPSFJHO�FYDIBOHF�ĜVDUVBUJPOT �FUD�IBWF�B�IVHF�JNQBDU�PO�UIF�QSPKFDU�DPTUT �UIFSF�BSF�PUIFS�GBDUPST�that need to be addressed with-in time to

BWPJE�DPTU�PWFSSVOT��1SPKFDU�PSHBOJ[BUJPOT�have repeatedly failed to address the

issues related to contracts administration

BOE�UJNFMZ�QSPDVSFNFOU �XIJDI�JG�IBOEMFE�FGGFDUJWFMZ �DBO�IFMQ�JO�SFEVDJOH�UIF�DPTUT�substantially.

"U�UJNFT �QSPKFDU�DPTU�FTUJNBUFT�BSF�IJHIMZ�VOSFBMJTUJD��"T�B�SFTVMU �UIF�BDUVBM�FYQFOEJUVSF�JODVSSFE�JT�TJHOJěDBOUMZ�IJHIFS�UIBO�UIF�QMBOOFE�WBMVF��"MUIPVHI �JO�DFSUBJO�TJUVBUJPOT �UIF�BEEJUJPOBM�

FYQFOEJUVSF�NJHIU�CF�VODPOUSPMMBCMF �B�realistic estimate can go a long way in

providing accurate and timely information

to relevant authorities to take more

JOGPSNFE�EFDJTJPOT��5IF�ĜBXFE�FTUJNBUFT�are usually due to the lack of information

GPS�FTUJNBUJPO�BOE�UIF�MBDL�PG�FYQPTVSF�UP�TVDI�IVHF�QSPKFDUT��5IVT �JU�JT�JNQPSUBOU�that planning and implementing agencies

TIPVME�IBWF�RVBMJěFE�DPTU�FOHJOFFST�BOE�QSPKFDU�QSPGFTTJPOBMT�XJUI�FYQFSUJTF�PG�QSPKFDU�NBOBHFNFOU�UPPMT �UFDIOJRVFT�BOE�QSBDUJDFT �GPS�FGěDJFOU�QSPKFDU�EFMJWFSZ�


04SE

CT

ION


Sector-wise impact of factors on cost and schedule overruns

The aforementioned factors have a varying

degree of impact on the project delivery from

one sector to another. For example, coal sector

is more sensitive to regulatory approvals, as

NBKPSJUZ�PG�UIF�DPBM�ěFMET�GBMM�VOEFS�GPSFTU�BSFB�and it takes around 3-5 years for acquiring all

requisite forest and environmental clearances.

On the other hand, telecom projects are least

impacted on account of regulatory approvals.

Similarly, scope creeps are common in airport

infrastructure projects mainly due to the need

to accommodate allied services (such as

immigration, custom, etc). Following section

provides sector-wise analysis of how various

factors affect the schedule and cost overruns.



Reasons for schedule overrun across sectors

Human resources Petroleum Power Coal Steel Civil Avia-tion Railways Roads &

HighwaysPort &

shippingTelecommu-

nication

Land/site handover 3 5 4 3 5 4 5 5 3

Delay in regulatory approvals 2 4 5 3 2 4 4 3 2

(FPMPHJDBM�TVSQSJTFT 4 4 5 3 3 2 2 3 2

Relationship with other projects 2 2 2 5 3 3 4 3 3

Ineffective procurement planning 2 2 2 3 2 2 4 3 2

Design/scope change 4 4 4 5 5 4 4 2 5

Weak/ineffective project monitoring 2 2 2 3 2 2 4 3 2

Inadequate availability of skilled resources 2 4 5 5 2 3 4 2 3

Contractual disputes 2 4 4 5 5 2 4 2 2

Lack of awareness of modern equipment 2 3 2 5 2 2 2 2 2

5!Very high impact 4!High impact 3!Moderate impact 2!Low impact

Source:�,1.(�JO�*OEJB��1.*�TVSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVOT ��


Reasons for cost overrun across sectors

Human resources Petroleum Power Coal Steel Civil Avia-tion Railways Roads &

HighwaysPort & ship-

ping

Scope creep 4 4 2 5 5 3 5 2

Design change/iterations 4 4 4 5 5 4 5 3

High cost of environmental safeguards 2 3 4 5 5 2 2 3

Acquisition of land at market price 3 4 2 3 3 2 5 2

Inadequate DPR 4 4 2 5 3 4 5 3

Weak procurement planning 4 4 4 5 2 2 4 2

Material price escalations beyond projections 4 5 5 5 5 4 5 5

Poor selection of consultant 3 2 2 5 3 2 4 3

Location and connectivity of project site 5 4 4 3 5 3 4 3

*ODSFNFOUBM�ěOBODJOH�DPTU 5 5 5 3 3 2 4 5

5!Very high impact 4!High impact 3!Moderate impact 2!Low impact

Note:�5IF�UFMFDPN�TFDUPS�EPFT�OPU�FYQFSJFODF�DPTU�PWFSSVOT�GPS�UIF�TVSWFZFE�QSPKFDUT�Source:�,1.(�JO�*OEJB��1.*�TVSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVOT ��

05SE

CT

ION


Mitigation strategies – Helping FOTVSF�FGěDJFOU�project delivery

The successful delivery of projects is affected by

a wide variety of internal and external factors.

Although, both internal as well as external

factors impact the delivery of project, internal

factors remain an area of concern by virtue of

them being controllable. To deliver projects

on time and within budget and scope, global

infrastructure companies use formalized project

management practices and take supportive

steps for the developing the competency in

this area. Additionally, with increasing project

size and complexity, many companies have

institutionalized the use of standard methods

for project and risk management. Also, various

nations have showed an increased willingness to

invest in training and development for project and

program management staff.


In view of the shortage of in-house

QSPKFDU�NBOBHFNFOU�QSPGFTTJPOBMT �*OEJBO�PSHBOJ[BUJPOT�IBWF�XJEFMZ�BEPQUFE�UIF�SPVUF�PG�IBWJOH�FYUFSOBM�JOEFQFOEFOU�1SPKFDU�.BOBHFNFOU�0GěDF�1.0��1SPKFDU�NBOBHFNFOU�PGěDF�1.0�JT�a relatively new concept in India and is

being widely used by Indian companies.1

)PXFWFS �PVS�EJTDVTTJPO�XJUI�UIF�project managers highlighted that due

UP�UIF�TIPSUBHF�PG�RVBMJěFE�QSPKFDU�NBOBHFNFOU�QSPGFTTJPOBMT �UIF�1.0T�are not able to function to the desired

level of capability.

"QBSU�GSPN�FTUBCMJTIJOH�1.0 �GPDVTFE�Risk Management has been widely

adopted and welcomed as a key measure

of mitigation against project overruns. A

comprehensive and detailed risk planning

and monitoring establishment ensures

prior detection and timely alerts on

changing response of various risks.

In addition to adoption of global best

practices of establishing PMO and risk

NBOBHFNFOU�TFU�VQ �SFTQPOEFOUT�BDSPTT�UIF�TFDUPST�IBWF�FYQSFTTFE�UIF�OFFE�for improvement in project planning and

monitoring capabilities along with better

risk management as areas requiring

immediate attention for improved project

delivery.

'VSUIFSNPSF �QFSJPEJD�NPOJUPSJOH�PG�projects and training of project staff for

better understanding and knowledge of

project management practices such as

DPOUSBDUT�NBOBHFNFOU �QSPDVSFNFOU�NBOBHFNFOU �WBMVF�FOHJOFFSJOH�EVSJOH�EFTJHO �FUD��IBWF�CFFO�JEFOUJěFE�BT�UIF�most effective measures for successful

project delivery.

1SPKFDU�.BOBHFNFOU�0GěDF�1.0�is an effective way for monitoring projects

4FUUJOH�VQ�B�1.0 �DPOTJTUJOH�PG�FYQFSJFODFE�NBOBHFST�BOE�TVCKFDU�NBUUFS�TQFDJBMJTU�PG�UIF�DPNQBOZ �IFMQ�JO�UJNFMZ�JEFOUJěDBUJPO�PG�JTTVFT�SFMBUFE�to cost and schedule overrun and allow

companies to take corrective actions

JO�UJNF��5IF�1.0�BMTP�TFSWFT�BT�BO�independent body directly reporting to

the Board of Directors about the progress

of project and supports oversight on

the projects. It drives successful

JNQMFNFOUBUJPO�PG�QSPKFDUT �UISPVHI�implementation of leading project

NBOBHFNFOU�QSPDFTTFT �QSPUFDUJOH�project against risks and ensuring

adequate guidance and information for

timely decision-making. Implementing a

PMO could help in achieving the following

QSPKFDU�PCKFDUJWFT��

Reduced cycle time and delivery

costs:�5IF�1.0�FTUBCMJTIFT�BOE�EFQMPZT�standard set of project management

QSPDFTTFT�BOE�UFNQMBUFT �XIJDI�enables project managers with an

established and tested module for better

management and monitoring of projects.

5IFTF�SFVTBCMF�QSPKFDU�NBOBHFNFOU�components help projects to engage

BMM�UIF�GVODUJPOT�JO�B�NPSF�PSHBOJ[FE�BOE�FGěDJFOU�NBOOFS�XJUI�NVDI�MFTT�FGGPSU��5IF�TUBOEBSE�BQQSPBDI�SFEVDFT�the learning time for the project team

while adapting to the limitations and

uniqueness of a project.

Improved quality of project

deliverables:�5IF�1.0 �CZ�WJSUVF�PG�TUBOEBSE�HMPCBM�BQQSPBDI �EFQMPZT�international best practices used at

TJNJMBS�QSPKFDUT �UIVT �JNQSPWJOH�UIF�RVBMJUZ�PG�QSPKFDU�EFMJWFSBCMFT��"MTP �UIF�TUBOEBSEJ[BUJPO�PG�EFMJWFSBCMF�JO�MJOF�XJUI�

globally established standards improves

the acceptability of the deliverables

worldwide.

&BSMZ�JEFOUJěDBUJPO�PG�JTTVFT�BOE�SJTLT� 5IF�1.0�SFHVMBSMZ�BOE�JOEFQFOEFOUMZ�tracks the status of the projects and

JEFOUJěFT�CPUUMFOFDLT�BOE�SJTLT�UIBU�NBZ�JNQBDU�QSPKFDU�EFMJWFSZ��5IF�VTF�PG�established methodologies at regular

JOUFSWBMT�FOBCMFT�JEFOUJěDBUJPO�PG�JTTVFT�BOE�SJTLT�BTTPDJBUFE�XJUI�UIF�QSPKFDUT �enabling timely decision making by the

relevant authorities.

Improved accuracy of project

estimates: 5IF�1.0�UBLFT�B�IPMJTUJD�WJFX�of the potential risks and benchmarks

UIF�FYJTUJOH�QSPKFDU�DPTU�XJUI�TJNJMBS�QSPKFDUT �UIVT�JNQSPWJOH�UIF�BDDVSBDZ�PG�UIF�QSPKFDU�FTUJNBUF��"MTP �UIF�BWBJMBCJMJUZ�of the trained professionals reduces the

chances of errors in different estimations.

Improved people and resource

management:�5IF�1.0�QSPWJEFT�USBJOJOH�JOUFSOBM�PS�UISPVHI�WFOEPST�BOE�mentors managers to build core project

management competencies. In certain

TFU�VQT �UIF�1.0�BMTP�NBOBHFT�TIBSFE�resources between various projects

forming part of a common program

QSPWJEJOH�CFUUFS�FGěDJFODZ�BOE�VUJMJ[BUJPO�of these resources.

Re-use of knowledge and the ability to

leverage that knowledge on current /

future projects:�5IF�1.0�NBJOUBJOT�UIF�repository of key learning’s from a

project – pertaining to best practices

BT�XFMM�BT�JNQSPWFNFOU�BSFBT��5IFTF�learning are disseminated to all

DPODFSOFE�QFPQMF�JO�UIF�PSHBOJ[BUJPO�and applied to current/future projects

thus avoiding the risk of similar issues at

different projects.

Our company has a concept of Integrated Project Management (IPM), under which all departments related to a project directly report to the project Executive Director (ED). 'PS�FH��QSPKFDU�EFQBSUNFOU �ěOBODF�EFQBSUNFOU �QFSTPOOFM�EFQBSUNFOU �FUD��EJSFDUMZ�report to the project ED. This avoids bureaucratic delays within the organisation and facilitates faster decision making.

Executive Director,Steel Manufacturing Company


1 PMI-KPMG study on drivers for success in infrastructure projects 2010 – Managing for change

*O�BEEJUJPO �B�1.0�UZQJDBMMZ�QFSGPSNT�UIF�GPMMPXJOH�GVODUJPOT�

y Monitor project performance

against the set targets and act as

an information center on project

progress

y Set-up and deploy standard

QSPDFTTFT �QSBDUJDFT�BOE�QSPDFEVSFT�for project implementation

y Mentor Project managers for future

project needs

y Provide consulting support on project

planning and implementation

y Conduct portfolio management

i.e. monitor inter project

JOUFSEFQFOEFODJFT �BVEJU�BOE�QSJPSJUJ[F�JOEJWJEVBM�QSPKFDUT �FUD��

5IF�JNQPSUBODF�PG�1.0�JT�EFNPOTUSBUFE�GSPN�PVS�TVSWFZ�SFTVMUT�BT�XFMM �XIFSFJO�86 percent of the respondents felt

the need for an independent PMO for

monitoring project and positively reacted

in its potential to manage cost and

schedule overruns.

PMO Role PMO Responsibilities

PMO ManagerPMO Management; Quality Management; Stakeholder Management

PlannerWork plan/ milestone Management;Scope management

CoordinatorProject Support: Scope, integration, change and resource management

Controller Financial Management

Program Administration Support

Project Support: General Administration

Project InformationInternal and external project communication (not change management)

Project Stream Lead

All typical PMO responsibilities for each of the work streams

&YIJCJU��3FRVJSFNFOU�PG�QSPKFDU�NBOBHFNFOU�PGěDF�



Risk Management techniques are used by only 56 percent of the respondents

An effective risk management

includes the processes concerned

XJUI�DPOEVDUJOH�SJTL�QMBOOJOH �SJTL�JEFOUJěDBUJPO �BOBMZTJT �SFTQPOTFT �BOE�monitoring and control during the life

cycle of a project. Indian infrastructure

companies are yet to match their global

counterparts in developing a risk–aware

culture and a rigorous risk management

EJTDJQMJOF�XJUIJO�UIFJS�PSHBOJ[BUJPO��*O�PVS�TVSWFZ �POMZ��QFSDFOU�PG�UIF�respondents said that they have a

risk management process in place for

BDIJFWJOH�QSPKFDU�PCKFDUJWFT��'VSUIFSNPSF �our discussions with the project

managers suggest that many companies

BQQFBS�UP�CF�TIPSU�PG�B�ĲIPMJTUJDĳ�BQQSPBDI �where the risk is fully integrated into

every aspect of the construction life cycle.

.PTU�PSHBOJ[BUJPOT�UBLJOH�QBSU�JO�TVSWFZ�TIPXFE�FOPVHI�DPOěEFODF�JO�UIFJS�FYJTUJOH�QSBDUJDFT �BT�NPSF�UIBO��QFSDFOU�PG�UIF�SFTQPOEFOUT �XIJDI�have established risk management

QSBDUJDFT �SBUFE�UIFJS�FYJTUJOH�QSBDUJDFT�BT�effective. Only 18 percent respondents

felt that there is a further scope of

improvement. Out of the entire gamut

PG�PSHBOJ[BUJPOT�TVSWFZFE �POMZ��percent opined that they have effective

risk management procedures in place.

5IF�QPPS�FGGFDUJWFOFTT�JO�QSBDUJDF�JT�further established by the fact that at

UIF�UJNF�PG�TVSWFZ�BSPVOE��QFSDFOU�PG�projects were running behind schedule

XJUI��QFSDFOU�XFSF�ESBXJOH�BEEJUJPOBM�FYQFOEJUVSF�BQBSU�GSPN�UIFJS�JOJUJBMMZ�planned budget2.

Exhibit 18: Usage of risk management techniques for identifying and monitoring risk


Exhibit 19: Effectiveness of risk management practices



2 315 Flash report on central sector projects, MoSPI, January 2012

Ineffective project planning and project monitoring is rated as UIF�NPTU�TJHOJěDBOU�SJTL�IBWJOH�maximum impact on project delivery

1SPKFDU�SJTL �VODFSUBJOUZ�BOE�TUBLFIPMEFS�JOĜVFODFT�BSF�UIF�IJHIFTU�BU�UIF�TUBSU�PG�a project and decrease gradually over a

QSPKFDUĳT�MJGFDZDMF��5IVT �CFGPSF�UIF�QSPKFDU�UFBN�HFUT�JOUP�UIF�FYFDVUJPO�NPEF �JU�is of utmost importance to do a detailed

QMBOOJOH�GPS�BMM�QPUFOUJBM�SJTLT �TP�UIBU�UIF�project could be completed effectively

BOE�FGěDJFOUMZ�XJUI�BT�GFX�EFWJBUJPOT�BT�QPTTJCMF��5IF�JNQPSUBODF�PG�FGGFDUJWF�planning is even highlighted by the survey

results. 74 percent of the respondents

rated ineffective project planning and

QSPKFDU�NPOJUPSJOH�BT�NPTU�TJHOJěDBOU�factor impacting project schedule and

DPTU��*OFGGFDUJWF�SFTPVSDF�VUJMJ[BUJPO �OPO�DPNQMJBODF�XJUI�SFHVMBUPSZ�SFRVJSFNFOUT �VO�BWBJMBCJMJUZ�PG�QSPKFDU�NBOBHFST �FUD��are some other factors which could

BEWFSTFMZ�JNQBDU�QSPKFDU�EFMJWFSZ��5IFTF�risks could be easily manageable at the

project level through an independent and

objective risk management team that

conducts risk reviews periodically and

can put in place a mitigation plan that is

BDUJPOBCMF�XJUIJO�UIF�EFěOFE�UJNFMJOFT�

Improve risk management skills for successful project delivery

5IF�CJHHFTU�TJOHMF�GBDUPS�JEFOUJěFE�GPS�improving risk management in projects

is to enhance the risk management

TLJMMT�PG�QSPKFDU�NBOBHFST��QFSDFOU�PG�the respondents believe that imparting

training to project team for identifying

BOE�BTTFTTJOH�SJTLT�DPVME�TJHOJěDBOUMZ�JNQSPWF�QSPKFDU�EFMJWFSZ��"EEJUJPOBMMZ �PVS�discussion with respondents highlighted

that majority of the project teams haven’t

received any formal project or risk

management training.

Developing project risk management

GSBNFXPSL �DPOEVDUJOH�JOEFQFOEFOU�reviews and developing risk management

reports are some other factors that could

positively impact the risk management in

projects.

Exhibit 20: Impact of risks on project delivery


Exhibit 21: Strategies to enhance risk management in projects



Strategies to control schedule overrun

Periodic review and oversight is one of

the most commonly adopted strategy

UP�DPOUSPM�QSPKFDU�TDIFEVMF�EFMBZ��5IJT�JT�primarily because infrastructure projects

generally span over a long duration and

hence require regular progress review.

5IF�OBUVSF�PG�SJTL�JOWPMWFE�JO�TVDI�projects also keeps evolving constantly.

)FODF �QSPBDUJWF�SJTL�BTTFTTNFOU�JT�required at the various stages of the

QSPKFDU��*O�EPDJMF�TDFOBSJPT �QSPKFDU�owners and contractors only attempt

to avoid and overcome the type of risks

EFěOFE�CZ�UIF�NBOBHFNFOU�EVSJOH�UIF�planning stage. Such a risk management

process often leads to failures as the

risk managers do not pay attention to

the evolving circumstances and fail to

envision the bottlenecks that might

have to be encountered at a later stage.

5IVT �JU�JT�JNQPSUBOU�UP�SFWJFX�UIF�QSPKFDU�progress regularly.

*OUFSOBMMZ �QSPKFDU�NBOBHFST�OFFE�UP�maintain periodic risk management

reports to identify the probable project

SJTLT��"EEJUJPOBMMZ �QSPKFDU�NBOBHFST�DPVME�split the various stages of the project

into smaller components to track the

target achievement on a regular basis.

5IJT�XPVME�IFMQ�JO�JNQSPWJOH�SFTPVSDF�VUJMJ[BUJPO�UISPVHI�CFUUFS�QMBOOJOH�BOE�closer monitoring.

Project reviews by third parties is

another technique to review projects.

Independent reviews by third parties

provide an objective opinion on the

QSPKFDU�TDPQF �CVEHFU �UJNFMJOFT �EFTJHO �QSPDVSFNFOU �UFDIOPMPHZ�BOE�DPOUSBDUPS�TFMFDUJPO �FUD��'VSUIFS �UIJT�DPVME�IFMQ�in bringing new ideas and break short

sighted thinking.

Project plans also suffer due to lack of

PWFSTJHIU��'PS�JOTUBODF �NPEFSOJ[BUJPO�PG�an international airport in eastern India

required the demolition of an old building

which stationed critical facilities such

BT�QPXFS�IPVTF �BJS�DPOEJUJPOJOH�QMBOU�and generator room for the functioning

PG�UIF�FYJTUJOH�UFSNJOBM��5IF�QMBOOJOH�team unable to assess the criticality of

the building and hence did not suggest

an appropriate relocation of the facilities

IBSCPSFE�CZ�UIF�PME�CVJMEJOH��5IJT�MFE�UP�the delay in demolition of the old building

and affected the time schedule of the

project.

Project reports and project management

tools are rated as most effective tool

GPS�QSPKFDU�NPOJUPSJOH �GPMMPXFE�CZ�$&0�dashboard.

Exhibit 22: Commonly adopted strategies to control project schedule delays

Exhibit 23: Effectiveness of project monitoring tools




Risk and reward program for project management teams/contractors are used occasionally

Risk and reward program for project

management teams and contractors

GPS�FYDFFEJOH�PS�NFFUJOH�UIF�UBSHFUT�are not common in comparison to other

NJUJHBUJPO�TUSBUFHJFT��*O�PVS�TVSWFZ ��percent respondents frequently used risk

and reward program as a measure for

controlling schedule overruns. Due to lack

PG�BO�BQQSPQSJBUF�JODFOUJWF�QSPHSBN �UIF�QSPKFDU�NBOBHFNFOU�UFBNT�BOE�FYUFSOBM�contractors and subcontractors are not

motivated enough to take interest beyond

UIFJS�EFěOFE�SFTQPOTJCJMJUZ�UP�NFFU�UIF�QSPKFDU�TDIFEVMF�BOE�DPTU��"U�UJNFT �the project management teams desist

from introducing innovative moves for

FGěDJFOUMZ�NFFUJOH�UIF�QSPKFDU�UJNFMJOF �BT�UIFZ�EP�OPU�ěOE�BOZ�EJSFDU�BEWBOUBHF�NPOFUBSZ�CFOFěUT�PS�BO�BQQSPQSJBUF�SFDPHOJUJPO�GPS�UIFNTFMWFT��

5P�NPUJWBUF�UIF�UFBNT �QSPKFDU�PXOFST�OFFE�UP�JODMVEF�B�DMFBSMZ�EFěOFE�SJTL�reward program in the project plan for

appropriately rewarding the project

team and the contractors for meeting

PS�FYDFFEJOH�UIF�UBSHFUT��'VSUIFS �UIF�risk-reward programmed should be

EFTJHOFE�JO�B�DMFBS�BOE�RVBOUJěBCMF�manner so that it motivates not only

the top level personnel of the project

FYFDVUJPO�UFBN�CVU�UIF�QFPQMF�JOWPMWFE�at all the levels of the team. Incentives

TVDI�BT�QFSGPSNBODF�CPOVT �FOSPMNFOU�UP�BEWBODF�USBJOJOH�QSPHSBNT �SFDPHOJUJPO�XJUIJO�UFBN �FUD��DPVME�IFMQ�JO�encouraging the project team to apply

innovative techniques for meeting the

UJNFMJOFT�JO�BO�FGěDJFOU�NBOOFS�


Strategies to control cost

Due to the long gestation period of

JOGSBTUSVDUVSF�QSPKFDUT �QSPKFDU�PXOFST�include cost escalation clause as a part

of the contract agreement. 65 percent

of the respondents use this strategy to

DPOUSPM�QSPKFDU�DPTUT��'VSUIFS �EFWFMPQJOH�cost effective project designs and joint

evaluation of project design for value

engineering is also used frequently.

)PXFWFS �OPU�NBOZ�DPNQBOJFT�PQUJNJ[F�their procurement methods to manage

cost.

Project owners need to develop long

term relationship with the contractors

and sub-contractors so as to map their

performance over a period of time and

identify the better performers. Deploying

practices such as demand consolidation

of high spend categories across the

FOUJSF�DPNQBOZ �DFOUSBMJ[FE�TPVSDJOH �developing new vendor and preferred

relationships through long term contracts

can also help in lowering the project

DPTU��5PPMT�TVDI�BT�&31�BOE�PUIFS�*5�CBTFE�TZTUFNT�UIBU�IFMQ�JO�FGěDJFOUMZ�tracking the source of materials should

CF�QSPNPUFE��5IF�QSPKFDU�PXOFST�DPVME�also look to leverage supplies from low-

cost countries such as China and Russia

in cases where the domestic supplies are

not cost effective.

8F�IBWF�FOUFSFE�UIF�ěYFE�WBMVF�contract with the vendor, thus any cost increase is borne by the contractor.

General Manager,Telecom company

Exhibit 24: Strategies used to control project cost overruns



Issues faced in adopting control strategies

(PWFSONFOU�QSPDFEVSFT�BOE�QPMJDJFT�BSF�SBUFE�BT�B�NBKPS�IJOESBODF�CZ�SFTQPOEFOUT�in adopting schedule control strategies. 86 percent of our survey respondents

suggest that they are unable to adopt controlling strategies on time due to stringent

(PWFSONFOU�QSPDFEVSFT��5IJT�JT�NBJOMZ�CFDBVTF�JO�B�(PWFSONFOU�TFU�VQ �EFWJBUJPO�from day to day operations requires an approval from higher authorities. Another

major reason highlighted in the survey in adopting the mitigation strategy is the

VOBWBJMBCJMJUZ�PG�TLJMMFE�SFTPVSDFT�UP�FYFDVUF�UIF�QSPKFDUT��"SPVOE�UISFF�GPVSUI�PG�UIF�SFTQPOEFOUT�GFFM�UIBU�MBDL�PG�BWBJMBCJMJUZ�PG�FYQFSJFODFE�WFOEPST�BOE�BSPVOE�IBMG�PG�UIF�UPUBM�SFTQPOEFOUT�BHSFF�UIBU�UIF�TIPSUBHF�PG�FYQFSJFODFE�EFTJHO�FOHJOFFST�BSF�NBKPS�CPUUMFOFDLT�JO�BEPQUJOH�UIF�NJUJHBUJPO�TUSBUFHJFT��'VSUIFS �PWFS��QFSDFOU�SFTQPOEFOUT�JOEJDBUFE�UIBU�UIFZ�GBDF�SFTJTUBODF�GSPN�DPOUSBDUPST�BOE�TVC�DPOUSBDUPST �JG�UIFZ�XBOU�UP�SFQMBDF�UIF�FYJTUJOH�QSPDFTTFT�XJUI�NPSF�FGěDJFOU�POFT�

Exhibit 25: Issues faced in adopting the schedule control strategies



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Project management – Proven method for successful delivery

Challenges in capital projects have grown multi

folds in the last decade. First experiment at three

lane track capacity enhancement by railways,

set up of country’s largest thermal power plant,

construction of large hydro power plants initiating

one of the biggest planned human exodus,

development of one of the world’s largest airport

in shortest time, etc. have only added greater

emphasis on established project management

techniques and practices being adopted from

project inception till closure.


5IF�SBUJPOBMF�GPS�1SPKFDU�.BOBHFNFOU�arises from the need to institute

DPOTJTUFOU�TUBOEBSET�BOE�NFUIPET �FMJNJOBUF�QSPKFDU�EFMBZT �DPSSFDU�QPPS�PS�JNQSPWF�QSPKFDU�QMBOOJOH�QSPDFTTFT �provide clarity on roles to ensure

authority is matched with responsibility

GPS�QSPKFDU�DPNQMFUJPO �BEWBODF�QSPKFDU�QFSGPSNBODF �SFNPWF�DPTU�PWFSSVOT�and contain costs. It thereby aims to

TFQBSBUF�QSPKFDU�QFSGPSNBODF�TVDDFTT��GBJMVSF�NFBTVSFT�GSPN�QSPKFDU�QSPHSFTT�NFFUJOH�UJNF�TDBMFT �DMFBSMZ�BHSFFE�NJMFTUPOFT �TFUUJOH�QBSBNFUFST�BU�UIF�FOE�PG�FBDI�QIBTF �FUD� �HVBSBOUFF�quality to project needs and augment

customer / coordinating agency

satisfaction.

Project Management encompasses

setting up and sustaining practices /

QSPDFEVSFT �QFSGPSNJOH�QSPKFDU�USBDLJOH�UP�SFQPSU�PO�QSPHSFTT �NPOJUPSJOH�JOUFS�project interdependencies for review

��QSJPSJUJ[BUJPO�PG�JOEJWJEVBM�QSPKFDUT �creating database for risk analysis and

building knowledge management

repository from lessons learnt. It

includes proposing consulting support

PO�QSPKFDUT �BOE�DPNNVOJDBUJOH�QSPKFDU�OFFET �TUBUVT�BEWBODFNFOU�UP�TFOJPS�management.

'VSUIFSNPSF �PGGFSJOH�USBJOJOH�UISPVHI�project skill development programs

and mentoring services to managers

BSF�JNQFSBUJWFT�GPS�SFBMJ[BUJPO�PG�future project needs. Provisioning of

training budget / level of investment

in professional training for employees

EVSJOH�UIF�QSPKFDU�QMBOOJOH�QSPDFTT �collaboration with educational

institutions / professional management

PSHBOJ[BUJPOT �QBSUJDJQBUJPO�JO�1SPKFDU�Management benchmarking forums are

crucial mechanisms to cultivate project

NBOBHFNFOU�FYQFSUJTF�JO�UIF�FNQMPZFFT��-FWFM�PG�JOWFTUNFOU �QSPKFDU�SJTLT �technical challenges along with sensitivity

in general public and political scenario

have not only induced the need for

objectivity / independent opinion / valued

VTF�PG�PVUTJEF�FYQFSUT�PO�QSPKFDU�TDPQF �CVEHFU �UJNFMJOFT �EFTJHO �QSPDVSFNFOU �UFDIOPMPHZ�BOE�DPOUSBDUPS�TFMFDUJPO �CVU�also on usage of assortment of project

NBOBHFNFOU�UPPMT �UFDIOJRVFT�BOE�CFTU�practices.

Absence of robust Project Management

DBQBCJMJUJFT�MFBE�UP�QSPKFDU�DPNQMFYJUJFT�OPU�CFJOH�BDDPVOUFE�GPS �JOBEFRVBUF�QMBOOJOH �TDIFEVMJOH�EFěDJFODJFT�relating to resource unavailability and or

NBUFSJBM�FTUJNBUJPO �DPOTUSVDUJPO�EFMBZT�resulting in disputes further leading to

considerable resource spending on heavy

MJUJHBUJPO�QSPDFTTFT �OPO�BEESFTTBM�UP�TUBGěOH�JTTVFT�MJNJUJOH�BHFODZĳT�DPOUSBDU�PWFSTJHIU�DBQBCJMJUJFT��-BDL�PG�TVGěDJFOU�stress on planning and management tools

��UFDIOJRVFT�DBO�MFBE�UP��

y *OTVGěDJFOU�VOEFSTUBOEJOH�PG�MPDBM�environment

y Inaccurate forecasts on usage

QSPKFDUJPOT �EFNPHSBQIJD�USFOET �market conditions and imminent

technological bottlenecks

y Due diligence decisions and

ascertainment of risks / changes in

FYPHFOPVT�GBDUPST�OPU�QSFDFEJOH�decision making process

y Absence of new ideas being brought

in causing short sighted habits and

thinking.


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Resource shortage – Plaguing the growth of the sector

The Indian Infrastructure sector plays an

important role in the India growth story servicing

the needs of the both public and private sectors.

The sector has a huge multiplier effect on the

growth of the economy. However, it faces

manpower challenges, which are detrimental to

the growth of the sector.


5IF�TVSWFZ�BMTP�TVHHFTUT�UIBU�UIFSF�JT�a dearth of skilled manpower across

sectors and this shortage can have an

adverse impact on the delivery and

DPTU�PG�UIF�QSPKFDU��5IF�BWBJMBCJMJUZ�PG�skilled project managers is proving to

be challenge in the Indian Infrastructure

sector and this situation in likely to get

BHHSBWBUFE�JO�UIF�GVUVSF��'VSUIFSNPSF �even the current education system is

unable to deliver the required number

of specialists across the project

NBOBHFNFOU�WBMVF�DIBJO��*O�BEEJUJPO �UIFSF�JT�B�TIPSUBHF�PG�FYQFSJFODFE�engineers with the desired project

management skill sets to take up larger

roles.

"T�QFS�UIF�TVSWFZ ��QFSDFOU�PG�UIF�respondents feel that lack of project

NBOBHFST�JT�B�NBKPS�DBVTF�PG�DPODFSO �GPMMPXFE�CZ�&OWJSPONFOUBM�1SBDUJUJPOFST��QFSDFOU �4BGFUZ�0GěDFST��QFSDFOU�BOE�&OHJOFFST�BOE�"SDIJUFDUT��QFSDFOU��

'VSUIFS �UIF�FGGFDUT�PG�TLJMMT�TIPSUBHF�BSF�apparent across various sectors as well.

"T�QFS�UIF�TVSWFZ �BCPVU��QFSDFOU�PG�UIF�respondents in the energy sector feel that

lack of skilled project managers is a major

cause of concern.

Sector-wise shortage of skilled professional - A cause of concern across sectors

Source: KPMG in India – PMI Survey on cost and schedule overrun, 2012; KPMG in India analysis


Lack of skilled project managers is the root cause for the time overruns in a project

-BUFMZ �JU�IBT�CFFO�PCTFSWFE�UIBU�UIF�JOĜPX�PG�UBMFOU�JO�UIF�JOGSBTUSVDUVSF�TFDUPS�IBT�CFFO�EFDMJOJOH�ĸ�BT�SFTPVSDFT�BSF�HPJOH�GPS�BMUFSOBUJWF�PQUJPOT �XIJDI�BSF�NPSF�MVDSBUJWF��5IJT�JTTVF�JT�GFMU�BDSPTT�WBSJPVT�TUBHFT�PG�QSPKFDU�MJGFDZDMF�GSPN�UIF�DPODFQUVBMJ[BUJPO�QSF�QMBOOJOH�UP�UIF�ěOBM�DMPTVSF�IBOEPWFS�TUBHF��

5IF�TVSWFZ�IBT�JEFOUJěFE�UIBU�UIF�CJHHFTU�SFBTPO�GPS�TDIFEVMF�BOE�UJNF�PWFSSVO�JT�UIF�MBDL�PG�TLJMMFE�QSPGFTTJPOBMT �XIJDI�SFTVMUT�JO�QSPCMFNT�TVDI�BT�QSPMPOHFE�ěOBMJ[BUJPO�PG�EFTJHO �TDPQF�DSFFQ �EFMBZ�JO�SFHVMBUPSZ�BQQSPWBMT�BOE�DPOUSBDUVBM�EJTQVUFT��

5IF�TVSWFZ�IBT�JOEJDBUFE�UIBU��QFSDFOU�PG�UIF�SFTQPOEFOUT�BHSFF�UIBU�UIF�TFDUPS�GBDFT�TIPSUBHF�PG�TLJMMFE�QSPKFDU�NBOBHFST�XJUI�SFRVJTJUF�TLJMM�TFU �XIJDI�BMTP�SFTVMUT�JO�UJNF�TDIFEVMF�PWFSSVO��5IF�MBDL�PG�SFRVJTJUF�TLJMM�TFU�BT�UIF�NBKPS�DBVTF�PG�DPODFSO�JT�BMTP�highlighted in the KPMG International’s Global Construction Survey 2012 indicates

that about 45 percent of the respondents in the ASPAC region are less pessimistic

BCPVU�FDPOPNJD�QSPTQFDUT�BOE�JOTUFBE�QPJOU�UP�TLJMMT�TIPSUBHFT�BOE�JOĜBUJPO�BT�B�continuing worry.

Lack of availability of skilled labour is an issue.

General Manager,Power Generation company

Sector-wise shortage of skilled professional - A cause of concern across sectors

Source: PMI-KPMG survey on cost and schedule overrun


55 | Bridging the Urban Housing Shortage in India

Indian economy has been witnessing a huge spate of

infrastructural investments over the last few years and the trend

is bound to continue for the coming years as well. We have been

witnesses to the strong and sustained growth powered primarily

by investment in various infrastructure segments. Construction

is the second largest economic activity in India after agriculture

in terms of employment and has been growing at a pace

never seen before1��)PXFWFS �UIF�TFDUPS�BU�UIF�TBNF�UJNF�JT�BMTP�XJUOFTTFE�XJUI�TIPSUBHF�PG�TLJMMFE�XPSLGPSDF �XIJDI�JT�EFUSJNFOUBM�GPS�UIF�HSPXUI�PG�UIF�TFDUPS��5P�PWFSDPNF�UIJT�JTTVF �UIF�(PWFSONFOU�IBT�UP�QMBZ�B�NPSF�QSPBDUJWF�SPMF��*U�TIPVME�DPOTJEFS�SFDPHOJ[JOH�WPDBUJPOBM�PS�TLJMM�USBJOJOH�JOTUJUVUFT�BT�QBSU�of the main stream.

Demand for construction professionals is growing in India

5IF�JOGSBTUSVDUVSF�DPOTUSVDUJPO�TFDUPS�IBT�POF�PG�UIF�MBSHFTU�XPSLGPSDF�SFRVJSFNFOUT �BOE�UIJT�SFRVJSFNFOU�PG�TLJMMFE�NBOQPXFS�JT�FYQFDUFE�UP�JODSFBTF�DPOTJEFSJOH�UIF�HSPXUI�QSPKFDUJPOT��"T�QFS�UIF�5XFMGUI�'JWF�:FBS�1MBO �UIF�TQFOEJOH�PO�UIF�JOGSBTUSVDUVSF�TFDUPS�JT�FYQFDUFE�UP�JODSFBTF�UP�64%��USJMMJPO�GSPN�64%��NJMMJPO�JO�UIF�&MFWFOUI�'JWF�:FBS�1MBO �SFTVMUJOH�UP�an increase in demand for the construction professionals across

the project management cycle.

'VSUIFS �UIF�EFNBOE�GPS�VOTLJMMFE �TFNJ�TLJMMFE �TVQQPSU�TUBGG�BOE�QSPGFTTJPOBMT�GPS�DPOTUSVDUJPO�JOEVTUSZ�JT�FYQFDUFE�UP�JODSFBTF�BU�B�$"(3��QFSDFOU�EVSJOH��UP��NJMMJPO�QFPQMF2.

Building Capabilities – Paramount to "DIJFWF�0QFSBUJPOBM�&GěDJFODJFT

Requirement of human resources for construction industry (‘000’s)

Human resources 2010 2022 - Forecasted

&OHJOFFST 928 ��

5FDIOJDJBOT�BOE�GPSFNBO 647 ��

Clerical ��

Skilled workers ��

Unskilled workers �� 56960

Total 35000 92000

Source:�"QQSPBDI�QBQFS�GPS��UI�ěWF�ZFBS�QMBO �1MBOOJOH�$PNNJTTJPO �,1.(�JO�*OEJB�"OBMZTJT

1 MoSPI, January 2012 Flash Report2 “An approach to the 12th Five year plan”, Planning Commission, October 2011, p123

8JUI�UIF�JODSFBTJOH�QSPKFDU�DPNQMFYJUZ�BOE�VTBHF�PG�BEWBODFE�UFDIOPMPHZ �UIF�EFNBOE�GPS�RVBMJěFE�QSPGFTTJPOBMT�GPS�QSPKFDU�NBOBHFNFOU�BOE�DPOTUSVDUJPO�JT�FYQFDUFE�UP�JODSFBTF�BU�B�GBTUFS�SBUF�JO�DPNQBSJTPO�UP�PWFSBMM�MBCPS�EFNBOE��#Z�� DPOTUSVDUJPO�industry would require between 4.6 – 5.2 million professional which is around four

UJNFT�PG�FYJTUJOH�BWBJMBCMF�QSPGFTTJPOBMT�.

While the supply of project professionals is not able to keep pace with the demand

Many infrastructure projects in India are suffering due to the

EFBSUI�PG�DPNQFUFOU�BOE�FYQFSJFODFE�QSPKFDU�NBOBHFST�BOE�project professionals. One of the reasons for this is the lack

of focus on project management courses in India’s education

TZTUFN��*OEJB�IBT�WFSZ�GFX�VOJWFSTJUJFT�MFTT�UIBO��UIBU�PGGFS�degree/diploma courses on project management in comparison

to China which has more than 100 universities offering different

courses in project management4. Further there are very few

institutions that offer courses on Infrastructure management.

5IF�DVSSJDVMVN�DPWFSFE�JO�UIFTF�DPVSTFT�GPDVTFT�PO�JOEVTUSZ�LOPXMFEHF �SFHVMBUPSZ�BTQFDUT�FUD� �CVU�UIFTF�DPVSTFT�EPOĳU�provide detailed knowledge about the international standards

BOE�MFBEJOH�QSBDUJDFT�PG�1SPKFDU�.BOBHFNFOU��5IFSF�JT�OFFE�UP�introduce project management as a subject in engineering and

management courses.

Another reason is the number of students that could enroll

for civil engineering courses has not increased much in

DPNQBSJTPO�UP�PUIFS�FOHJOFFSJOH�TUSFBNT��'PS�JOTUBODF �JO�� DJWJM�FOHJOFFSJOH�QSPHSBNT�IBE�UIF�DBQBDJUZ�UP�FOSPMM�� TUVEFOUT �XIJMF�DPNQVUFS�TDJFODF�BOE�JOGPSNBUJPO�UFDIOPMPHZ�EFQBSUNFOUT�DPVME�BDDFQU�POMZ�� #Z�� DPNQVUFS�science and other information technology programs reached to

�� DJWJM�FOHJOFFSJOH�DMJNCFE�UP�POMZ�� 5.

Demand of skilled construction professionals by the end of 2022 (in ‘000’s)

Professionals 2010 - Estimated 2022 – Forecasted

Project managers 70 ��

Civil engineers 815 ��

Planners 50 ��

Surveyors 50 ��

Quality control professionals 100 ��

)4&�QSPGFTTJPOBMT 50 ��

Total 1135 4585-5190

Source:�/4%$��#VJMEJOH �$POTUSVDUJPO�BOE�3FBM�&TUBUF�4FSWJDFT�4FDUPS��,1.(�JO�*OEJB�"OBMZTJT


3 KPMG in India Analysis factoring the investment projections and distribution of human resources in infrastructure sector4 “India lagging China in project management”, The Economic Times, 18 June 20105 “A High-Tech Titan Plagued by Potholes”, The New York Times, 25 August 2010

5BCMF�CFMPX�HJWFT�UIF�QSPKFDUFE�TVQQMZ�PG�DPOTUSVDUJPO�QSPGFTTJPOBM�

"MUIPVHI �UIF�BCTPMVUF�OVNCFS�PG�workers employed across all categories

IBT�JODSFBTFE �UIF�TUSFOHUI�PG�UIF�TLJMMFE�workforce has been consistently going

EPXO��5IF�CFMPX�DIBSU�JMMVTUSBUFT�UIF�HBQ�between demand and supply of skilled

professionals impacting the project

EFMJWFSZ��#Z�� *OEJB�JT�FYQFDUFE�UP�IBWF�B�TIPSUGBMM�PG�BSPVOE��NJMMJPO�QSPGFTTJPOBMT�XIJDI�JT�BQQSPYJNBUFMZ��percent of the total demand7��5IJT�EFDMJOF�in skilled workers proportion brings out

the need for skill development of the

workers employed in the industry.

Supply of skilled construction professionals by the end of 2022 (in ‘000’s)6

Professionals 2022 - Forecasted supply

Project managers 120

Civil engineers 1400

Planners 90

Surveyors 85

Quality control professionals 170

)4&�1SPGFTTJPOBMT 85

Total 1950

Source:�"QQSPBDI�QBQFS�GPS��UI�ěWF�ZFBS�QMBO �1MBOOJOH�$PNNJTTJPO��,1.(�JO�*OEJB�"OBMZTJT

Shortage of Project Professionals in 2022

Source: NSDC - Building, Construction and Real Estate Services Sector (2022); KPMG in India Analysis


6 KPMG in India Analysis assuming number of students passing out each year and percentage of students joining the infrastructure industry 7 KPMG in India Analysis assuming number of students passing out each year and percentage of students joining the infrastructure industry

Hence building project management capability and maturity is priority for most organizations in India

Shortage of talent in the construction

sector is a long term problem and will

continue to push up project costs and

SJTLT��5IF�FEVDBUJPO�BOE�USBJOJOH�DBQBDJUZ�offered through various schemes

currently are clearly inadequate to meet

the demand of the large percentage

of unskilled workers in the Indian labor

NBSLFU��5IF�FEVDBUJPO�TZTUFN�JT�PGUFO�not delivering the required number of

TQFDJBMJTUT�BDSPTT�QSPKFDU�NBOBHFNFOU �FOHJOFFSJOH �TVSWFZJOH �DPOUSBDU�management and the skilled/semi-skilled

MBCPS��5IF��TU�SPVOE�PG�UIF�/440�BMTP�SFDPOěSNFE�UIBU�BDDPSEJOH�UP�XIJDI�more than 90 percent of our population

receives no vocational training8. So the

JNNJOFOU�OFFE�JT�UP�FYQBOE�UIF�SFBDI�

PG�USBJOJOH�QSPWJEFST �TFU�VQ�NPEFMT�BOE�institutes with the capability to scale.

5IF�JOEVTUSZ�OFFET�B�HFOVJOF�DPMMBCPSBUJPO�CFUXFFO�QSPKFDU�PXOFST �DPOUSBDUPST �(PWFSONFOUT�BOE�USBJOJOH�providers to attract more school leavers

BOE�HSBEVBUFT �UP�KPJO�JOGSBTUSVDUVSF�industry. Companies should also seek

to stay in touch with changing employee

aspirations. By encouraging diversity in

JUT�FNQMPZNFOU�QSBDUJDFT �BOE�CZ�PGGFSJOH�HSFBUFS�ĜFYJCJMJUZ�JO�XPSLJOH�IPVST �UIF�sector can reach out to a wider potential

audience that perhaps would not

previously have considered such a career.

*OWFTUNFOU�JO�FYJTUJOH�FNQMPZFFT�JT�BMTP�DSVDJBM�JO�PSEFS�UP�PGGFS�CFUUFS�EFěOFE�DBSFFS�TUSVDUVSFT �XJUI�B�HSFBUFS�GPDVT�on training and higher salaries where

possible.

We surveyed respondents on measures

that could be adopted to build the project

management capabilities among the

employees. Majority of the respondents

agreed that the following strategies are

effective means to overcome resource

TIPSUBHF�BOE�TLJMM�TFU�EFěDJFODJFT�

Meaningful steps would have to be taken

to support both the infrastructure and

DPOTUSVDUJPO�JOEVTUSZ �GPS�BDIJFWJOH�UIF�EFTJSFE�HSPXUI�PG�FDPOPNZ��5IF�LFZ�step would be to correct the internal

JNCBMBODFT �JOIFSFOU�UP�UIF�TFDUPS �to make the Construction industry

competitive and enable it to match the

growth of other sectors of the economy.

5IF�OFFE�PG�UIF�IPVS�JT�UP�DSFBUF�B�ĲTLJMMFE�ecosystem’ with partnerships between

JOEVTUSZ�QMBZFST �USBJOJOH�PSHBOJ[BUJPOT�BOE�UIF�(PWFSONFOU�UP�FOTVSF�NVUVBM�support and enhancement of collective

CFOFěUT�

Strategies to overcome skill shortage Survey response

Very Effective Effective

Develop in-house Project Academy / ‘Center of Project .BOBHFNFOU�&YDFMMFODFĳ�GPS�USBJOJOH�BOE�DFSUJGZJOH�QSPKFDU�NBOBHFST�BOE�PUIFS�LFZ�QFPQMF�JOWPMWFE�JO�FYFDVUJOH�QSPKFDUT

��

Develop structured training programs and succession plans to build strong professionals ��

Propagate Infrastructure and allied sector as a lucrative employment option

��

*ODSFBTF�JOWFTUNFOUT�JO�FYJTUJOH�FNQMPZFFT�XJUI�HSFBUFS�GPDVT�PO�USBJOJOH �ĜFYJCJMJUZ�JO�XPSLJOH�IPVST �CFODINBSLJOH�BOE�JODSFBTJOH�compensation

��

*ODSFBTF�DPPQFSBUJPO�XJUI�&EVDBUJPOBM�*OTUJUVUFT�UP�TFU�VQ�TQFDJBM�BDBEFNJDT �FODPVSBHF�JOUFSOTIJQT�BOE�PGGFS�TDIPMBSTIJQT ��

Source:�,1.(�JO�*OEJB�ĸ�1.*�4VSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVO ��


8 Case for Setting up Sector Skill Councils in India”, CII, p7

08SE

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Recommendations – Next steps

Based on the survey responses along with our

research and experience of project management’s

MFBEJOH�QSBDUJDFT �XF�IBWF�JEFOUJěFE��recommendations for Government, policy

makers and project owners that could help in

debottlenecking infrastructure projects and

improve project delivery in the country.


5P�FYQFEJUF�JOGSBTUSVDUVSF�QSPKFDUT �UIFSF�is a need to develop an effective ‘single

XJOEPX�DMFBSBODFĳ�NFDIBOJTN��5IF�mechanism facilitates and streamlines

interaction with different regulatory

authorities and provides a single point

of contact for all permits and approvals

necessary for infrastructure projects.

5IJT�XJMM�IFMQ�JO�QSPNPUJOH�JOGSBTUSVDUVSBM�EFWFMPQNFOU�CZ�BMMPXJOH�TJNQMJěDBUJPO�PG�QSPDFTTFT �EPDVNFOUBUJPO �TDSFFOJOH �and clearances and increasing

transparency in the approval system.

)PXFWFS �UP�NBLF�UIJT�TVDDFTTGVM �JU�JT�JNQFSBUJWF�UIBU�JOTUJUVUJPOBMJ[BUJPO�PDDVST�BU�BMM�MFWFMT�PG�HPWFSOBODF�$FOUSBM �4UBUF �BOE�MPDBM�(PWFSONFOU��'VSUIFS �UIF�ěOBM�policy framework should be universally

BDDFQUFE�CZ�UIF�DFOUSF�BOE�UIF�4UBUFT �and amongst various States. Some

MFWFM�PG�ĜFYJCJMJUZ�BOE�DVTUPNJ[BUJPO�JT�BDDFQUBCMF�PO�B�DBTF�CZ�DBTF�CBTJT �CVU�it is important that the core policy should

OPU�CF�BMUFSFE��"MTP �B�UJNFMJOF�TIPVME�CF�BTTJHOFE�GPS�HJWJOH�UIF�ěOBM�OPE�UP�UIF�project. Institution failing to meet these

timelines should attract penalties.

(PWFSONFOU�DPVME�GPMMPX�B�UISFF�TUFQ�BQQSPBDI�UP�JOTUJUVUJPOBMJ[F�UIJT�

y $SFBUF�B�DIFDLMJTU�GPS�EJWFSTJěFE�approvals with a step-by-step

guide along with a list of required

EPDVNFOUT��5IJT�DIFDLMJTU�XPVME�BMTP�JODMVEF�UIF�MJTU�PG�DPODFSOFE�PGěDFTĳ�addresses and contact details.

y Open single service windows that

DFOUSBMJ[F�BQQMJDBUJPOT�BOE�GPSXBSE�them to relevant authorities to

NJOJNJ[F�UIF�OVNCFS�PG�QIZTJDBM�WJTJUT�and save time.

y 5SBOTGPSN�TJOHMF�BDDFTT�TFSWJDF�window into one stop agency that

processes applications internally

and has the authority to take

informed decisions by comprising

representatives of various approval

agencies at a central level.

"DDPSEJOH�UP�UIF�8PSME�#BOL�TUVEZ �India ranks at number 182 among 185

economies on the ease of obtaining

DPOTUSVDUJPO�QFSNJUT��5IF�GPMMPXJOH�UBCMF�illustrates India’s status versus other

countries on various aspects related to

construction permits.

$VSSFOUMZ �JO�*OEJB�PO�BO�BWFSBHF �any construction project requires

BQQSPYJNBUFMZ��QFSNJUT �XIJDI�UBLFT�almost 196 days to conclude. With the

introduction of “single window clearance”

NFDIBOJTN �UIJT�UJNFGSBNF�JT�FYQFDUFE�UP�SFEVDF�DPOTJEFSBCMZ��5IJT�ZFBS �5BJXBO�implemented a single window for pre-

construction approvals and made changes

to the rules applicable to construction

JOTQFDUJPOT��5IF�DIBOHFT�FMJNJOBUFE��QSPDFEVSFT�BOE��EBZT�GSPN�UIF�QSPDFTT�of dealing with construction permits1.

*O�*OEJB �TFWFSBM�4UBUFT�IBWF�TVDDFTTGVMMZ�implemented single window clearance

for industrial development—model

that can be replicated for infrastructure

TFDUPS��'PS�FYBNQMF �(VKBSBU�QSPWJEFT�single window clearance facility to

FOUSFQSFOFVST �TP�UIBU�UIFZ�DBO�HFU�clearances from various authorities under

one roof to set up industrial units in the

4UBUF��5IF�(PWFSONFOU�PG�(VKBSBU�IBT�introduced single Window clearance in

UIF�4UBUF�UISPVHI�*OEVTUSJBM�&YUFOTJPO�#VSFBV�J/%&95C�Ĺ�B�TJOHMF�QPJOU�DPOUBDU�PSHBOJ[BUJPO�JO�(VKBSBU2. Investors

can submit proposals online and avail

BQQSPWBMT�VOEFS�TJOHMF�XJOEPX��5IF�(PWFSONFOU�IBT�BMTP�CFFO�JOWFTUJOH�in upgrading technology infrastructure

to consolidate and streamline various

processes and stages related to smooth

granting of approvals.

01 Set up a single window clearance mechanism to simplify the regulatory approval process

Indicators India Brazil China Indonesia Japan Mexico Best performer globally (Global Ranking)

Dealing with Construction Permits SBOL

182 �� 181 75 72 �� )POH�,POH��

1SPDFEVSFT�OVNCFS �� 17 28 �� 14 10 )POH�,POH��

5JNF�EBZT 196 469 270 158 �� 69 4JOHBQPSF��

Source:�%PJOH�#VTJOFTT�� 8PSME�#BOL �0DUPCFS��


1 Doing Business 2013, World Bank, October 20122 http://www.indextb.com/destination-gujarat/formalities.aspx

5IFSF�BSF�UXP�DSJUJDBM�SFRVJSFNFOUT�GPS�implementing an effective single window

DMFBSBODF�

ľ� Empowerment: A single window

clearance agency would be able

to promote investment and

allow smooth implementation of

infrastructure projects. It is important

UP�TFOTJUJ[F�WBSJPVT�(PWFSONFOU�departments towards effective

functioning of such an agency

that ushers positive growth in the

infrastructure sector by providing all

regulatory approvals in a time bound

manner. Different authorities often

feel that they will eventually lose

their say in the clearance process

BOE�ěOBMMZ�UIFJS�DPOUSPM �JG�TVDI�FNQPXFSFE �DFOUSBMJ[FE �GSPOU�FOE�department emerges. Such an agency

needs to be safeguarded by senior

(PWFSONFOU�PGěDJBMT�BOE�BO�FGGFDUJWF�(PWFSONFOU�TVQQPSU�UP�GVODUJPO�smoothly.

ľ� Investment in technology:�5IFSF�is need to allot appropriate budget

for setting up and effectively

running single window operations.

*OWFTUNFOUT�JO�UFDIOPMPHZ�BOE�*5�infrastructure to access various

SFRVFTUT�UISPVHI�B�DFOUSBMJ[FE�EBUBCBTF�BSF�FYUSFNFMZ�JNQPSUBOU��

.BOZ�MFHBDZ�*5�JOGSBTUSVDUVSFT�FJUIFS�FYJTU�JO�TJMPT�PS�MBDL�UIF�TDBMBCJMJUZ�that such a project may require—they

need to be assessed for upgrades or

replacement.

5IF�(PWFSONFOU�DBO�JOTJTU�PO�MJTUJOH�of the requisite documents and

process guide to allow easy access to

information and smooth processing

PG�UIF�JOGSBTUSVDUVSF�QSPQPTBMT��5IFO �the approvals can be obtained through

a single access point that collects

JOGPSNBUJPO �DPOEVDUT�TDSFFOJOH �BOE�DMFBST�QSPQPTBMT �UIVT�FYQFEJUJOH�UIF�infrastructure projects in the country.

5IF�.P41*�JT�NPOJUPSJOH�UIF�QFSGPSNBODF�of central sector projects in 16 sectors

DPTUJOH�NPSF�UIBO�*/3��DSPSF��5IF�current mechanism of monitoring

projects is at a broad level and doesn’t

focus on project de-bottlenecking to

avoid cost and schedule overruns.

5IFSF�JT�B�OFFE�UP�TFU�VQ�VQ�B�UISFF�UJFS�QSPKFDU�NBOBHFNFOU�PGěDF�JO�UIF�DPVOUSZ��

5IJT�1.0�XPVME�NPOJUPS�BOE�QSPWJEF�oversights at national level. All projects

BCPWF�B�DFSUBJO�UISFTIPME�MJNJU�TBZ�PWFS�*/3��DSPSF�PS�UIF�QSPKFDUT�PG�/BUJPOBM�importance would fall under this structure.

Below is the structure and functions of

UIJT�1.0�BU�FBDI�MFWFM�

02 4FUVQ�B�UISFF�UJFS�QSPKFDU�QSPHSBN�NBOBHFNFOU�PGěDF�1.0�TUSVDUVSF�JO�UIF�country to monitor and de-bottleneck infrastructure projects

Three-tier structure for PMO

PMO Functions

1.0�BU�UIF�$FOUSF�.P41*

1. 'PSNVMBUJPO�BOE�SFWJFX�PG�QPMJDZ �TUBOEBSET�BOE�HVJEFMJOFT�PO�QSPKFDU�NBOBHFNFOU�2. $FOUSBMJ[FE�NPOJUPSJOH�PG�QSPKFDUT�JO�DP�PSEJOBUJPO�XJUI�4UBUF�1.0T�BOE�JNQMFNFOUJOH�BHFODJFT��.FOUPSJOH�PG�$FOUSBM�(PWFSONFOU�BHFODJFT�GPS�JNQSPWJOH�QSPKFDU�NBOBHFNFOU�QSPDFTTFT�BOE�EFBMJOH�XJUI�

FYDFQUJPOT�4. Country strategy for competence development.

PMOs in each State

1. $PPSEJOBUJPO�XJUI�4UBUF�(PWFSONFOU�BOE�JNQMFNFOUJOH�BHFODJFT�UP�SFTPMWF�JTTVFT�2. Reporting to PMO at the centre on the current status of projects.

��%FěOJOH�QSPDFTTFT�BU�4UBUF�MFWFM�GPS�QSPKFDU�SFMBUFE�DMFBSBODFT�4. 1SPKFDU�BENJOJTUSBUJPO�TVQQPSU�JODMVEJOH�GBDJMJUBUJPO�PG�QSPKFDU�XFC�TJUF �QSPKFDU�NBOBHFNFOU �TPGUXBSF�TVQQPSU �

QFSJPEJD�SFWJFXT �FUD�5. .FOUPSJOH�PG�4UBUF�(PWFSONFOU�BHFODJFT�GPS�JNQSPWJOH�QSPKFDU�NBOBHFNFOU�QSPDFTTFT�BOE�EFBMJOH�XJUI�FYDFQUJPOT�

PMOs in implementing agencies

1. Monitoring and reporting to State PMO on the current status of projects.

2. &TDBMBUJOH�JTTVFT�CFZPOE�UIFJS�PXO�QVSWJFX�UP�4UBUF�1.0�GPS�TPMVUJPOT�BU�4UBUF�BOE�DFOUSBM�MFWFM��Building project management capability at the site.

4. Identifying trained manpower requirements and arranging for training and competence development.

Source:�İ"�GSBNFXPSL�GPS�&GGFDUJWF�"EPQUJPO�PG�1SPKFDU�.BOBHFNFOU�JO�*OEJBı �'*$$* �.BZ��


.PTU�PG�UIF�(PWFSONFOU�QSPKFDUT�BSF�awarded through competitive bidding.

6OEFS�UIJT�NFDIBOJTN �UIF�DPNQBOJFT�UIBU�TBUJTGZ�RVBMJGZJOH�DSJUFSJB �JO�UFSNT�PG�UFDIOJDBM�DBQBCJMJUJFT �NJOJNVN�ZFBST�PG�FYQFSJFODF�BOE�TPVOE�ěOBODJBM�capabilities are eligible to bid for the

projects. Once the qualifying criteria

BSF�NFU �UIF�EFDJTJPO�PG�BXBSEJOH�UIF�project solely depends on the bid cost/

QSJDF�UBSJGG��)PXFWFS �NBKPSJUZ�PG�PVS�survey respondents are of the view

that awarding contracts in this manner

may not be healthy in the long term

from the perspective of project quality

BOE�WJBCJMJUZ��5IF�DPOUSBDUPS �JO�PSEFS�UP�SFNBJO�B�TUFQ�BIFBE�PG�UIFJS�DPNQFUJUPST �may not necessarily include all the cost

FMFNFOUT�BOE�RVPUF�BSUJěDJBMMZ�MPX�QSJDF��5IVT �UIFSF�JT�B�MJLFMJIPPE�UIBU�UIF�-��NBZ�compromise on quality and timeline by

deploying resources so as to be within

the quoted price.

0OF�BMUFSOBUJWF�UP�UIF�FYJTUJOH�CJEEJOH�QSPDFTT�-��DPVME�CF�UIF�BWFSBHF�CJE�NFUIPE��6OEFS�UIJT�NFUIPE �UIF�DPOUSBDU�is awarded to the contractor whose

CJE�TBUJTěFT�B�DFSUBJO�SFMBUJPOTIJQ�XJUI�UIF�BWFSBHF�PG�BMM�CJE�QSJDFT��5IF�CBTJD�BEWBOUBHF�PG�UIF�BWFSBHF�CJE�NFUIPE �GSPN�BO�PXOFSĳT�QFSTQFDUJWF �JT�UIBU�JU�safeguards against signing a construction

contract for an unrealistically low bid

price that would almost certainly lead to

EJTQVUFT�EVSJOH�QSPKFDU�FYFDVUJPO�

Another alternative could be allowing the

project owners to negotiate with other

TVJUBCMF�CJEEFST�TBZ�-��BOE�-��BMPOH�XJUI�-��CJEEFS��5IJT�QSPDFTT�TIPVME�be conducted in a transparent manner

through reverse auctions. Under reserve

BVDUJPO �UIF�TVQQMJFST�CJE�POMJOF�BOE�BSF�BCMF�UP�TFF�UIF�DPNQFUJUPSĳT�CJET �without knowing the identity of the

CJEEFS��5IJT�NFBOT�UIBU�TVQQMJFST�XJMM�instantly have an understanding of where

they stand in relation to other bidders.

3FWFSTF�BVDUJPOT�DPVME�PGGFS�(PWFSONFOU�TJHOJěDBOU�DPTU�TBWJOH�CFOFěUT �SFTVMU�JO�MPXFS�DZDMF�UJNFT �JODSFBTF�DPNQMJBODF �FOIBODF�USBOTQBSFODZ �JODSFBTF�DPMMBCPSBUJPO �CPPTU�TVQQMJFS�QBSUJDJQBUJPO �and provide feedback for participants.

*O�*OEJB �EJTQVUF�SFTPMVUJPO�UISPVHI�KVEJDJBSZ�JT�HFOFSBMMZ�B�UFEJPVT �MFOHUIZ�process and may take several years

UP�SFTPMWF��&WFO�UIPVHI �HMPCBMMZ �arbitration is a preferred mechanism

PG�EJTQVUF�SFTPMVUJPO��JO�*OEJB �UIF�arbitration mechanism is still evolving.

5IF�"SCJUSBUJPO�BOE�$PODJMJBUJPO�"DU �1996 was enacted to achieve the

UXJO�HPBMT�PG�JO�FYQFOTJWF�BOE�RVJDL�SFTPMVUJPO�PG�EJTQVUFT �CVU�UIF�HSPVOE�reality is far away from the target. One

of the underlying causes is that neither

the public nor the private sector in

India is enthusiastic about the idea of

"SCJUSBUJPO��5IJT�JT�NBJOMZ�EVF�UP�UIF�GBDU�that Arbitration awards are invariably

challenged in the court on account of

BNCJHVJUZ�BOE�MBDL�PG�FOGPSDFBCJMJUZ �BOE�UIFSF�JT�OP�ěYFE�UJNFMJOF�GPS�DPNQMFUJPO�of proceedings.�

A few initiatives that could improve the

EJTQVUF�SFTPMVUJPO�QSPDFTT�JO�*OEJB�

Strengthen existing arbitration laws:

5IFSF�JT�UIF�OFFE�UP�NPEJGZ�UIF�QSFTFOU�arbitration mechanism in a way that

makes it more effective and enforceable.

'VSUIFSNPSF �JOTUFBE�PG�IBWJOH�NVMUJQMF�BVUIPSJUJFT �POF�ěOBM�BQQFMMBUF�BVUIPSJUZ�such as an ‘Infrastructure Projects

5SJCVOBMĳ�OFFET�UP�CF�TFUĸVQ�GPS�settlement of these disputes.

Encourage institutional arbitration:

5IF�TFUUMFNFOU�PG�EJTQVUFT�UISPVHI�JOTUJUVUJPOBM�BSCJUSBUJPO �TVDI�BT�UIF�Construction Industry Arbitration Council

$*"$ �JT�CFUUFS�UIBO�BE�IPD�BSCJUSBUJPO��Institutional arbitration provides an

FTUBCMJTIFE�GPSNBU�XJUI�B�QSPWFO�SFDPSE �ensures impartial decision-making and

adherence to pre-established rules and

procedures.

Create Dispute Resolution Board (DRB)

to avoid disputes: DRBs are created

CZ�UIF�FYQSFTT�DPOTFOU�PG�UIF�FNQMPZFS�and the contractor to monitor the project

FYFDVUJPO�BU�WBSJPVT�TUBHFT�PG�DPNQMFUJPO��5IF�QSJNBSZ�GVODUJPO�PG�%3#T�JT�UP�monitor the progress of the project with

respect to contract requirements. In

case of any non compliance with respect

UP�UIF�DPOUSBDU �UIF�#PBSE�JNNFEJBUFMZ�interferes and suggests ways to resolve

the dispute.

However one of the ways to deal with

disputes is to avoid disputes. Many

disputes in the infrastructure sector could

be avoided if contract agreements are

NFUJDVMPVTMZ�ESBGUFE �UBLJOH�BMM�QSPCBCMF�costs and risks into consideration.

'VSUIFS �DMFBSMZ�EFěOJOH�UIF�SPMFT�BOE�responsibilities of all parties could help in

avoiding unnecessary misunderstandings.

03

04

Modify bidding criteria procedures

%FWFMPQ�SPCVTU�QSPDFTT�GPS�GBTU�BOE�FGěDJFOU�EJTQVUF�SFTPMVUJPO


3 Arbitration and Conciliation Act 1996, Vakilno1 website, http://www.vakilno1.com/ bareacts/arbitandonciliation/ArbitrationandConciliationAct-1996.htm, accessed 15 December 2012

5IF�TVSWFZ�SFTVMUT�JOEJDBUF�UIBU�lack of project management skills in

professionals working on infrastructure

QSPKFDUT�JT�JNQBDUJOH�FGěDJFOU�QSPKFDU�delivery. Indian project managers have

acquired project management skills

QSJNBSJMZ�UISPVHI�QBTU�FYQFSJFODFT�BOE�QSPKFDU�FYQPTVSFT��"MUIPVHI �B�SJDI�JOEVTUSZ�FYQFSJFODF�IFMQT�JO�HBJOJOH�PWFSTJHIU �JO�UPEBZĳT�SBQJEMZ�DIBOHJOH�XPSME�BOE�FWPMWJOH�UFDIOPMPHZ �UIFSF�JT�need to impart formal training to project

managers and regularly update their skills.

5SBJOJOH�XJMM�OPU�POMZ�IFMQ�NBOBHFST�JO�their day to day work but also equip them

to handle new challenges in the most

FGěDJFOU�XBZ��*O�PVS�QPJOU�PG�WJFX �UIJT�DPVME�CF�BDIJFWFE�JO�UISFF�XBZT�

Change curriculum to introduce

project management:�&EVDBUJPOBM�institutes in India are not giving much

importance to the project management

curriculum and in comparison to other

countries very few institutions in India

offer project management degree

QSPHSBNT��'PS�JOTUBODF �NPSF�UIBO��JOTUJUVUFT�JO�$IJOB�PGGFS�DPVSTFT�TQFDJěD�UP�QSPKFDU�NBOBHFNFOU �XIFSFBT�UIJT�number is less than 104�JO�*OEJB��5IVT �

it is important to introduce project

management in the curriculum of

FOHJOFFSJOH �NBOBHFNFOU�BOE�PUIFS�UFDIOJDBM�JOTUJUVUFT��(PWFSONFOU�DBO�IFMQ�JO�FYQFEJUJOH�UIF�QSPDFTT�CZ�QVTIJOH�the project management courses in the

(PWFSONFOU�JOTUJUVUFT�PG�OBUJPOBM�SFQVUF��0ODF�UIFTF�JOTUJUVUFT�NBLF�UIF�DIBOHF �PUIFST�BDSPTT�UIF�DPVOUSZ�BSF�FYQFDUFE�UP�follow.

Cooperation between industry and

educational institutions:�5IFSF�JT�B�need for greater degree of collaboration

between the industry and educational

institutions so as to reduce the

demand supply gap for trained project

management professionals. Industry

can help educational institutions

UISPVHI�DBQJUBM �QBSUJDJQBUF�JO�DVSSJDVMVN�EFWFMPQNFOU �QSPWJEF�GBDVMUZ�GPS�JOEVTUSZ�JOUFSGBDF �BOE�IFMQ�JO�JOUFSOTIJQ�BOE�QMBDFNFOUT��0O�UIF�PUIFS�IBOE �educational institutes would not only

IFMQ�JO�ěMMJOH�UIF�JODSFNFOUBM�EFNBOE�for project management professionals

but can also help in enhancing the

QSPKFDU�NBOBHFNFOU�TLJMMT�PG�UIF�FYJTUJOH�XPSLGPSDF �CZ�DPOEVDUJOH�PO�UIF�KPC�training.

Build in house academy for the project

management training: Infrastructure

JOEVTUSZ�DPVME�BEPQU�UIF�NPEFM�PG�*5�companies to meet the shortage of

TLJMMFE�QSPGFTTJPOBMT��.BOZ�*5�DPNQBOJFT�have developed in-house academy for

training their employees on key skills

needed for their day to day work. Indian

infrastructure industry can look to

SFQMJDBUF�B�TJNJMBS�NPEFM �XIFSF�JO�IPVTF�training can be conducted for newly

SFDSVJUFE�BOE�FYJTUJOH�FNQMPZFFT�UP�enhance their professional competencies.

05 Institutionalize project management training for professionals


4 “India lagging China in project management”, The Economic Times, 18 June 2010

5IPVHI�UIF�MBCPS�QSPEVDUJWJUZ�BOE�FEVDBUJPO�MFWFMT�BSF�SJTJOH �*OEJB�TUJMM�needs to improve the education and

USBJOJOH�RVBMJUZ �FTQFDJBMMZ�GPS�UIF�infrastructure sector. According to

8PSME�#BOL �UIF�WPDBUJPOBM�FEVDBUJPO�TUSFBN�JO�*OEJB�JT�RVJUF�TNBMM �FOSPMMJOH�MFTT�UIBO��QFSDFOU�PG�TUVEFOUT�BU�UIF�upper secondary level5��"MTP �7PDBUJPOBM�&EVDBUJPO�BOE�5SBJOJOH�7&5�TZTUFN�JT�not responding to the needs of the labor

NBSLFU �BT�MFTT�UIBO��QFSDFOU�PG�JUT�HSBEVBUFT�ěOE�FNQMPZNFOU6.

5P�DSFBUF�B�MBSHF�QPPM�PG�SFBEJMZ�FNQMPZBCMF�MBCPS�GPSDF �CPUI�(PWFSONFOU�and industry need to come together and

develop a mechanism to impart training

and develop skills.

Setting up of National Skill Development

$PSQPSBUJPO�/4%$ �B�1VCMJD�1SJWBUF�1BSUOFSTIJQ�111�OPO�QSPěU�PSHBOJ[BUJPO�to facilitate skill development in the

country is a step in right direction. NSDC

targets to enhance skills of 150 million

people by 20227��"MPOH�XJUI�UIJT �UIF�following two initiatives could help in

TPMWJOH�UIF�MBCPS�TDBSDJUZ�JO�UIF�DPVOUSZ�

Creating a National Board for

vocational education –�5IFSF�JT�B�OFFE�UP�EFWFMPQ�BO�PSHBOJ[BUJPO�UIBU�GPDVTFT�PO�WPDBUJPOBM�FEVDBUJPO��5IJT�PSHBOJ[BUJPO�should have the representation from

JOEVTUSZ �NJOJTUSZ �FEVDBUJPO�JOTUJUVUJPOT�BOE�/(0T�BOE�GPDVTFT�PO�

y developing a broad-based curriculum

for vocational education based on

TFDUPS�TQFDJěD�SFRVJSFNFOUT

y BXBSEJOH�EFHSFFT �EJQMPNBT�BOE�DFSUJěDBUFT�UP�TVDDFTTGVM�DBOEJEBUFT

y ensuring a close interaction between

industries and vocational institutes

y DSFBUJOH�B�MBSHF�QPPM�PG�RVBMJěFE�BOE�FGěDJFOU�GBDVMUZ�GPS�WPDBUJPOBM�DPVSTFT�

Developing skills of local people by

corporates –�'PS�FYBNQMF �XIJMF�UIF�land acquisition and regulatory approvals

QSPDFTTFT�BSF�JO�QSPHSFTT �DPNQBOJFT�could start imparting training to the local

people. So when the construction of

UIF�QSPKFDU�TUBSUT �UIFSF�JT�MBSHF�QPPM�of skilled people available locally. State

(PWFSONFOUT�DPVME�GBDJMJUBUF�UIJT�QSPDFTT�JO�UXP�XBZT��'JSTU �CZ�DSFBUJOH�BXBSFOFTT�among the local people about the

JNQPSUBODF�PG�CFJOH�TLJMMFE�BOE�TFDPOE �CZ�BMMPXJOH�DPNQBOJFT�UP�VTF�FYJTUJOH�JOGSBTUSVDUVSF�TVDI�BT�TDIPPM�QSFNJTFT�BGUFS�OPSNBM�TDIPPM�XPSLJOH�IPVST�UP�DPOEVDU�DMBTTFT�XPSLTIPQT��5IJT�BQQSPBDI�IBT�UIF�GPMMPXJOH�CFOFěUT�

y Creates large pool of locally available

skilled and employable people

y Less resistance from local people

GPS�MBOE�BDRVJTJUJPO �BT�UIFZ�XJMM�HFU�employment from this project

y 1SPWJEFT�BDDFTT�UP�MBCPS�GPSDF�CBTFE�PO�UIFJS�QFSGPSNBODF�XIJDI�DPVME�CF�developed further for plant operations.

06 Reform India’s Vocational Education and Training program to create a large pool of employable work force


5 World Bank report on vocational education and training system in India6 World Bank report on vocational education and training system in India7 National Skill Development Mission, Press Information Bureau, 16 August 2010

07 %FWFMPQ�FGěDJFOU�USBOTQPSU�BOE�MPHJTUJDT�TZTUFN�JO�UIF�DPVOUSZ�UP� enable faster project implementation

5SBOTQPSU�JOGSBTUSVDUVSF�JO�UIF�DPVOUSZ �UIPVHI�JNQSPWJOH �JT�OPU�BCMF�UP�LFFQ�UIF�pace with increasing logistics demand.

5P�TVTUBJO�UIF�(%1�HSPXUI�SBUF�PG��QFSDFOU�PWFS�UIF�OFYU�EFDBEF �UIFSF�is need to reform the India’s transport

and logistics sector. Our survey results

indicate that many projects suffer from

DPTU�BOE�TDIFEVMF�PWFSSVOT �EVF�UP�lack of good transport infrastructure

in the country. As mentioned by our

TVSWFZ�SFTQPOEFOUT �QPPS�IFBMUI�PG�SPBET �JOFGěDJFODZ�UP�DBSSZ�IFBWZ�MPBE �non availability of last mile connectivity

to project sites and high cost of

transportation are some of the factors

DSFBUJOH�IJOESBODFT�JO�TNPPUI�FYFDVUJPO�of the project.

Following steps could help in improving

the transport infrastructure in the

DPVOUSZ�

Expedite the construction of Dedicated

Freight Corridors (DFC) and create

new DFCs:��5IF�(PWFSONFOU�IBT�QMBOT�to increase the railways’ transportation

capacity by building high-speed and

high-capacity dedicated freight corridors.

5IFTF�DPSSJEPST�XPVME�GBDJMJUBUF�UIF�GBTUFS�NPWFNFOU�PG�GSFJHIU �FYQFDUFE�UP�reduce travel time by a third8 �FOBCMJOH�

B�TVCTUBOUJBMMZ�IJHIFS�MFWFM�PG�USBGěD�BOE�reduce transportation cost. Under phase

� �UIF�XPSL�PO�UXP�DPSSJEPST��8FTUFSO�%'$�BOE�&BTUFSO�%'$��TQBOOJOH�B�UPUBM�MFOHUI�PG�BCPVU��SPVUF�LN�JT�VOEFSXBZ��5IF�8FTUFSO�$PSSJEPS�XJMM�traverse the distance from Dadri to

.VNCBJ �QBTTJOH�UISPVHI�UIF�4UBUFT�PG�%FMIJ �)BSZBOB �3BKBTUIBO �(VKBSBU�BOE�.BIBSBTIUSB��XIJMF�UIF�&BTUFSO�$PSSJEPS�will start from Ludhiana in Punjab and

QBTT�UISPVHI�UIF�4UBUFT�PG�)BSZBOB �6UUBS�Pradesh and Bihar before terminating at

Dankuni in West Bengal9.

5P�QSPNPUF�JOWFTUNFOU�BOE�DBQJUBMJ[F�UIF�railway connectivity along the western

DPSSJEPS �(PWFSONFOU�JT�TFUUJOH�VQ�%FMIJ�.VNCBJ�*OEVTUSJBM�$PSSJEPS�%.*$ �a mega investment project of USD 90

CJMMJPO��6OEFS�UIJT�QSPKFDU �(PWFSONFOU�envisages to develop 9 Investment

3FHJPOT�XJUI�BSFB�TQSFBE�PG�BU�MFBTU��TR��LN�BOE��*OEVTUSJBM�"SFBT�XJUI�BSFB�TQSFBE�PG�BU�MFBTU��TR��LN��'PS�UIF�ěSTU�QIBTF ��JOWFTUNFOU�SFHJPOT�BOE��JOEVTUSJBM�BSFBT�BSF�TIPSUMJTUFE��5IFTF�regions are across the States of Uttar

1SBEFTI �)BSZBOB �3BKBTUIBO �(VKBSBU�BOE�Maharashtra10.

5IPVHI�UIFTF�JOJUJBUJWFT�BSF�JO�UIF�SJHIU�EJSFDUJPO �UIF�DVSSFOU�QSPHSFTT�PO�UIFTF�mega projects is way behind targets.

(PWFSONFOU�OFFE�UP�QSJPSJUJ[F�UIFTF�projects and take all possible steps to

remove bottlenecks for timely completion

PG�QSPKFDUT��'VSUIFS �(PWFSONFOU�DPVME�start planning for at least two additional

DFCs – Delhi-Chennai and Chennai-

Mumbai.

Increase national highway networks

and improve road maintenance

program:�*O�*OEJB �SPBET�BSF�UIF�QSJNBSZ�NPEF�PG�USBOTQPSU��5IFZ�DBSSZ�BSPVOE��percent of India’s total freight . For many

large infrastructure projects particularly

TJUVBUFE�JO�UIF�IJOUFSMBOE �SPBET�BSF�UIF�only transport mode for equipment and

construction material.11

5IFSF�JT�BO�VSHFOU�OFFE�UP�GPDVT�PO�VQHSBEJOH�BOE�CSPBEFOJOH�PG�FYJTUJOH�national highways and adding new

SPBET�VOEFS�IJHIXBZ�DBUFHPSZ��'VSUIFS �(PWFSONFOU�TIPVME�GPDVT�PO�DSFBUJOH�a systematic road maintenance plan

UP�JNQSPWF�SPBET�FGěDJFODZ �JODSFBTF�average speed and reduce transportation

cost.


8 Freight corridor back on track, Times of India, dated November 16, 20119 Dedicated Freight Corridor Corporation of India (www.dfccil.org)10 Delhi Mumbai Industrial Corridor (www.dmic.co.in)11 India Transport Sector, World Bank

.BOZ�4UBUF�(PWFSONFOUT�BOE�departments maintain different

empanelled list of vendors for their

respective projects and services. For

JOGSBTUSVDUVSF�QSPKFDUT �XIFSF�NPTU�PG�UIF�RVBMJGZJOH�DSJUFSJB�BSF�TBNF �JU�XPVME�CF�BQQSPQSJBUF�UP�DSFBUF�BO�FYIBVTUJWF�list of empanelled vendors at central

(PWFSONFOU�MFWFM��5IJT�MJTU�XPVME�IBWF�information about the vendor credentials

TVDI�BT�UPUBM�ZFBS�PG�FYQFSJFODF �UZQF�BOE�WBMVF�PG�QSPKFDUT�FYFDVUFE �ěOBODJBM�DBQBCJMJUJFT �QBTU�QFSGPSNBODF�FUD��"EEJUJPOBMMZ �UIFSF�JT�OFFE�UP�JOUSPEVDF�the knowledge of project management

EJTDJQMJOF �BT�POF�PG�UIF�DSFEFOUJBMT�UP�ensure that vendor has the complete

knowledge of project management

UFDIOJRVFT�BOE�CFTU�QSBDUJDFT �5IF�information provided by the vendors

TIPVME�UIFO�CF�WFSJěFE�CZ�B�DFOUSBM�FOUJUZ�CFGPSF�SFHJTUFSJOH�UIFN�JO�UIF�MJTU��"MTP �there should be a provision of updating

UIJT�MJTU�QFSJPEJDBMMZ�TBZ�RVBSUFSMZ�PS�TFNJ�BOOVBMMZ�UP�JODMVEF�OFX�WFOEPST�BOE�removing the non-performing ones.

5IFSF�BSF�TFWFSBM�BEWBOUBHFT�PG�IBWJOH�BO�FNQBOFMMFE�MJTU�PG�WFOEPST�

y Create a large pool of registered

vendors to choose from across the

country

y Reduce time in awarding the

contracts as awarding a contract to

the empanelled list vendor doesn’t

require background check as the

vendor’s credentials are already

WFSJěFE�CZ�UIF�DFOUSBM�BHFODZ��5IJT�could save an average of 2-4 months

in awarding the contract

y Reduce possibility of forming

cartel by vendors as large number

of vendors would be available for a

particular work

y Pressurize vendors to excel in

projects as poor performance on a

single project could cost them the

delisting from the central empanelled

list.

5SBEJUJPOBMMZ �QSPKFDUT�GPS�EFWFMPQNFOU�PG�3PBET �"JSQPSUT �3BJMXBZT�BOE�Ports have been funded by State and

$FOUSBM�(PWFSONFOUT��)PXFWFS �EVF�UP�CVEHFUBSZ�DPOTUSBJOUT �UIF�(PWFSONFOUT�is looking at increased participation

from the private sector for transport

JOGSBTUSVDUVSF�QSPKFDUT��"MUIPVHI �UIF�1VCMJD�1SJWBUF�1BSUOFSTIJQ�111�NPEFM�IBT�FWPMWFE�JO�SFDFOU�UJNFT �QSJWBUF�investment has fallen short of the

UBSHFUT��'PS�JOTUBODF �BT�QFS�UIF�NJE�UFSN�BQQSBJTBM�PG�&MFWFOUI�'JWF�:FBS�1MBO �JO�road segment private sector invested

BSPVOE�*/3�� DSPSF�GSPN�"QSJM��UP�"VHVTU�� XIJDI�XBT�XFMM�CFMPX�UIF�QMBOOFE��UBSHFU�PG�*/3�� DSPSF��Private road developers depend largely

on highway toll collections as a medium

UP�SFDPWFS�UIFJS�JOWFTUNFOUT��)PXFWFS �

toll collections in India are fraught with

challenges such as revenue leakages

which are proving to be a major deterrent

for private investment in roads.12

Following steps could help in promoting

PPP investment in the infrastructure

QSPKFDUT��

Create a detailed policy for

implementing PPP projects: 5IFSF�is need to create a detailed PPP policy

DMFBSMZ�EFěOJOH�UIF�TFDUPST�PQFO�UP�111T �the preferred scheme for each sector and

UIF�TVQQPSU�BWBJMBCMF�GSPN�(PWFSONFOU�BHFODJFT��'VSUIFS �UIJT�QPMJDZ�TIPVME�aim to bring more transparency in the

CJEEJOH�BOE�BXBSEJOH�QSPDFTTFT �XIJDI�XPVME�CPPTU�DPOěEFODF�BOE�JODSFBTF�participation of private investors in the

infrastructure sector.

Ensure adequate returns to private

players:�5BSJGGT�GPS�NPTU�PG�UIF�infrastructure projects are regulated and

QSJWBUF�QMBZFST�BSF�OPU�BMMPXFE�UP�ěY�PS�BEKVTU�UIFN��5P�IFMQ�FOTVSF�BEFRVBUF�returns to private players on their invested

DBQJUBM �UIFSF�JT�OFFE�UP�EF�SFHVMBUF�UBSJGGT�GPS�TQFDJěD�JOGSBTUSVDUVSF�TFDUPST�XJUI�necessary safeguards.

Develop long term debt market for

infrastructure projects: PPP design

and policy should provide adequate

QSPUFDUJPO�UP�EFCU�GVOEJOH �TP�UIBU�NPSF�BOE�NPSF�ěOBODJBM�JOTUJUVUJPO�XJMMJOH�to lend their money to PPP projects.

'VSUIFS �JNQSPWJOH�UIF�IFBMUI�PG�DPVOUSZĳT�long–term bond market and promotion of

infrastructure bonds could result in better

participation from foreign investors.

08

09

Create an exhaustive list of empanelled vendor at Central level for infrastructure projects

Promote Public Private Partnership (PPP) in Infrastructure sector


12 Mid-term appraisal of Eleventh Five Year Plan, Planning Commission

10 Promote joint evaluation of project design for value engineering

5IF�QSPKFDU�NBOBHFNFOU�UFBNT�lack value engineering approach

leaving minimal opportunities for

UIF�DPOUSBDUPST�UP�VUJMJ[F�BOZ�WBMVF�FOHJOFFSJOH�PQQPSUVOJUZ��.PSFPWFS �NPTU�contractors and companies lack adequate

PSHBOJ[BUJPOBM�TFU�VQ�UP�UBLF�BEWBOUBHF�PG�WBMVF�FOHJOFFSJOH�DPODFQUT��"MTP �UIF�FYJTUJOH�TZTUFN�PG�JUFN�SBUF�DPOUSBDUT�does not motivate the contractors

enough to employ value engineering

approach as they do not get any incentive

for the savings.

1SPKFDU�PXOFST �XIP�DPOUSPM�NPTU�PG�UIF�engineering decisions in projects based

PO�JUFN�SBUF�DPOUSBDUT �TIPVME�MPPL�UP�engage the contractors for joint evaluation

of project design. Contractors need to

set-up dedicated value engineering teams

DPNQSJTJOH�PG�FYQFSUT�XJUI�TJHOJěDBOU�FYQFSJFODF�JO�EFTJHO �FOHJOFFSJOH�BOE�QSPDVSFNFOU��5IF�QSPKFDU�PXOFST�BOE�the contractors should also attempt

to collaborate with global engineering

institutes and companies so as to employ

UIF�MBUFTU�EFTJHOJOH�FYQFSUJTF�JO�UIF�project.

Project owners and contractors should

DMFBSMZ�EFěOF�UIF�QFSGPSNBODF�JOEJDBUPST�GPS�NFBTVSJOH�UIF�FGěDJFODZ�PG�UIF�WBMVF�FOHJOFFSJOH�UFBN��*U�DPVME�CF �GPS�JOTUBODF �UIF�NFBTVSF�PG�UIF�QFSDFOUBHF�cost saving at the various stages of

project implementation. Based on the

performance of the value engineering

UFBN �UIFZ�TIPVME�CF�PGGFSFE�B�TIBSF�in the estimated cost saving or other

incentives to drive them for greater

adoption of value engineering concepts.


09SE

CT

ION


Case studies – A deep dive into projects

5P�VOEFSTUBOE�UIF�QSPKFDU�TQFDJěD�DIBMMFOHFT�exhaustively, we visited few project sites,

interviewed several people across levels

including project managers, contractors and

vendors, etc. To provide a holistic overview of

infrastructure industry, these projects have been

selected from different sectors, at different stage

of implementation and experiencing different

magnitude of schedule and cost overruns.


y /51$ĳT�MBSHFTU�UIFSNBM�QPXFS�TUBUJPO

y "OUJDJQBUFE�QSPKFDU�DPTU�JT�XJUIJO�UIF�CVEHFU�BOE�BQQSPYJNBUFMZ�UXP�NPOUIT�EFMBZ�JT�FYQFDUFE�JO�UIF�QSPKFDU�EFMJWFSZ

y 5IF�QSPKFDU�IBT�B�EFEJDBUFE�NPOJUPSJOH�BOE�SFQPSUJOH�UFBN�BU�TJUF�Ĺ�FOTVSJOH�immediate corrective actions in case of any slippages

y Delayed delivery of critical equipments and poor site connectivity are major reasons for project delay

y %BJMZ�NPOJUPSJOH�PG�DSJUJDBM�QBUI�QSPHSFTT �EJSFDU�QBZNFOU�UP�TVC�DPOUSBDUPST�BOE�increase use of railways for equipment transport are some techniques used by /51$�UP�EF�CPUUMFOFDL�UIF�QSPKFDU�

Introduction

7JOEIZBDIBM�QPXFS�QSPKFDU�JT�UIF�MBSHFTU�UIFSNBM�QPXFS�TUBUJPO�PG�/51$2 and is located

JO�4JEIJ�EJTUSJDU �.BEIZB�1SBEFTI��5IF�QMBOU�IBT�BO�FYJTUJOH�DBQBDJUZ�PG�� .8�UIFSNBM�XJUI��Y��.8�BOE��Y��.8�VOJUT��5IF�DPBM�JT�TPVSDFE�GSPN�OFBSCZ�/$-�NJOFT�BOE�USBOTQPSUFE�UISPVHI�.FSSZ�(P�3PVOE�.(3�USBOTQPSUBUJPO�TZTUFN��LNT�MFOHUI�XJUI�EPVCMF�USBDL�PXOFE�BOE�PQFSBUFE�CZ�/51$��/51$�JT�DVSSFOUMZ�FYFDVUJOH�B�CSPXO�ěFME�FYQBOTJPO�QSPKFDU�BU�7JOEIZBDIBM�QMBOU�XJUI�BEEJUJPO�PG��Y��.8�UIFSNBM�QPXFS�QMBOUT��5IF�CPJMFS�UVSCJOF�HFOFSBUPS�#5(�DPOUSBDU�JT�HJWFO�UP�#)&-�XIJMF�#01�JT�CFJOH�FYFDVUFE�CZ�WBSJPVT�DPOUSBDUPST�JO�TQMJU�QBDLBHF�NPEF��

Current project status

Originally planned Anticipated/ Revised Overrun

Project completion date

October-2012 December-2012 2 Months

Project cost (INR Crore)

� �� NIL

4PVSDF��,1.(�JO�*OEJB�ĸ�1.*�4VSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVO ��CBTFE�PO�JOUFSBDUJPO�XJUI�TVSWFZ�respondents

Following are the key details of project

Capacity under installation ��Y��.8

Location 4JEIJ �.BEIZB�1SBEFTI

Coal source NCL mines

Water source%JTDIBSHF�DBOBM�PG�4JOHSBVMJ�4VQFS�5IFSNBM�1PXFS�Station

Investment approval ��+BOVBSZ��

4PVSDF��,1.(�JO�*OEJB�ĸ�1.*�4VSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVO ��

CASE STUDY 1 NTPC Vindhyachal Stage IV1

FACTS


1 KPMG in India- PMI Survey on cost and schedule overrun, 20122 Coal Based Power Stations, NTPC Website, accessed 26 June 2012

5IF�QSPKFDU�FYFDVUJPO�BU�TJUF�JT�JO�GVMM�TXJOH��5IF�DPOUSBDUPST�IBWF�CFFO�NPCJMJ[FE�JO�GVMM�TUSFOHUI�BOE�NBUFSJBM�EFMJWFSZ�JT�BMTP�PO�HPJOH��5IF�QSPKFDU�JT�JO�JUT�MBTU�MFH�PG�FYFDVUJPO�where the systems are nearing completion.

5IF�QIZTJDBM�QSPHSFTT�PG�UIF�QSPKFDU�JT�MJUUMF�CFIJOE�JUT�PSJHJOBM�TDIFEVMF�BOE�JT�FYQFDUFE�UP�CF�EFMBZFE�CZ�BSPVOE�UXP�NPOUIT��)PXFWFS �HJWFO�UIF�DPNQMFYJUZ�BOE�TJ[F�PG�UIF�QSPKFDU �BOE�JG�XF�DPNQBSF�UIJT�QSPKFDU�XJUI�PUIFS�JOGSBTUSVDUVSF�QSPKFDUT�PG�TBNF�TDBMF�BDSPTT�TFDUPST �7JOEIZBDIBM�FYQBOTJPO�XPVME�CF�POF�PG�UIF�CFTU�NBOBHFE�QSPKFDUT��#FMPX�BSF�UIF�LFZ�NJMFTUPOFT�XJUI�UIFJS�PSJHJOBM�SFWJTFE�DPNQMFUJPO�EBUF�

5IF�BCPWF�FTUJNBUFE�EBUFT�BSF�QSPWJEFE�CZ�UIF�1�4�UFBN��8IJMF�UIF�QSPKFDU�UFBN�JT�PQUJNJTUJD�PG�BDIJFWJOH�TZODISPOJ[BUJPO�BT�QFS�TDIFEVMFE�EBUF �CBTFE�PO�UIF�QSPKFDU�TUBUVT�BU�UIF�UJNF�PG�TJUF�WJTJU�JO�%FDFNCFS�� UIF�UBSHFU�BQQFBST�EJGěDVMU�UP�BDIJFWF��0O�'JOBODJBM�GSPOU �BDDPSEJOH�UP�1�4�)FBE �UIF�QSPKFDU�JT�XJUIJO�CVEHFU�BOE�OP�DPTU�PWFSSVOT�BSF�FYQFDUFE�

Sr. No.

Milestone

Unit 1 Unit 2

Plan (as per L2 schedule)

Original/Revised

expected completion

Actual/ex-pected delay (months)

Plan (as per L2 Schedule)

Original/Revised expected completion

Actual/ex-pected delay (months)

1#&4�CPJMFS�&SFDUJPO�TUBSU

Nov-09 Mar-10 5 Mar-10 Jun-10 �

2 #%-�#PJMFS�%SVN�-JGUJOH Apr-10 Jun-10 2 Aug-10 Jan-11 5

� )5�)ZESP�5FTU Mar-11 Jun-11 � Jul-11 Dec-11 5

4 �#-6�#PJMFS�-JHIU�6Q Sep-11 Nov-11 2 Jan-12 May-12 4

5 4#�4UFBN�#MPXJOH Nov-11 Jan-11 2 Mar-12 Jun-12 �

6$&4�$POEFOTFS�&SFDUJPO�4UBSU

Sep-10 Oct-10 1 Jan-11 Jun-11 5

7 5(&4�5(�&SFDUJPO�4UBSU Nov-10 Dec-10 1 Mar-11 Jul-11 4

8 5(#6�5VSCJOF�#PY�VQ Oct-11 Dec-11 2 Feb-12 Jun-12 4

9 5(0'� Dec-11 Jan-12 1 Apr-12 Jun-12 2

10 4ZODISPOJ[BUJPO Feb-12 Feb-12 - Jun-12 Aug-12 2

11 Full Load Mar-12 - Oct-12 -

/PUF��5IF�BCPWF�TUBUVT�JT�BT�PO�%FDFNCFS��FYQFDUFE�UJNFMJOFT�NJHIU�IBWF�DIBOHFE

4PVSDF��1.*�,1.(�TVSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVO��CBTFE�PO�JOUFSBDUJPO�XJUI�TVSWFZ�SFTQPOEFOUT


Project Monitoring & Reporting system in place at the project site

5IF�QSPKFDU�UFBN�IBT�B�EFEJDBUFE�monitoring and reporting team at site

VOEFS�)FBE�ĸ�1MBOOJOH��4ZTUFNT�1�4 �which reports directly in to the Project

1MBOOJOH��.POJUPSJOH�(SPVQ�11.(�BU�/51$�DPSQPSBUF��5IF�TUSVDUVSF�PG�Planning & Systems team is shown on

UIF�SJHIU�

5IF�1�4�UFBN�JOUFSBDUT�XJUI�QSPKFDU�UFBN�and contractors on daily basis to collect

information on project progress and

updates reports which are circulated to

/51$�)FBE�0GěDF �3FHJPOBM�PGěDFT�BOE�the project team. Following reports are

generated for the purpose of reporting

QSPKFDU�QSPHSFTT�

y Daily Progress Report (DPR):�5IF�DPR contains package-wise progress

as against monthly planned quantities.

5IF�SFQPSU�JT�HFOFSBUFE�CZ�SFTQFDUJWF�package engineers and submitted

UP�1�4�UFBN �XIJDI�DPNQJMFT�UIF�SFQPSU�GPS�DJSDVMBUJPO��5IF�%13�BMTP�has separate section for work done in

DSJUJDBM�QBDLBHFT �XIJDI�JT�BMTP�TFOU�UP�users via SMS.

y Weekly Progress Report (WPR):

WPR is package-wise report on

weekly work done as against monthly

QMBO��5IF�SFQPSU�DPOUBJOT�EFUBJMFE�information on work completed on

critical packages.

y Monthly Progress Report:�5IF�monthly progress report contains

detailed project status report

containing information on the project

QSPHSFTT �NJMFTUPOFT�DPNQMFUFE�BOE�UBSHFU�DPNQMFUJPO�GPS�UIF�QSPKFDU��5IJT�SFQPSU�JT�HFOFSBUFE�CZ�11.(�UFBN�JO�/51$�IFBE�PGěDF�

Reasons for project delay

While an enterprise-level risk

JEFOUJěDBUJPO�BOE�NBOBHFNFOU�FYFSDJTF�XBT�DPOEVDUFE�GPS�/51$ �GPSNBM�FYFSDJTF�GPS�QSPKFDU�MFWFM�SJTL�JEFOUJěDBUJPO�JT�OPU�carried out. No formal system of risk

QMBOOJOH �NJUJHBUJPO�BOE�NPOJUPSJOH�JT�JO�place at the project level. Following are

UIF�LFZ�SFBTPOT�SJTLT�GPS�QSPKFDU�EFMBZ �BT�JEFOUJěFE�CZ�UIF�QSPKFDU�UFBN�EVSJOH�POF�UP�POF�EJTDVTTJPO�

y Material Delivery from BHEL:

%FMBZFE�TVQQMZ�PG�#5(�NBUFSJBM�CZ�#)&-�IBT�CFFO�B�NBKPS�CPUUMFOFDL�in progress and resulted in delay of

critical milestones. Due to limited

NBOVGBDUVSJOH�DBQBDJUZ �#)&-�DPVME�not meet the supply schedule of

various concurrent projects under

FYFDVUJPO�CZ�/51$�BT�XFMM�BT�PUIFS�State utilities. Due to spurring

JOEVTUSJBM�BDUJWJUJFT �TFWFSBM�DPNQBOJFT�IBWF�BOOPVODFE�HSFFOěFME�BOE�CSPXOěFME�UIFSNBM�QPXFS�QMBOUT �leading to a wide gap in demand and

supply of power plant equipments.

'VSUIFS �#)&-�IBE�UP�EFQFOE�PO�MJNJUFE�BWBJMBCMF�WFOEPST�HMPCBMMZ �XIP�NBOVGBDUVSF�JOEVTUSJBM�DBTUJOHT �forging and piping materials for power

plant equipments. Due to heavy order

CPPLJOHT �WFOEPST�PG�#)&-�DPVME�OPU�honor their commitments in supplying

UIF�DSJUJDBM�SBX�NBUFSJBMT�UP�#)&-�and this in turn severely affected the

manufacturing and supply schedule.

5IJT�IBT�MFE�UP�TMJQQBHFT�JO�BDIJFWJOH�critical milestones and resulted in

EFMBZ�JO�VOJU�DPNNJTTJPOJOH��'VSUIFS �TJODF�(PWFSONFOU�JT�JOWPMWFE�GSPN�CPUI�TJEFT �/51$�DPVMEOĳU�JNQPTF�QFOBMUZ�PO�#)&-��

y Site connectivity:�5IF�TJUF�JT�OPU�very well connected with major

DJUJFT �XIJDI�FYQPTFT�UIF�QSPKFDU�UP�logistics and transport related issues.

5IFSF�JT�IVHF�WFIJDVMBS�USBGěD�PO�UIF�roads connecting to the plant site

EVF�UP�QSPYJNJUZ�UP�/$-�NJOFT�BOE�PUIFS�JOEVTUSJBM�BSFB��5IVT�QPPS�SPBE�DPOOFDUJWJUZ�BOE�IFBWZ�USBGěD�MFBE�UP�longer transportation time affecting

the progress of the work.

y Contractor Default:�/51$�JT�FYFDVUJOH�UIF�QSPKFDU�CZ�TQJMU�QBDLBHF�mode and there are several small

and big contractors that are providing

material and services for the project.

5IFSF�JT�BMXBZT�B�SJTL�PG�EFGBVMU�CZ�one contractor that can lead to overall

EFMBZ�JO�QSPKFDU��5IFSF�IBWF�CFFO�JOTUBODFT�JO�QBTU�JO�/51$�QSPKFDU�where the contractors had backed out.

y Project Integration:�5IF�QSPKFDU�JT�CFJOH�FYFDVUFE�JO�TQMJU�QBDLBHF�NPEF�and hence the risk of integrating

QSPKFDU�BDUJWJUJFT�DPNFT�PO�/51$��Individual contractors will perform

their piece of work and will be

responsible for completing their

scope only. Any issues relating to

coordination between activities of two

contractors and ensuring performance

PG�UIF�QMBOU�BT�B�XIPMF�MJFT�XJUI�/51$�

DGM, P&S

Sr. Manager

Dy. Manager Dy. Manager Dy. Manager Sr. Engineer

Sr. Manager


4PVSDF��,1.(�JO�*OEJB�ĸ�1.*�4VSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVO ��

Measures taken by NTPC to de-bottleneck project

1. /51$�IFMQFE�UIFJS�DPOUSBDUPST�JO�FBTJOH�PVU�UIFJS�JOUFSOBM�DBTI�ĜPX�QPTJUJPOT��CZ�FJUIFS�NBLJOH�QBZNFOUT�directly to their sub-contractors or at

times giving them advance payments.

5IFTF�QBZNFOUT�BSF�TFUUMFE�BHBJOTU�the contractor bills and are helpful in

NBJOUBJO�UIF�DPOTUSVDUJPO�QBDF �UIVT�avoiding delays.

2. 5P�PWFSDPNF�MPHJTUJD�JTTVFT�SFMBUFE�UP�SPBE�USBOTQPSU �/51$�SFMJFE�PO�railways to transport its material.

'VSUIFS �UP�NBLF�SBJMXBZ�NPEF�FDPOPNJDBM �/51$�DPOTPMJEBUFE�UIF�supplies of its different contractors

BU�POF�QMBDF �TVGěDJFOU�GPS�B�GVMM�MPBE�USBJO��5IFTF�USBJOT�NBZ�FJUIFS�DPOUBJO�the requirements of one plant or

nearby multiple plants. If these trains

IBWF�TVQQMJFT�GPS�PUIFS�QMBOUT�BT�XFMM �it is then transported to designated

TJUF�FJUIFS�UISPVHI�SPBE�PS�SBJMXBZT�JG�UIFSF�JT�DPOOFDUJWJUZ�

��/51$�IBT�B�EFUBJMFE�QSPKFDU�monitoring and reporting system in

place. Projects are monitored at micro

MFWFM �FOBCMJOH�FBSMZ�JEFOUJěDBUJPO�PG�any slippage and ensuring immediate

corrective action.


y 5IF�QSPKFDU�JOWPMWFT�DBQBDJUZ�FYQBOTJPO�PG�POF�PG�*OEJBĳT�MBSHFTU�PQFO�DBTU�DPBM�mine

y -BUFTU�UFDIOPMPHJFT�TIPWFM�EVNQFS�DPNCJOBUJPO �TVSGBDF�NJOFST�BSF�EFQMPZFE�UP�SFNPWF�PWFSCVSEFO��5IFTF�UFDIOPMPHJFT�BSF�FOWJSPONFOU�GSJFOEMZ�BOE�NJOJ-NJ[F�SFRVJSFNFOUT�GPS�CMBTUJOH

y )JHI�DPTU�PG�MBOE�BDRVJTJUJPO �MBDL�PG�FYQFSJFODF�JO�BXBSEJOH�HMPCBM�DPOUSBDUT�and delay in getting regulatory approvals are major reasons for cost and time overruns

y 5P�FYQFEJUF�UIF�MBOE�BDRVJTJUJPO�BOE�SFHVMBUPSZ�BQQSPWBM�QSPDFTTFT �QSPKFDU�UFBN�has proactively prepared employment proposals and revised compensation ěHVSFT��'VSUIFS�UIF�UFBN�IBT�QSPQPTFE�UP�PVUTPVSDF�3�3�BDUJWJUJFT�

(FWSB�0QFO�$BTU�#MPDL�0$1�JT�MPDBUFE�JO�UIF�TPVUI�DFOUSBM�QBSU�PG�,PSCB�$PBMěFME�in Korba District of Chhattisgarh. It has an area of about 19 sq. km. and is the largest

open cast coal mine in India1��5IF�QSPKFDU�VOEFS�DPOTJEFSBUJPO�JT�UIF�DBQBDJUZ�FYQBOTJPO�QSPKFDU�GSPN�BO�FYJTUJOH��NJMMJPO�UPOOFT�QFS�ZFBS�NUQB�UP��NUQB�BOE�GVSUIFS�UP��NUQB��*OJUJBMMZ �XIFO�UIF�FYQBOTJPO�XBT�FOWJTBHFE�GSPN��NUQB�UP��NUQB �UIF�UBSHFU�DPNQMFUJPO�EBUF�GPS�UIJT�FYQBOTJPO�XBT�.BSDI��#FGPSF�UIJT�FYQBOTJPO�DPVME�IBWF�CFFO�BDIJFWFE �BQQSPWBM�GPS�TVCTFRVFOU�FYQBOTJPO�GSPN��NUQB�UP��NUQB�XBT�SFDFJWFE�BOE�UIF�NJMFTUPOFT�XFSF�SFWJTFE�GPS�B�DPNQMFUJPO�EBUF�PG�.BSDI��5IF�EFMBZT�UIBU�XFSF�BUUSJCVUBCMF�UP��NUQB�XFSF�CFJOH�BCTPSCFE�JO�UIF�FYQBOTJPO�GSPN��NUQB�UP��NUQB��5IVT �BT�QFS�UIF�DVSSFOU�QSPKFDU�QSPHSFTT �UIFSF�JT�OP�TDIFEVMF�EFMBZ��*O�UIJT�DBTF�TUVEZ �XF�IBWF�QSJNBSJMZ�GPDVTFE�PO�UIF��NUQB�FYQBOTJPO�QIBTF�


Expansion capacity'SPN��NUQB�UP��NUQB�BOE�GSPN��NUQB�UP��mtpa

Location ,PSCB �$IIBUUJTHBSI

Land Requirement 4184.5 Ha

Investment approval Date+VMZ��NUQB

+VOF��NUQB

Project cost*/3�� DSPSF��NUQB

*/3�� DSPSF��NUQB

Target completion.BSDI��NUQB

.BSDI��NUQB


CASE STUDY 2 GEVRA Expansion OCP (SECL)

FACTS


1 Mineral Resources of Korba, Official website of Korba district, http://korba.nic.in/ kwMines.htm

Background and current status

(FWSB�NJOF�QSPKFDU�SFQPSU�XBT�QSFQBSFE�CZ�$FOUSBM�.JOF�1MBOOJOH��%FTJHO�*OTUJUVUF�-JNJUFE�$.1%J�JO��XJUI�JOJUJBM�DBQBDJUZ�PG��NUQB��'JSTU�FYQBOTJPO�QMBO�XBT�QSFQBSFE�JO�.BSDI��GPS�BO�BOOVBM�QSPEVDUJPO�VQUP��NUQB��*O�� B�TDIFNF�for augmentation of production by 2 mtpa was prepared and sanctioned by Coal India

-JNJUFE�$*-�CPBSE��+VMZ��*O�� 4&$-�HPU�UIF�BQQSPWBM�GPS�FYQBOEJOH�UIF�NJOF�DBQBDJUZ�GSPN��NUQB�UP��NUQB��0O��.BSDI�� (FWSB�NJOF�QSPEVDFE�� UPOOFT�PG�DPBM �UIF�IJHIFTU�RVBOUJUZ�PG�DPBM�FWFS�QSPEVDFE�CZ�BOZ�NJOF�PS�DPBMěFME�JO�*OEJB�PO�B�TJOHMF�EBZ��*O�� JU�XBT�EFDJEFE�UP�GVSUIFS�JODSFBTF�UIF�NJOF�DBQBDJUZ�GSPN��NUQB�UP��NUQB��

"T�PO�"QSJM�� (FWSB�NJOF�IBT�UIF�NJOFBCMF�SFTFSWFT�PG��.5 �XJUI�BO�FYQFDUFE�MJGF�PG��ZST�BOE�NBYJNVN�RVBSSZ�EFQUI�PG��NFUFST��1SFTFOU�EFQUI�PG�XPSLJOHT�JT�BCPVU��NFUFST�BHBJOTU�BO�VMUJNBUF�QMBOOFE�EFQUI�PG��NFUFST �BT�QFS�TBODUJPOFE�QSPKFDU�SFQPSU�13��

Need for expansion from 25 mtpa to 35 mtpa

*O�.BZ�� UIF�EFNBOE�PG�DPLJOH�DPBM�GPS�&MFWFOUI�1MBO�XBT�FTUJNBUFE�BU��.5�XIFSFBT�JOEJHFOPVT�TVQQMZ�XBT�FTUJNBUFE�BU��.5 �UIVT�MFBWJOH�B�TIPSUGBMM�PG��.5��5P�NFFU�UIJT�EFěDJU �$*-�IBT�GPSNVMBUFE�BO�FNFSHFODZ�DPBM�QSPEVDUJPO�QMBO�BOE�(FWSB�0QFO�$BTU�XBT�JEFOUJěFE�BT�POF�PG�UIF�QSPKFDUT�JO�FNFSHFODZ�DPBM�production plan.

Gevra mine capacity expansion plan

Source: KPMG in India – PMI Survey on cost and schedule overrun, 2012; based on interaction with survey respondents


Land Requirement

5IF�UPUBM�MBOE�SFRVJSFNFOU�JODMVEJOH�UIF�'PSFTU�-BOE�JO�4BGFUZ�[POF�GPS�&YQBOTJPO�UP��NUQB�BT�QFS�UIF�1SPKFDU�3FQPSU�13�XBT�� )B��5IF�MBOE�BDRVJSFE�BHBJOTU�UIF�13�JT�� )B �UIVT�IBWJOH�B�TIPSUGBMM�PG��)B��'VSUIFS �UIFSF�JT�B�QMBOOFE�DBQBDJUZ�FYQBOTJPO�UP��NUQB �GPS�XIJDI��)B�PG�BEEJUJPOBM�MBOE�JT�SFRVJSFE��5IVT �UIF�UPUBM�MBOE�SFRVJSFNFOU�JT�� IB�PVU�PG�XIJDI�POMZ��QFSDFOU�JT�BDRVJSFE2��5IF�TVNNBSZ�PG�MBOE�SFRVJSFNFOUT�BSF�HJWFO�CFMPX��

Technology

(FWSB�PQFODBTU�QSPKFDU�JT�CFJOH�XPSLFE�CZ�PQFODBTU�NFUIPET�EFQMPZJOH�TIPWFM�EVNQFS�DPNCJOBUJPO�BOE�)&..�IFBWZ�FBSUI�NPWJOH�NBDIJOFSZ�DPOěHVSBUJPO��4VSGBDF�NJOFS�UFDIOPMPHZ�JT�VTFE �XIJDI�EPFT�OPU�SFRVJSF�ESJMMJOH �CMBTUJOH��DSVTIJOH�PG�DPBM��'VSUIFS �UIJT�UFDIOPMPHZ�QSPWJEFT�DPBM�PG�UIF�SFRVJSFE�TJ[FT��

5IJT�UFDIOPMPHZ�IBT�GPMMPXJOH�BEWBOUBHFT�BHBJOTU�UIF�DPOWFOUJPOBM�NFUIPE��

y &OWJSPONFOU�GSJFOEMZ�UFDIOPMPHZ

y Improvement in coal quality by selective mining

y Minimum manpower required for operating the machines

y &MJNJOBUJPO�PG�ESJMMJOH �CMBTUJOH�BOE�DSVTIJOH�QSPDFTTFT

y /P�EVTU�HFOFSBUJPO�EVSJOH�DPBM�DVUUJOH �BT�JO�CVJMU�XBUFS�TQSBZJOH�TZTUFN�TVQQSFTT�any dust which could be generated during coal cutting

y 1SPEVDUJPO�PG��NN�TJ[F�DPBM

y .JOJNVN�DIBODF�PG�ěSF�JO�UIF�DPBM�GBDF�


Note: - Values mentioned in green indicate that the land has been acquired.

2 As on Dec 31, 2011

Nature of contracts

"U�QSFTFOU �UIF�0WFSCVSEFO�0#�SFNPWBM�JT�EPOF�CZ�EFQBSUNFOUBM�-BCPS�4&$-�FNQMPZFE�XJUI�ESJMMJOH�BOE�CMBTUJOH�and using high capacity Shovel-Dumper

combination mechanism. At present

BQQSPYJNBUFMZ��QFSDFOU�PG�UIF�FYUSBDUJPO�JT�UISPVHI�TVSGBDF�NJOFS�BOE�balance is through conventional method

ESJMMJOH��CMBTUJOH�PG�$PBM�

Coal mining is subcontracted to

various contractors / vendors who are

SFTQPOTJCMF�GPS�FYUSBDUJOH�DPBM�VTJOH�TVSGBDF�NJOFS �MPBEJOH �USBOTQPSUJOH�UP�CHP & unloading of coal.

(MPCBM�UFOEFST�XFSF�ĜPBUFE�GPS�UIF�)&..ĳT�&3�4IPWFM��$VN �%VNQFS��5��$VN�4IPWFM�XBT�QSPDVSFE�GPS�UIF�ěSTU�UJNF�CZ�4&$-�

Economic Valuation

According to initial project report dated

0DUPCFS�� UIF�JODSFNFOUBM�DBQJUBM�SFRVJSFE�GPS�DBQBDJUZ�FYQBOTJPO�GSPN��NUQB�UP��NUQB�XBT�FTUJNBUFE�BU�*/3��DSPSF��5IF�VQEBUFE�DBQJUBM�estimate for the project dated July 2007

was INR 780.12 crore. In September

�� UIJT�DPTU�XBT�GVSUIFS�SFWJTFE�UP�*/3�� DSPSF��5IJT�JT�UIF�ěOBM�BQQSPWFE�DPTU�BOE�JT�BSPVOE��QFSDFOU�NPSF�UIBO�the actual estimates.

5IF�DBQJUBM�JOWFTUNFOU�PG�QMBOU�BOE�machinery for incremental 10 mtpa was

FTUJNBUFE�BU�*/3��DSPSF��5IF�DBQJUBM�JOWFTUNFOU�PO�)&..�)FBWZ�.BDIJOFSZ�alone was estimated at INR 464.09 crore.

Milestone Status

#FMPX�JT�UIF�MJTU�PG�NBKPS�QSPKFDU�NJMFTUPOFT�XJUI�UIFJS�TDIFEVMF�DPNQMFUJPO�EBUF�

S. No. Milestone Description Target Date of Completion

1. /PUJěDBUJPO�PG��)B�-BOE�V�T��J�PG�$#"�"DU July 2005

2. Final Forest Clearance of 100.01 Ha land August 2008

�� &OWJSPONFOUBM�$MFBSBODF June 2009

4. Commissioning of Workshop March 2011

5. Commissioning of Store March 2011

6. %PVCMJOH�PG�+VOBEJI�ĸ,PSCB�3BJMXBZ�5SBDL�PG�4JEJOH November 2006

7. $PNNJTTJPOJOH�PG��TU��$VN�4IPWFM�BMPOHXJUI��5�%VNQFST January 2010

8. $PNNJTTJPOJOH�PG��OE��$VN�4IPWFM�BMPOHXJUI��5�%VNQFS August 2010

9. Construction of Haul Road March 2011

10. Construction of Residential Building March 2012

11. $POTUSVDUJPO�PG��,7�4VC�TUBUJPO March 2012

12. $PNNJTTJPOJOH�PG��,7�0�)�-JOF .BSDI��

�� 1IZTJDBM�QPTTFTTJPO�PG�5FOBODZ�-BOE�JO��TU�QIBTF December 2012

14. Augmentation of CHP including Silo .BSDI��

15. Installation and commissioning of In-pit coal transport system .BSDI��

��5FOEFSJOH�JT�JO�QSPDFTT��4DIFEVMFE�NPOUI�PG�'JOJTI�JT�UFOUBUJWF�"T�PO�+BOVBSZ��

4PVSDF��,1.(�JO�*OEJB�ĸ�1.*�4VSWFZ�PO�DPTU�BOE�TDIFEVMF�PWFSSVO ��CBTFE�PO�JOUFSBDUJPO�XJUI�TVSWFZ�SFTQPOEFOUT


Reasons for cost and schedule overruns

y Increase in land compensation due

to policy change:- In the project

SFQPSU �GPS�UIF�DPTU�FTUJNBUJPO�PG�MBOE�BDRVJTJUJPO �UIF�SBUF�PG�BHSJDVMUVSF�MBOE�was assumed as INR 7.00 Lakh per

)B��PS�*/3�� MBLI�QFS�BDSF��5IJT�XBT�CBTFE�PO�UIF�4UBUF�(PWFSONFOU�DPNQFOTBUJPO�SBUF�PG�*/3�� QFS�acres. As per the revised Chhattisgarh

(B[FUUF�EBUFE�ĸ��.BSDI�� the rate was increased to INR 8.00

-BLI�QFS�BDSF��5IVT �GPS�UFOBODZ�MBOE�PG��)B �UIF�CVEHFU�DPTU�increased by over 180 percent from

INR 27.8 crore to INR 78.27 crore.

y Delay in Procurement of HEMM: -

5IF�&3�4IPWFM��$VN�XBT�UP�CF�QSPDVSFE�GPS�UIF�ěSTU�UJNF�JO�UIF�QSPKFDU �XIJDI�XBT�EPOF�VTJOH�UIF�(MPCBM�5FOEFS�QSPDFTT��*O�UIF�QSPKFDU�SFQPSU �UIF�UPUBM�UJNF�DPOTJEFSFE�GPS�UFOEFS�ěOBMJ[BUJPO�XBT��ZFBST�BOE�B�period of one year for manufacturing

��TVQQMZ�PG�UIF�FRVJQNFOU��)PXFWFS �EVF�UP�MBDL�PG�FYQFSJFODF�JO�BXBSEJOH�the contracts through global

UFOEFS�QSPDFTT �UIF�BDUVBM�UJNF�UBLFO�GPS�UFOEFS�ěOBMJ[BUJPO�GSPN�SFWJTFE�TQFDJěDBUJPO�BOE�UFSNT�BOE�DPOEJUJPOT�UP�XPSL�PSEFS�JTTVF�XBT�BQQSPYJNBUFMZ��ZFBST�+BOVBSZ��UP�.BSDI�� XIJDI�JT�B�EFMBZ�PG�BQQSPY��NPOUIT�GSPN�QMBOOFE�FTUJNBUFT��'VSUIFS �UIF�EFMJWFSJFT�PG�UIF�NBUFSJBM�XFSF�FYQFDUFE�UP�TUBSU�GSPN�"QSJM��POXBSET �JO�BDUVBM�JU�TUBSUFE�POMZ�GSPN�+BOVBSZ�� XIJDI�JT�B�EFMBZ�PG�BQQSPY��NPOUIT�

y Procurement of specialized

equipment at a higher cost: - In the

13�PG��NUQB�UIF�DPTU�PG�&3�4IPWFM�42 cum was considered to be INR

��DSPSF�GPS�GPVS�FRVJQNFOUT�J�F��*/3��$SPSF�QFS�TIPWFM��5IF�actual cost of procurement for each

TIPWF�JT�BQQSPY��*/3��DSPSF �UIVT�

BMNPTU�BO�JODSFBTF�PG�BQQSPYJNBUFMZ�INR 41 crore per Shovel & increase of

BQQSPYJNBUFMZ�*/3��DSPSF�JO�UPUBM��5IF�13�FTUJNBUF�GPS�UIF�)&..ĳT�and other P&M were based mainly

on the standard price list of mining

FRVJQNFOU�QVCMJTIFE�CZ�$.1%*- �Ranchi.

y Delay in getting approvals from

State Government: - Approvals /

BTTJTUBODF�SFMBUFE�UP�-BOE�BDRVJTJUJPO �R&R etc. are pending with the State

(PWFSONFOU��5IFTF�BSF�BDUJOH�BT�bottlenecks / delay factors in physical

QPTTFTTJPO �BDRVJTJUJPO�BOE�PUIFS�QSPDFTTFT�SFMBUFE�UP�MBOE��5IF�QFOEJOH�JUFNT�BSF��

- Help to start with production from

BDRVJSFE�GPSFTU�MBOE �XIJDI�JT�the only land left under physical

possession.

- 'JOBMJ[BUJPO�PG�SF�IBCJMJUBUJPO�TJUF�BU�Utarda.

- Submission of Statement V &

VI of remaining villages under

acquisition.

y Delay in getting internal approvals

(SECL Board): - Many of the

BQQSPWBMT�BSF�QFOEJOH�BU�UIF�4&$-�DPSQPSBUF�MFWFM �XIJDI�IBWF�CFFO�TFOU�GSPN�UIF�1SPKFDU�4JUF��5IF�BQQSPWBMT�QFOEJOH�BSF��

- Proposal for employment of

another 5 Nos. eligible candidates

of land looser was submitted to

HQ for approval vide letter No. 90

dated 12 April 2011

- Compensation of houses and

EXFMMJOHT�PG��IPVTF�PXOFS�PG�Pondi village was submitted to HQ

for approval vide proposal no. 175

dated 14 June 2011

- Revised compensation of 172.719

Ha land of Pondi village was

submitted to HQ for approval vide

proposal no. 468 dated 11 July

2011

- Proposal for appointment of an

FYUFSOBM�DPOTVMUBOU�BT�BEWJTPS�UP�facilitated land acquisition.

5IF�QFOEJOH�BQQSPWBMT�BSF�BGGFDUJOH�UIF�acquisition of land.

y Ambiguity over R&R Policy: -

5IF�$*-�3�3�QPMJDZ�TUJQVMBUFT�employment to all the land losers

subject to availability of vacancies in

UIF�PSHBOJ[BUJPO��"EEJUJPOBMMZ �VOEFS�$MBVTF�JJ�PG�QPJOU�OVNCFS��QBHF�OP��PG�$*-�3�3�1PMJDZ��TUJQVMBUFT�that land losers who are not eligible

for employment shall be offered cash

compensation at the rate prescribed

JO�UIF�OFX�3�3�QPMJDZ�OPUJěFE�CZ�Ministry of Rural Development

.P3%��)PXFWFS �UIF�4UBUF�3�3�QPMJDZ�TQFDJěFT�DPNQFOTBUJPO�BOE�FNQMPZNFOU�UP�BMM��5IVT �UIFSF�JT�BO�ambiguity in company’s and State

3�3�QPMJDZ��5IVT �EFMBZ�JO�ěOBMJ[JOH�the employment and compensation is

affecting the land acquisition.


Measures taken by SECL to debottleneck project

1. 'PS�FYQFEJUJOH�UIF�QSPHSFTT�PG�MBOE�BDRVJTJUJPO �UIF�(FWSB�UFBN�proactively prepared employment

QSPQPTBM �HPU�UIF�MJTU�BQQSPWFE�GSPN�the collector and obtained consent

PG�UIF�WJMMBHFST��"EEJUJPOBMMZ �SFWJTFE�DPNQFOTBUJPO�ěHVSFT�XFSF�QSFQBSFE�GPS�POF�PG�UIF�WJMMBHFT��"MTP �QSPKFDU�team proposed appointment of retired

%FQVUZ�$PMMFDUPS�GPS�FYQFEJUJOH�UIF�land acquisition process.

2. In the case of ambiguity over R&R

1PMJDZ �UIF�(FWSB�UFBN�QSPQPTFE�NPEBMJUJFT�JO�UIF�FYJTUJOH�$*-�3�3�QPMJDZ �TVDI�UIBU�UIF�JTTVF�DBO�CF�resolved as soon as possible.

��'PS�3FIBCJMJUBUJPO �BT�QFS�QSFWBJMJOH�QSBDUJDF �4UBUF�(PWFSONFOU�PO�UIF�request of the project owner allots

the land in the nearby area of the

QSPKFDU��5IF�MBOE�QSPWJEFE�CZ�UIF�(PWFSONFOU�IBT�UP�CF�EFWFMPQFE�with infrastructural facilities such

BT�TDIPPMT �IPVTFT �QBSLT�FUD��BOE�handed over to the affected families.

(FWSB�UFBN�GPSFTFFT�UIJT�BT�B�SJTL�BT�(PWFSONFOU�MBOE�JT�OPU�BWBJMBCMF�in nearby area of the project for

SFTFUUMFNFOU��5P�PWFSDPNF�UIJT�SJTL �(FWSB�UFBN�IBT�QSPQPTFE�UIBU�UIF�FOUJSF�BDUJWJUJFT�MBOE�BDRVJTJUJPO�BOE�EFWFMPQNFOU�PG�3FIBCJMJUBUJPO�may be outsourced or cash

compensation / monetary package in

lieu of resettlement plot and building

BTTJTUBODF�*/3�� QFS�GBNJMZ�BT�BMSFBEZ�BQQSPWFE�CZ�.$-�#PBSE�CF�provided.


y 'JSTU�DPOUBJOFS�QSJWBUJ[BUJPO�QSPKFDU�BU�UIF�.VNCBJ�QPSU

y 1SPKFDU�JT�EFMBZFE�CZ�UISFF�ZFBST�BOE�BOUJDJQBUFE�QSPKFDU�DPTU�JT�FYQFDUFE�UP�increase by 40 percent from scheduled cost

y -BDL�PG�EFUBJMFE�QMBOOJOH �OPO�QFSGPSNBODF�PG�DPOUSBDUPS�BOE�QPPS�DPPSEJOBUJPO�between dredging and berth construction works leads to schedule and cost overrun.

.VNCBJ�1PSU�IBT�CFFO�UIF�QSJODJQBM�HBUFXBZ�UP�*OEJB �BT�JU�DBUFST�UP��QFSDFOU1 of the

DPVOUSZĳT�TFB�CPSOF�USBEF�IBOEMFE�CZ�NBKPS�QPSUT�PG�UIF�DPVOUSZ��5IPVHI�USBEJUJPOBMMZ�EFTJHOFE�UP�IBOEMF�HFOFSBM�DBSHP �PWFS�UIF�ZFBST �UIF�QPSU�IBT�BEBQUFE�UP�DIBOHJOH�TIJQQJOH�USFOET�BOE�DBSHP�QBDLBHJOH�GSPN�CSFBL�CVML�UP�VOJUJ[BUJPO�QBMMFUJ[BUJPO�BOE�DPOUBJOFSJ[BUJPO��$POTUSVDUJPO�BOE�EFWFMPQNFOU�PG�UXP�PGGTIPSF�DPOUBJOFS�CFSUIT�BOE�UFSNJOBMT�JT�UIF�ěSTU�DPOUBJOFS�QSJWBUJ[BUJPO�QSPKFDU�BU�UIF�.VNCBJ�1PSU��5IF�QSPKFDU�JOWPMWFT�DPOTUSVDUJPO �ěOBODJOH �FRVJQQJOH �PQFSBUJPOT�BOE�NBOBHFNFOU�PG�UIF�PGGTIPSF�DPOUBJOFS�UFSNJOBM�JO�UIF�.VNCBJ�)BSCPS�PO�B�#VJME�0QFSBUF�5SBOTGFS�#05�CBTJT��5IF�QSPKFDU�JT�BXBSEFE�UP�*OEJSB�$POUBJOFS�5FSNJOBM�1WU��-UE�*$5 �XIJDI�JT�B�KPJOU�WFOUVSF�CFUXFFO�(BNNPO�*OGSBTUSVDUVSF�1SPKFDUT�-UE �(BNNPO�*OEJB�-UE�BOE�%SBHBEPT�41-�PG�4QBJO�GPS�B��ZFBS�DPODFTTJPO�QFSJPE�

Construction details

5IF�DPNQMFUF�DPOTUSVDUJPO�XPSL�JT�EJWJEFE�BNPOH�UXP�QBSUJFT��

y .VNCBJ�1PSU�5SVTU�.C15��.C15�XJMM�IBWF�UP�EP�UIF�DBQJUBM�ESFEHJOH�PG�UIF�EFTJHOFE�ESBGU�PG��NFUFST�BOE�ěMMJOH�PG�UIF�FYJTUJOH�1SJODFĳT�BOE�7JDUPSJB�1�7�Dock basin areas up to +4.79m CD by dredging sand available near Dharamatar

DSFFL�BSFB �XJUIJO�UIF�.VNCBJ�QPSU�MJNJUT��.C15�IBT�BXBSEFE�UIJT�XPSL�DPOUSBDU�UP�M/s Jaisu Shipping Co.

y *OEJSB�$POUBJOFS�5FSNJOBM�*$5��.C15�IBT�TJHOFE�B�MJDFOTFE�BHSFFNFOU�XJUI�.�T�(BNNPO�*OEJB�$POTPSUJVN�GPS�UIF�DPOTUSVDUJPO�PG�0GGTIPSF�$POUBJOFS�5FSNJOBM�PO�#05�#BTJT��5IF�XPSL�JODMVEF�DPOTUSVDUJPO�BOE�PQFSBUJPO�PG�UXP�DPOUBJOFS�CFSUIT�PG��NFUFST�FBDI�JODMVEJOH�BQQSPBDI�USFTUMFT �MBZJOH�PG�USBDLT�GPS�3BJM�$POUBJOFS�%FQPU�3$% �EFNPMJUJPO�PG�FYJTUJOH�TUSVDUVSFT�BU�1SJODFĳT�BOE�7JDUPSJB�%PDLT�GPS�integrated development of the container yard and relocation of services.

Below are the major details of project

Capacity Addition 5XP�PGGTIPSF�DPOUBJOFS�UFSNJOBMT

Location .VNCBJ �.BIBSBTIUSB

Project Execution #05�CBTJT

Investment approval Date /PWFNCFS ��


CASE STUDY 3Construction of an Offshore Container

Terminal at Mumbai Port Trust

FACTS


1 Introduction, Mumbai Port Trust, http://mumbaiport.gov.in/index2.asp?slid=34&sublin kid=10&langid=1, accessed 19 June 2012

Current project status



.C15 Dec 2010 .BS�� 28 Months

*$5 Dec 2010 %FD�� .POUIT


.C15 445 610 ��

*$5 � ��


5IF�QSPKFDU�XBT�BQQSPWFE�JO�/PWFNCFS�� XJUI�QMBOOFE�DPNQMFUJPO�EBUF�PG�%FDFNCFS��)PXFWFS �CBTFE�PO�UIF�DVSSFOU�QSPHSFTT�QSPKFDU�JT�FYQFDUFE�UP�CF�DPNQMFUFE�CZ�%FDFNCFS�� XJUI�B�EFMBZ�PG�BSPVOE��NPOUIT��0O�ěOBODJBM�GSPOU �QSPKFDU�DPTU�JT�FYQFDUFE�UP�JODSFBTF�CZ��QFSDFOU�GSPN�*/3�� DSPSF�UP�_*/3�� DSPSF��

Project Planning and current status

Agency Description Planned date Actual dateDelay in months

Percentage of work

completed

ICT

License Agreement signed between .VNCBJ�1PSU�5SVTU�BOE�.�T�*OEJSB�$POUBJOFS�5FSNJOBM�1WU��-UE�

Dec 2007 Dec 2007 - 100

Financial Closure June 2008 Nov 2008 5 100

Commencement of Construction Aug 2008 May 2009 9 100

Completion of civil works and commission-JOH�PG�UXP�CFSUIT�BU�*$5

Dec 2010 %FD�� 85

MbPT

Handing over the site for trestle Dec 2007 Dec 2007 - 100

Handing over already developed land at Princes and Victoria Dock of the Licensed QSFNJTFT�GPS�0$5

Dec 2007 In phases - 85

Completion of Capital dredging for the berth pocket and handing over to the Licensee for construction

Dec 2009 Apr 2012 28 100

Filling of Victoria Dock and handing over to the Licensee.

Dec 2009 Dec 2012 �� 85

Filing of Prince’s Dock and handing over to the Licensee

Dec 2009 Dec 2012 �� 85

Completion of Capital dredging for Approach $IBOOFM�BOE�5VSOJOH�$JSDMF�

Oct 2010 Mar 2012 17 55

-BZJOH�PG�3BJMXBZ�5SBDLT�GPS�3$% Dec 2010 .BS�� 28 5



Project cost overrun

Agency DescriptionOriginal estimate

(INR crore)Actual/revised (INR

crore)Increase (%)

ICT

&1$�DPOUSBDU�GPS�DJWJM�XPSL�DPNQSJTJOH�DPOTUSVDUJPO�PG�USFTUMF �CFSUI �DPOUBJOFS�ZBSE��VUJMJUJFT

�� 589.6 ��

/PO�&1$�DPOUSBDU �� 72.2 107.5

Mechanical equipments and electrical & Fire Fighting works

�� 450 67.7

.JTDFMMBOFPVT�ěYFE�BTTFUT�"$ �DPNQVUFST�FUD� 10.0 44.9 ��

BPS investments 15.0 25.0 66.7

Contingencies 41.2 20.8 ��

1SFMJNJOBSZ��QSFPQFSBUJWF�FYQFOTFT 76.0 86.7 14.1

Debt service reserve �� 25.9 6.6

Interest during construction 108.8 114 4.8

Total 1,015.7 1,429.1 40.7

MbPT

Capital Dredging 279.4 468.2 67.6

Filling 78.0 ��

Dock closure works ��

Rail tracks for RCD 9.2 16.0 74.7

Relocation of underground services 0.7 0.7 -

Navigational aids �� 1.8 ��

&OWJSPONFOU�.BOBHFNFOU�1MBO 1.2 1.2 -

Total 444.9 610.0 37.1

Grand Total 1,460.6 2,039.1 39.6



Reasons for schedule and cost overrun

y %FMBZ�JO�ěOBODJBM�DMPTVSF��As a part

PG�#05 �QSPKFDU�ěOBODJOH�IBE�UP�CF�arranged by private concessionaire.

Due to 2008 global recession banks

put stringent norms for project

ěOBODJOH��UIVT�EFMBZJOH�UIF�QSPDFTT�PG�ěOBODJBM�DMPTVSF�CZ��NPOUIT�

y More dredging work than

estimated: Due to inaccurate

FTUJNBUFT�EVSJOH�QMBOOJOH�QIBTF �UIF�actual rock dredging quantity was

NVDI�NPSF�UIBO�FTUJNBUFE��'VSUIFS �the estimates prepared by the

consultant were inaccurate resulting

JOUP�NBKPS�WBSJBUJPO�JO�RVBOUJUJFT �leading to project schedule and cost

PWFSSVO��5IJT�JT�UIF�NBKPS�SFBTPO�which has cascading impact on the

overall project delivery.

y Slow mobilization by EPC

contractor:�&1$�$POUSBDU�XBT�TJHOFE�PO��%FDFNCFS��IPXFWFS�UIF�actual work commenced only from

��.BZ�� DBVTJOH�B�EFMBZ�PG��NPOUIT��5IF�EFMBZ�XBT�QSJNBSJMZ�PO�QBSU�PG�UIF�#05�PQFSBUPS�JO�ěOBMJ[BUJPO�PG�&1$�DPOUSBDU�

y Delay in project site handover:�5IF�project requires some work on the

FYJTUJOH�1SJODFĳT�BOE�7JDUPSJB�1�7�%PDL��.C15�EFMBZFE�UIF�IBOEJOH�over of this area to the contractor by

��NPOUIT��5IJT�BMTP�MFE�UP�JODSFBTF�JO�DPTU �BT�SFTPVSDFT�XFSF�JEMF�EVSJOH�this period.

y Delay in awarding dredging work

contract: Delay in tendering process

occurred as the eligibility criteria were

SFWJTFE�CBTFE�PO�UIF�TUBOEBSEJ[BUJPO�DPNNJUUFFĳT�SFDPNNFOEBUJPOT��5IF�offers received from the contractors

necessitated revision in cost

FTUJNBUFT �XIJDI�SFRVJSFT�BEEJUJPOBM�(PWFSONFOU�BQQSPWBM �MFBEJOH�UP�project delay.

y Delay in completing work by

dredging contractor: As per the

QSPWJTJPOT�PG�UIF�DPOUSBDU �UIF�DPOUSBDUPS�IBE�UP�DPNQMFUF��milestones i.e. dredging in berth

QPDLFU�CZ�0DUPCFS�� ěMMJOH�PG�P&V Dock basins by June 2010 and

dredging in approach channel by

"QSJM��)PXFWFS �UIF�DPOUSBDUPS�missed the targets leading to delay of

��NPOUIT��5IF�SFBTPOT�GPS�EFMBZT�JO�achieving these milestones were as

GPMMPXT�

- Accident of MSC Chitra in Mumbai

Harbor resulted in suspension of

soil dredging by 28 days

- Delay in deployment of dredgers in

time by the contractor

- 4MPX�QSPHSFTT�JO�ěMMJOH�XPSL�CZ�UIF�contractor

- Non-deployment of requisite

dredgers to meet the weekly

PVUQVU�TQFDJěFE�JO�UIF�DPOUSBDU�CZ�the contractor

y Lack of integrated project master

schedule:�5IF�QSPKFDU�JT�EJWJEFE�JOUP�two packages i.e. dredging and berth

DPOTUSVDUJPO��BOE�CPUI�UIFTF�BDUJWJUJFT�have individual project schedule.

5IFTF�TDIFEVMFT�BSF�OPU�JOUFHSBUFE�to make a single project schedule.

'VSUIFS �UIF�QSPKFDU�QSPHSFTT�JT�NPOJUPSFE�TFQBSBUFMZ �XJUI�BDDFTTJOH�UIF�JOUFSEFQFOEFODJFT�SJTL�CFUXFFO�UIFN��5IF�EFMBZ�JO�DPNQMFUJPO�PG�works by the dredging contractor

has resulted in delayed handing over

PG�UIF�BTTFUT�UP�UIF�#05�PQFSBUPS �leading to overall project delay.

y Delay in obtaining security

clearance:�5IF�TFDVSJUZ�DMFBSBODF�for the bidder was received after a

period of 18 months from the Central

(PWFSONFOU�

Measures taken by MbPT/ICT to de-bottleneck project

1. 5IF�*$5�IBT�WFSZ�FGěDJFOU�SFQPSUJOH�system for construction activities.

5IFSF�IBWF�OPU�CFFO�BOZ�NBKPS�EFMBZT�EVF�UP�FYFDVUJPO�PG�DPOTUSVDUJPO�BDUJWJUJFT �CVU�EVF�UP�EFMBZ�JO�IBOEPWFS�of construction site

2. 5IF�.C15�IBT�BQQPJOUFE�BO�independent engineer for design

BQQSPWBMT �RVBMJUZ�DPOUSPM�BOE�NPOJUPSJOH�QSPHSFTT�PG�UIF�#05�operator. Due of regular monitoring

UIFSF�XBT�OP�EFMBZ�GSPN�#05�PQFSBUPS�TJEF��)PXFWFS �TDPQF�PG�JOEFQFOEFOU�engineer’s work only focuses on

#05�PQFSBUPS�BOE�EPFT�OPU�JODMVEF�ESFEHJOH�BDUJWJUJFT �NBLJOH�JU�EJGěDVMU�to monitor interdependencies among

these two activities.

��5IF�FTUJNBUFT�GPS�ESFEHJOH�prepared by the consultants were

not appropriate leading to cost and

TDIFEVMF�PWFSSVOT��5IF�.C15�CPBSE�has instructed the HOD committee

DPNQSJTJOH�PG�$& �'"�$"0�BOE�%$�UP�suggest appropriate action against the

consultant for the lapse.

4. In lieu of non-compliance of the

DPOUSBDU�EFQMPZJOH�SFRVJTJUF�ESFEHFST��BOE�EFMBZ�JO�DPNQMFUJPO�PG�UIF�XPSL�.C15�CPBSE�IBT�SFDPWFSFE�/3��DSPSFT��QFSDFOU�MJRVJEBUFE�EBNBHFT�GSPN�UIF�DPOUSBDUPS�

5. .C15�BQQPJOUFE�BO�JOEFQFOEFOU�engineer and project management

consultants to submit monthly

progress reports of the project.

6. 5P�IBWF�TNPPUI�FYFDVUJPO�PG�QSPKFDU�XPSLT�.C15�FOTVSFE�UP�JODMVEF�all infrastructure works like Capital

ESFEHJOH �3$%�FUD��JO�UIF�-JDFOTFFĳT�scope of work.

7. 5P�NJOJNJ[F�UIF�JNQBDU�PG�EFMBZ�PG�one activity into other i.e. dredging

BOE�CFSUI�DPOTUSVDUJPO �JOEFQFOEFOU�&OHJOFFS�XBT�BQQPJOUFE�UP�NPOJUPS�interdependencies of works by

.C15�BOE�#05�PQFSBUPS�BOE�1SPKFDU�

.BOBHFNFOU�$POTVMUBOU�1.$�XBT�NPOJUPSJOH�.C15�DPNQPOFOU�PG�XPSL�


y 5IF�QSPKFDU�UBSHFUFE�UP�JNQSPWF�UIF�SFěOFSZ�NBSHJOT �CZ�FOIBODJOH�UIF�QSPEVD-UJPO�PG�WBMVF�BEEFE�QSPEVDUT�TVDI�BT�.4�BOE�-1(

y Project was delayed by one year and three months years and completed within the budgeted cost

y $IBOHF�JO�QSPKFDU�TDPQF �EFMBZ�JO�FRVJQNFOU�TVQQMZ�GSPN�WFOEPST�BOE�TIPSUBHF�of skilled manpower are some factors that leads to schedule and cost overrun

y 5P�FYQFEJUF�UIF�QSPKFDU�EFMJWFSZ �)1$-ĳT�TFOJPS�NBOBHFNFOU�XBT�JOWPMWFE�JO�negotiation with vendors.

.VNCBJ�SFěOFSZ�JT�PXOFE�CZ�)JOEVTUBO�1FUSPMFVN�$PSQPSBUJPO�-JNJUFE�)1$-�BOE�IBT�B�DBQBDJUZ�PG��NJMMJPO�NFUSJD�UPOOFT�QFS�BOOVN�..51"��5IF�QSPKFDU�VOEFS�DPOTJEFSBUJPO�FOWJTBHFE�UIF�TFUUJOH�VQ�PG�B�OFX�HSBTT�SPPU�'MVJEJ[FE�$BUBMZUJD�$SBDLJOH�6OJU�'$$6�XJUI�B�DBQBDJUZ�PG��..51"�BU�.VNCBJ�SFěOFSZ��5IJT�QSPKFDU�IBT�IFMQFE�SFěOFSZ�UP�QSPEVDF�IJHI�WBMVF�EJTUJMMBUF�QSPEVDUT�TVDI�BT�-1(�BOE�.4 �UIVT�BDIJFWJOH�IJHIFS�SFěOFSZ�NBSHJOT�

Project Description

5IF�1SPKFDU�FOWJTBHFE�TFUUJOH�VQ�PG�B�HSBTT�SPPU�TFDPOEBSZ�VOJU�JO�BO�FYJTUJOH�SFěOFSZ��5IF�GBDJMJUJFT�JODPSQPSBUFE�UIF�601�'$$�5FDIOPMPHZ�GPS�IJHI�DPOWFSTJPO�XJUI�BEWBODFE�DPNCVTUPS�SFHFOFSBUPS�GFBUVSF�BOE�JOUFHSBUJPO�PG�UIF�'MVF�(BT�4DSVCCJOH�6OJU�'(46�XJUI�#FMDP�5FDIOPMPHZ��5IF�OFX�'$$6�QSPKFDU�XBT�WFSZ�DPNQMFY�XJUI��TZTUFNT�TQSFBE�BDSPTT�UIF�SFěOFSZ��5IF�QSPKFDU�IBE�GPMMPXJOH�NBKPS�GBDJMJUJFT�

y FCCU Feed Section consisting of feed Pre-heaters & Furnace

y 3FBDUPS�ĸ�3FHFOFSBUJPO�TFDUJPO�DPOTJTUJOH�PG�DBUBMZTU�DJSDVMBUJPO�DJSDVJU �DBUBMZTU�IBOEMJOH�TFDUJPO �ĜVF�HBT�DPPMJOH�DJSDVJU

y .BJO�'SBDUJPOBUPS�BOE�(BT�$PODFOUSBUJPO�6OJU�($6

y 'MVF�(BT�TDSVCCJOH�TFDUJPO�'(46

y Fuel gas treating section

y "TTPDJBUFE�VUJMJUJFT �%JTUSJCVUFE�DPOUSPM�TZTUFN�%$4 �TVCTUBUJPO�SFRVJSFE�GPS�QBSBMMFM�PQFSBUJPO�PG�OFX�'$$6�XJUI�FYJTUJOH�'$$6�


Capacity under installation '$$6�XJUI�B�DBQBDJUZ�PG��..51"

Location .VNCBJ �.BIBSBTIUSB

Contract Type&OHJOFFSJOH�1SPDVSFNFOU�$POTUSVDUJPO�.BOBHF-NFOU�&1$.

Investment approval March 2007


CASE STUDY 4 Installation of FCCU at Mumbai Refinery

FACTS





September-2009 December-2010 15 Months


900.47 900.47 NIL


5IF�QSPKFDU�XBT�BQQSPWFE�PO��.BSDI�� XJUI�QMBOOFE�DPNQMFUJPO�EBUF�PG��4FQUFNCFS��)PXFWFS �UIF�QSPKFDU�HPU�EFMBZFE�CZ��NPOUIT�BOE�DPNNJTTJPOFE�PO��%FDFNCFS��0O�ěOBODJBM�GSPOU �UIF�QSPKFDU�XBT�DPNQMFUFE�XJUIJO�UIF�allocated budget. Following are the major milestones planned with their actual

DPNQMFUJPO�EBUF�


Milestone Description Planned Date Actual DateDelay

(in months)

Process

Issue of equipment data sheets 16 August 2007 16 November 2007 ��

Issue of P & ID's & line list for engineer-ing

17 September 2007 26 December 2007 ��

Issue of complete process package - FCCU

01 October 2007 26 December 2007 2.9

Issue of P & ID's & line list for utility distribution

15 October 2007 05 February 2008 ��

Prepare and issue P&ID's and line list for utilities/offsites

��+BOVBSZ�� 01 February 2008 ��

Engineering

1SFQBSF�BOE�ěOBMJ[F�FRVJQNFOU�MBZPVU 01 October 2007 29 November 2007 2

1SFQBSF�QSFMJNJOBSZ�QJQJOH�.50�DPN-QMFUF

��+BOVBSZ�� +VOF�� 5

1SFQBSF�%$4�1,( 29 February 2008 11 April 2008 1.4

$PNQMFUF�NPEFMJOH �("%�BOE�*40T 01 September 2008 10 November 2009 14.5

1SFQBSF�ěOBM�QJQJOH�.50 15 October 2008 18 September 2009 ��

Prepare main air blower 01 October 2007 26 December 2007 2.9

Prepare fractionator column 04 October 2007 06 November 2007 1.1

Ordering

Issue LOI for main air blower 01 February 2008 29 April 2008 2.9

Issue LOI for fraction Column 05 February 2008 08 February 2008 -

*TTVF�-0*�GPS�IFBU�FYDIBOHFST 19 February 2008 02 April 2008 1.4

Issue LOI for vessels 04 March 2008 ��+VMZ�� 5

Issue LOI for DCS ��+VOF�� 24 October 2008 ��

Issue LOI for Burner ��.BZ�� 14 October 2008 4.5


Milestone Description Planned Date Actual DateDelay

(in months)

Manufacturing and Delivery

Manufacturing and delivery at site - Flue gas cooler

��0DUPCFS�� 09 April 2009 ��

Manufacturing and delivery at site - 2VFODI�5PXFS

20 January 2009 04 September 2010 19.7

Delivery at site - Slurry Pumps 06 February 2009 25 September 2010 19.9

Manufacturing and delivery at site - Wet gas compressor

27 February 2009 ��"QSJM�� 14.0

Manufacturing and delivery at site - Fractionator Column

04 April 2009 ��4FQUFNCFS�� 6.0

Manufacturing and delivery at site – DCS 29 April 2009 ��"VHVTU��

Delivery at site – Burner 01 April 2009 22 October 2009 6.8

Manufacturing and delivery at site - Main air blower

01 June 2009 ��'FCSVBSZ�� -

Construction

3FNPWBM�PG�FYJTUJOH�GBDJMJUJFT�BOE�BSFB�clearance

��%FDFNCFS�� 19 August 2008 7.7

$PNQMFUJPO�PG�ĜVF�HBT�DPPMFS�XPSLT ��+BOVBSZ�� 15 March 2010 ��

Civil work for sub-station complete 29 April 2009 25 March 2010 11

Installation of wet gas compressor ��+VOF�� 06 May 2009 -

Fabrication & erection of heater 29 July 2009 10 June 2010 10.5

Installation of DCS ��+VMZ�� 15 September 2009 1.5

Completion of scrubbing unit work ��+VMZ�� 16 December 2010 16.8

&SFDUJPO�PG�SFBDUPS�SFHFOFSBUPS 05 August 2009 ��.BSDI�� -

Complete electrical and instrumentation work

29 September 2009 15 December 2010 14.7

Mechanical completion 29 September 2009 16 December 2010 14.8



Reasons for Schedule Delay

Change in Project Scope: Due to lack of

QSPQFS�QMBOOJOH�BOE�FYUFSOBM�GBDUPST �UIF�project scope was changed during the

FYFDVUJPO�QIBTF�MFBEJOH�UP�EFMBZT��5IF�project scope was changed on following

GSPOUT�

y "T�QFS�UIF�PSJHJOBM�QMBO �UIF�JNQMFNFOUBUJPO�PG�'(46�GBDJMJUJFT�XBT�UP�CF�EPOF�UISPVHI�-VNQ�4VN�5VSO�,FZ�-45,�NPEF��)PXFWFS �EVF�UP�QPPS�SFTQPOTF�UP�-45,�QVCMJD�UFOEFS�GPS�'(46�156�DBVTUJD�GBDJMJUJFT �UIF�DPOUSBDU�XBT�DPOWFSUFE�UP�&1$.�NPEF��*O�PSJHJOBM�-45,�NPEF �UIF�'(46�JNQMFNFOUBUJPO�TDIFEVMF�XBT�GPS��NPOUIT �CVU�JO�DPOWFOUJPOBM�NPEF �&OHJOFFST�*OEJB�-JNJUFE�&*-�estimated 24 months

y A number of improvement measures

were initiated during the course of

the project implementation including

ĸ�SFMPDBUJOH�PG�DBVTUJD�GBDJMJUJFT �implementation of catalyst cooler

GBDJMJUJFT �TUBOEBSEJ[BUJPO�PG�'(46�156�DBVTUJD�GBDJMJUJFT �TUSFBNMJOJOH�PG�PGGTJUF�QJQJOH�BOE�DBCMF�USFODIFT �which were not planned in original

project plan.

Delay from vendors and contractors:

Many of the critical equipment supplies

were delayed from the contractors and

WFOEPST�TJEF��4QFDJěDBMMZ �GPMMPXJOH�equipments were delayed affecting the

PWFSBMM�QSPKFDU�EFMJWFSZ�

y Delay of 15 months in delivery of

"VYJMJBSZ�.BJO�"JS�#MPXFS�XJUI�SFTQFDU�to project schedule

y Delay of 14 months in delivery of the

'MVF�(BT�4DSVCCFS�.JE�TFDUJPO�CZ�.�T�BHPV

y %FMBZ�PG��NPOUIT�CZ�&*-�JO�BDIJFWJOH�80 percent detailed engineering

milestone and delay of 15 to 16

months with respect to critical

&OHJOFFSJOH�NJMFTUPOFT�XJUI�cascading impact on procurement and

construction

y Deliveries of balance lose items for

."#��"."#��8($�XBT�EFMBZFE�CZ�

.�T�#)&-�UP�/PWFNCFS��

y Completion of Catalyst Cooler

GBDJMJUJFT�CZ�.�T�-�5�FYUFOEFE�CFZPOE�November 2010.

Delay in shifting of existing facilities:

4JODF�JU�XBT�B�CSPXOěFME�QSPKFDU �JU�SFRVJSFE�TIJGUJOH�PG�FYJTUJOH�GBDJMJUJFT�UP�make site ready for construction. Delay

JO�TIJGUJOH�FYJTUJOH�GBDJMJUJFT�BOE�TJUF�IBOEPWFS �MFE�UP�QSPKFDU�TDIFEVMF�PWFSSVO

Other factors: Other factors which were

not considered during project planning

MFBEJOH�UP�QSPKFDU�EFMBZT�XFSF�

y &YUFOEFE�BOE�TFWFSF�NPOTPPO�conditions from July to September

�� TFWFSFMZ�IBNQFSFE�TJUF�activities

y Shortage of skilled manpower such

as piping engineers at the contractor

side.

Measures taken by HPCL to debottleneck project

1. One of the reasons for schedule

overrun was delay from vendors

BOE�DPOUSBDUPST��5P�FYQFEJUF�UIF�QSPHSFTT�PO�UIJT�GSPOU �)1$-�TFOJPS�management and project team

initiated a series interactions with

senior management of equipment

TVQQMJFST�BOE�DPOUSBDUPST�#)&- �&*-�BOE�#)17 �UP�VOEFSTUBOE�the challenges and decide on the

corrective measures.

2. HPCL project progress was closely

monitored by the project team and the

critical issues were escalated to the

UPQ�NBOBHFNFOU�PG�)1$-��"U�UJNFT �the issues were even escalated to the

NJOJTUSZ�UP�FYQFEJUF�UIF�QSPHSFTT�

��'PS�FYQFEJUJOH�TJUF�DPOTUSVDUJPO�BOE�UP�MJNJU�UIF�JNQBDU�PG�EFMBZT �B�TFSJFT�of recovery plans and innovative

measures were implemented. For

FYBNQMF �DPOUSPM�PG�ESBXJOHT�XBT�TIJGUFE�GSPN�IFBE�PGěDF�UP�TJUF�PGěDF�so that drawings were released on

priority basis in line with the sequence

PG�FYFDVUJPO�


y $BQBDJUZ�FYQBOTJPO�QSPKFDU�GSPN��NJMMJPO�UP��NJMMJPO�QBTTFOHFST�BOOVBMMZ

y "OUJDJQBUFE�QSPKFDU�DPTU�JT��QFSDFOU�IJHIFS�UIBO�CVEHFUFE�DPTU�BOE�BQQSPYJ-NBUFMZ�POF�ZFBS�BOE�UXP�NPOUIT�EFMBZ�JT�FYQFDUFE�JO�UIF�QSPKFDU�EFMJWFSZ

y %FMBZ�JO�IBOEJOH�PWFS�PG�DPOTUSVDUJPO�TJUF�UP�DPOUSBDUPS �JOFGGFDUJWF�%13T�BOE�EFMBZ�JO�HFUUJOH�BQQSPWBM�GSPN�(PWFSONFOU�PO�SFWJTFE�DPTU�FTUJNBUFT�BSF�TPNF�critical factors that leads to schedule overruns.

CASE STUDY 5

/FUBKJ�4VCIBT�$IBOESB�#PTF�*OUFSOBUJPOBM�/4$#*�BJSQPSU�JT�TJUVBUFE�JO�,PMLBUB �8FTU�#FOHBM��'SPN�"QSJM��UP�.BSDI�� JU�XBT�UIF�ěGUI�CVTJFTU�BJSQPSU�JO�UIF�DPVOUSZ�JO�UFSNT�PG�PWFSBMM�QBTTFOHFS�USBGěD1 �BOE�OJOUI�CVTJFTU�JO�UFSNT�PG�JOUFSOBUJPOBM�QBTTFOHFS�USBGěD��5IF�FYQBOTJPO�BOE�NPEFSOJ[BUJPO�QSPKFDU�JT�UBSHFUFE�UP�JODSFBTF�UIF�FYJTUJOH�BJSQPSU�DBQBDJUZ�GSPN��NJMMJPO�UP��NJMMJPO�QBTTFOHFST�BOOVBMMZ��5IF�TDPQF�PG�XPSL�JODMVEFT�DPOTUSVDUJPO�PG�UXP�ěWF�TUPSJFE�4UBUF�PG�UIF�BSU�JOUFSDPOOFDUFE�EPNFTUJD�BOE�JOUFSOBUJPOBM�UFSNJOBMT �B�QBSL�DVN�XBUFS�CPEZ�BOE�B�SJHIU�UVSO�ĜZPWFS�EFEJDBUFEMZ�DPOOFDUJOH�7*1�3PBE�UP�UIF�BJSQPSU��5IF�UFSNJOBMT�XJMM�IBWF�DBS�QBSLJOH�GBDJMJUZ �IPUFMT �GPPE�DPVSUT �BOE�EVUZ�GSFF�TIPQT�FUD��5IF�QSPKFDU�IBT�CFFO�BXBSEFE�UP�*5%��*5%$FN�+7 �B�DPOTPSUJVN�PG�*UBMJBO�5IBJ�%FWFMPQNFOU�1VCMJD�$PNQBOZ�-JNJUFE�BOE�*5%�$FNFOUBUJPO�India Limited.


Capacity expansionFrom 9.6 million passengers to 20 million passen-gers annually

Location ,PMLBUB �8FTU�#FOHBM

Investment approval date August 2008


Expansion and Modernization of NSCBI

Airport

FACTS




August 2011 October 2012 14 Months


1942.5 ��


5IF�QSPKFDU�XBT�BQQSPWFE�PO��"VHVTU�� XJUI�QMBOOFE�DPNQMFUJPO�EBUF�PG��"VHVTU��)PXFWFS �UIF�QSPKFDU�HPU�EFMBZFE�CZ��NPOUIT�BOE�OPX�FYQFDUFE�UP�CF�DPNNJTTJPOFE�JO�0DUPCFS��0O�ěOBODJBM�GSPOU �UIF�QSPKFDU�DPTU�JT�FYQFDUFE�UP�JODSFBTF�CZ��QFSDFOU�GSPN�*/3�� DSPSF�UP�*/3�� DSPSF�


1 Traffic News, Airport Authority of India; KPMG in India Analysis

Project Milestones

#FMPX�BSF�UIF�NBKPS�NJMFTUPOFT�GPS�/4$#*�"JSQPSU�BT�PO�"VHVTU��5IFTF�EFUBJMT�BSF�QSPWJEFE�XJUI�UIF�TVSWFZ�RVFTUJPOOBJSF�

Task Name Start DateActual/Expected Finish Date

Construction of Integrated Passenger Terminal Building (NSCBI, Kolkata) November 2008 March 2012

5FSNJOBM�#VJMEJOH November 2008 March 2012

(FOFSBM�3FRVJSFNFOU November 2008 March 2012

$POTUSVDUJPO�*OGPSNBUJPO�$MJFOU�%FMJWFSBCMF November 2008 February 2010

Preliminaries November 2008 September 2011

Earthwork March 2009 July 2011

International Terminal May 2009 December 2010

&YDBWBUJPO May 2009 March 2010

8BUFSQSPPěOH�#BTFNFOU November 2009 December 2010

Domestic Terminal March 2009 July 2011

&YDBWBUJPO March 2009 July 2010

8BUFSQSPPěOH October 2009 July 2011

Structure October 2009 September 2011

RC Superstructure October 2009 September 2011

International Terminal October 2009 September 2011

Arrival Lower Level October 2009 November 2010

Arrival Upper Level January 2010 January 2011

Departure Lower Level April 2010 March 2011

Departure Upper Level January 2011 September 2011

Steel Structures May 2009 September 2011

Domestic February 2010 September 2011

International May 2009 September 2011

3PPěOH December 2010 December 2011

Façade February 2011 October 2011

Road Work May 2009 December 2011

Wood Work April 2010 December 2011

%PNFTUJD�5FSNJOBM April 2010 November 2011

*OUFSOBUJPOBM�5FSNJOBM September 2010 December 2011

Internal Finishing April 2010 December 2011

%PNFTUJD�5FSNJOBM September 2010 December 2011

*OUFSOBUJPOBM�5FSNJOBM April 2010 December 2011

Car Park November 2009 July 2011

RCC Floor Slab November 2009 December 2010

RCC Middle Level July 2010 April 2011

3$$�5PQ�-FWFM August 2010 July 2011


Task Name Start DateActual/Expected Finish Date

External Finishing August 2010 December 2011

MES Work August 2010 December 2011

1PXFS�4VQQMZ��%(�4FUT August 2010 November 2011

&MFWBUPST��&TDBMBUPST April 2011 December 2011

Fire Fighting November 2010 December 2011

HVAC October 2010 December 2011

*OUFSOBM��&YUFSOBM�&MFDUSJěDBUJPO November 2010 November 2011

1MVNCJOH �4BOJUBSZ �%SBJOBHF �8BUFS�4VQQMZ November 2010 December 2011

5FTUJOH��$PNNJTTJPOJOH�PG�.&1�4ZTUFNT July 2011 September 2011

/PUF��5IF�BCPWF�TUBUVT�BT�PO�"VHVTU��FYQFDUFE�UJNFMJOFT�NJHIU�IBWF�DIBOHFE


Reasons for Schedule and Cost Overruns

Delay in handing over of the site: At the

UJNF�PG�BXBSE�PG�DPOUSBDU �POMZ��QFSDFOU�of land was handed over to the contractor.

5IF�SFNBJOJOH�MBOE�XBT�IBOEFE�PWFS�JO�QBSUT��TP�UIBU�FYJTUJOH�BJSQPSU�PQFSBUJPOT�TIPVME�OPU�CF�JOUFSSVQUFE��'VSUIFS �delay in required removal or demolition

PG�FYJTUJOH�TUSVDUVSF �MFE�UP�TDIFEVMF�overrun.

Inaccurate DPRs and ineffective

planning:�5IF�QSPKFDU�QMBO�EJE�OPU�GPDVT�on the relocation of critical facilities such

BT�XBUFS�SFTFSWPJS �QPXFS�IPVTF �BJS�conditioning plant and generator room

which were stationed in an old building

and needed to be demolished under

UIF�FYQBOTJPO�QSPKFDU�QMBO��"T�B�SFTVMU �the demolition of the old structure was

EFMBZFE �MFBEJOH�UP�BO�PWFSBMM�QSPKFDU�EFMBZ

Shortage of land at construction site

for stacking of construction materials:

y 5IF�TJUF�PG�*OUFHSBUFE�1BTTFOHFS�5FSNJOBM�#VJMEJOH�JT�WFSZ�DMPTF�UP�UIF�FYJTUJOH�PQFSBUJPOBM�GBDJMJUJFT�J�F��BQSPO �domestic terminal building and other

allied structures due to which no land

contiguous to the work site could

be handed over to the contractor for

stacking of construction materials and

fabrication / structural steel works

constitutes a major part of the job.

5IFTF�NBUFSJBMT�JODMVEJOH�GBCSJDBUFE�steel structure were stacked in non-

contiguous and scattered sites around

the Airport premises causing logistics

problem and delay in fabrication work.

y Delay in completing security clearance

GPS�EVNQJOH�PG�FYDBWBUFE�NBUFSJBM�inside operational area

Pending revised budget approval

from PIB, leading to delay in awarding

packages: Due to cost escalation of

DPOTUSVDUJPO�NBUFSJBM �UIF�CVEHFU�DPTU�was overrun by 20 percent. A revised

cost estimate was submitted to Public

*OWFTUNFOU�#PBSE�1*# �GPS�XIJDI�approval is awaited2. Due to budget

constraint there is delay in awarding the

contracts.

Delay in obtaining approvals: NSCBI

Airport received late approval from State

(PWFSONFOU�GPS�7*1�ĜZPWFS�BOE�UIFSF�XBT�a delay in removal of encroachments by

State municipality.

‘Work-to-rule’ agitation: Protest from

"JSQPSUT�"VUIPSJUZ�PG�*OEJBĳT�""*�JOUFSOBUJPOBM�BJSQPSUT�EJWJTJPO�*"%�FOHJOFFST�BOE�FNQMPZFFT �XIJDI�IBE�taken around 60 engineers off the

PWFSUJNF�SPTUFS �TMPXFE�EPXO�UIF�QSPKFDU�QSPHSFTT��5IJT�BHJUBUJPO�JT�POF�PG�UIF�major reasons for pushing the project

completion date from March 2012 to

October 2012.

Measures taken by AAI to debottleneck project

1. Chairman of AAI was himself involved

and had meetings with the leaders

of protesting employees. It was only

after his assurance agitation was

suspended.

2. Along with in-house Project

Monitoring & Quality Assurance

1.2"�DFMM �""*�IBT�BQQPJOUFE�BO�independent consultant to ensure the

quality of construction work.


2 As on September 2011

Bridging the Urban Housing Shortage in India | 92

Common risks and suggestive NFBTVSFT�BDSPTT�ěWF�DBTF�TUVEJFT"T�PCTFSWFE�JO�UIF�BCPWF�DBTF�TUVEJFT �there are common factors impacting the

project delivery across these projects

whereas the risk are peculiar to each

QSPKFDU��'VSUIFS �XF�IBWF�TFFO�DPNQBOJFT�adopt different approaches to overcome

PS�NJOJNJ[F�UIF�JNQBDU�PG�EFMBZT�PO�UIF�overall project completion. Based on our

FYQFSJFODF�PG�DBTF�TUVEJFT �CFMPX�BSF�few suggestions that can be addressed

by project owners to help rule out key

DPODFSOT��

�&YIBVTUJWF�SJTL�JEFOUJěDBUJPO�BU�the planning stage

8IJMF�BOBMZ[JOH�UIF�QSPKFDUT �XF�JEFOUJěFE�UIBU�NPTU�DPNQBOJFT�EPOĳU�conduct detailed risk assessment at the

QMBOOJOH�TUBHF��&BDI�QSPKFDU�IBT�TPNF�TQFDJěD�SJTLT�SFMBUFE�UP�UIF�TVSSPVOEJOH�FOWJSPONFOU �DPOUSBDUPST�BOE�MPDBM�stake holders that could impact project

DPNQMFUJPO��'PS�FYBNQMF �7JOEIZBDIBM�project has risks around timely supply

from equipment supplier and NSCBI

airport has risk related to constructing a

QSPKFDU�BU�BO�PQFSBUJPOBM�TJUF��5IVT �UIFSF�is need to do a very detailed analysis of all

QPTTJCMF�SJTLT��'VSUIFS �UIFTF�SJTLT�OFFE�UP�be formally documented and monitored

BU�FBDI�TUBHF�PG�QSPKFDU�FYFDVUJPO�

Holistic view of regulatory approvals

Majority of projects faced hindrances in

HFUUJOH�TUBUVUPSZ�BQQSPWBMT��5IFSF�JT�B�need to include approvals process and

UJNFMJOFT�JO�UIF�QSPKFDU�QMBO�XJUI�TQFDJěD�timelines. Any deviation in achieving

these timelines should have a suitable

NJUJHBUJPO�QMBO �GPS�UJNFMZ�DPNQMFUJPO�PG�QSPKFDU��'VSUIFS �GSPN�(PWFSONFOU�side there is a need to make approval

and clearance processes smooth by

introducing innovative measures such as

single window clearance.

Develop Integrated Project Delivery Schedule

.PTU�QSPKFDUT�BSF�CFJOH�FYFDVUFE�CZ�TQMJU�QBDLBHF�NPEF �JO�XIJDI�NVMUJQMF�contractors are carrying out different

TDPQF��'VSUIFS �FBDI�DPOUSBDUPS�TVCNJUUFE�its own schedule which is generally

not integrated to make a single project

TDIFEVMF��5IF�NPOJUPSJOH�JT�DBSSJFE�PVU�based on individual schedules. In this

TZTUFN�JG�POF�DPOUSBDUPS�JT�EFMBZJOH �UIF�effect will not be seen on activities of

PUIFS�DPOUSBDUPST��5IVT �UP�NPOJUPS�UIF�QSPKFDU�XJUI�NVMUJQMF�DPOUSBDUPST �JU�JT�WFSZ�important to have one a single integrated

project schedule encompassing the

TDPQF�PG�BMM�DPOUSBDUPST��"EEJUJPOBMMZ �UIJT�schedule has to be updated frequently to

monitor overall project status.

Build power partnership with vendors

Delay in getting equipments from

suppliers/contractors is another reason

which impacts the project delivery.

Building a long term relationship with

vendors could help in timely delivery of

FRVJQNFOUT��'VSUIFS �KPJOU�FWBMVBUJPO�of project by project owners and the

DPOUSBDUPST �DBO�IFMQ�JO�JEFOUJGZJOH�UIF�bottlenecks and taking corrective actions.

*O�DBTF�PG�)1$- �UJNFMZ�JOWPMWFNFOU�PG�TFOJPS�NBOBHFNFOU�PG�CPUI�QBSUJFT�)1$-�BOE�DPOUSBDUPS �IBE�IFMQFE�JO�JEFOUJGZJOH�the concerns and they mutually agree on

the corrective actions.

Enhance monitoring agency (PMO) to monitor the progress and bottlenecks on regular basis

Most companies have an in-house

system of monitoring project progress.

)PXFWFS �TFUUJOH�VQ�B�DFOUSBMJ[FE�JOEFQFOEFOU�NPOJUPSJOH�BHFODZ�1.0�could help in monitoring the project

progress and identifying bottlenecks in an

FGěDJFOU�NBOOFS��'VSUIFS �UIJT�XPVME�BDU�as an interface between project site and

DPSQPSBUF�PGěDF �FOIBODJOH�UIF�QSPKFDU�delivery.

Buy-in from execution team on project schedule

5IF�QSPKFDU�TDIFEVMF�JT�PGUFO�QSFQBSFE�CZ�UIF�DPSQPSBUF�PGěDF�BOE�HJWFO�UP�UIF�QSPKFDU�UFBN�GPS�FYFDVUJPO��5IF�TDIFEVMF�JT�OPU�QSFQBSFE�CZ�UBLJOH�JO�UP�DPOěEFODF�BMM�UIF�FYFDVUJOH�BHFODJFT�TVDI�BT�FOHJOFFSJOH �QSPDVSFNFOU�BOE�FYFDVUJPO�UFBNT��5IJT�DSFBUFT�JTTVFT�BSPVOE�accountability of the timelines given in the

TDIFEVMF��5IF�QSPKFDU�TDIFEVMF�IBT�UP�CF�signed off by all agencies after agreeing to

the timelines given for their activities.


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Global insights — Learning from global projects

Although building infrastructure projects is a

global challenge today, the sector is expected to

experience an unprecedented level of investment

and expansion in infrastructure around the world.

An estimated USD 40 trillion of investment would

be needed by 2050 to sustain the global growth1.

To understand the infrastructure challenges

and how industry is preparing to overcome

them, KPMG International conducts ‘Global

$POTUSVDUJPO�4VSWFZĳ �XIJDI�SFĜFDUT�UIF�DPODFSOT�and views of the world’s leading engineering

and construction companies. This survey also

highlights that while the intensity of some issues

is same across the globe, others have more

impact in a particular region or country.


1 KPMG International’s publication — “Insight – The global infrastructure magazine”, November 2010

Challenges of global construction industry

Project delays and cost overruns is a

global phenomenon and India is no

FYDFQUJPO��%VF�UP�EJGGFSFODF�JO�UIF�TPDJP�FDPOPNJD�BOE�QPMJUJDBM�NBUVSJUZ�MFWFMT �UIF�VOEFSMZJOH�DBVTFT�BOE�UIFSFGPSF �UIF�remedies differ from country to country.

%FTJHO�DSFFQ �QPPSMZ�EFěOFE�TDPQF�BOE�lack of approvals have been regarded

as the main causes of delays across the

globe. Contractual disputes also impact

the project schedule although none of the

global construction survey respondents

from the Americas region cited this as

B�DPODFSO �XIJDI�DPVME�JOEJDBUF�UIBU�contracts are tied down more tightly in

this region.

Skill shortage is another issue impacting

the implementation of infrastructure

projects. 84 percent2 of the respondents

felt that the construction industry is not

doing enough to tackle skills shortages.

"MTP �UIF�JOEVTUSZ�JT�NBLJOH�FYUFOTJWF�VTF�PG�GPSFJHO�MBCPS�PO�QSPKFDUT �XIJDI�is both a reaction to local shortfalls and

a natural consequence of the increased

mobility of people.

'VSUIFS �EVF�UP�JODSFBTJOH�DPODFSOT�GPS�DMFBO�FOWJSPONFOU �TVTUBJOBCMF�construction is very high on the agenda

of project owners. Nearly all surveyed

companies have an environmental

QPMJDZ�JO�QMBDF �XJUI�UIF�#PBSE�UBLJOH�responsibility in over two-thirds of cases.

5IPVHI�TVTUBJOBCJMJUZ�JT�QFSDFJWFE�BT�B�DPNQMJBODF�CVSEFO �TVSQSJTJOHMZ�NPTU��QFSDFOU�CFMJFWF�JU�XJMM�BDUVBMMZ�JODSFBTF�QSPěUBCJMJUZ��$PNQBOJFT�DPVME�CFOFěU�CZ�presenting a green image to stakeholders

ĸ�QBSUJDVMBSMZ�DVTUPNFST �UIF�MPDBM�DPNNVOJUZ�BOE�FNQMPZFFT��5IF�TVSWFZ�respondents agree that there are multiple

CFOFěUT�PG�TVTUBJOBCMF�DPOTUSVDUJPO��)PXFWFS �TPNF�SFTQPOEFOUT�EP�OPU�IBWF�a management system to set appropriate

key performance indicators to measure

sustainable performance. Inability to

deliver sustainable infrastructure projects

can have dire consequences for the

developer’s reputation.

Reasons for schedule delay globally

Reasons for cost overrun globally

Note: Respondents could answer more than one option

Source: Global Construction Survey 2008, KPMG International




2 Global Construction Survey 2008, KPMG International

Leading practices followed in the construction industry

Sophisticated approach to risk

management - With growing

VODFSUBJOUJFT�JO�UIF�HMPCBM�NBSLFU �SJTL�management is emerging as one of the

key imperatives for project management.

Leading companies of the world

apply ‘holistic’ approach where risk is fully

integrated into every aspect of the project

life cycle. Rigorous analysis is done at the

planning and bidding stages as part of

BO�FWPMWJOH�SJTL�DVMUVSF��'VSUIFS �QSPKFDU�owners consider and evaluate factors

that may have a direct or indirect impact

on the project such as macro-economic

DPOEJUJPO �UBY�TUSVDUVSF �FOWJSPONFOUBM�QPMJDZ �BOE�DSFEJU�BWBJMBCJMJUZ�

%VSJOH�QSPKFDU�FYFDVUJPO �B�NFDIBOJTN�is put in place to seek a more objective

review of projects by dedicated risk

QSPGFTTJPOBMT �PGUFO�PO�B�RVBSUFSMZ�CBTJT��

"DDPSEJOH�UP�,1.(�*OUFSOBUJPOBMĳT�(MPCBM�$POTUSVDUJPO�4VSWFZ�� QFSDFOU��of the respondents believed that their

systems and controls were fairly or very

TPQIJTUJDBUFE �SFĜFDUJOH�JODSFBTJOH�investment in risk management over a

number of years.

Preferred partnership with suppliers -

(MPCBMMZ �NPTU�PG�UIF�DPNQBOJFT�IBWF�formal or informal partnering agreements

XJUI�DPOUSBDUPST �WFOEPST�BOE�TVQQMJFST��"DDPSEJOH�UP�,1.(�*OUFSOBUJPOBMĳT�(MPCBM�$POTUSVDUJPO�4VSWFZ�� PWFS�90 percent of respondents had some

preferred partnerships with their

contractors and suppliers . Preferred

partnerships not only helped companies

to get reduced prices but also guaranteed

SFTPVSDFT�UP�DBSSZ�PVU�UIF�XPSL�POTJUF �gain priority attention for critical projects

and reduce contractual claims.

Talent management -�5P�PWFSDPNF�SFTPVSDF�TIPSUBHF �UBMFOU�NBOBHFNFOU�is one of the top agenda for infrastructure

DPNQBOJFT��5P�EFWFMPQ�BOE�SFUBJO�B�IJHI�RVBMJUZ�FNQMPZFF�CBTF �DPNQBOJFT�BSF�OVSUVSJOH�UBMFOU�JO�LFZ�QPTJUJPOT �JOWFTUJOH�JO�OFDFTTBSZ�USBJOJOH �BOE�SFUBJOJOH�UIF�best people during adverse conditions.

'VSUIFS �UP�BUUSBDU�GSFTI�UBMFOU�JO�UIF�JOEVTUSZ �TPNF�QSBDUJDBM�NFBTVSFT�BSF�VOEFSUBLFO�JODMVEJOH�CFUUFS�USBJOJOH �HSFBUFS�DPPQFSBUJPO�XJUI�VOJWFSTJUJFT �BOE�an improved salary and career structure.

We’re entering into more strategic partnerships and joint ventures when executing larger projects, in order to spread the risk and leverage key strengths

Survey respondent, United StatesGlobal Construction survey 2009,

KPMG International

We try to identify key staff early and give them job rotation and training opportunities.

Survey respondent, Europe, Middle East and Africa region

Global Construction survey 2009, KPMG International


Cost escalation management: In

a world where costs are constantly

JODSFBTJOH �HSFBUFS�FGěDJFODZ�JT�UIF�LFZ�UP�DPOUSPM�UIF�QSPKFDU�DPTU�PWFSSVOT��5P�DSFBUF�B�MPXFS�DPTU�PQFSBUJPO �DPNQBOJFT�are carefully managing all elements of the

TVQQMZ�DIBJO �BOE�GPDVTJOH�PO�JODSFBTJOH�their productivity. Companies employ a

variety of techniques to manage rising

DPTUT �XJUI�VTBHF�TQSFBE�GBJSMZ�FWFOMZ�BDSPTT�MPOH�UFSN�TVQQMZ�BHSFFNFOUT �FBSMZ�QSPDVSFNFOU �QSF�QVSDIBTJOH�PG�WPMBUJMF�NBUFSJBMT �QBTTJOH�SJTLT�UP�the supply chain and hedging vital

commodities.

Contract clauses: Due to uncertainty

JO�UIF�DPTU�PG�LFZ�NBUFSJBM �DPNQBOJFT�are increasingly using contract clauses

UIBU�TQFDJěDBMMZ�BEESFTT�JOĜBUJPO��.PTU�companies choose to be transparent

by referring to publicly available cost

indices in their contracts. According to

,1.(�*OUFSOBUJPOBMĳT�(MPCBM�$POTUSVDUJPO�4VSWFZ�� QFSDFOU�PG�SFTQPOEFOUT�claim to practice this for the majority of

UIFJS�QSPKFDUT��5IJT�QSBDUJDF�JT�GPVOE�UP�CF�UIF�NPTU�DPNNPO�JO�&VSPQF �.JEEMF�&BTU�BOE�"GSJDB �XJUI�SFMBUJWFMZ�MJUUMF�TVDI�BDUJWJUZ�JO�"TJB�1BDJěD��)PXFWFS �these types of contracts are preferred

CZ�DPOUSBDUPST �XIFSFBT�OPU�BMM�QSPKFDU�owners are willing to share these risks by

agreeing to contract clauses that cover

rising costs. KPMG in India’s point of view

Majority of reasons that lead to project cost and schedule overruns in India are not

NVDI�EJGGFSFOU�GSPN�BOZXIFSF�FMTF�JO�UIF�XPSME��)PXFWFS �UIF�UFDIOJRVFT�VTFE�CZ�(PWFSONFOU�BOE�JOEVTUSZ�UP�PWFSDPNF�UIFTF�CPUUMFOFDLT�BSF�EJGGFSFOU��'BTUFS�SFHVMBUPSZ�BQQSPWBMT �EFUBJMFE�QSPKFDU�QMBOOJOH �DPOUJOVPVT�QSPKFDU�NPOJUPSJOH�BOE�JODMVTJWF�SJTL�NBOBHFNFOU �DPVME�NBLF�*OEJB�DPNQBSBCMF�UP�BOZ�PUIFS�DPVOUSZ�JO�UIF�world in terms of project delivery.

Reasons for schedule delay globally




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Sector snippets


Petroleum

y India’s demand for oil & gas is continuously increasing, though the indigenous production is almost stagnant, leading to increasing imports

y Major sector players are ONGC, IOCL, BPCL, HPCL, OIL, GAIL, RIL, Essar1

y 4MPX�QBDF�PG�FYQMPSBUJPO�BDUJWJUJFT �NBUVSJOH�PJM��HBT�ěFMET�BOE�controlled price regime are some of the key challenges.

Sector Overview

y India is the fourth largest consumer of

FOFSHZ��0JM��(BT�TFDUPS�DPOUSJCVUFT�around 40 percent in India’s primary

energy consumption2.

y 0JM�DPOTUJUVUFT�BSPVOE��QFSDFOU�PG�*OEJBĳT�UPUBM�JNQPSUT��.

y "T�PG�.BSDI�� *OEJB�IBT��SFěOFSJFT�XJUI�B�UPUBM�DBQBDJUZ�PG��.51"4.

y 'SPN��UP�� QSPEVDUJPO�PG�DSVEF�PJM�IBT�HSPXO�BU�B�$"(3�PG��QFSDFOU�GSPN�BSPVOE��NJMMJPO�UPOOFT�UP��NJMMJPO�UPOOFT��%VSJOH�the same period the production of

natural gas has increased at 6.7

QFSDFOU�Q�B�GSPN��#$.�UP��BCM5.

y 'SPN��UP�� consumption of petroleum products

increased at 4.6 percent p.a and gas

DPOTVNQUJPO�BU��QFSDFOU�Q�B�5

Petroleum products and natural gas consumption

Source: Historic consumption of petroleum products and natural gas, Petroleum planning and analysis cell (PPAC), accessed June 2013


1 India Oil & Gas sector competitive landscape, BMI, 11 December 2012 2 BP statistical review of world energy 2012, June 20123 Handbook of Statistics on Indian Economy, Reserve Bank of India, June 20134 Installed Refinery Capacity, PPAC, accessed June 20135 Historic production of petroleum products and natural gas, (PPAC), accessed June 2013

Five year plans performance

Oil and gas is one of the few sectors

XIJDI�NPTUMZ�FYDFFE�UIF�JOWFTUNFOU�UBSHFUT�MBJE�PVU�JO�ěWF�ZFBST�QMBOT��'PS�JOTUBODF �JO�5FOUI�'JWF�:FBS�1MBO �UIF�BDUVBM�FYQFOEJUVSF�XBT��QFSDFOU�PG�QMBOOFE�PVUMBZ�BU�*/3�� DSPSF��4JNJMBSMZ �EVSJOH�UIF�NJE�UFSN�BQQSBJTBM�PG�FMFWFOUI�QMBO �(PWFSONFOU�IBE�SFWJTFE�JUT�QMBOOFE�PVUMBZ�UP�*/3�� DSPSF�GSPN�*/3�� DSPSF �B��QFSDFOU�JODSFBTF�JO�QMBOOFE�FYQFOEJUVSF��5IJT�JT�mainly because of aggressive investment

QMBOT�CZ�PJM�BOE�HBT�DPNQBOJFT��5IF�BDUVBM�FYQFOEJUVSF�EVSJOH�UIF�ěSTU�UXP�ZFBST�BOE��NPOUIT�PG�&MFWFOUI�1MBO�VQ�UP�"VHVTU��XBT�*/3�� DSPSF�XIJDI�JT��QFS�DFOU�PG�UIF�QMBO�approved outlay6.

Key Challenges

1. Slow pace of exploration activities:

*O�*OEJB �BSPVOE��QFSDFOU�PG�BDSFBHF�TUJMM�GBMMT�VOEFS�QPPSMZ�FYQMPSFE�UP�VOFYQMPSFE�SFHJPO7��"MTP �FWFO�BGUFS�EJTDPWFSJOH�PJM�HBT �EFWFMPQNFOU�BOE�QSPEVDUJPO�PG�ěFMET�UBLF�NVDI�MPOHFS�time.

2. .BUVSJOH�0JM�(BT�ěFMET� Most of the

QSPEVDJOH�ěFMET�IBWF�NBUVSFE�BOE�are witnessing a declining production.

.VNCBJ�IJHI�BOE�(VKBSBU�BSF�UZQJDBM�FYBNQMFT�PG�TVDI�ěFMET��"MTP �*NQSPWFE��&OIBODFE�0JM�3FDPWFSZ�*03�&03�QSPHSBNT�JNQMFNFOUFE�CZ�0/($�XFSF�VOBCMF�UP�BSSFTU�UIF�decline.

3. Underutilization of existing natural

gas infrastructure: Natural gas

QJQFMJOF�BOE�$JUZ�(BT�%JTUSJCVUJPO�$(%�JOGSBTUSVDUVSF�MBJE�EPXO�CZ�DPNQBOJFT�NJHIU�CF�VOEFS�VUJMJ[FE�primarily due to constrained domestic

supply of natural gas.

4. Risk of natural gas infrastructure

not being laid down: Due to low

FOUSZ�CBSSJFS �OPO�TFSJPVT�QMBZFST�IBWF�entered in to the business and now

they might not lay the gas pipelines.

Further some new companies that

have entered in the gas business

don’t have requisite capabilities to lay

infrastructure.

Emerging Trends

1. Exploration activities:�5P�QSPNPUF�investment in upstream activities

(PWFSONFOU�IBT�MBVODIFE�/FX�&YQMPSBUJPO�-JDFOTJOH�1PMJDZ�/&-1��*O�UIF�ěSTU�FJHIU�SPVOET�PG�/&-1�TQBOOJOH�� 1SPEVDUJPO�4IBSJOH�$POUSBDUT�14$T�GPS��FYQMPSBUJPO�CMPDLT�IBWF�CFFO�TJHOFE��/&-1�*9�SFDFJWFE��CJET�GPS�� blocks .6

2. Unconventional sources: India

has huge potential to develop

unconventional sources of

hydrocarbon including Shale gas and

$#.��5IF�(PWFSONFOU�PG�*OEJB�JT�QMBOOJOH�UP�MBVODI�UIF�ěSTU�SPVOE�PG�CJEEJOH�GPS�TIBMF�HBT�JO�UIF�5XFMGUI�Five Plan8

3. Fuel prices: Petrol prices have

been decontrolled with effect from

June 2010 and there are plans to

decontrol diesel prices as well.

$VSSFOUMZ �(PWFSONFOU�JT�XPSLJOH�on a mechanism of direct transfer of

TVCTJEZ�GPS�LFSPTFOF�BOE�-1(�9

Planned expenditure vs Actual expenditure

* XI plan actual expenditure is only up to August 2009

Source: Planning commission


6 Seventh to Eleventh Five Year Plans, Planning Commission7 Directorate General of Hydrocarbon (DGH)8 India to launch shale gas exploration bid during 12th Plan, Indian Express, dated 22

November, 20119 Poor consumers may get cash subsidy on LPG, kerosene and fertilizers, Economic

Times, 6 July 2011

Power

y With substantial addition in power generation capacity, peak power EFěDJU�IBT�EFDSFBTFE�JO�UIF�SFDFOU�ZFBST

y Major sector players are NTPC, NHPC, PGCIL, PTC, Tata power, Lanco Power1

y Slow pace of project execution, shortage of power equipments, delays in land acquisition and regulatory approvals are some of the key challenges.

Sector Overview

y India’s power demand and supply

is continuously increasing. During

��UP�� QFBL�FMFDUSJDJUZ�EFNBOE�IBT�JODSFBTFE�BU�B�$"(3�PG��QFSDFOU�BOE�TVQQMZ�BU�B�$"(3�PG��QFSDFOU2.

y "T�PO��"QSJM�� UIF�UPUBM�JOTUBMMFE�capacity for power generation was

BCPVU��(8��"SPVOE��QFSDFOU�PG�UIJT�DPNFT�GSPN�DPBM ��QFSDFOU�GSPN�IZESP ��QFSDFOU�GSPN�HBT�and the remaining 15 percent is

DPOUSJCVUFE�CZ�OVDMFBS �EJFTFM�BOE�other renewable sources of energy�.

Peak power demand supply in India

Source: Power Scenario at a Glance, Central Electric Authority, 2013


1 India power sector competitive landscape, BMI, 4 January 20132 “Power Scenario at a Glance”, Central Electric Authrotiy, June 20133 “Installed Generation Capacity”, Central Electric Authority, April 2013


5IF�QFSGPSNBODF�PG�QPXFS�TFDUPS�JO�ěWF�ZFBS�QMBOT�JT�NPTUMZ�MPXFS�UIBO�UIF�QMBOOFE�UBSHFU��)JTUPSJDBMMZ �BMM�UISFF�TFDUPST�ĸ�DFOUSBM �4UBUF�BOE�QSJWBUF�ĸ�IBWF�fallen short of achieving the planned

UBSHFUT��'PS�JOTUBODF �/JOUI�BOE�5FOUI�'JWF�:FBS�1MBO�CBSFMZ�NBOBHFE�UP�BDIJFWF�half of the planned capacity addition.

)PXFWFS �UIF�QSPTQFDUT�PG�&MFWFOUI�1MBO�look better and according to mid-term

BQQSBJTBM �PG�JU�JT�FYQFDUFE�UP�BDIJFWF�around 80 percent of the targeted

capacity addition.

"MTP �GPS�FWFSZ�ěWF�ZFBS�QMBO�UIF�DBQBDJUZ�addition targets are much higher from

the previous year achievement. For

FYBNQMF �&MFWFOUI�'JWF�:FBS�1MBO�UBSHFU�is around four times then the actual

capacity additions achieved in tenth plan.

Participation from the private sector is

also increasing mainly due to favorable

(PWFSONFOU�QPMJDJFT�BOE�QPXFS�TFDUPS�reforms.

Key Challenges

1. Delay in project execution: India

has been failing to meet the capacity

BEEJUJPO�UBSHFUT�CZ�TJHOJěDBOU�NBSHJOT��'PS�UIF�&MFWFOUI�'JWF�:FBS�1MBO �POMZ�around 70 percent4 of the planned

target capacity addition was met.

2. Shortage of fuel availability: Power

TFDUPS�JT�GBDJOH�TJHOJěDBOU�DIBMMFOHFT�in securing fuel supply primarily due

to lack of good quality domestic

DPBM �FYQFOTJWF�JNQPSUFE�DPBM�BOE�limitation in domestic gas supply.

3. Delay in land acquisition and

environment clearances: Absence of

single window clearance mechanism

results in delay in acquiring land

BOE�PUIFS�FOWJSPONFOU�DMFBSBODFT �thus leading to a prolonged pre-

development cycle.

4. Shortage of power equipment:

5IF�EFNBOE�PG�QPXFS�FRVJQNFOU�FYDFFET�UIF�TVQQMZ�QSJNBSJMZ�GPS�UIF�DPSF�DPNQPOFOUT�PG�#PJMFST �5VSCJOFT�BOE�(FOFSBUPST��5IF�QSJNBSJMZ�SFBTPO�for this mismatch is the equipment

manufacturers were unable to keep

pace with increasing generation

capacity.

Emerging Trends

1. Power Reforms: (PWFSONFOU�IBT�taken several steps to promote

investment and private sector

participation in the sector. Some of

the major reforms that have been

JNQMFNFOUFE�PWFS�UIF�ZFBST�JODMVEF��5IF�&MFDUSJDJUZ�"DU�� VOCVOEMJOH�PG�4&#T �UBY�CFOFěUT �"DDFMFSBUFE�Power Development and Reform

1SPHSBN�"1%31�GPS�EJTUSJCVUJPO �QFSNJTTJPO�GPS�USBEJOH�PG�QPXFS �FUD��5IFTF�EFWFMPQNFOUT�IBWF�HJWFO�rise to new opportunities for power

players especially in the power

generation space.

2. Increased private sector

participation: As a result of favorable

(PWFSONFOU�QPMJDJFT�BOE�JOJUJBUJWFT �there have been a plethora of new

projects announced by the private

TFDUPS�DPNQBOJFT��5IF�TIBSF�PG�private sector in total electricity

generation has grown rapidly from

MFTT�UIBO��QFSDFOU�JO�UIF�5FOUI�1MBO�UP�BSPVOE��QFSDFOU�EVSJOH�UIF�&MFWFOUI�1MBO��5IJT�TIBSF�FYQFDUFE�to further increase to 50-60 percent

EVSJOH�UIF�5XFMGUI�QMBO5.

3. Promotion of renewable energy

for power generation:�(PWFSONFOU�is promoting renewable energy for

power generation to meet the dual

challenges of energy security and

DMJNBUF�DIBOHF��*OEJB�IBT�TJHOJěDBOU�potential for solar energy and to tap

this potential the Jawaharlal Nehru

/BUJPOBM�4PMBS�.JTTJPO�+//4.�XBT�MBVODIFE�JO��5IF�NJTTJPO�UBSHFUT�� .8�PG�TPMBS�QPXFS�CZ��6.

Planned target vs actual achievement

Source: Power Scenario at a Glance, Central Electric Authority, 2012


4 Mid-term appraisal of Eleventh Five Year Plan, Planning Commission5 Tenth and Eleventh Five Year Plan, Planning

Commission6 PM launches Jawaharlal Nehru National Solar Mission

– Solar India, Press Information Bureau, 11 January 2010

Coal

y %SJWFO�CZ�TJHOJěDBOU�JODSFBTF�JO�EFNBOE�GSPN�QPXFS�BOE�TUFFM�sectors, the gap between the demand and supply of coal is widening

y Major sector players are CIL, SCCL1

y Slow pace of exploration, lack of evacuation infrastructure and environmental concerns are some of the key challenges.

Sector Overview

y India is the third largest producer

PG�DPBM�JO�UIF�XPSME �BDDPVOUJOH�GPS�about 5.6 percent of the total global

production2.

y "SPVOE��QFSDFOU�PG�*OEJBĳT�BOOVBM�primary energy consumption is

sourced through coal�.

y "T�PG�"QSJM�� *OEJBĳT�UPUBM�recoverable coal reserves stood at

��CJMMJPO�UPOOFT�CU�PG�XIJDI�about 118 bt are proved reserves4.

y 5IF�QPXFS�TFHNFOU�JT�UIF�MBSHFTU�consumer of coal in India accounting

for about 75 percent of the total

coal consumption1. Other segments

JODMVEF�TUFFM �DFNFOU �SBJMXBZT�BOE�GFSUJMJ[FS�JOEVTUSZ�

Coal production and consumption

Source: Ministry of Coal


1 India mining sector competitive landscape, BMI, 26 October 20122 BP Statistical Review 2012, June 20123 Ministry of Coal4 Ministry of Coal


5JMM�UIF�FOE�PG�&JHIUI�'JWF�:FBS�1MBO �DPBM�sector was able to achieve the planned

FYQFOEJUVSF�UBSHFUT��)PXFWFS �UIF�QFSGPSNBODF�PG�SFDFOUMZ�DPODMVEFE�ěWF�year plans has been disappointing. For

JOTUBODF �JO�/JOUI�BOE�5FOUI�'JWF�:FBS�1MBOT �UIF�BDUVBM�FYQFOEJUVSF�BHBJOTU�UIF�QMBOOFE�PVUMBZ�XBT�BCPVU��QFSDFOU�*/3�� DSPSF�BOE��QFSDFOU�*/3�� DSPSF�SFTQFDUJWFMZ��%VSJOH�UIF�NJE�UFSN�BQQSBJTBM�PG�FMFWFOUI�QMBO �(PWFSONFOU�has revised its planned outlay of INR

�� DSPSF�UP�*/3�� DSPSF �B�EFDMJOF�PG�BCPVU��QFSDFOU��5IF�NBJO�reason behind this is the monopolistic

role of the State owned players in the

Indian coal sector5.

Key Challenges

1. Slow pace of exploration activities:

Of the total recoverable coal

SFTFSWFT �BCPVU��QFSDFOU�BSF�JO�UIF�‘indicated and the inferred’ category6.

5IJT�SFĜFDUT�TMVHHJTIOFTT�JO�UIF�FYQMPSBUJPO�EPNBJO�JO�UIF�*OEJBO�DPBM�sector.

2. Socio-environment issues:

4JHOJěDBOU�QPSUJPOT�PG�UIF�*OEJBĳT�coal reserves lie in the forest areas

JOGFTUFE�CZ�OBYBMT��-BOE�BDRVJTJUJPO�in such sensitive areas poses a

NBKPS�DIBMMFOHF�GPS�UIF�TFDUPS��"MTP �environmental clearance and forest

clearance processes for project

implementation is generally slow.

3. Lack of Competition:�5IF�*OEJBO�DPBM�sector is predominantly monopolistic

JO�OBUVSF �MBSHFMZ�DPOUSPMMFE�CZ�$PBM�India and other State owned miners.

.PSFPWFS �UIFSF�JT�BO�BCTFODF�PG�BO�independent regulator in this sector.

4. Inadequate evacuation

infrastructure: Coal sector primarily

depends on rail evacuation for off-take

and delivery of coal stocks. With

TJHOJěDBOUMZ�HSPXJOH�EFNBOE �UIF�evacuation infrastructure needs to be

FOIBODFE�GPS�TVTUBJOJOH�BO�FGěDJFOU�transportation.

5. Environmental concerns:

6OTDJFOUJěD�NJOJOH�PG�DPBM�JO�*OEJB�has led to a number of environmental

QSPCMFNT�JO�UIF�QBTU��5IFSF�JT�B�dominance of open cast mining

techniques in India as the production

from using such techniques can start

in short span of time.

Emerging Trends

1. Captive mining for coal: Captive

mining for coal is gradually increasing

JO�UIF�DPVOUSZ��"T�PG�.BSDI�� coal blocks with reserves of 45.89

billion tonnes have been allocated for

DBQUJWF�NJOJOH��1SJWBUF�DPNQBOJFT �whose involvement in the country’s

DPBM�TFDUPS�JT�MJNJUFE�UP�KPJOU�WFOUVSFT �have been allocated 100 blocks with

SFTFSWFT�PG��CJMMJPO�UPOOFT7.

2. Efforts for technology

enhancement: Indian coal miners are

JODSFBTJOH�UIFJS�3�%�FYQFOEJUVSFT�in an attempt to enhance technology

and ensure productivity gains. Indian

players are also warming up to

collaborate with the foreign partners

GPS�JNQMFNFOUBUJPO�PG�DPNQMFY�projects in the sector.

3. Widening demand-supply gap:

5IF�EFNBOE�GPS�DPBM�JO�*OEJB�JT�SBQJEMZ�increasing mainly driven by the new

QSPKFDUT�JO�UIF�QPXFS�TFDUPS �XIFSFBT�indigenous production is not able to

JODSFBTF�XJUI�TBNF�QSPQPSUJPO��5IJT�has created a demand supply gap

JO�UIF�DPVOUSZ�BOE�UP�NFFU�UIJT�HBQ �India has been increasingly importing

DPBM��*O��ĸ�� UIF�DPVOUSZ�JNQPSUFE��NJMMJPO�UPOT�PG�DPBM�JODMVEJOH�UIFSNBM�BOE�DPLJOH�DPBM �SFĜFDUJOH�B�44 percent increase over imports of

68.9 million tons in 2010–118.


* XI plan actual expenditure is only up to August 2009



5 Seventh to Eleventh Five Year Plans, Planning Commission6 Ministry of coal7 2011 India Energy Handbook8 Coal Imports, Press Information Bureau,14 May 2012

Steel

y India has surplus iron production and is a net exporter of steel

y Major sector players are SAIL, TISCO, JSW, Essar1

y Hindrances in land acquisition, depleting iron ore reserves and shortage of raw materials are some of the key challenges.

Sector Overview

y India has become fourth largest

producer of crude steel in the world

BOE�JT�FYQFDUFE�UP�CFDPNF�UIF�second largest producer by 20152.

y &YQPSU�PG�ěOJTIFE�TUFFM�EVSJOH��TUPPE�BU��NJMMJPO�UPOOFT�XIJMF�JNQPSUT�EVSJOH��TUPPE�BU��million tonnes�.

y Although the per capital steel use has

JODSFBTFE�GSPN��LH�JO��UP��kg in 2010-11� �JU�JT�TJHOJěDBOUMZ�MPXFS�compared to the world average of

about 215 kg�.

y 5IF�DPOTUSVDUJPO�BOE�JOGSBTUSVDUVSF�segment was the largest consumer

PG�ěOJTIFE�TUFFM �BDDPVOUJOH�GPS�BCPVU�61 percent of the total consumption4.

Other major segments include

manufacturing and automobile

industry.

Finished steel production and consumption

Source: Annual report 2011-12, Ministry of Steel


1 India Metal sector competitive landscape, BMI, 25 May 2012 2 Annual Report 2011-12, Ministry of Steel3 Ministry of Steel4 IBEF Report


After achieving only 40 percent and 44

percent of the planned outlay during

/JOUI�BOE�5FOUI�'JWF�:FBST�1MBOT �the steel sector has posted a strong

SFDPWFSZ�EVSJOH�UIF�FMFWFOUI�QMBO��5JMM�%FDFNCFS�� UIF�TFDUPS�IBT�BMSFBEZ�achieved about 80 percent of the planned

FYQFOEJUVSF�GPS�UIF�FMFWFOUI�QMBO��5IF�main reason behind this is the aggressive

spending by the steel companies for

DBQBDJUZ�FYQBOTJPO�QSPKFDUT5.

Key Challenges

1. Hindrances in land acquisitions:

Land acquisition is a sensitive issue

in India. Land acquisition approvals

often take a long time in the country

SFTVMUJOH�JO�QSPKFDU�EFMBZT��.PSFPWFS �the environmental clearances also

generally take longer than stipulated

time in the country.

2. Shortage of raw materials:�5IF�steel manufacturers often face the

shortage of raw materials especially

coal and natural gas in India. India is

an importer of high grade coking coal

which is a major feedstock for the

steel sector.

3. Depleting iron ore resources: India

has limited resources of iron ore.

Moreover the iron ore resources are

depleting fast in the country.

4. Lack of adequate infrastructure:

While the coking coal is imported

JOUP�*OEJB�UISPVHI�QPSUT �NPTU�PG�the steel manufacturing plants are

MPDBUFE�JOMBOE��)FODF �UIF�TUFFM�NBOVGBDUVSFST�IBWF�UP�CFBS�FYUSB�burden in their transportation costs.

Emerging Trends

1. #SPXOěFME�FYQBOTJPO�QSPKFDUT� In

view of the surge in steel demand in

UIF�DPVOUSZ �B�OVNCFS�PG�CSPXOěFME�projects have been initiated in the

recent past to increase the production

DBQBDJUZ��5IF�EPNFTUJD�EFNBOE�GPS�TUFFM�JT�FYQFDUFE�UP�JODSFBTF�BU�an annual average rate of over 10

percent till 2014 and would require

B�TJHOJěDBOU�JODSFBTF�JO�UIF�FYJTUJOH�production capacity6.

2. Efforts for technology

enhancement: Indian steel

manufacturers are warming up to the

application of advance technologies

TVDI�BT�IJHI�UPQ�QSFTTVSF �IJHI�CMBTU�UFNQFSBUVSF�BOE�QVMWFSJ[FE�DPBM�injection in the production processes.

Both public and private sector players

are also increasing their R&D budget

with focus on introduction of advance

technologies.

3. Mergers and acquisitions:�5IF�Indian steel industry has witnessed

a number of major merger and

acquisition deals in the recent past.

"QBSU�GSPN�UIF�EPNFTUJD�EFBMT �UIF�TFDUPS�BMTP�XJUOFTTFE�TJHOJěDBOU�B�OVNCFS�PG�DSPTT�CPSEFS�CPUI�JOCPVOE�BOE�PVUCPVOE�EFBMT�


* XI plan expenditure during April 2007-December 2010



5 Seventh to Eleventh Five Year Plans, Planning Commission6 IBEF Report

Ports

y 4IBSF�PG�OPO�NBKPS�QPSUT�JO�UPUBM�USBGěD�IBT�SJTFO�TIBSQMZ�GSPN��percent in 2005-06 to 40 percent in 2011-12

y Major sector players are Government authorities, Adani Group, DP world, APM Terminal1

y Slow pace of development, lack of integrated approach and highly congested ports are some of the key challenges.

Sector Overview

y India’s port sector handles about 95

percent of India’s total international

cargo by volume and about 70 percent

by value2.

y 0WFS�UIF�MBTU�TFWFSBM�ZFBST �UIF�SPMF�of major ports has been reducing in

growth terms when compared to non-

NBKPS�QPSUT��5IF�USBGěD�BU�NBKPS�QPSUT�IBT�CFFO�HSPXJOH�BU�$"(3�PG�BSPVOE��QFSDFOU�EVSJOH��UP��while that at non-major ports has been

HSPXJOH�BU�$"(3�PG��QFSDFOU�ĸ�B�difference of over 10 percent�.

y 5IF�(PWFSONFOUĳT�.BSJUJNF�"HFOEB�2020 aims to increase the psort

DBQBDJUZ�UP�PWFS�� NJMMJPO�UPOOFT�CZ�':��BHBJOTU�UIF�FYQFDUFE�USBGěD�PG�BCPVU�� NJMMJPO�UPOOFT�CZ�then4��5IJT�JT�MJLFMZ�UP�CSJOH�EPXO�UIF�DVSSFOU�BWFSBHF�VUJMJ[BUJPO�MFWFM�PG�PWFS�90 percent to about 80 percent5 �UIVT �reducing port congestion.

5SBGěD�BU�*OEJBO�QPSUT

Source: Indian Ports Association, Crisil, KPMG in India analysis


1 India port sector,BMI, accessed 4January 2013 2 India in Business, Ministry of External Affairs3 Indian Ports Association, Crisil; KPMG in India analysis4 Ministry of Shipping’s Maritime Agenda 2010-205 Indian Ports Association, Crisil; Maritime Agenda 2010-20; KPMG in India analysis


5IF�QFSGPSNBODF�PG�UIF�QPSU�TFDUPS�JO�UFSNT�PG�UIF�ěWF�ZFBS�QMBOT�IBT�CFFO�B�NJYFE�CBH��BNPOH�UIF�MBTU��ěWF�ZFBS�QMBOT �POMZ��QMBOT�XJUOFTTFE�NPSF�PG�BDUVBM�FYQFOEJUVSF�UIBO�XIBU�XBT�FBSMJFS�BMMPDBUFE��5IF�TDFOBSJP�JO�SFTU�PG�UIF��plans was critically unfavourable with

BDUVBM�FYQFOEJUVSF�CFJOH�BT�MPX�BT�KVTU��QFSDFOU�PG�UIF�UBSHFU�JO�/JOUI�QMBO��'VSUIFS �EVSJOH�UIF�NJE�UFSN�BQQSBJTBM�PG�UIF�&MFWFOUI�1MBO �UIF�JOWFTUNFOU�target in the port sector is reduced to INR

�� DSPSF�XIJDI�JT�MFTT�UIBO�IBMG�PG�UIF�PSJHJOBM�QSPKFDUJPO�PG�*/3�� DSPSF6.

Key Challenges

1. Delay in Infrastructure

development: It has been observed

that of the 276 port projects

envisaged under National Maritime

%FWFMPQNFOU�1SPHSBNNF�� POMZ��DPVME�CF�DPNQMFUFE�UJMM�ěTDBM��7��5IVT�SFTVMUJOH�B�EFMBZ�JO�development of port projects

2. Lack of integrated approach:

Standalone initiatives by various

ministries results in lack of master

plan approach for development of

mega projects.

3. Over port utilization levels:�*O�*OEJB �UIF�QPSU�VUJMJ[BUJPO�JT�BQQSPYJNBUFMZ�90 percent as against the global

TUBOEBSET�PG��QFSDFOU��5IVT�SFTVMUJOH �JO�IJHI�DPOHFTUJPO�BOE�turnaround time and hampering global

competitiveness of most of Indian

major ports.

Emerging Trends

1. Capacity addition: 5IF�DBQBDJUZ�BU�CPUI�UIF�&BTUFSO�BOE�8FTUFSO�.BKPS�1PSUT�IBT�JODSFBTFE�BU�B�$"(3�PG��QFSDFOU�EVSJOH�':��':��8.

2. Change in International trade

pattern: -BUFMZ �*OEJB�IBT�TIJGUFE�its trade pattern from traditional

dominance of the US and Western

&VSPQF�UP�GPDVTJOH�PO�&BTU�BOE�"TJB�1BDJěD�SFHJPOT��*U�IBT�CFFO�PCTFSWFE�UIBU�UIF�TIBSF�PG�$IJOB�JODMVEJOH�)POH�,POH�BOE�GFX�FDPOPNJFT�"VTUSBMJB �*OEPOFTJB�BOE�3FQVCMJD�PG�,PSFB�JO�*OEJBĳT�UPUBM�USBEF�IBT�BMNPTU�EPVCMFE�EVSJOH�':��':�� XIJMF�UIF�share of developed markets such as

UIF�64 �(FSNBOZ �'SBODF�BOE�UIF�6,�either remained same or decreased

to half of their respective levels during

the same period9.

3. Changes in Cargo Handling: 5IF�Indian maritime sector has been

witnessing the following major

DIBOHFT�JO�DBSHP�IBOEMJOH�

y In terms of overall cargo handled in

UPOOFT �UIF�USBEJUJPOBM�EPNJOBODF�of eastern major ports has been

overtaken by western major ports.

%VSJOH�':��':��UIF�USBGěD�handled at western major ports

IBWF�JODSFBTFE�BU�B�$"(3�PG��QFSDFOU �XIJMF�UIF�USBGěD�IBOEMFE�BU�eastern major ports increased at a

$"(3��QFSDFOU�10

y 8JUIJO�UIFTF�PWFSBMM�DBSHP�USFOET �UIF�DPOUBJOFS�USBGěD �IPXFWFS �has been witnessing a different

growth story. In terms of absolute

USBGěD�NJMMJPO�UPOOFT �DPOUBJOFS�USBGěD�JT�FTUJNBUFE�UP�BDDPVOU�GPS�BQQSPYJNBUFMZ��QFSDFOU�JO�':��PG�UIF�PWFSBMM�DPNNPEJUZ�pie of around 885 million tonnes.

5IJT�TIBSF�JT�FYQFDUFE�UP�JODSFBTF�UP��QFSDFOU�CZ�':��PG�UIF�UPUBM�QSPKFDUFE�QJF�PG�� NJMMJPO�tonnes6.


��9*�QMBO�BDUVBM�FYQFOEJUVSF�JT�POMZ�GPS�ěSTU�UXP�ZFBST ��BOE��



6 Seventh to Eleventh Five Year Plans, Planning Commission7 Crisil research8 Crisil research; KPMG in India analysis9 Ministry of Commerce, KPMG in India analysis10 Indian Ports Association, Crisil, KPMG in India analysis

Railways

y Railways is the principle mode of transportation for freight and passengers

y Indian Railways enjoys a near monopoly position in the country

y Highly congested network and frequent Government interventions are some of the key challenges.

Sector Overview

y 5IF�OVNCFS�PG�QBTTFOHFST�NPWFE�IBT�been increasing from about 6.2 billion

JO��UP��CJMMJPO�JO�� HSPXJOH�BU�$"(3�PG��QFSDFOU1.

y 5IF�GSFJHIU�NPWFNFOU�IBT�CFFO�increasing from 728 million tonnes

JO��UP�� NJMMJPO�UPOOFT�JO�� HSPXJOH�BU�$"(3�PG��percent1.

y Coal is the leading commodity

transported through railways and

in 2010-11 its share in total rail

freight is around 46 percent2. Other

DPNNPEJUJFT�JODMVEF�TUFFM �GFSUJMJ[FST �DFNFOU �FUD�

y 5IF�SBJMXBZ�JT�QMBOOJOH�UP�BEE�� kms of new lines in the period 2010-

2020�.

Rail freight and passenger movement

Source: Ministry of Railways


1 Ministry of Railways, KPMG in India analysis2 Crisil research; KPMG in India analysis3 Indian railways, web search


5IF�JOWFTUNFOU�UBSHFU�BDIJFWFNFOUT�in the railways sectors have been very

CMFBL�JO�UIF�QBTU�ěWF�ZFBS�QMBOT��*O�UIF�5FOUI�QMBO�UIF�QFSDFOUBHF�BDIJFWFNFOU�IBT�EFDSFBTFE�UP��QFSDFOU�GSPN��percent in the Seventh Plan. In the

NJE�UFSN�BQQSBJTBM�PG�UIF�&MFWFOUI�1MBO�UIF�UPUBM�FYQFOEJUVSF�UBSHFU�JT�SFEVDFE�UP�*/3�� DSPSF�XIJDI�JT��QFS�cent lower than the earlier projection of

*/3�� DSPSF��#PUI�$FOUSBM�TFDUPS�and private investments are below the

PSJHJOBM�QSPKFDUJPOT��*O�5XFMGUI�1MBO �UIF�investment envisaged in railways is INR

�� DSPSFT4.

Key Challenges

1. Infrastructure challenges: Railway

JOGSBTUSVDUVSF�JT�IJHIMZ�DPOHFTUFE �especially in areas that are critical

GSPN�GSFJHIU�QFSTQFDUJWF��5IPVHI�USBGěD�NBOBHFNFOU�JT�HSBEVBMMZ�CFJOH�VQEBUFE �B�MBSHF�DIVOL�PG�UIF�OFUXPSL�is not modern yet.

2. Lack of reliable freight

transportation services: Lack

of tracks dedicated to freight

transportation and low priority

accorded to freight trains vis-à-vis to

passenger trains have been resulting

in rail being usually considered as

slow and unreliable transportation

PQUJPO��5IJT�IBT�OFHBUJWFMZ�JNQBDUFE�the competitiveness of railways.

3. Regulatory challenges: Increasingly

frequent interventions by Indian

railways in determining pricing

GPS�DPOUBJOFSJ[FE�SBJM�TFSWJDFT�IBT�hindered the business potential that

private players have been envisioning

JO�UIF�MBTU��ZFBST��4JNJMBS�IBT�been the case with private investors.

5IPVHI�B�OVNCFS�PG�PQQPSUVOJUJFT�GPS�QSJWBUF�JOWFTUPST�FYJTU�XJUIJO�UIF�XJEFS�BSFB�PG�GSFJHIU�DBSSJBHF �UIF�policy governing private participation

is still evolving.

Emerging Trends

1. Role of PPP: With the entry of private

QMBZFST�JO�DPOUBJOFSJ[FE�GSFJHIU�NPWFNFOU�CZ�SBJM �UIF�JODSFBTFE�competitiveness among public versus

QSJWBUF�QMBZFS �BT�XFMM�XJUIJO�UIF�private players is gradually resulting in

competitive offering to end users.

2. Focus on metro rail: While currently

very few cities such as Delhi and

,PMLBUB�CPBTU�PG�NFUSP�SBJM�BWBJMBCJMJUZ �PWFS��DJUJFT�JODMVEJOH�#BOHBMPSF �.VNCBJ �$IFOOBJ �"INFEBCBE �Hyderabad and Lucknow are currently

FOWJTJPOJOH�EFWFMPQNFOU�PG�NFUSP�SBJM �UIF�QSPKFDUT�CFJOH�FJUIFS�JO�QMBOOJOH �EFTJHOJOH�PS�FYFDVUJPO�TUBHFT5.

3. *ODSFBTFE�GPDVT�PO�GSFJHIU�TQFDJěD�infrastructure: Keeping an eye on the

GVUVSF �UIF�(PWFSONFOU�JT�EFWFMPQJOH�two Dedicated Freight Corridors

%'$T�TQBOOJOH�PWFS�� LNT �FYQFDUFE�UP�CF�DPNQMFUFE�CZ��6. In

UFSNT�PG�FYQFDUFE�OPO�DPOUBJOFSJ[FE�USBGěD�BMPOH�UIF�8FTUFSO�BOE�&BTUFSO�%'$T �BCPVU��NJMMJPO�UPOT�BOOVBMMZ�JT�FYQFDUFE�UP�CF�DBSSJFE�CZ�UIF�UXP�%'$T�JO��UIJT�USBGěD�JT�FYQFDUFE�UP�JODSFBTF�UP�BCPVU��million tons annually by 2021-227.





4 Seventh to Twelfth Five Year Plans, Planning Commission5 Indian railways, city metro authorities, web search6 Ministry of Railways, web search7 DFC website, KPMG in India Analysis

Civil Aviation

y $JWJM�BWJBUJPO�JO�*OEJB�IBT�XJUOFTTFE�TJHOJěDBOU�HSPXUI�JO�SFDFOU�ZFBST�CPUI�JO�UFSNT�PG�QBTTFOHFS�BOE�GSFJHIU�USBGěD

y Major airport developers are AAI, GVK, GMR1

y High capital requirements, increasing security concerns, lack of skilled manpower are some of the key challenges.

Sector Overview

y 5IF�DJWJM�BWJBUJPO�TFDUPS�JO�*OEJB�IBT�been playing an increasingly critical

role in the overall scheme of air-based

NPWFNFOU �CF�JU�GSFJHIU�USBOTQPSUBUJPO�or passenger movement.

y 5IF�GSFJHIU�IBT�CFFO�HSPXJOH�GSPN��million tonnes in 2006-07 to about 2.2

NJMMJPO�UPOOFT�JO��$"(3��QFSDFOU �UIF�OVNCFS�PG�QBTTFOHFST�has increased from about 96 million

to 159 million during the same period

$"(3��QFSDFOU2.

y 5IF�NBKPS�DPOTUJUVFOUT�PG�UIF�CVML�GSFJHIU�BSF�UFMFDPN��*5�QSPEVDUT �QIBSNBDFVUJDBMT �IJ�WBMVF�HBSNFOUT�accessories and perishable items.

y Changes in regulatory space have

CFFO�PGGFSJOH�OFX�PQQPSUVOJUJFT��the currently discussed policy

guidelines on allowing foreign carriers

UP�UBLF�FRVJUZ�JO�*OEJBO�BJSMJOFT �JG�JNQMFNFOUFE �XPVME�PQFO�VQ�B�plethora of investment opportunities.

Air freight and passenger movement

Source: CRISIL, AAI, KPMG in India analysis


1 India airport sector, BMI, accessed 3 January 20132 Crisil, Airports Authority of India, KPMG in India analysis


5IF�DJWJM�BWJBUJPO�TFDUPS�JO�*OEJB�JT�UIF�only segment within transportation

infrastructure that has witnessed

DPOTJTUFOUMZ�FYDFMMFOU�QFSGPSNBODF�JO�UFSNT�PG�BDUVBM�QMBOOFE�FYQFOEJUVSF�versus the planned allocation. With the

POMZ�FYDFQUJPO�PG�UIF�/JOUI�1MBO �BMM�PG�UIF�MBTU��ěWF�ZFBS�QMBOT�IBWF�TFFO�UIF�BDUVBM�FYQFOEJUVSF�CFJOH�NPSF�UIBO�XIBU�XBT�envisaged at the commencement of the

QMBO �UIJT�CFJOH�EFTQJUF�UIF�GBDU�UIBU�UIF�allocation has been increasing manifold in

BCTPMVUF�UFSNT��'PS�JOTUBODF �UIF�QMBOOFE�allocation increased from less than INR

� ��DSPSF�JO�UIF�4FWFOUI�1MBO�UP�PWFS�*/3�� DSPSF�JO�UIF�&MFWFOUI�1MBO��*O�UIF�5XFMGUI�1MBO �TIBSF�PG�QSJWBUF�TFDUPS�JT�FYQFDUFE�UP�CF�BSPVOE��QFSDFOU�PG�total investment in airport infrastructure.

8JUI�TFWFSBM�(SFFOěFME�BOE�#SPXOěFME�QSPKFDUT�JO�QSPHSFTT �TVDI�BO�FYQFOEJUVSF�TDFOBSJP�JT�BMPOH�FYQFDUFE�MJOFT�.

Key Challenges

1. Lack of skilled professionals:

Shortage of skilled manpower in

TQFDJBMJ[FE�TVC�TFDUPST�TVDI�BT�NBJOUFOBODF �SFQBJS�BOE�PWFSIBVM�.30�QPTFT�B�DIBMMFOHF�XJUIJO�UIF�civil aviation sector.

2. Financial constraints: With

JODSFBTJOH�MFWFM�PG�TFDVSJUZ�UISFBU �there is a need for latest technologies

and infrastructure at the airports

BOE�SFMBUFE�TFU�VQT��5IVT �DSFBUJOH�ěOBODJBM�QSFTTVSF�PO�UIF�TFDUPS��

3. Infrastructural constraints: Civil

aviation operations being asset-

JOUFOTJWF�BOE�FYQFOTJWF �LFFQJOH�the capital cost under control is an

immense challenge. Lack of long

UFSN��ZFBS�WJFX�FOTVSJOH�additional land availability for further

MBSHF�FYQBOTJPOT�NBZ�OFHBUJWFMZ�impact the prospects of civil aviation

infrastructure as demand grows

BOE�DJUJFT�FYQBOE��5IF�JTTVF�PG�land acquisition and environmental

concerns are likely to become all the

more critical in the years ahead.

Emerging Trends

1. Increase in infrastructure

investments:�5P�PWFSDPNF�UIF�SJTJOH�USBGěD �JOGSBTUSVDUVSF�DPNQBOJFT�BSF�FYQFDUFE�UP�JOWFTU�*/3��CJMMJPO�PWFS�UIF�OFYU�ěWF�ZFBST��"MNPTU��percent of the investments would be

BJNFE�BU�JOGSBTUSVDUVSF�FYQBOTJPO�BOE�NPEFSOJ[BUJPO�PG�NFUSP�BJSQPSUT4 .

2. *ODSFBTF�JO�USBGěD�BU�OPO�NFUSP�airports:�"JSMJOFTĳ�SPVUF�EJWFSTJěDBUJPO�UP�NFFU�SPVUF�ĸ�EJTQFSTBM�HVJEFMJOFT �JT�MJLFMZ�UP�JODSFBTF�UIF�USBGěD�BU�OPO�NFUSP�BJSQPSUT��5IFTF�HVJEFMJOFT�SFRVJSF�BJSMJOFT�UP�EFEJDBUF�B�ěYFE�percentage of their services to routes

DPWFSJOH�OPO�NFUSP�BJSQPSUT��'VSUIFS �a surge in leisure and medical tourism

JT�FYQFDUFE�UP�JODSFBTF�USBGěD�BU�OPO�NFUSP�BJSQPSUT�BT�DBSSJFST�FYQBOE�internationally and provide direct

connectivity to non-metro tourist

DFOUFST��"MTP �JODSFBTF�JO�CVTJOFTT�USBWFM�XJMM�BMTP�TVQQPSU�USBGěD�HSPXUI�

3. Increase in Other Growth Avenues:

Opportunities in general aviation

DIPQQFST �CVTJOFTT�KFUT �DIBSUFS�TFSWJDFT�BSF�BMTP�MJLFMZ�UP�JODSFBTF�at a fast pace with growing bottom-

line of corporate and high net worth

individuals.





3 Seventh to Twelfth Five Year Plans, Planning Commission4 Airport Authority of India, Crisil Research

Roads

y With expansion of highways and rural roads, the demand for road freight has increased

y Major players in road construction sector are NHAI, L&T, Reliance1

y Delays in project execution and sub-optimal infrastructure for maintaining roads are some of the key challenges.

Sector Overview

y 5IF�SPBE�TFDUPS�GPSNT�UIF�CBDLCPOF�PG�EPNFTUJD�JOGSBTUSVDUVSF�JO�*OEJB �given that the share of highways

in domestic freight movement has

jumped from a low of 11 percent of

82 million tonnes in 1950-51 to 61

QFSDFOU�PG�� NJMMJPO�UPOOFT�JO�2007-082.

y *O�UIF�SFDFOU�ZFBST �SPBE�GSFJHIU�IBT�been growing from 621 btkm in 2005-

��UP��CULN�JO��BU�B�$"(3�PG��QFSDFOU�.

y While the National Highways

constitute a meager 2 percent of the

PWFSBMM�SPBE�OFUXPSL �UIFZ�DBSSZ�DMPTF�to about 40 percent of the total road

freight4��5IJT�IJHIMJHIUT�UIF�QSFTTVSF�PO�*OEJBĳT�IJHIXBZ�JOGSBTUSVDUVSF �UIVT�underlining the need for constant

maintenance and addition of new

highways.

y 4UBUFT�PG�3BKBTUIBO �.BEIZB�1SBEFTI �,BSOBUBLB �(VKBSBU�BOE�.BIBSBTIUSB�are taking several majors measures

to promote private participation in

construction/maintenance of State

roads.

Road freight

Source: CRISIL, KPMG in India analysis


1 India road sector, BMI, accessed 4 January 2013 2 IDBI Capital’s Railways Sector report 2010, KPMG in India Analysis3 Crisil, KPMG in India Analysis4 KPMG in India’s report — ‘Adding Wheels’


5IF�QFSGPSNBODF�PG�UIF�SPBE�TFDUPS�XJUI�SFTQFDU�UP�UIF�ěWF�ZFBS�QMBOT�IBT�CFFO�ĜVDUVBUJOH��BNPOH�UIF�MBTU��ěWF�ZFBS�QMBOT �XIJMF�JOJUJBM�GFX�QMBOT�TBX�BDUVBM�FYQFOEJUVSF�NPSF�UIBO�XIBU�XBT�QMBOOFE �this trend got reversed in the last latest

UIF�/JOUI�BOE�5FOUI�QMBOT��/PUBCMF�JT�the fact that planned investment in

UIF�&MFWFOUI�1MBO�BT�FOWJTBHFE�BU�UIF�beginning of the plan was over INR

� �� DSPSF�ĸ�BMNPTU��UJNFT�PG�what was planned for the Seventh plan.

)PXFWFS �EVSJOH�NJE�UFSN�BQQSBJTBM�UIJT�UBSHFU�JT�TJHOJěDBOUMZ�SFEVDFE�UP�*/3�� DSPSF�B��QFSDFOU�EFDMJOF�from original projections5��5IF�EFDMJOF�in investment is due to a shortfall in the

award of road projects by NHAI during

UIF�ěSTU�UISFF�ZFBST�PG�UIF�QMBO�

Key Challenges

1. Delay in execution of projects:

Persistent issues in land acquisition

and environmental clearance have

CFFO�DBVTJOH�FYFDVUJPO�EFMBZT�JO�majority of cash contract project.

Average time overrun has been about

22 months6.

2. Sub-optimal infrastructure: Factors

such as lack of timely and quality

NBJOUFOBODF�PG�SPBE�JOGSBTUSVDUVSF �integrated-cum-automated toll

DPMMFDUJPO�NFDIBOJTN �USBGěD�congestions and frequent violation

PG�SVMFT�TVDI�BT�NBYJNVN�XFJHIU�UP�be carried by a truck result in sub-

optimal road infrastructure and freight

USBOTQPSUBUJPO��5IJT�JO�UVSO�SFTVMUT�JO�reduced average speed of trucks and

other commercial vehicles.

Emerging Trends

1. Focus on development of

expressways:�5IF�TFDUPS�JT�witnessing increased focus on

DPOTUSVDUJPO�PG�FYQSFTTXBZT�JO�BO�attempt to provide dedicated road

connectivity between near-placed

important cities. A total of around

�� LN�PG�(SFFOěFME�OBUJPOBM�FYQSFTTXBZT�JT�QMBOOFE�UJMM��7

2. Increase in opportunities: Most

of the projects under Phase III

BQQSPYJNBUFMZ�� LN�PG�UIF�National Highway Development

1SPHSBN�BSF�FYQFDUFE�UP�CF�BXBSEFE�PO�#VJME�0QFSBUF�5SBOTGFS�#05�CBTJT�during 2010-156.

3. Increasing demand for extensive

road network: Increasing demand

in tier 2 cities is creating multiple

consumption hubs instead of the

conventional ‘demand islands’ in

TFMFDU�NFUSPQPMJUBO�DJUJFT �UIVT�resulting in the need for improved

BOE�FGěDJFOU�SPBE�USBOTQPSUBUJPO��"EEJUJPOBMMZ �UIF�VQUSFOE�JO�PSHBOJ[FE�retailing is increasing the need for last

mile reach which is feasible only via

FYUFOTJWF�SPBE�OFUXPSLT��5IJT�IBT�been driving the development of State

and rural roads.





5 Seventh to Twelfth Five Year Plans, Planning Commission6 CRISIL Report on Road Sector, 20107 Seventh to Eleventh Five Year Plans, Planning Commission

Telecom

y *OEJBO�IBT�XJUOFTTFE�TJHOJěDBOU�HSPXUI�JO�UFMFDPN�TVCTDSJCFS�CBTF �though the average revenue per user (ARPU) remains at a low level compared to global average

y Major sector players are BSNL, MTNL, Airtel, Vodafone, Idea1

y High competition, infrastructure bottlenecks and Government regulations are some of the key challenges.

Sector Overview

y 5IF�*OEJBO�UFMFDPNNVOJDBUJPOT�market has continued to show

consistent growth with total

subscribers reaching more than 898

NJMMJPO�CZ�.BSDI��2

y Wireless subscribers contribute more

than 867 million with a tele-density of

more than 70 percent2

y Urban wireless market is reaching

saturation with a tele-density of more

UIBO��QFSDFOU �IPXFWFS�SVSBM�market has lot of potential with a tele-

density of 40 percent only2

y Indian telecom service revenues are

FYQFDUFE�UP�SFBDI�*/3� ��CJMMJPO�CZ�':��GSPN�*/3� ��GSPN��.

Telecom subscriber base

Source: DOT - Annual Report, 2010-2011; Economic Intelligence Unit, 2012


1 India telecommunication sector competitive landscape, BMI, 18 December 20122 Telecom Subscription Data, TRAI, March 20133 Telecom outlook, Crisil Research, April 2013


5IF�HSPXUI�JO�UFMFDPN�TFDUPS�IBT�CFFO�phenomenal and this sector mostly

outperforms its investment targets as

MBJE�PVU�JO�ěWF�ZFBST�QMBOT��&WFO�EVSJOH�UIF�NJE�UFSN�BQQSBJTBM�PG�UIF�&MFWFOUI�QMBO �(PWFSONFOU�SFWJTFE�JU�FYQFOEJUVSF�UBSHFU�UP�*/3�� DSPSF�XIJDI�JT��QFSDFOU�IJHIFS�UIBO�UIF�BDUVBM�UBSHFU�PG�*/3�� DSPSF��5IJT�PWFS�achievement is due to a 60 percent higher

level of investment by the private sector

as compared to the original projections4.

Competition in this sector has been quite

JOUFOTF �SFTVMUJOH�JO�CFOFěUT�BDDSVJOH�to the economy and the users through

improved quality of service at lower costs.

Key Challenges

1. Intense Competition: Presence of

��PQFSBUPST�IBT�MFE�UP�QSJDF�XBST �resulting in very low ARPU levels.

7PJDF�"316�DPOUJOVFT�UP�EFDMJOF �BGGFDUJOH�UIF�QSPěUBCJMJUZ�PG�UIF�players.

2. Regulation: Delay in revision of

QPMJDJFT�QFSUBJOJOH�UP�TQFDUSVN �MJDFOTJOH�BOE�.�" �IBT�MFE�UP�uncertainty in the sector.

3. Infrastructure Bottleneck: Network

DBQBDJUZ�JT�OFBSJOH�TBUVSBUJPO��network infrastructures in rural areas

remain limited.

4. Low Broadband Subscriber base:

Despite huge investments in the

JOGSBTUSVDUVSF �UIF�JOUFSOFU�BOE�broadband subscriptions remains very

MPX�BU��NJMMJPO�BOE��NJMMJPO�BT�PG�%FDFNCFS�� SFTQFDUJWFMZ �compared to the target of 40 million

and 20 million by 20105.

Emerging Trends

1. �(�XJMM�CF�B�HSPXUI�ESJWFS�JO�UIF�NFEJVN�UFSN��JODSFNFOUBM��(�SFWFOVF�JT�FYQFDUFE�UP�DPOTUJUVUF��QFSDFOU�PG�NPCJMF�SFWFOVF�CZ�':�� contributing to ARPU uplift6.

2. Mobile Number Portability has

SFDFOUMZ�CFFO�JNQMFNFOUFE� �JU�JT�FYQFDUFE�UP�BDDFMFSBUF�FYDFMMFODF�JO�service quality.

��$"1&9�JT�MJLFMZ�UP�EFDMJOF�JO�UIF�short term on account of the high

�(�TQFDUSVN�DIBSHFT�QBJE�CZ�UIF�telecom players as well as the

SFMBUJWFMZ�TMPXFS�USBGěD�HSPXUI�JO�UIF�XJSFMFTT�TFHNFOU��5IJT�EFDMJOF�in investment is not likely to stunt

growth with leading operators having

UIF�SFRVJTJUF��(�UFDIOPMPHZ�JO�QMBDF�

4. 5FMFDPN�QMBZFST�JO�*OEJB�IBT�SFDFOUMZ�started the price war over tablets and

PUIFS�NPCJMF�TNBSU�QIPOFT �XIJDI�JT�FYQFDUFE�UP�JODSFBTF�UIF�VQUBLF�PG��(�services and hence the data services.





4 Seventh to Eleventh Five Year Plans, Planning Commission5 Performance Indicator Report , TRAI, December 20116 India Strategy, Motilal Oswal, January 2011

13SE

CT

ION


Participant QSPěMF�BOE�TUVEZ�methodology


Survey responses were gathered through a face-to-face interview followed by a detailed questionnaire

XJUI�TFOJPS�QFSTPOOFM�PG��QVCMJD�TFDUPS�QSPKFDUT�GSPN�MFBEJOH�DPNQBOJFT�JO�JOGSBTUSVDUVSF�TQBDF �CFUXFFO�4FQUFNCFS��BOE�+BOVBSZ��5IF�QSPKFDUT�BSF�GSPN�OJOF�TFDUPST�ĸ�1PXFS �1FUSPMFVN �$PBM �4UFFM �3BJMXBZT �3PBE�BOE�)JHIXBZT �$JWJM�"WJBUJPO �1PSUT�BOE�4IJQQJOH �BOE�5FMFDPN�

5IF�JOUFSWJFXT�XFSF�DPOEVDUFE�CZ�TFOJPS�SFQSFTFOUBUJWFT�PG�,1.(�JO�*OEJB�TQFDJBMJ[JOH�JO�UIF�JOGSBTUSVDUVSF�JOEVTUSZ �XJUI�UIF�RVFTUJPOT�SFĜFDUJOH�DVSSFOU�BOE�POHPJOH�DPODFSOT�FYQSFTTFE�CZ�UIF�industry and clients.

Percentage of respondents across sectors

Project Capital cost (INR Crore)


Project duration (years)

Participant’s company turnover (INR crore)


12SE

CT

ION


Appendix


Road trasport and highway have maximum number of ongoing projects

Source: MOSPI, December 2012 Flash Report


Summary of Projects - Sector Wise

Sectoral break up of on-going infrastructure projects in India


Value Wise breakup for all ongoing projects

Power sector projects have highest value


Source: Crisil

Average Monthly prices of Steel Billet 2000-2011

Steel Prices has triple in last 10 years

Sr. No. SectorNumber of

Projects

Projects with Schedule over-

run

Original Cost (in Rs.

Crore)

Anticipated cost ( in Rs. Crore)

Cost overrun percentage

1 Atomic Energy 5 3 41,548 47,832 15

2 Civil Aviation 6 2 5,474 6,063 11

3 Coal 51 21 36,057 37,511 4

4 Fertilisers 3 0 4,066 4,066 0

5 Steel 17 10 65,286 71,443 9

6 Petrochemical 1 0 5,461 8,920 63

7 Petroleum 73 34 1,77,448 1,88,692 6

8 Power 99 52 2,27,823 2,43,653 7

9 Railways 126 35 61,394 1,48,132 141

10 Road Transport & Highways 146 85 94,418 96,357 2

11 Shipping & Ports 20 6 15,908 18,175 14

12 Telecommunications 14 8 5,965 5,906 -1

13 Urban Development 4 1 44,245 49,518 12

14 Water Resources 1 1 543 1,187 119


Sector level Schedule and Cost overruns

Steel Price Trends


South India has highest cement prices

Source: Embay cement report

Cement Price Trends

Monthly Cement Price trends

Source: BP Statistical Review, 2012

India Primary Energy Demand

India Energy demand is growing at a CAGR of 7.9 percent

India Energy Demand


Coal has more than 50 percent share in India’s total primary energy consumption

Source: BP Statistical Review, 2012

Primary Energy Consumption by fuel

Source: MOSPI, December 2012 Flash Reports

Railways Sector: Project schedule and cost overun trends

.PTU�PG�UIF�SBJMXBZT�TFDUPS�QSPKFDUT�EP�OPU�IBWF�ěYFE�EBUF�PG�DPNNJTTJPOJOH

Railways


Railways sector break up of 44 delayed projects in December 2012


Railway Sector: No of projects delayed (in months)

Source: Statistical Summary, Indian Railways

3BJMXBZ�4FDUPS��%JTUSJCVUJPO�PG�QFTTBOHFS�5SBGěD

3BJMXBZ�QBTTFOHFS�USBGěD�JT�HSPXJOH�BU�B�$"(3�PG��QFSDFOU�Q�B



Power Sector: Project schedule and cost overun trends

Around 50 percent of the power sector projects are delayed

Power Sector

Railways Rolling Stock

Sr. No. Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

1 Stem locos 43 44 43 42 43 43

2 Diesel Locos 4,816 4,843 4,963 5,022 5,137 5,197

3 Electric Locos 3,294 3,443 3,586 3,825 4,033 4,309

4 Passenger carriages 38,855 40,696 42,079 43,526 45,048 46,688

5 EMU/DMU/DHMU 6,454 6,641 6,984 7,487 8,053 8,617

6 Rail cars 41 38 38 37 34 34

7 Other coaching vehicles 5,905 6,180 5,985 6,477 6,500 6,560

8 Wagons 2,07,723 2,04,034 2,12,835 2,20,549 2,29,997 2,39,321



Power sector break up of 52 delayed project in December 2012


Power Sector: No of projects delayed (in months)

Source: CEA

Breakup of installed electricity capacity source wise (as on 30 January, 2013)

57 percent of installed electricity generation capacity is coal-based


Source: CEA

Peak Power Demand Supply in India

*OEJB�IBT�QFBL�QPXFS�EFěDJU�PG�BCPVU��QFSDFOU


State-wise estimated Average rate of electricity (updated up to March 2010)

State

Domestic 1KW

(1000KWh/Month)

Domestic 10KW

(1000KWh/Month)

Commercial 2KW

(3000KWh/Month)

Commercial 30KW

(4500KWh/Month)

Agriculture 2HP

(4500KWh/Month)

Agriculture 10HP

(2000KWh/Month)

Andhra Pradesh 238.5 492.25 593.5 623.83 33.75 29.75

Assam 340 475 558.33 564.18 271.19 373.65

Bihar 243.8 395.38 515.87 U 500.08 124.00 U 124.00 U

140.45 - 166.07 R - 74.00 R 74.00 R

Chattishgarh 187.4 368.9 403.35 460.2 110 110

Gujarat 437.83 617.83 U 660.66 703.72 55 55

353.83 526.53 R - - - -

Haryana 367.4 463.44 481 481 25 25

H. P. 221.45 307.71 486 488.88 210.38 204.88

J & K 129.86 234.93 242.4 380.07 61 61

Jharkhand 161 180 436.67 U 436.67 52 52

107 - 136.33 R - -

Karnataka 292.43 570.52 D 688.63 D 710.68 D 0 0

292.43 527.47 E 683.38 E 705.43 E

281.93 507.52 F 639.63 F 656.78 E

Kerala 187 517.61 775.83 952.17 73.74 73.74

Madhya Pradesh 386.2 592.24 U 601.04 602.69 217.5

374.8 555.85 R 541.75 543.24 247.5

Maharashtra 277.94 598.72 530.88 781.58 133.44 133.44

Orissa 135.2 286 384.8 452.75 102 102

Punjab 320.2 483.22 550.1 550.1 0 0

Rajasthan 417.5 392.75 U 556.67 555.78 126.5 116.5

390.25 358.53 R - - - -

Tamilnadu 120 269.5 602 608.53 0 0

Uttarpradesh 369 393.00 U 505.67 U 505.67 U 224.00 U 224.00 U

124 124.00 R 232.33 R 232.33 R 91.50 R 91.50 R

Uttarakhand 230 216.5 375 436.76 85.00 U 85.00 U

West Bengal 272.59 556.06 U 471.41 U 645.99 U 164.15 162.19

Ar. Pradesh 345 345 410 410 265 265

Goa 138 232.5 383 429.67 118 118

Chadigarh 179 304 387 387 165 165

Delhi NDMC 159.6 329.7 463.4 526.4 - -

Source: CEA Annual Report, 2010-11


Around 45 percent of the petroleum sector projects are delayed


Petroleum Sector: Project schedule and cost overun trends


Petroleum Sector: No of projects delayed (in months)

Petroleum sector break up of 39 delayed projects in December 2012

Petroleum Sector


*OEJB�3FěOFSZ�$BQBDJUZ

Company LocationCapacity (mtpa)

01.04.2013

IOC Digboi 0.7

Guwahati 1.0

Barauni 6.0

Baroda 13.7

Haldia 7.5

Mathura 8.0

Panipat 15.0

CPCL Chennai 10.50

Narimanam 1.0

BRPL Bongaigaon 2.4

Total - IOC 65.8

BPCL Mumbai 12.0

KRL Cochin 9.5

NRL Numaligarh 3.0

Total - BPCL 24.5

HPCL Mumbai 6.5

Vizag 8.3

HMEL, GGSR 9.0

Total - HPCL 23.8

MRPL Mangalore 15.0

RIL Jamnagar 33.0

RIL (SEZ) Jamnagar 27.0

ONGC Tatipaka 0.1

Essar Oil Vadinar 20.0

BORL Bina 6.0

Total 215.1

Source: PPAC Note : Capacity as on April 2013

Petroleum Products for 2011-2012 (MTPA)

Distillates Product Production Consumption Imports Exports

Light distillates LPG 9.6 15.4 5.0 0.2

MS 27.2 15.0 0.7 14.3

Naphtha 18.8 11.2 1.9 10.2

Sub Total 55.6 41.5 7.5 24.7

Middle distillates SKO 8.0 8.2 0.6 0.0

ATF 10.1 5.5 0.0 4.6

HSD 82.8 64.8 1.1 19.9

Sub Total 100.9 78.5 1.7 24.5

Heavy distillates FO/LSHS 19.4 9.2 0.9 7.9

Bitumen 4.6 4.6 0.1 0.0

Others 23.4 14.1 4.7 3.1

Sub Total 47.4 27.9 5.7 11.0

Total 203.9 148.0 14.9 60.2

Source:PPAC

One-third of coal sector projects are delayed


Coal Sector: Project schedule and cost overun trends


Coal Sector: No of projects delayed (in months)

Coal sector break up of 21 delayed projects in December 2012

Coal Sector



Coal production and consumption have grown at a CAGR of 4.9 percent and

8.6 percent respectively

Source: Annual Report, Ministry of Coal

Coal Sector: Production and Consumption

Source: Annual Report, Ministry of Coal

Coal Imports Trends

Coal imports are increasing at a CAGR of 18.6 percent

Majority of India’s coal reserves are non-coking coal

Source: Ministry of Coal

Coal Sector: Coal Reserves by type as on April, 2012


Steel Sector: Project schedule and cost overrun trends

Cost overrun has decreased in steel sector

Steel Sector


Steel sector break up of 10 delayed projects in December 2012


Steel Sector: No of projects delayed (in months)

Source: Annual Report 2012-13, Ministry of Steel

Crude Steel Production, Capacity and Capacity Utilization

Steel capacity utilization is consistently high at 85-90 percent


Steel imports are increasing and exports are decreasing

Source: Annual Report 2011-12, Ministry of Steel

Export Import Trends for Finished Steel


Telecom Sector: Project schedule and cost overun trends

In last year several telecom projects were completed

Telecom Sector


Telecom sector break up of 8 delayed projects in January 2012


Telecom Sector: No of projects delayed (in months)

Source: Department of Telecom

Wireless ARPU

Wireless ARPU have stabilized in last few years


Subscriber base and teledensity has started declining


Total Subcriber base and Teledensity

Source: TRAI; Crisil

Internet and Broadband User

Internet users are increasing at a CAGR of 19 percent p.a


Shipping & Port Sector

Data revenue‘s share in the total revenue is increasing


Data Revenues as % of Total revenues


Shipping & Port Sector: Project schedule and cost overun trends

Around 40 percent of shipping and port sector projects are delayed


Shipping & port sector break up of 7 delayed projects in December 2012


Shipping & Port Sector: No of projects delayed (in months)

$BSHP�5SBGěD�BU�.BKPS�1PSUT�$PNNPEJUZ�8JTF�GPS�UIF�ZFBS��

(‘000 tonnes) POL Iron ore*Fertilizers Coal Container

Others TotalFinished Raw Thermal Coking Tonnage TEUs

Kolkata 700 158 64 29 - 37 6,957 463 3,855 11,800

Haldia 6,196 1,715 109 278 1,976 4,502 2,869 137 10,439 28,084

Paradip 16,466 1,834 142 4,004 21,394 4,912 171 13 7,629 56,552

Visakhapatnam 15,021 12,279 2,018 565 2,951 6,820 4,554 248 14,752 58,960

Ennore 1,124 - - - 14,240 685 - - 1,836 17,885

Chennai 13,425 52 190 231 - - 29,708 1,539 9,798 53,404

Tuticorin 792 - 487 564 6,661 - 9,372 479 10,384 28,260

Cochin 13,896 - 22 331 28 - 4,607 326 961 19,845

New Mangalore 24,301 2,616 519 17 2,553 4,357 692 48 1,981 37,036

Mormugao 823 7,421 78 0 768 6,605 213 20 1,785 17,693

Mumbai 34,784 - 156 356 4,210 - 829 58 17,702 58,037

JNPT 4,286 - - - - - 57,909 4,259 2,306 64,501

Kandla 54,355 1,006 3,678 946 4,064 374 1,934 118 27,265 93,622

Total 186,169 27,081 7,463 7,321 58,845 28,292 119,815 7,708 110,693 545,679

Note: Notes: POL: Petroleum, oil and lubricants; TEU: Twenty-foot equivalent unit; JNPT: Jawaharlal Nehru Port Trust

Source:IPA, CRISIL


Capacity at Major Ports

(million tonnes) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Kolkata 12.6 13.4 14.6 15.8 15.8 16.4 16.4 17.1

Haldia 42.2 43.5 46.7 46.7 46.7 50.7 50.7 50.8

Paradip 51.4 56.0 56.0 71.0 76.5 76.5 76.5 106.3

Visakhapatnam 55.0 58.5 61.2 62.2 62.2 64.9 72.9 67.3

Ennore 48.8 50.0 53.4 55.8 69.4 79.7 79.7 83.2

Chennai 13.0 13.0 13.0 16.0 16.0 31.0 31.0 31.0

Tuticorin 20.6 20.6 20.8 22.8 22.8 27.0 33.3 33.3

Cochin 19.4 20.2 28.4 28.4 29.9 41.0 41.0 44.7

New Mangalore 38.0 41.3 43.5 44.2 44.2 45.6 51.0 69.0

Mormugao 29.5 30.0 33.1 33.1 37.1 41.9 41.9 41.9

Mumabi 43.8 44.7 44.7 43.7 43.7 44.5 44.5 44.5

JNPT 36.1 52.4 54.3 58.0 58.0 64.0 64.0 64.0

Kandla 46.0 61.3 63.5 77.3 77.2 86.9 86.9 91.2

Total 456.2 504.8 533.0 574.9 599.4 670.1 689.8 744.3

Source:IPA , CRISIL

5SBGěD�PG�7FTTFMT�BU�7BSJPVT�1PSUT�$BUFHPSZ�XJTF��

(Nos.) Dry Bulk Liquid Bulk Break Bulk Containers Others* Total

Kolkata 60 239 319 577 27 1,222

Haldia 761 853 57 291 - 1,962

Paradip 904 317 75 30 16 1,342

Visakhapatnam 1,147 715 219 351 38 2,470

Ennore 241 92 - - 52 385

Chennai 223 507 524# 789 - 1,519

Tuticorin 425 226 430 365 46 1,492

Cochin 50 359 37 389 547 1,382

New Mangalore 206 693 157 80 19 1,155

Mormugao 547 153 37 48 - 785

Mumabi 333 1,102 568 14 40 2,057

JNPT 66 445 45 2,233 127 2,916

Kandla 715 1,318 456 225 - 2,714

All Ports 5,678 7,019 2,924 5,392 912 21,401

Source:IPA , CRISIL


Over the year, schedule overrun in road sector projects has decreased


Road Transport & Highway Sector: Project schedule and cost overrun trends


Road Transport & Highway Sector: No of projects delayed (in months)

Road sector break up of 86 delayed projects in December 2012

Roads and Highways


State-wise Road length in relation to area and population

StatesTotla Roald

Length (kms)

Road Length

Per 1,000 sq kms of area per 1,000 of population

Andhra Pradesh 3,45,012 1,254.4 4.2

Arunachal Pradesh 16,494 197.0 13.8

Assam 2,30,334 2,936.5 7.8

Bihar 1,20,127 1,275.7 1.3

Chhattisgarh 74,434 550.6 3.2

Goa 10,569 2,854.9 6.6

Gujarat 1,46,630 748.0 2.6

Haryana 29,726 672.4 1.2

Himachal Pradesh 36,298 652.0 5.5

Jammu & Kashmir 22,323 100.5 2.0

Jharkhand 17,531 219.9 0.6

Karnataka 2,55,454 1,331.9 4.4

Kerala 2,04,757 5,268.7 6.1

Madhya Pradesh 1,65,740 537.7 2.4

Maharashtra 2,23,322 725.8 2.1

Manipur 16,502 739.1 7.0

Meghalaya 9,839 438.7 3.9

Mizoram 6,158 292.1 6.4

Nagaland 22,304 1,345.3 10.3

Orissa 2,15,404 1,383.4 5.4

Punjab 45,178 897.1 1.7

Rajasthan 1,71,479 501.1 2.7

Sikkim 1,873 264.0 3.2

Tamil Nadu 1,81,213 1,393.3 2.7

Tripura 31,733 3,026.2 9.1

Uttar Pradesh 2,84,673 1,181.6 1.5

Uttarakhand 41,041 767.4 4.3

West Bengal 2,11,770 2,386.1 2.4

Source: MOSPI ,MORTH

Capacity of National Highways

Width of carriageway

National Highways length (2007-08)





(km) (per cent) (km) (per cent) (km) (per cent) (km) (per cent) (km) (per cent)

> Four - lane 9,325 14.0 12,053 17.1 16,314 23.0 16,187 22.8 17,700 24.7

Two - lane 39,079 58.5 37,646 53.4 36,886 52.0 36,995 52.2 38,536 53.7

One - lane 18,350 27.5 20,849 29.6 17,734 25.0 17,752 25.0 15,536 21.6

Total 66,754 100.0 70,548 100.0 70,934 100.0 70,934 100.0 71,772 100.0


Road Network in India as in year 2011-2012

Road NetworkLength

(Kilometers)

Percentage of Toatal

Length 5SBGěD

National Highway 71,772 1.7 40

State Highway 154,522 3.840

Major and other District Roads 266,058 6.5

Rural roads 3,617,240 88 20

Total 4,109,592 100 100



50 percent of the civil aviation projects are delayed in December 2012


Civil Aviation Sector: Project schedule and cost overrun trends


Civil Sector: No of projects delayed (in months)

Civil aviation sector break up of 3 delayed projects in December 2012

Civil Aviation


Domestic freight (tonnes)

Airports 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Metro Airports

MUMBAI 1,52,159 1,59,724 1,51,328 1,74,184 1,99,831 190288

DELHI 1,16,027 1,30,904 1,28,332 1,63,913 2,09,113 200525

CHENNAI 42,969 41,918 52,806 71,246 93,336 84730

BANGALORE 67,642 70,011 58,310 71,893 87,515 83256

KOLKATA 47,144 49,989 47,305 70,168 84,861 81703

HYDERABAD 22,934 27,119 24,580 30,164 36,390 34472

Total 4,48,875 4,79,665 4,62,661 5,81,568 7,11,046 6,74,974

Non - metro Airports

AHMEDABAD 16,868 12,739 11,018 15,060 19964 15,060

GOA 4,181 3,289 3,460 4,247 4016 4,247

TRIVANDRUM 1,413 1,415 1,442 1,540 1449 1,540

CALICUT 602 363 368 282 191 282

GUWAHATI 1,919 1,642 5,276 8,520 7761 8,520

AMRITSAR 111 376 2,290 161 89 2,299

SRINAGAR 1,918 1,501 1,815 2,016 2361 2,016

JAIPUR 2,539 2,142 5,763 8,177 6475 8,177

NAGPUR 4,058 3,773 4,717 9,145 4588 9,145

COCHIN 6,166 5,934 7,857 8,610 8533 8,610

PUNE 9,983 11,653 17,845 27,828 24134 27,828

COIMBATORE 3,617 4,616 6,285 6,637 7281 6,637

LUCKNOW 1,653 1,873 3,407 3,492 3690 3,492

MANGALORE 410 311 382 305 267 305

VARANASI 352 315 363 422 356 422

PATNA 1,768 1,957 1,928 3,279 3425 3,279

TRICHURAPALLI 12 20 25 0 0 -

VADODARA 1,962 2,198 1,745 2,099 2282 2,099

JAMMU 1,167 1,094 1,157 1,371 1265 1,371

INDORE 3,378 4,952 5,301 5,380 4734 5,380

VISAKHAPATNAM 535 766 938 1,107 1046 1,107

AGARTALA 4,737 5,979 6,755 7,105 6889 7,105

BHUBANESWAR 1,258 1,287 1,998 2,667 2286 2,667

UDAIPUR - - - 0 0 -

BAGDOGRA 568 636 869 1,114 1672 1,114

PORTBLAIR 1,962 2,139 2,290 2,299 2386 2,299

MADURAI 655 572 574 580 842 580

BHOPAL 744 1,028 924 1,175 890 1,175

RAJKOT 812 666 635 933 738 933

AURANGABAD 1,058 963 1,247 1,841 1227 1,841

RAIPUR 1,600 1,444 1,593 2,356 2870 2,356

IMPHAL 568 636 4,719 6,002 4984 6,002

CHANDIGARH 395 413 219 1,013 3042 549

LEH 902 842 1,368 1,426 1336 1,426

JUHU 334 412 383 311

JODHPUR 101 90 n.a 27 41 n.a.

RANCHI 336 449 677 1,306 1650 1,306

SILCHAR 338 319 342 480 497 480

TIRUPATI - 27 23 12 26 13

DIBRUGARH - 299 331 322 343 322

Other Airports - - 1,057 1,279 1491 995

Total 80,980 81,130 1,09,386 1,41,615 1,37,117 1,43,290

Grand Total 4,82,457 5,32,191 5,60,645 5,43,791 6,90,954 8,54,336

Source: Airport Authority of India


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Airports 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Metro Airports

MUMBAI 7.35 7.98 8.12 8.23 9.08 9.70

DELHI 6.65 7.34 7.77 8.31 9.28 10.75

CHENNAI 2.90 3.41 3.66 3.86 4.25 4.31

BANGALORE 1.26 1.54 1.64 1.94 2.22 2.35

KOLKATA 0.81 1.00 1.00 1.19 1.43 1.57

HYDERABAD 1.21 1.44 1.57 1.72 1.89 1.93

Total 20.17 22.73 23.76 25.25 28.14 30.61


AHMEDABAD 0.40 0.70 0.68 0.85 0.83 0.74

GOA 0.40 0.43 0.39 0.43 0.58 0.58

TRIVANDRUM 1.19 1.40 1.47 1.70 1.84 1.84

CALICUT 0.90 1.08 1.52 1.66 1.83 1.98

GUWAHATI - - 0.01 0.01 0.01 0.03

AMRITSAR 0.49 0.20 0.44 0.50 0.47 0.40

SRINAGAR 0.02 0.02 0.02 0.02 - -

JAIPUR 0.19 0.08 0.22 0.26 0.25 0.23

NAGPUR 0.08 0.55 0.09 0.05 0.04 0.04

COCHIN (CIAL) 1.43 1.77 2.01 2.23 2.36 2.59

PORT BLAIR 0.00 -

PORT BLAIR - - - - 0.00 0.00

PUNE 0.05 0.03 0.03 0.04 0.06 0.06

COIMBATORE 0.01 0.05 0.09 0.09 0.10 0.10

LUCKNOW 0.13 0.17 0.17 0.28 0.34 0.36

MANGALORE 0.03 0.16 0.21 0.28 0.25 0.26

VARANASI 0.03 0.05 0.05 0.05 0.06 0.06

BAGDOGRA - - - 0.02 0.02 0.02

TRICHURAPALLI 0.16 0.30 0.38 0.59 0.67 0.79

GAYA 0.05 0.05 0.05 0.06 0.05 0.08

PATNA - - - - - -

Total 5.56 7.07 7.81 9.10 9.75 10.17

Other Airports 0.02 0.02

Grand Total 25.73 29.79 31.57 34.36 37.91 40.80



International freight for the last six years (in tonnes)

Airports 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Metro Airports

MUMBAI 3,27,507 3,73,770 3,78,610 4,08,452 4,70,402 4,67,182

DELHI 2,74,801 3,01,959 2,97,931 3,33,473 3,90,932 3,67,830

CHENNAI 1,95,197 2,27,958 2,19,562 2,49,522 2,95,497 2,72,461

BANGALORE 97,847 1,07,701 99,690 1,02,751 1,35,263 1,41,693

KOLKATA 36,379 41,004 40,743 40,088 45,098 43,890

HYDERABAD 21,715 24,059 29,665 36,295 42,170 43,627

Total 9,53,446 10,76,451 10,66,201 11,70,581 13,79,362 13,36,683


AHMEDABAD 4,126 6,708 10,294 11,657 12,980 11,793

GOA 964 775 688 917 2,535 2,154

TRIVANDRUM 30,465 30,673 30,169 31,708 37,795 46,753

CALICUT 10,691 8,747 12,556 17,132 21,964 25,400

GUWAHATI 51 6 2 - - -

AMRITSAR 1,744 1,252 1,798 2,784 5,834 6,998

SRINAGAR - - - - - -

JAIPUR 728 395 340 446 398 235

NAGPUR 1 4 217 279 346 388

COCHIN 17,009 18,987 25,219 32,779 32,198 34,173

PUNE 7 1 - - - -

COIMBATORE 1,615 1,300 917 702 390 467

LUCKNOW 158 134 49 378 586 839

MANGALORE - - - - - -

VARANASI - 13 3 - - 1

PATNA - - - - - -

TRICHURAPALLI 868 1,153 904 1,349 1,775 2,012

GAYA - - - - - -

Total 68,427 70,148 83,156 1,00,131 1,16,801 1,31,213

Other Airports 76 -

Grand Total 10,21,873 11,46,599 11,49,357 12,70,712 14,96,239 14,67,896



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Airports 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Metro Airports

MUMBAI 14.90 17.88 15.32 17.37 20.00 21.04

DELHI 13.79 16.63 15.07 17.81 20.67 25.13

CHENNAI 6.08 7.21 6.18 6.67 7.80 8.62

BANGALORE 6.86 8.58 7.12 8.00 9.37 10.34

KOLKATA 5.19 6.46 5.99 6.86 8.20 8.74

HYDERABAD 4.54 5.54 4.65 4.80 5.71 6.52

Total 51.36 62.30 54.33 61.51 71.75 80.39


AHMEDABAD 2.09 2.46 2.14 2.68 3.22 3.95

GOA 1.81 2.14 1.83 2.20 2.50 2.94

TRIVANDRUM 0.60 0.70 0.48 0.64 0.68 0.98

CALICUT 0.23 0.23 0.16 0.21 0.23 0.23

GUWAHATI 1.07 1.34 1.37 1.58 1.92 2.22

AMRITSAR 0.11 1.14 0.13 0.20 0.30 0.49

SRINAGAR 0.68 0.76 0.72 0.91 1.04 1.63

JAIPUR 0.60 0.77 0.98 1.27 1.41 1.60

NAGPUR 0.58 0.13 0.71 0.76 1.20 1.38

COCHIN 1.13 1.57 1.35 1.65 1.98 2.13

PORTBLAIR 0.50 0.33 0.48 0.52 0.58 0.61

PUNE 1.53 1.64 1.74 2.21 2.75 3.23

COIMBATORE 0.85 1.01 0.92 1.01 1.14 1.24

LUCKNOW 0.48 0.54 0.65 0.91 1.24 1.66

MANGALORE 0.45 0.55 0.49 0.56 0.59 0.63

VARANASI 0.32 0.40 0.36 0.43 0.50 0.68

PATNA 0.31 0.39 0.34 0.55 0.84 1.02

TIRUCHCHIRAPPALLI 0.05 0.09 0.09 0.10 0.09 0.12

GAYA 0.00 0.00 0.00 0.00 0.00 0.02

VADODARA 0.40 0.50 0.44 0.50 0.60 0.67

JAMMU 0.47 0.55 0.40 0.52 0.69 0.89

INDORE 0.36 0.50 0.60 0.70 0.88 1.11

VISAKHAPATNAM 0.33 0.55 0.60 0.63 0.71 0.96

AGARATALA 0.32 0.41 0.37 0.50 0.75 0.84

BHUBANESWAR 0.35 0.41 0.67 0.83 1.04 1.25

UDAIPUR 0.24 0.29 0.26 0.36 0.37 0.37

BAGDOGRA 0.26 0.37 0.44 0.53 0.65 0.71

MADURAI 0.26 0.41 0.35 0.37 0.39 0.51

BHOPAL 0.17 0.29 0.23 0.26 0.32 0.42

RAJKOT 0.16 0.15 0.13 0.19 0.23 0.26

AURANGABAD 0.17 0.20 0.19 0.22 0.27 0.40

RAIPUR 0.25 0.41 0.40 0.44 0.53 0.80

IMPHAL 0.21 0.32 0.32 0.41 0.56 0.73

CHANDIGARH 0.15 0.23 0.36 0.47 0.65 0.80

LEH 0.14 0.17 0.20 0.23 0.26 0.37

DIBRUGARH 0.23 0.23

TIRUPATI 0.17 0.24

JUHU 0.14 0.14 0.15 0.15 0.00 0.00

JODHPUR 0.11 0.14 0.08 n.m 0.18 0.21

RANCHI 0.15 0.11 0.25 0.27 0.36 0.49

SILCHAR 0.12 0.15 0.14 0.15 0.16 0.21

Total 18.16 22.52 21.54 26.12 32.22 39.24

Other Airports 1.41 1.55 1.87

Grand Total 69.52 84.81 75.87 89.04 105.52 121.51

Source: Airport Authority of India | n.m: Not Meaningful



About KPMG in India

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About KPMG Real Estate & Construction Practice

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JODMVEF�1.0��.PEFM�#VTJOFTT�1SPDFTTFT �"DDPVOUJOH�"EWJTPSZ�4FSWJDFT �5BY�1MBOOJOH��4USVDUVSJOH �*OUFSOBM�"VEJU �.�" �1& �3FTUSVDUVSJOH�"EWJTPSZ�and others.

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in India and Internationally.

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About PMI

1.*�JT�POF�PG�UIF�XPSMEĳT�MBSHFTU�OPU�GPS�QSPěU�NFNCFSTIJQ�BTTPDJBUJPOT�for the project management profession. Our professional resources and

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PMI’s worldwide advocacy for project management is reinforced by our

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KPMG Contacts

Pradeep UdhasPartner and Head MarketsT: +91 22 3090 2040 E: [email protected]

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PMI Contacts

Raj KaladyManaging Director PMI India

Dhiraj Gyani Head - Government Relations PMI India

PMI IndiaPMI Organization Centre Private LimitedMumbai, IndiaE: [email protected]

PMI’s India Service CentreNew Delhi, IndiaT: +91 124 4517 140E: [email protected]

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Project Delays & Overruns Study - KPMG

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