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Construction : Cover Story | May 2016 | Source : Infrastructure Today

Needed: Project Managers

Many railway projects are plagued by time overruns. Indian Railways need adequate numbers of skilled project managers to handle planned projects.

Background
The Indian Railways, which had a modest beginning in 1853, has since then been an integral part of the nation, a network that has held together a population of one billion. A self-propelled social welfare system that has become the lifeline of a nation, the Indian Railways has woven a subcontinent together and brought to life the concept of a united India.

The railways in India are the largest rail web in Asia and the world´s second largest under one management.

Private Funding
One of the world´s largest railway systems is in dire need of a makeover. The Indian Railways network covers 65,436 kilometers and moves 8.4 billion people annually. The government has called for $1 trillion in investments to bring the system into the 21st century, but modernisation will not be a small feat. Politically sensitive low fares prevent the system from being able to fund capital projects. Prime Minister Narendra Modi announced his solution to these formidable challenges in 2015 through public-private partnerships (PPPs).

To reach this goal, the government has for the first time allowed 100 percent foreign direct investment in rail projects.

Risky Propositions
PPP rail projects aren´t likely to sell themselves because of India´s unfortunate track record on railway projects, including excessive delays due to land acquisition problems and costly time and budget overruns.

The PPP model has worked well for port and road projects, but is relatively uncommon in rail. Although the factors affecting the project timelines primarily appear to be associated with external factors such as land acquisition and unclear Resettlement & Rehabilitation (R&R) policies, the underlying reason behind them remains the delayed or non-identification of prerequisites to overcome these factors. In the absence of adequate identification of these dependencies, the projects usually land in trouble at the start itself, which in turn manifests into delayed project delivery or higher cost at completion.

These external factors can be mitigated by timely actions given that a strong and periodic information system is established to provide necessary information. The private sector is well-suited to take on the operation of rail lines or to replicate successful projects such as the Delhi Metro, but is less equipped to handle land acquisition, safety issues or first-time initiatives like high-speed rail, for which cost and project outlay are difficult to estimate.

Success for future PPP projects comes down to how well the government crafts contracts, industry analysts say. These contracts must correctly define technical specifications, accurately estimate project costs and detail all risks the private sector is expected to assume. PMI also suggests that the government must amend its policy. For example, today when the government (or a financial institute) places a Request for Proposal (RFP), it evaluates the financials and past project performance of the concerned organisations.

But what about project management skills? Do the concerned identities evaluate the project management capabilities and expertise of the organisation executing the project? Do they check if the organisation has a Project Management Office? The RFP should have clear indicators on whether an organisation has the requisite project management skills and processes in place. One of the simplest (initial) things to check is whether the organisation has certified project managers. It´s as simple as that. If you look at IT organisations, the first thing they ask for in their RFPs is for certified project managers.

Need for Skilled Project Managers in India
The majority of rail projects in India are affected by time overruns. These overruns vary from a few months to as high as five or more years, placing the project viability at risk. Delays in land acquisition and site handover are the primary reasons for schedule overruns in the pre-execution phase.

Delays can lead to increase in the final cost of a project, tying down client capital due to non-completion of the project and accentuate the social impact on stakeholders. Time is a factor that is essential for all activities that have to be carried out. In a contract document, a specific time phase is given for delivery of the project. If the time is being exceeded, more money is often spent, which could lead to increase in the final cost of the project and also wastage and under-utilisation of manpower and resources. Hence, it is important to deliver projects on time, as it would result in providing economic and social goods that thousands of people lack today and will create economic growth that will eventually pay for all stakeholders.

As per the Flash Report for January 2016 released by the Ministry of Statistics and Programme Implementation (MoSPI) on the status of Central Sector Infrastructure Projects costing Rs 150 crore and above, there are a total of 297 railway projects under the monitor. Out of these, 31 are projects delayed beyond their original date. The need of the hour is to create a skills ecosystem with partnerships to ensure mutual support and enhancement of collective benefits. It´s challenging to locate an adequate number of skilled project managers in the country to handle current and planned infrastructure projects.

According to the report jointly produced by PMI and global consulting firm KPMG, lacklustre project planning and monitoring are the primary causes of time and cost overruns. While regulatory and other external challenges are significant, eliminating internal problems - i.e., insufficient project management training - could mitigate India´s world-renowned project bottlenecks. Survey data in the report indicates that companies are well aware of the problem. In fact, the sector will have a shortage of about 3 million project professionals by 2022, which includes project managers, civil engineers, planners, surveyors and safety professionals.

To fill this huge gap, the report recommends that the government reform its vocational education and training system to respond better to market needs. It also says that the time has come to formalise professional training for project managers, both in colleges and at companies, where in-house academies could ensure employees have the skills to get the job done right.

There needs to be a genuine collaboration between project owners, contractors, governments and training providers to attract more skilled professionals to the infrastructure industry. The top recommendations of the KPMG/PMI report put the onus on India´s government to clean up its act.

The first way is by providing a single point of contact for project personnel throughout the regulatory process to centralise applications and expedite the permit approvals. Secondly, by creating a three-tier project/program management office (PMO) that would provide centralised oversight for all large infrastructure projects. And thirdly, by institutionalising project management training for professionals working on infrastructure projects.

Infrastructure companies could also adopt the model of IT companies to meet the shortage of skilled professionals. Many IT companies have developed in-house academies for training their employees on key skills needed for their day-to-day work. The Indian infrastructure industry can look to replicate a similar model, where in-house training can be conducted for newly recruited and existing employees to enhance their project management competencies. L&T Institute of Project Management at Baroda, a PMI Registered Education Provider (REP) is a prime example of this model.

It´s hard to imagine such seemingly intractable problems disappearing anytime soon, but something´s got to give if India is to achieve anything close to the goals which the government has outlined for itself.

Realising the necessity of the present scenario, PMI in association with FICCI has identified three critical issues which need to be addressed to reduce the gap between the as-is and to-be state to create a conducive environment for projects like Make in India to succeed. They are as follows:
1.A framework and implementation plan for continuous improvement in quality of stakeholder engagement and risk management in large projects
2.Need for nodal agencies to monitor project execution and provide support for on-time completion, primarily to intervene when projects run into problems and to pick up signals for proactive action in the future
3.Training and tools for enhancing organisational project management capabilities, especially in government, for project monitoring and organisation for project execution.
To sum up, the country is taking a leap towards setting itself on a growth trajectory using various initiatives. The launch of pet projects like Make in India, Digital India, Smart Cities, etc., by our honorable Prime Minister, opening doors for Foreign Direct Investment (FDI), entering into PPP models with corporate India, are signs of an attempt to create a better India. To sustain the pace and ensure successful execution of these initiatives, it is essential that standard processes for planning, implementation and monitoring are put in place where project management plays a vital role.
This article has been authored by Raj Kalady, MD, Project Management Institute, India.

 
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