Infrastructure eclipse

A McKinsey study on India's infrastructure reveals that underperformance in the sector during 2008-17 will result in GDP loss of $200 billion (about Rs 9.6 lakh crore) by FY 2017.

PROBLEMS:

• Low investment in planning and engineering leads to high costs of implementation.
  Understanding costs of projects or overestimating scope invariable means larger-than-budgeted spending.
• It takes around 23 months to get all relevant clearances before a tender can be issued.
  Approvals are needed from sources such as Planning Commission, ministries and Cabinet Committee for Economic Affairs (CCEA), before a tender is floated.
• Most road projects suffer from land acquisition delays after tendering.
  A Ministry of Planning survey shows that 70 per cent of all government projects are delayed due to archaic land acquisition laws.

PRESCRIPTIONS:

• Construction-related cases should be handled by fast-track courts.
  This is a practice followed by many countries. Also, similar courts for other issues have done well in India.
• Employing lean techniques can result in substantial cost and time savings.
  The instance, assembling the structures in a power plant instead of building on the spot reduces total project duration by 46 per cent and cuts cost by 52 per cent.
• The quality-cum-cost-based approval approach is best for selection consultants.
  A firm's performance on previous projects and sector experience should be considered. This has ensured reduction of cost overruns to just 6-7 per cent in the US.
• Delivery mode should be decided before tendering on a project-by-project basis.
  By pre-selecting the delivery mode (i.e. cash or concession) one can optimise the project scope, thus increasing the chances of a good response to the tender.
• Prevalence of design, procurement and construction best practices are low among Indian providers.
  Most Indian providers are either unaware of lean construction principles or have not adopted to them in a meaningful way.