PMI-KPMG Study on Project Schedule and Cost Overruns
Project Skills Shortage Impacts Infrastructure Projects
India has set an ambitious target of investing USD 1 trillion in infrastructure during the Twelfth Five Year Plan period. However, the country has consistently fallen short of meeting such targets with projects suffering time and cost overruns. The 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 are from power, petroleum, coal, steel, railways, roads & highways, civil aviation, ports & shipping, and telecom sectors.
The study found that ineffective project planning and project monitoring is the most significant risk that has the maximum impact on project delivery. Survey respondents feel that poor program management results in ineffective co-ordination with projects and schedule delays. In the pre-execution stage, the lack of program management manifests in delays on account of land acquisition and site handover, and manifold regulatory approvals from several agencies. In the execution and closing phases, 79 per cent of the respondents feel insufficient management of project design/scope change is largely responsible for schedule overrun. Hence, it is imperative for companies to have effective project management and risk management techniques to monitor and control these risks during the project lifecycle.
The study highlights the importance of the Project Management Office (PMO) in ensuring successful implementation of projects through the deployment of project management leading practices. The PMO also helps in proactive risk identification and provides adequate guidance and information for timely decision-making. Although, Indian organizations have widely used external or independent PMOs, the shortage of qualified project management professionals has meant that the PMO cannot function to the desired level of capability. About 86 per cent of the respondents agree that PMO can be an effective way of monitoring and delivery of projects.
The KPMG-PMI report also includes techniques to improve risk management skills for successful project delivery. It deliberates that developing a project risk management framework, conducting independent reviews, and developing risk management reports are some factors that will positively impact risk management in projects.
The report also rates the deployment of practices such as centralized sourcing, preparing effective and timely project reports, CEO dashboard, and the usage of project management tools as the most effective mode to control schedule and cost overruns.
It emphasizes on a balanced Public Private Partnership (PPP) approach in the infrastructure sector for faster implementation of projects. Although the PPP model has evolved in recent times, private investment has fallen short of the targets. Creating a detailed policy for implementing PPP projects that is aimed at more transparency in the bidding and awarding processes will boost confidence and increase participation of private investors in the infrastructure sector.
The survey reveals that by 2022 the Indian infrastructure sector is likely to face a shortage of around three million project professionals, including project managers, civil engineers, planners, surveyors, and safety professionals. Lucrative careers in finance and information technology are leading talent away from the construction industry. India’s vocational training curriculum that falls short of global standards adds to the problem. Hence, it is imperative to increase investments in training and mentoring to develop the requisite skillset in professionals.
- Set up a single window clearance mechanism to simplify the regulatory approval process
- Set up a three-tier project/program management office (PMO) structure in the country to monitor and de-bottleneck infrastructure projects
- Modify bidding criteria procedures
- Develop robust process for fast and efficient dispute resolution
- Institutionalize project management training for professionals
- Reform India’s vocational education and training program
- Develop efficient transport and logistics system for faster project implementation
- Create an exhaustive list of empanelled vendor at the central level for infrastructure projects
- Promote public private partnership in the infrastructure sector
- Promote joint evaluation of project design for value engineering