Assessment of infrastructure projects and corrective recommendations for performance improvement

Infrastructure development is critical for the economic progress of a country. In India, the slow pace of infrastructure development has often been cited as a major factor impeding economic progress.
PMI, in association with KPMG India and the Ministry of Statistics and Programme Implementation (MoSPI), Government of India, has published a research report on the state of infrastructure projects in the country and ways to improve project performance. The research report, Revamping Project Management, is a follow-up to a similar report that PMI had published in 2012.

According to a “flash report” by the MoSPI in January 2018, around 20 percent of projects by the central government are delayed beyond their scheduled date of completion. As many as 345 projects have incurred cost overruns, amounting to Rs. 2.19 lakh crore, and 354 projects have recorded an average delay of 45 months. Multiple factors have contributed to shoddy performance: poor planning and risk management, lack of collaboration among stakeholders, uncertainties in the land acquisition process and regulatory approvals, scarcity of skilled workers, and above all, lack of mature project management processes.

As the Narendra Modi government kick-starts the agenda for its second term, the report serves as a stark reminder of the need for pre-planning, robust project management processes, capability building, improved construction methodologies, risk management, skill development, and stakeholder management.

The report is based on a study that includes qualitative discussions and interviews, case studies, an impact assessment of the 2012 MoSPIPMI- KPMG study and its recommendations, an analysis to ascertain thematic root causes for time and cost overruns, and recommendations for implementation agencies.

The study includes insights from interviews conducted with individuals from 25 public sector undertakings across nine sectors. The case studies are from five infrastructure sectors — roads, power, oil and gas, railways, and civil aviation.

The study reveals that the root causes of overruns can be classified into three categories:

1. Process and capability: unavailability of skilled staff, inadequate technology usage, ad hoc planning
2. Culture and mindset: limited sense of project ownership, "contractual" party focus, weak risk management, delayed decisionmaking
3. External factors: delay in regulatory approvals, delay in land acquisition, market factors such as price escalation and economic factors

The report makes a number of recommendations for implementation agencies to improve project performance. The key recommendations are:

1. Invest heavily in pre-planning and site investigation
2. Implement collaborative and agile planning
3. Reform procurement processes and strengthen contract management
4. Implement lean construction principles for productivity improvement
5. Embed a culture of risk management from concept to commissioning
6. Strengthen people management processes
7. Augment organizational skill sets
8. Deepen stakeholder management for land acquisition and regulatory approvals
9. Establish a robust project governance structure

The performance of infrastructure projects in the country will improve only when these measures are implemented across various stakeholders including key ministries, nodal agencies and think tanks, government departments that are overseeing project implementation, central and state public sector undertakings, and engineering and contracting firms.

Click to read the report