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Indian Infrastructure Project cost overrun at INR 4,82,529 Crores

The Indian Infrastructure project cost overrun stand at INR 4,82,529 Crores, which translates to around 18.65% of the original cost. According to reports by the Ministry of Statistics and Programme Implementation (MSPI), out of 1820 infrastructure projects (projects with more than 100 Cr budget), 848 were delayed and 431 reported cost overruns.

Cost variance

  • Budgeted cost of the 1820 projects = 25,97,066 Crores
  • Estimated cost at completion = 30,69,595 Crores
  • Cost overrun = 4,82,529 Crores

Schedule variance

  • 848 projects got delayed, out of the total number of 1820 infrastructure
  • For 298 projects, neither the year of commissioning nor the tentative gestation period has been reported
  • Out of 848 delayed projects;
    • 202 projects had a delay between 1 to 12 months
    • 200 projects had a delay between 13 to 24 months
    • 323 projects had a delay between 25 to 60 months
    • 123 projects had a delay above 60 months

Root causes for time over runs

  • Delays in land acquisition
  • Delays in clearances from environment and forest departments
  • Lack of infrastructure support
  • Project tendering delays
  • Engineering delays
  • Delays due to scope change
  • Procurement delays
  • Law and order problems
  • Pandemic

For a large number of projects, the project executing agencies are not reporting the revised cost estimates. May be, they do not have any clue about it.

How do these numbers compare with the global benchmarks?

The global benchmark for schedule and cost overruns for infrastructure projects can vary depending on the specific type of project, its complexity, location, and other factors. However, studies and reports often cite figures that suggest significant challenges in this area.

One widely referenced study is the “Global Infrastructure Hub’s Global Infrastructure Outlook” report, which provides comprehensive analysis on infrastructure investment needs and trends worldwide. According to this report and other similar studies, schedule overruns of 20% to 25% and cost overruns of 50% to 100% (18%) are not uncommon for large infrastructure projects.

Observations

When compared to global benchmarks, the cost and schedule overruns of Indian infrastrcture projects are within the global benchmarks. However there are many projects which are not included in the report by MSPI. Another point to be noted is the calculation of schedule variance. It is calculated based on the latest revised schedule, not based on the initial schedule. Third point is, this is not done sector wise, hence may lack accuracy.

References

Minstry of Statistics & Programme Implementation

Global Infrastructure Hub’s Global Infrastructure Outlook

Future of Operations Managers

Proliferation of AI into day to day business operations are forcing professionals to seek meaningful pivots to their careers which will help them to leapfrog into blue ocean opportunities which can leverage their current knowledge and experience. Today I had a very meaningful discussion in this regard, with a senior operations manager of a well known multinational bank. She is at the crossroads of her career and want to plan ahead pro-actively. . Here are the key aspects of our conversation;

Question 1 – If there is another round of downsizing, the pure advisory roles will be affected first. With the next promotion, I will get into the advisory role. What do you suggest?

Answer – You are right. Stick to hands on operations role.

Question 2 – Will mastering professional project management based on a globally accepted standard like PMBOK will help me to grow professionally

Answer 1 : As an operations manager one get amble opportunities to leap into leadership roles by taking up the ownership for internal projects and driving them to closure successfully. In most of the digital transformation projects, the operations (functional) managers has a major role to play. In one bank where I worked closely with the digital transformation project teams, the operations managers were acting as the product owners and owning up the product backlog grooming and prioritization. By mastering professional project management skills, operations managers will be able to act as very effective product owners becuase of their knowledge about how things really work (domain knowledge).

Answer 2 – Slowly but surely, the digital transformation projects will start leveraging the power of artificial intelligence. Without domain knowledge it is impossible to identify opportunities for leveraging AI in operations. Again, all AI projects have to take the iterative and incremental (agile) path to get perfected. This will again open up opportunities for those operations managers who understand how agile and AI projects work, so that they can contribute and grow without loosing their hands on touch on operations.

Answer 3 – Most of the banks outsource their software development work to other organizations. If one is looking for career swith from a functional organization to a projectized organization, then there are amble opportunities for those operations managers with good domain and project management knowledge and credentials.

Conclusion

Operations managers with project management skills and high level knowledge about AI will be in super demand in the near future, provided they are able to contribute to those internal projects combining their experience, knowledge and project management skills. Or, if they are aspiring for a career swith to IT companies, there are many who are seeking competent professionals who can translate their knowledge, experience and project management skills into tangile deliverables or services for their clients.

Projects are considered as successful, if they are completed on time, within budget, met the scope and achieved the business objectives of the project. How do we really achieve Poject sucess?

Initiation

  • Right Project Selection – If the project does not have a strong business case, it will fail eventually

Planning

  • Right project execution strategy (Agile, Waterfall, Hybrid) – A wrong project execution strategy can fail a project. For example, projects where scope is not clear, techno;ogy is new calls for agile / iterative development, till there is clarity. Once clarity is established, the rest of the project can follow waterfall or hybrid.
  • Right tools & techniques (Scheduling, Estimation, Project Management Information Systems) – On many occassions projects fail becuase the right tools are not used effectively.
  • Developing the subsidiary plans – Generally speaking, nothing good happens in projects without proper planning. For project success, one need to plan the following;
    • Quality management plan
    • Communications management plan
    • Procurement management plan
    • Resource management plan
    • Risk management plan
    • Schedule management plan
    • Stakeholder management plan
    • Change management plan
    • Configuration management plan
  • Developing the integrated project plan – For monitoring and controlling at a project level, all the subsidiary plans and the various other lower level plans must be integrated into a cohesive integrated project plan.

Execution

  • Executing the project as per the plan
  • Corrective and preventive actions

Monitoring & Controlling

  • Lag indicators
    • Schedule variance
    • Schedule performance index
    • Cost variance
    • Cost performance index
    • Scope variance
    • Quality issues
    • Risks occured
  • Lead indicators
    • Estmated date of completion (work package, milestone, project)
    • Estimated cost at completion
    • Anticipated risks

Closing

  • Closing phase
  • Closing project
  • Project Management Professional (PMP) is the most popular project management certification in the world. Right now, there are more than 1400000 PMP certfied professionals across the World. According to PMI Survey, PMP certified project professionals earn 16% more than their counterparts who are not PMP Certified.
  • The PMP certification is based on the Project Management Body Of Knowledge (PMBOK) by Project Management Institute (PMI,USA) . The PMBOK covers;
    • Predictive Project Management (Waterfall)
    • Agile Project Management (Adaptive)
    • Hybrid Project Management
  • Before applying for the PMP Certification, it is mandatory to attend 35 hours of formal project management training based on PMBOK.

Eligibility

OR

Exam content

People (42%)

  • Manage conflict
  • Lead a team
  • Support team performance
  • Empower team members and stakeholders
  • Build a team
  • Address and remove impediments
  • Negotiate
  • Collaborate with stakeholders
  • Build shared understanding
  • Engage and support virtual teams
  • Define team ground rules
  • Mentor relevant stakeholders
  • Application of emotional intelligence to improve team performance

Process (50%)

  • Execute project with the urgency required to deliver business value
  • Manage communications
  • Assess and manage project risks
  • Engage stakeholders
  • Plan and manage budget and resources
  • Plan and manage schedule
  • Plan and manage quality
  • Plan and manage scope
  • Integrate project planning activities
  • Manage project changes
  • Plan and manage procurements
  • Manage project artifacts
  • Determine appropriate project methodology
  • Establisg project governance structure
  • Manage project issues
  • Ensure knowledge transfer
  • Plan and manage project/phase closure or transitions

Business environment (8%)

  • Plan and manage project compliance (EHS)
  • Evaluate and deliver project benefits and value
  • Evaluate and address external business environment changes for impact on scope
  • Support organizational change
  • They understand the critical parameters that must be monitored and controlled for project success
  • They understand the building blocks and their inter-relationships for monitoring and controlling the lead and lag indicators
  • They understand the need for Project Management Information Systems
  • They understand the globally accepted project management vocabulary, hence can communicate better
  • PMP certification is an endorsement for minimum viable professional project management knowledge to be effective in larger projects

Preperation for PMP with a right balance of theory and practice will tremendously crash the learning curve to master professional project management based on a globally recognized standard (PMBOK).

To learn more about the PMdistilled PMP Preperation Program, Click here

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