Firms urged to strengthen internal systems and processes

“To minimise implementation risks, revenue leakage”

July 29, 2010 01:46 am | Updated 01:46 am IST - CHENNAI:

RISK ANALYSIS: Ramesh Subramaniam, president, Sri City Pvt Ltd, addressing a session in Chennai on Wednesday. ( From left ) Amit Bansal, Director-Forensic Services ( Infrastructure Sector ), KPMG India and T Chitty Babu, convenor, CII panel onlInfrastructure and Urban development panelurban development. Photo : R. Ravindran

RISK ANALYSIS: Ramesh Subramaniam, president, Sri City Pvt Ltd, addressing a session in Chennai on Wednesday. ( From left ) Amit Bansal, Director-Forensic Services ( Infrastructure Sector ), KPMG India and T Chitty Babu, convenor, CII panel onlInfrastructure and Urban development panelurban development. Photo : R. Ravindran

As the size, scale and investments on infrastructure projects get bigger, companies need to strengthen their internal systems and processes to minimise implementation risks and revenue leakage due to measures of misconduct, according to experts at a seminar held here on Wednesday.

Participants at a session on ‘Project Implementation risks in infrastructure-Typical Misconduct Practices,' hosted by the Confederation of Indian Industry (CII), advocated tighter grip across various functions of project implementation to avoid losses that were sometimes not just financial but could mar reputations.

Amit Bansal, Director-Forensic Services (Infrastructure Sector), KPMG India, said inadequate focus on internal processes and systems could prove costly for companies as ticket sizes of projects go up, increasing the complexity and attendant risks.

Companies stood to lose as much from weaknesses in internal controls that leaked revenue through procurement, over-invoicing, fake invoices and manipulation of tender procedures as they did from the conventional project management failures of planning and scheduling, Mr. Bansal said.

Citing case-studies from KPMG-led audits, he pointed out that typical misconduct practices ranged from keeping the scope of a contract vague to enable manipulation mid-way into implementation to pilferage of raw materials passed off as scrap.

In one case of over-invoicing, a company shelled out payment to a contractor on a cost of project basis instead of a cost of works basis resulting in releasing funds disproportionate to the progress of the project, he said.

While advocating that boards and managements take overall responsibility for efficient controls and adherence to a written code of conduct, ultimately “it is all about creating a culture of empowerment and a passion for the work in a team,” Mr. Bansal said.

Ramesh Subramaniam, president, Sri City Pvt. Ltd, stressed the importance of adhering to a detailed master plan while implementing infrastructure projects. A master plan that provided for zoning industrial, commercial and residential establishments within a project area was essential for the “what-will-go-where” allocation.

T. Chitty Babu, convenor, Infrastructure and Urban Development Panel, CII Chennai, said total infrastructure spending in India was expected to increase from the 2005 level of $24 billion to $47 billion in 2010.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.