With the liberalisation of the economy and the special status of ‘Navratna’ and now ‘Maharatna,’ and consequently greater freedom to the PSUs (public sector undertakings) in chartering their own growth plan, many mega projects are currently being implemented, or are in the offing, begins S. N. Choudhary, Executive Director (Projects) at the Panipat Refinery of Indian Oil Corporation Ltd (IOCL). Such big projects have great challenges, of which the most important one is the completion of such projects on time, he adds, during the course of a recent email interaction with Business Line.
Excerpts from the interview.
How can we overcome the challenges that big-ticket public sector projects face?
Almost invariably, all big-ticket projects of PSUs are delayed. Public sector managements have a strong desire and conviction to set out timeline for completion, based on international standards, but their conviction normally evaporates midway during implementation due to a variety of reasons.
There are instances where the finance department people of the PSU own the project and they work in isolation, resulting in delay in decision-making. Normally, project managers, being technical persons, are weak in commercial and legal aspects; this results in a free play by various business partners causing delay to the project.
Big projects have greater risk also. Therefore, it is imperative for the PSU to analyse a project from the viewpoints of operating necessity, competitiveness, etc., in great detail, rather than venture into large investments just due to greater autonomy accorded by the Government. Heavy dependence on consultants and the attitude of back-seat driving, instead of front-seat driving of project in PSUs, can cost heavily.
Other issues include placement of engineers without project management skills; lack of adequate compensation for the arduous nature of jobs for PSU project engineers; bureaucratic approach of PSU officers; low concern for the workforce and their welfare and wages resulting in extremely low output; absence of accountability; and directionless project leader.
To address these challenges, the following may help:
(a) The Government needs to provide relaxed rules for projects, as in the case of Delhi Metro Rail; and the result is salutary.
(b) Project certification training can be given to project team for behavioural, commercial, and legal aspects in order to enhance risk-taking ability and decision-making capability.
(c) Every big-ticket project should have a full-time advisor competent to advise on all critical issues.
(d) Changes in terms and conditions of contract should take care of labour welfare measures; and there should be a rigorous implementation of administration of correct wages.
(e) Since the nature of job is very tough, the compensation package needs to be designed appropriately.
Can you give us a few examples of how you managed some of the critical problems that arise on a day-to-day basis?
Critical problems which arose on a day-to-day basis were broadly the following:
(a) Delay in wage payment and non-payment of wages;
(b) Frequent cable-cutting and interruption in construction power supply;
(c) Dumping of surplus earth by contractors on the road to save transportation cost;
(d) Rampant pilferage of materials such as steel and cables;
(e) Acute financial problem to contractors due to the downturn of the global economy; and
(f) High absenteeism of labour due to sickness.
All labour and wage-related issues were directly handled by me, and labourers had direct access to my room for the resolution of any problem. In case contractors were experiencing financial crunch, payment was made directly by IOCL so that labourers would have utmost confidence in the system. At all the entrance gates, complaint box was kept and labourers were using the same for airing their grievances and problems. All issues raised through complaint box were also directly addressed by me.
If a cable is cut during excavation by excavator or other equipment, the jointing cost may be hardly Rs 50,000; but if the information is not provided about the location, searching for the place of cable-cut sometimes used to take 2 to 3 days, with a serious and telling effect on productivity.
Therefore, I made a policy that if after cutting of cable, the contractor informs, he has to pay the repair cost only, i.e. Rs 50,000; but if a contractor conceals this damage, he has to cough up a penalty of Rs 20 lakh. Similarly, for dumping of earth on roads, a penalty of Rs 20 lakh was levied to curb the menace of bad housekeeping.
On a co-operative basis, all contractors were made to agree to deploy retired Army personnel as security during the night, and thus the pilferage was curbed. Additionally, the height of boundary wall was also increased.
To help contractors, two actions were taken. First, release of payment within a week instead of 72 days as provided in the contract; and secondly, providing financial assistance generously to the needy contractors.
Again, to control absenteeism, on a co-operative basis, a first-aid centre was established having qualified doctors in all the three shifts. Apart from handling emergency, the doctor was assigned the job of health check-up of 100 labourers daily. Moreover, a team of doctors used to visit the colony everyday in rotation and sick labourers were medically attended to. It was all contributory by all contractors; and IOCL only acted as a catalyst to bring them under one umbrella.
The money collected as penalty as stated above was also released after the completion of the work but they had to spend a small amount towards discharging social responsibilities such as the development of schools, hospitals, and villages of the adjoining area.
Considering the fact that many public sector projects in the country suffer from serious cost/ time overruns and have been languishing in execution, do you think it is possible to turn such projects around?
Only a few projects cannot be brought on an even keel, especially where the management is not interested in completing during its tenure and/ or the state Government is not inclined to bring the project on time, and instead of rendering help, some ticklish issues get politicised. Apart from these, I am a firm believer that it is always possible to turn around the project. The PSU Board has been given tremendous power and, as it is being utilised by IOCL, other Boards should also utilise and endeavour to complete the project with minimum delay or no delay.
Moreover, project managers should be given authority to take judicious decisions as per the guidelines of the management and the CVC (Central Vigilance Commission), and to complete the jobs, with the approval of management then flowing. This also requires appropriate delegation of powers. Projects can be completed on time in PSUs if the managements are inclined to do so. If they do not wish, there are a hundred pretexts.
Any other points of interest?
There has been a mushroom growth of consultants who do not have the desired skills but get jobs using contacts. Such consultants keep engineers on hire, for engineering and site supervision. Contract engineers have no commitment and they are over head and ears in unethical practices. Clients have to be doubly sure, therefore, before selecting consultants.
Unfortunately, there are private consultants who play havoc at the instance of many PSU managements; and there seems to be no system to control this. The CVC should take a lead role and ban some such consultants who do not follow the rules, succumbing to the designs of clients.