Key role of a Project Manager in infrastructure growth for redefining India

Transcription

1 Key role of a Project Manager in infrastructure growth for redefining India

2 Key words: Redefinition, Infrastructure, Project Management, Human Capital, Digitalization, Communication Networks From times immemorial, the need for infrastructure development in India has been discussed at length. Strategies were formulated; a number of five year plans rolled out but what remains to be done has always been growing than the actual growth. ABSTRACT: Infrastructure is the backbone of any nation. India is still treated as a developing economy because of the low-infra development and resultant poor standards of living of the population. Railways, roadways, airports, energy, power, ports, communications, urban infrastructure facilities play a vital role in attracting and determining the investments by foreign countries. Infrastructure is, therefore, the key driver of growth for establishing India at the global level. A lot has been done for infrastructure development in India but a much more remains to be done to place the country as a world class choice to foreign direct investors in various sectors. Today the world is looking at India for its huge human capital. The government can meet its objective of Make in India only by encouraging industry investments in critical sectors and utilizing the human resources to the full extent. This requires a long term vision to re-define the infra needs of India to a ground level, creating responsible groups and delegating the development at root level. A project/program management approach is the best solution to avoid higher costs, delays and to complete each development project with the expected standards. Since infrastructure projects require very huge funds and involve numerous stakeholders, the risk of projects not meeting the targeted standards is very high. Innovative investment mechanisms including Public Private Partnership, Crowd Funding, Incubation Centres, Financial Inclusion, and above all professional project management approach can reduce the risks under these programs to a great extent, reducing the inherent corruption.

3 Table of Contents: Overview of the paper Why redefine India? Importance of Infrastructure in Redefining India Project Management vis-à-vis Infrastructure Growth Key Role of the Project Manager Specific considerations for an Infrastructure Project Manager Case Study Challenges Critical Success Factors Process Adopted Benefits of Applying PM Methodology Quantified Benefits Lessons Learnt Conclusion References Introduction: Infrastructure is the backbone of economy of any country. India is determined at the present juncture, to re-establish itself at the global level and emerge as world class economy, with its concepts and themes such as Make in India and Digital India. It is high time that all the growth contributors from the infrastructure sector are reviewed once again and make their shares for the redefinition of India. A professional project management approach is the only way out to overcome the barricades of growth in meeting the infrastructure targets of India. The entire portfolio of infrastructure and the various development programs under it can be perfectly fit to be projects by themselves. The infrastructure targets can be translated into independent projects to measure the achievements and make appropriate revisions. The primary objective of this paper is to summarize the key role played by a project manager in contributing for the growth in infrastructure sector. Secondly, the paper attempts to bring out a few benefits that can be reaped by applying project management methodology to infrastructure growth as a part of redefining India.

4 Why and How Redefine India India is known to the world as the largest democratic country and as the second most populous country. It has a distinct recognition for its diversity, rich history, traditions and values, and well known for its human assets in terms of hard work and intelligence. However, being still considered as a developing country even after sixty eight years of independence, there is every need for India to redefine itself and unleash the true potential. India has to re-emerge as the major economic player in the world. Redefining India is not a simple task either by definition or by achievement. Ours is a huge country where the human capital is jeopardised with different set of beliefs, practices, culture and adoptions. In order to prove the world about what India can really make out, Government has started encouraging various eminent groups to form, involve and contribute by way of refined thoughts, ideas and initiatives. Taking the advantage provided by the revolutionary framework called internet, active citizens, scholars, social activists have raised to contribute, to educate and to empower the citizens of India. Out of the various initiatives, the themes that are relevant to infrastructure are Redefine India, and campaigns such as Make in India, Digital India, Smart Cities etc. Redefine India is one such initiative which has taken a shape as a common united platform of collective responsibility of the four pillars of any nation viz., Citizens, Corporates, NGOs and Governments. Today the government has replaced the Planning Commission with Niti Ayog; The entire world is looking at India- at our spectacular reforms, reorganization efforts and rebuilding strategies. In the wake of amass transformation of global state of affairs, India has all set for reviewing the progress and redefining itself in terms of infrastructure by radical leaps such as PPP, FDI etc. Share of infrastructure in the redefinition: If one looks at the need to redefine India and consequent redefinitions in its vital components, infrastructure perhaps stands at the first place. Owing to the rapid growth rate of our economy, and unlimited speed of urbanization, the importance to infrastructure has also gone through tremendous changes. Because infrastructure is crucial to sustain the country s expansion and long term growth, top priority is given in budgets and various plans. Foreign investors, including US and Saudi Arabian

5 companies along with private participators are keen to invest and contribute to the advancement in this sector. Oxford Advanced Learner s dictionary defines infrastructure as the basic systems and services that are necessary for a country or an organization to run smoothly, for example buildings, transport and water and power supplies. Essentially, infrastructure, therefore, means that the physical components of inter-related systems that are essential for a society and a country to enable living conditions for its inhabitants to sustain and enhance. Infrastructure provides the basic support system for other sectors of a nation s economy. Infrastructure requirements can only be met through development of the relevant infrastructure capacity in the domestic economy. Therefore, it has always been a focus area in the hitherto five year plans 1. The role of infrastructure in redefinition of India can be compared with transplantation of heart in a human body. Similar to how crucial function a heart performs pumping blood and keeps one alive, similarly the infrastructure as a whole provides the core support system for the economy and keeps the growth alive. For example, developing roadways, railways, enabling digital infrastructure, communication networks, water, power, waste management, energy etc., will take India to top heights in terms of growth of economy, quality of standards and attracting foreign investors to India. The concept of redefining India has taken the following shape which contains infrastructure as the key element: 2 1 Twelfth Five Year Plan: Extracted from

6 When India is redefined in terms of Prosperous India - infrastructure development plays a key role to make the economy more strong and wealthy. Infrastructure provision has to happen in urban as well as rural areas to meet the increasing needs of population by way of rail or road connectivity, providing schools, hospitals, building solar energy plants, waste management plants, water recycling plants etc., in addition to the standard infrastructure facilities required.

7 Relating Project Management to infrastructure growth: Social standards and quality of life are directly related to infrastructure and measured with core facilities provided such as power, water, waste disposal, railways, communication, supply chain, logistics framework, transport networks, etc. The following diagram shows the relationship between project management and infrastructure growth: What a project is intended for as per PMBOK? A project creates a product or a component, can be an enhancement of an existing item or an item itself How can we relate it to infrastructure? Infrastructure by way of power plant provides power to industries and household Power Plant set up/ maintenance/ enhancement of capacity is a project How it benefits the growth of economy? Generates more income, employment, industrialization and improves standards of society A project creates a service or capability to perform a service (business function that supports production or distribution) A project can create an improvement in the existing product or service lines (such as Six Sigma Project for reducing defects) Infrastructure by way of communication, satellite network, digital network enablement in rural and semi urban areas Enhancing the capacity and size of communication platforms in urban and metro areas Infrastructure development by way of improving the quality of services offered by Railways presently such as improved catering services, increasing the server capacity of ticketing system, providing improved facilities in transportation etc. Creates awareness and educates various groups at large; Can be used to improve skills, trainings and equal development of geographies- to strengthen the human capital Improved services ensure that more people use the benefits offered thereby giving way to more revenue to government. Indian railways are one of the largest railway networks in the world and if the quality of services is improved, definitely it will redefine the infrastructure quality in India.

8 Key Role of Project Manager: By nature, infrastructure projects require huge capital investment of funds, long range planning, continuous management, commitment of required time, human resources and involve numerous risks. Estimation and management of cost is the major challenge combined with schedule slippages. Above all, stakeholder management is extremely essential and equally difficult. Various factors such as government policies, national and international politics, mismatch of user needs and objective conflicts among stakeholders are some of the prominent challenges of any infrastructure project. A project manager in infrastructure projects is assigned to lead the project team that is responsible for achieving the project objectives. While this is common for any of the projects, in case of infrastructure projects, the business value that is created by the project manager is what is reflected as a direct contribution to infrastructure growth. The performing project manager s role becomes really critical with his application of inter-personal skills such as communication, influencing, political and cultural awareness, negotiation, conflict management and decision making. Keeping the specifics of infrastructure projects, a professional project manager would apply his knowledge, skills and use various tools and techniques to complete the infrastructure objectives. For example, in infrastructure projects, the requirements may be easily identified such as setting up a communication network channel for a distinct user group. However, this one requirement has to be aligned with the needs, expectations and concerns of various stakeholders hence adequate planning becomes very critical. A professional project manager makes suitable plans and executes the project so as to balance the project constraints of scope, quality and schedule. Risk management and stakeholder management are key success factors for infrastructure projects. A project manager is vital in bringing out strategic plans for analyzing market demand, identifying the opportunity keeping in view the social needs, legal implications and environmental considerations. To summarize, the project manager is key success factor for an infrastructure project since he is directly responsible for accurate estimates of costs, risks and he manages stakeholders and governs the project.

9 Specific considerations for an Infrastructure Project Manager: The project risks should be shared and transferred with the appropriate authority to mitigate their effect to the best possible minimum If the risk governance process needs improvements, the Project Manager should take initiative to set up system and processes in place The project manager has to share all the accurate, relevant and timely information to senior management who can influence the decisions. Progress on milestones, budgets and risks should be reported continuously The project manager has to understand the overall risk strategy across his company and should try to eliminate any unwanted risk concentration at his level Where the stakeholders are required to take action, the project manager should monitor that appropriate arrangements are made and executed for this process Finally, the project manager should be knowledgeable enough with the global macroeconomic, country wide and portfolio wise risk data Case study: In order to explain how project management approach can be utilized to reduce/overcome the risks of an infrastructure project, a paper submitted by J. Reilly and J. Brown on Management and Control of Cost and Risk for Tunneling and Infrastructure Projects is studied in detail and presented here. Challenges of infrastructure projects as envisaged in the paper: (a) Making realistic cost estimates (b) Schedule slippages (c) Disrupted continuity (d) Improper and inadequate planning of requirements (e) Technical complexity (f) Complex risks for infrastructure projects including catastrophes, operational risks, quality standard mismatches etc. (g) DEFICIENT PROJECT MANAGEMENT According to a study conducted by PwC on Capital Projects and Infrastructure, most of the cost overruns are caused by the following factors.

10 From the above, it is evident that a skilled project manager can lead an infrastructure project to its success by making accurate estimates, defining the objectives appropriately and managing risks, stakeholders communication and strategies. Critical Success Factors: Risk Identification & Mitigation Accurate estimates of risks and costs Timely strategy for better cost management

11 Process adopted/methodology followed in the case study: Cost Estimate Validation Process, or CEVP 3 uses risk and uncertainty methods to structure a project cost estimate to produce a range of probable cost. The concept incorporates principles similar to those infrastructure projects using risk analysis processes. The procedure was applied to a set of infrastructure projects in Washington State (USA), estimated at about US $25 billion, as well as to many smaller projects. The process included explicit identification of high-cost and schedule risk drivers leading to an ability to develop explicit risk management plans early in a project s development, directly from the CEVP process. The CEVP approach essentially consisted the following steps: Initially the project estimates are examined in detail and the project base costs are decided. For this purpose the base costs are defined as those costs that would occur if all the expectations come true. Subsequently, the variations and risk contingencies are deducted from the base cost All the potential risks are identified by the Project Manager and opportunities measured with their probabilities and consequences. In other words, the impact and benefit analysis is the key document brought out by Project Manager at this stage Finally, the base costs, risk and opportunity events are combined to estimate probable ranges of cost and schedule. This probable range includes all the relevant risk and opportunity events that the project manager can identify. This output contains more realistic ranges of probable costs for several complex infrastructure projects Benefits of applying PM Methodology : (a) The project manager has contributed for the success of this case by (i) identifying the high cost and schedule risk drivers (ii) identifying a risk management policy and formalizing a risk mitigation plan (iii) implementing the mitigation strategy for risk to reduce the impacts (iv) deciding on how to handle the residual risk by accepting or transferring it. (b) Only project management approach could foresee the risks properly in this case. While the project charter is developed, the project manager had a vision of risks existing in design, 3 CEVP is registered to the Washington State Department of Transportation to recognize its development and application of this new process and to assure that, if the process is applied by others, that they acknowledge WSDOT and follow the basic requirements of the process.

12 procurement, construction and operation of large and complex infra project. Project management methodology ensured that a strategic approach is defined and implemented early. (c) By applying systematic and timely project planning approach, the project manager successfully performed the management task of risk identification, analysis, mitigation and contingency planning. Since risk planning is the utmost critical activity in infrastructure projects, this assumes greater importance. (d) The project manager used well established risk and management procedures and models by applying the database and lessons learnt through external and internal sources. This resulted into appropriate risk mitigation plans to suit specific project conditions. (e) The monitoring and control process of project management applied successful models of risk quantification such as derivative cost and schedule probabilities. (f) Project management approach comprehensively and rationally evaluated the options available at various stages of the project and remained focused on project objectives, priorities and project goals. Quantified benefits in the case study: The Cost Estimate Validation Process (CEVP) was developed by a small concept team of WSDOT Managers and Consultants (Reilly, McBride, Dye & Mansfield, 2002). The process includes the effects of all foreseeable risk (and opportunity) events. After initial definition it was directly applied to 9 large complex, transportation projects, with a collective value about $US 25 billion, by WSDOT and the concept team, with other consultants (Brown, 2002). Lessons learnt: a) Cost estimations are extremely critical in infrastructure projects and accurate cost estimation is an extensive and chronic problem than what it is perceived to be. Hence the Project Manager has to diligently plan for more realistic estimates from the beginning itself b) The effect of risk events should be properly envisioned in infrastructure projects otherwise scope management will be really difficult as the project progresses c) Better strategy and Project Management are the key factors for reducing the risks and ultimate success of the project

13 Conclusion: Enterprise environmental factors are a major consideration, in addition to stakeholder management and project governance framework for infrastructure projects. In the absence of a professional project management approach, the infrastructure projects cannot be successful. Various infrastructure projects have failed in India and at global level as well because the professional approach was not fully implemented, the logic and strategy was not properly formulated and the dependencies were not adequately envisioned. On the other hand, projects which have used a professional project manager s expertise were benefited with the scientific approach, risk management techniques, better contingency planning etc. An effective project manager would make a difference to project outcome in terms of communication and his learned art of leadership. In a nutshell, the key role of a project manager in infrastructure projects for redefining India can be summarized as under: (a) Long range planning and stakeholder management are key areas: Creating a framework and appropriate project plan keeping in view the specific quality requirements, considering all the relevant stakeholders and managing the risks in infra projects (b) By predicting and managing project crises, a project manager can ensure effective execution with proactive steps towards risk mitigation and implementing suitable contingency plans for infrastructure projects (c) Using the latest technology, open source tools, organizational assets, global data sources available for effective project execution and monitoring References: i. Twelfth Five Year Plan Volume-1 Planning Commission, Government of India ii. Building India-Transforming the Nation s Logistic Infrastructure by McKinsey & Company iii. Digital Infrastructure KPMG India, CII iv. Draft Paper: Infrastructure Challenges in India-The role of Public Private Partnerships by Geethanjali Nataraj v. Management and Control of Cost and Risk for Tunneling and Infrastructure Projects by J. Reilly & J. Brown vi. Gridlines- The opportunity and challenge of India s infrastructure by PWC

14 Websites: a. EG0S19HW\Digital India _ Welcome.html b. c. Infrastructure problems: d. e. Energy, Infrastructure and Communication: Acronyms: CEVP : Cost Estimate Validation Process PM : Project Management PMP : Project Management Professional PPP : Public-Private Partnerships WSDOT: Washington State Department of Transportation