The above picture shoes the Primavera the software used is project management process of Delhi Metro.
Cost Control
- The main reason for cost over-runs in big projects is non-adherence to the project schedule due to delays in land acquisition, legal hurdles, etc. Some of the cost control measures which were implemented in DMRC include -
- The Delhi Metro Railway (Operation & Maintenance) Act, 2002 provided special powers to DMRC to acquire land for the metro / other utilities or property development in order to
- recover costs. This law superseded Delhi’s local municipal laws and stay orders could not be issued by lower courts. It has not provided for resettlement and rehabilitation and deals with the cash component only.
- DMRC entered into a special agreement with Delhi Transco Ltd power supply at low rates. It also negotiated with the central government for exemption of import duty and excise tax and with the state government for exemption of sales tax and work contract tax, resulting in cost savings of about1800 crore.
- Pacific Consultants International (PCI) provided overall consultancy for the project. A major part of the project was supervised by consultants and construction was delegated to a consortium of contractors. This reduced the in-house governance cost drastically.
Assessment
- A traffic congested city like Delhi. Approximately 1.05 million passengers use the metro system of normal weekdays.
- The environmental benefits are assumed to be in range of 1,800fewer buses on the roads, annual fuel savings of 1712 million and substantial reduction in air pollution.
- DMRC which was able to implement the metro network ahead of schedule and on budget, is the consultant on many such projects.
Comparison
Project Cost
“Project Cost Management describes the processes required to ensure that the project is completed within the approved budget. It consists of resource planning, cost estimating, cost budgeting, and cost control.”
Delhi Metro-
The Delhi Metro Rail Project was initiated on 1st October 1998. The entire project was divided into four phases. Phase I and II had estimated capital cost of Rs. 14, 430 crores at 2004 prices. Although more recent estimates tell us that the cost of construction would be at Rs. 200 crores per km.
Phase I completed in 2006 on budget at Rs 10,571 cores.
The means of finance for Delhi Metro were as follows:
Due to tsunami crisis, JBIC had decided to reduce the loan for next funding and it will pay only 40% cost of the project.
The below table illustrates the various components of capital cost for phase I at 2004 prices which was Rs 64,060 million and consists of the foreign exchange cost of Rs. 7720million and the domestic and labour cost of Rs. 56,340 million. The corresponding figure for the phase II is Rs. 80260 million at 2004 prices.
Cost estimate of DM (phase I):-
The Delhi Metro had been provided with the following concessions by GOI to make the project viable (reported in RITES (1995a) :-
- The cost of land equivalent to Rs. 2180 million has been provided as an interest free subordinate loan by GOI/GNCTD to be repaid by the Delhi Metro within 5 years after the senior debt is repaid fully by the twentieth year of taking the loan.
- The risk associated with the exchange rate fluctuations is borne by government in case of foreign debt,
- The Delhi Metro is exempted from payment of income tax, capital gains tax, property tax and customs duty on imports.
- The Delhi Metro is permitted to generate resources through property development over a period of 6-20 years
- No dividend is paid on GOI share of equity till the senior debt is repaid fully by the twentieth year.
The first phase of the project which was estimated to cost approx. Rs. 6000 crore (at 2004 prices) was completed at a cost of Rs.10571 crore.
Kolkata Metro:-
The Kolkata Metro’s construction work started in 1973-74 since which the project faced the several problems one of which being non-availability of sufficient funds till 1977-78.
Funds came in dribbles and the project never got the support of the state government, which saw it as a central government project, since it is under the Indian Railways.
The North South metro project was allotted only $14.38 million during the first 7 years. The cost of construction escalated to $32.55million at 1993-94 price level due to delay. The metro, which started its journey Oct 24, 1984, was constructed entirely by Indian Railway engineers, without help from a single foreign consultant or foreign contractor. The major stretch of the metro lies below sea level.
The East-west metro project is estimated to be a Rs4,874.58 crores ($1.1 billion) project. The EW metro’s major stake is with Indian Railways and rest with Japan Bank of International Cooperation. To avoid the mistakes in construction of North south metro project , the east west project would be operated by a separate and new company called Kolkata Metro Rail Corporation.
The following table depicts the components of capital cost for Kolkata Metro East west corridor project:
The State Government of West Bengal initially had not been as supportive towards the metro project in there city as the Delhi State Government has been towards its own project.
The operations of Trams in the city were heavily subsidized as they were provided cheaper electric power while no subsidy was provided to Metro Railway as it was operated by central government.
The previous table compares the fare of Delhi metro (DMRC) and Kolkata Metro. Kolkata metro provides the cheapest fares in the world but this also has led to continuous loss generation. There have been hefty hike in the salaries of staff as well however the earnings have not increased in the same ratio.
Comparison:-
Project Time
“Project Time Management describes the processes required to ensure timely completion of the project. It consists of activity definition, activity sequencing, activity duration estimating, schedule development, and schedule control.”
Delhi Metro:-
Delhi Metro Railway Corporation (DMRC) works on business principles which follow strict adherence to timelines. The phase I of the Delhi Metro project was to be completed in 10years time however the project was completed two years and nine months ahead of its schedule. Phase II of the project was to be completed in 4years time and was successfully completed in year 2010-11.
If the project is delayed by one day it costs Rs, 1.3 crores to DMRC whereas in case of phase II it would cost them Rs. 4.5 crores. This was communicated to everyone in the organization so that they would realize the importance of completing deadlines.
To ensure completion of projects on time Delhi Metro followed the system of Reverse Clocks in which the clock indicates how many days are left for that particular segment of the project to be completed. This kept everyone in the organization on their feet. There were also weekly meeting scheduled with the top managers of the site mangers or the contractors in order to find out any problems which the contractors might face which would result in failure of duty. This way delays in project were avoided.
Kolkata Metro:-
Approved in 1972, Kolkata Metro’s 16.45 km route between Dum Dum and Tollygunj was constructed over a period of 23 years, unlike the Delhi Metro which set records by constructing 65.1 km of lines in eight years.
Kolkata metro was more of trial and error affair as the construction period of the Kolkata project was also saddled with issues such as non-availability of funds till 1977-78, shifting of underground utilities, court injunctions and irregular supply of vital materials.
Recently the officials of the executing agency, Kolkata Metro Railway Corporation (KMRC), said problems like land acquisition in Salt Lake that had been slowing down the project nine months ago still had not been solved. Execution delays caused the East-West Metro project to fall behind schedule. Kolkata Metro took 22years for completion and the cost went up by 14times.
Comparison:-
Project HR Management
At DMRC staff council meetings are held on a weekly and monthly basis to discuss day-to-day affairs, staff members are encouraged to make suggestions and recommendations for improvement. Competency building workshops are organized to educate staff members in time management, team building and motivational techniques for their personal and professional development.
The Delhi Metro Training School, established in 2002, is the only specialized training institute in South Asia in metro operations and maintenance technology. It imparted training to the metro maintenance and operations staff and was certified by the International
KMRC on the other hand is bursting with staff with 140 employees per km DMRC being a learner organization with two main departments project organization and operations & maintenance has only 34 employees per km.
Project Autonomy
The decision making process of DMRC is very fast and this has been helped by the structure of the organization. The structure of the DMRC is such that it is owned 50% by the Government of India and 50% by the Government of Delhi. Hence neither of the Governments can fully control giving the board of directors the final authority for any decision to be taken in the organization. The board of directors in their wisdom and their trust in Mr. E. Sreedharan who is the managing director of DMRC) have delegated most of the powers to him so that more decisions can be taken in the organization itself.
DMRC have awarded many contracts such as contracts covering even thousand tonnes of coal. The average can be taken for a civil engineering contract for 18 days. This is the speed with which DMRC takes decision. There are cases where the organization has decided tenders in hours. The tenders are decided and there is so much of mutual trust in the whole organization because integrity is seen to be carried by everyone. The level of mutual trust is so much that when a tender is due, a discussion takes place and they know what they require and it is all finalized very fast.
However in case of Kolkata Metro since the power of authority laid with the Indian Railways the whole decision making process was quite slow. They didn’t have a separate independent body like Delhi metro and hence had to face lot of government interferences and bureaucratic games which resulted in delays in the project.
Decision with the Government, normally will take 2 years which DMRC may take in 2 days for reaching their purpose.
Comparison:-
Project Revenue
Delhi Metro
- In 2007, the Delhi Metro claimed to be one of only five metro systems in the world that operated at a profit without government subsidies
- Revenue by leasing out trains & stations for film shoots.
- Producers have to pay as much as 1 lakh (US$2,220) for every hour of filming, besides a security deposit and insurance.
- For financial year ended March 2008, Metro reported operating revenues of Rs. 305.27 crore (US$67.8 million) and a PAT of Rs. 19.98 crore (US$4.44 million)
Operating revenues rose to Rs. 723.77 crore (US$160.7 million) and PAT rose to Rs. 90.43 crore (US$20.1 million) for the financial year ended March 2009
Kolkata Metro
The biggest problem being faced by the Kolkata Metro Railway is that it is incurring losses which are increasing every year. The net revenue loss in 1990-91 was US $ 1.09 million which has multiplied to $12.96 million during 2000-01. As per the fare comparison done previously we know that Kolkata Metro fare is one of the lowest in the world. Fare structure on Metro Railway was last revised with effect from 01.10.2001 after a gap of 3 years. Less fare revisions and high expenditure has resulted in huge losses for Kolkata Metro as even today it operated on loss of Rs 86 crores.
Quality Management
Delhi Metro-
- Special quality assurance team was appointed independent of field executive.
- A detailed project report (DPR) was prepared by each employee as per the benchmark.
- Schedules and reverse lock were put to check on time lag
- Every Monday a review check was performed by the senior officials.
-
1st railway project in the world to earn carbon credits under CDM. So far, earned 400,000 carbon credits by saving energy through the use of regenerative braking systems on its trains
-
2nd metro in the world to be ISO 14001 certified for environmentally friendly construction
- Won awards for environmentally friendly practices from organizations including the UN and International Organization for Standardization
- Most of the Metro stations on the Blue Line conduct rainwater harvesting as an environmental protection measure.
Kolkata Metro-
Calcutta Metro took 22 years for completion and the cost went up by 14 times and more than anything else when the Metro was under construction, the city was put to a lot of hardships and inconvenience. The central revenue itself, which is the artery of the whole city was kept open just like that for years.
However with new metro project in Kolkata for east west line General Consultant is hired who monitor the contractor’s activities for quality assurance.
Conclusion
Though the Delhi Metro may shine in comparison to Calcutta’s, its financial picture may not actually be as glowing as it is made out to be. Certain critics of Delhi metro have the opinion that the balance sheet is healthy not because of sound financial management but due to excessive help from the government. Apart from getting concessional loans and land, DMRC is exempted from paying a slew of taxes and duties and dividend on government equity for 30 years.
Kolkata Metro cannot be labeled as complete failure either as it was established at the time when technology wasn’t so sophisticated also the concepts of project management were not widely in use. But despite its lack of performance and technical glitches it showed us how to avoid the mistakes which are generally made in any major project. Today if Mr. E. Sreedharan was able to efficiently manage Delhi Metro Project only because he chose to learn from the mistakes made in management of Kolkata metro.
References
Budget of Delhi metro
