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| Vinayak Chatterjee: Consulting practice and infrastucture | | The consulting practice holds the key to effective design and delivery. Introspection is necessary in the profession |
| Vinayak Chatterjee / New Delhi Dec 21, 2009, 00:46 IST |
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 Lord Rama’s mission of building the sea bridge to Lanka was achieved without much ado. He had with him Nala and Neela, two clever monkey “architects, design engineers and project management specialists” who were able to plan the bridge, and supervise its implementation by the vanar sena. Though thousands of years have passed, challenges in infrastructure development remain quite similar.
Infrastructure comprising power, roads, ports, railways, metro rail, airports, irrigation, water and sanitation, real estate, telecom, and industrial, urban and social infrastructure rely heavily on consultancy practice. Even if 60 per cent of the investments envisaged in the Eleventh Plan period were to materialise, infrastructure development would see $300 billion of investment in the Eleventh Plan period. To put this number in perspective, this level of investment would bring into fruition around 2,700 projects of an average size of Rs 500 crore — provided, of course, design and delivery challenges are met. Each of these projects would require consulting services in feasibility, design, engineering, project planning, project management, environmental, financial and legal domains. The delivery of these services is as critical to project development as identifying funds for investment. Historically, however, the focus of most debate and discussion has been more on land acquisition, various clearances and financial closure.
My colleague at Feedback Ventures, Anand Krishnamurthy, has spent some time understanding the structure and size of the consulting market for infrastructure. There are a handful of large Rs 500 crore-plus firms in the public sector, such as Engineers India Limited (EIL) and RITES, and 60-100 firms in the Rs 5-500 crore range, mainly in the private sector. The sub-Rs 5-crore category consists of highly fragmented, regionally-dispersed entities encompassing more than 2,000 firms. Foreign firms are allowed to operate freely in the Indian market other than legal firms and chartered accountant (CA) practice. Krishnamurthy’s investigations also reveal that the infrastructure services market is between Rs 12,000 crore and Rs 15,000 crore per annum, growing at 20 per cent. This is not a small market size and is equivalent to about 20 per cent of the IT services exports market. While the market size is seemingly attractive, the moot question is whether consulting firms have competitiveness and capability to address the market needs.
Even at the current “lower than desired” rate of infrastructure development, we are witnessing issues in service delivery such as glitches in traffic projections, variances in projected and actual total project costs (TPC) in road projects, and instances of serious design failures in landmark projects. A 2008 study by the World Bank on the Indian road construction industry has highlighted the following aspects with respect to availability and competitiveness of skilled professionals:
Under a medium-growth scenario, the supply will fall short by 18-28 per cent, while under a high-growth scenario, the gap will widen considerably from 55-64 per cent over the next eight years;
Unsatisfactory ratings on skills and availability of workforce.
The underlying reasons for the perceived lack of adequate capacity are following:
One, lack of experienced professionals in the band of 10-20 years of experience, leading to overloading and quality issues.
Two, pressure on order booking, which forces firms to bid aggressively without sufficient thought on resource-planning and resource-costing.
Three, civil-engineering, historically, has not been considered as attractive an option as other engineering branches.
Four, infrastructure firms are competing for fresh engineering talent against IT firms.
Five, lack of home-grown expertise in airports, metro rail and ports sectors which saw very little participation by the private sector historically.
Six, lack of bandwidth for consulting companies to conduct internal training programs.
Seven, often inadequate capitalisation of consulting companies vis-à-vis requirements of growth and liquidity.
Eight, inadequate exposure of domestic firms to the best global practices.
Fundamentally, the challenges concern human resource development and honest delivery. Here are two measures to take on this challenge:
Self-governance
The infrastructure services industry routinely operates under a set of model concession agreements, design specifications and performance standards. More importantly, it operates under an unstated code of professional conduct. There is a felt need for a self-governing body for infrastructure consultants, which would represent not only the interests of the professional community, but it will also promote and regulate universal standards of delivery. This body could be set up on the lines of the Advertising Standards Council of India which aims to promote honest advertising, fair competition and respectability of the profession. The proposed body could also be a nationally-recognised body for accreditation.
Responsibility for skill development
There is no justification for imploring the government for skill-building programmes. Cases in point in successful skill-building are firms like NIIT, which have supported the IT industry in its high growth phase. The three key learnings from such firms that can be directly applied to infrastructure consulting services are: They were created and operated by the private sector; they had a strong focus on employability and they promoted the IT industry as an attractive career option. Attempts are being made now to address specific skill needs for construction services through institutes such as National Institute of Construction Management and Research (NICMAR), and National Academy of Construction. More general skill development programmes are underway at Adani Institute of Infrastructure Management; a course on Infrastructure Engineering at IIT Madras, etc. The self-governing body (suggested above), should work with these and similar institutes to impart specific training, employ interns and evolve certificate courses that would be recognised by the industry.
Finally, there is the issue of involvement of consultants in policy-making and project monitoring by government agencies. The task of designing, financing and implementing projects is getting more and more complicated as the public private partnership (PPP) movement is gathering momentum. Complexities arise from simultaneous juggling of technical requirements, concession agreements, viability establishment, fund raising and compliance with regulatory issues. It is best that consultants are involved whenever new policies and frameworks are being developed — in a structured, consultative process. To the credit of the government, such involvement has been seen to be deepening in the policy arena in the last few years; not so, however, in project implementation and related tracking.
It is often said in jest that “A carelessly planned project takes three times longer to complete than expected; a carefully planned project takes only twice as long.” Clearly, a difference can be made!
The author is the Chairman of Feedback Ventures. He is also the Chairman of CII’s National Council on Infrastructure. Views expressed are personal
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