Some Critical Issues Pertaining to Road Construction Industry

Some Critical Issues Pertaining to Road Construction Industry

H. L. Chawla, Consultant, World Bank

During the course of inspections carried out by me as a part of various World Bank missions on the National Highways, State Highways and other road construction projects in the country, I have tried to find out the various constraints affecting the progress of the construction of the roads. Some of the critical issues pertaining to the Indian Road Construction Industry are as under:
  • Pre-construction issues
  • Land surveying, investigations and design issues
  • Construction and contract management issues

Pre-construction issues:

  • Delay in land acquisition
  • Resettlement of project affected persons
  • Tree cutting
  • Shifting of utilities
Since encumbrance free site is not made available to the contractors in the initial stages of the project, the contractors delay the mobilization and in most of the cases, the contractors use the mobilization advance elsewhere.

One more reason is that the extent of land to be acquired is not possible to be identified because of the outdated land records and poor quality of designs. Sometimes additional land requirements become necessary to take care of the designed right of way.

Another reason is that the trees to be cut are not properly demarcated on the design drawings. Moreover, the clearances and permissions from the Ministry of Environment and Forests is a pre-requisite and takes quite some time before the trees are cut and design right of way made available to the contractors.

Since no proper records exist of the under ground utilities like water supply, sewerage lines, electrical and telephone cables etc., these utilities get identified as encumbrance only during the implementation stage of the project. Similarly shifting of overhead electrical and telephone lines (which are visible including poles) takes a long time. This leads to delay as the shifting of these utilities brings in hardships to the general population and suitable alternate arrangements are required to be made.

Some Critical Issues Pertaining to Road Construction Industry
There are numerous government agencies involved from which clearances/approvals/permissions are required to be obtained before the utilities can be shifted or relocated. This takes a great deal of time. There are cumbersome procedures involved and sometimes the relevant laws and regulations are also not very clear.

The delay in the handing over of the encumbrance-free land to the contractor generally takes as much as about 30 months compared to about 20 months which should have been the ideal case. Even when the land was finally made available, there exist still some encumbrances which put a constraint on the contractor’s capacity to undertake construction work in an un-interrupted and continuous manner. Because of the above reasons, substantial extensions of time are required to be given to the contractors.

These time over runs lead to cost over runs. These also lead to claims by the contractors for idle resources and demand for compensation.

Land Surveying, Investigations, and Design Issues

The land acquisition for the highway projects is carried out in accordance with the principles laid out in the National Highways Act or the Land Acquisition Act. These two Acts govern the acquisition of land for defined public purposes and compensation in lieu thereof. If all due processes are followed, the land acquisition as per the NH act should normally take about 15 months and under the Land Acquisition around 24 to 30 moths.

Since such a long time is taken to acquire the land, the process should get started much earlier or may be at the same time as the project is at the design stage. But actually the land acquisition plans are prepared very late.

There are quite a few reasons for the delay and some of these are:
Some Critical Issues Pertaining to Road Construction Industry
    • Outdated revenue maps form the basis for preparation of land acquisition plans. The records are often not been updated for a long period of time.
    • The land acquisition plans are often not realistic as the design consultants lack expertise to prepare such plans. They also do not carry out the alignment and ground verification.
    • There are frequent changes in the designs and alignments during implementation stage. In some cases, there are discrepancies in the project coordinates and the reference frames resulting in mismatch thereby resulting in redesign of the alignment.
    • The project authorities have to depend on the human resources from the revenue authorities, who are already over stretched and cannot, provide the required assistance on time.
    • In the absence of clear guidelines on providing compensation in special cases (including land owners with unclear titles or more than one owner), the settlement process takes a much longer time.
    • In addition to the above, the reasons for delay in resettlement are as follows:
    • Delay in finalization of the alignment and corridor of impact during project preparation stage
    • Delay in identification and finalization of the list of displaced persons. The list of title holders gets finalized after the declaration of award by the competent authority.
    • The alternative land for relocation during preparation stage is not firmed up
    • Construction and contract management issues:
    • Very weak contract management & enforcement environment.
    • The role of the Independent Engineer is not clear. Many of the Employers staff and domestic supervision consultants do not have adequate knowledge/ to understand the FIDIC conditions of contract (being followed in most of the NH and state highways projects).
    • Lack of the understanding between the Employers and the contractors that speedy completion of the projects is to both parties’ interest.
    • Lack of understanding of the contract conditions both by the Employers and the contractors.
    • Since the Employer is usually lacking in fulfilling his obligations under the contract, such as timely delivery of encumbrance free land, timely decision making on the variations, making payments on time, early activation of dispute resolution mechanism, his leverage on the contract enforcement gets eroded.
    • There is a resistance to acceptance of the responsibility in taking decisions, even when the Employer’s staff is convinced. This is because of a “fear psychosis” and the staff tries to pass on the buck.
    • There is lack of training imparted to the Employer’s, CSC’s & contractor’s staff on the general terms and conditions of the contract and the division of the parties’ rights, duties and obligations as per the contract. This results in lack of motivation for treating the project as a common goal and working as a “team”and all the parties try to shift the blame to others and no one tries to take the responsibility.
    • Due to dearth of construction management skills in the country, the contractor’s performance gets affected. This includes the contractor’s work planning, resource and workflow management, cash flow management and his overall project management.
    • The contractors generally quote low to win the contract. They normally have their eyes on making money through raising claims at a subsequent date knowing fully well that the Employer will certainly provide them many avenues to do so, particularly because of delay in making land available and delay in decisions, payments etc.
    • Since the role of the Independent Engineer is not very clear so the Engineer takes no responsibility.
    • The Engineer is not accountable as after the project is completed, he is simply not there.
Some Critical Issues Pertaining to Road Construction Industry
  • The supervision consultancy contracts are generally time based. This creates a perverse incentive to delayed decision making resulting in extension of the civil works and consequently in the extension of the CSC contract.
  • The staff in the CSCs is also not fully conversant with the FIDIC conditions of contract and is also not up to date with latest quality management techniques and new technologies. They are thus handicapped in managing contracts effectively with timely and quality decision making.
The delay in the construction has led to a large gap between the budget allocation and actual expenditure on the road construction in the country in the past few years. This gap has been in the range of 15-20%. About 70% of the contracts have been delayed and about 50% of the contracts had cost over runs of more than 25%. The mean delay was about 73% of the original contract completion time.

The need of the hour is to find an early solution to ensure timely completion of the road construction projects.

Acknowledgment

The World Bank: Indian Road Construction Industry: Capacity issues, constraints & recommendations.

NBMCW September 2010

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