The Union Budget of 2022-2023 should leave no doubt in anyone's mind about India's ambitions. The ambition of providing electricity and water to every household, the ambition of creating new jobs for 100 million people on the strength of MAKE IN INDIA, and the ambition to increase India's GDP by 10%-15% every year. And why not? After all, we have enough people to buy products made in the country, enough people in the country to make those products, and a government that's not shying away from big investments. India undoubtedly has the potential to achieve all these ambitions.
But there is a big difference between potential and actual outcomes. To convert potential into real results, we must adopt new ways of managing infrastructure projects. Specifically, ways to increase the flow of projects. The industry as well as government agencies must step up their game. In the budget, the construction companies of India will get more such projects worth Rs 1 lakh crore. But instead of just increasing the rate at which we start these projects, we must also complete them at a faster rate. However, according to the government's own Ministry of Statistics and Program Implementation (MoSPI), projects in India above Rs 150 crore have an average delay of 47 months. Their March 2021 report highlighted that there had been no improvement in this delay from 2014 to 2021. And it wasn’t just delays; these projects also cost 20% more than their original budget.
Lest we should get carried away with castigating India's managers and bureaucrats let's realize that even in the rest of the world, in developed countries, infrastructure projects are not completed on time. According to McKinsey, infrastructure projects costing more than $100 million (Rs 750 crore) in the world have an average delay of 35%. According to the 53rd Annual Conference of the Associated Schools of Construction, 98% of projects in the US are delayed (interestingly, in Africa only 75% are delayed). And this is the situation when 10 billion dollars (7.5 trillion rupees) are spent every year in the world on project management software and dashboards.
The point of the issue is that we need to execute projects much better way than rest of the world. Not only do our projects need to be on time but at twice the speed so that we can bring the construction of roads from 35-40 kms per day to 70 kms per day. This can happen overnight only by applying the principles of Flow Management to projects.
Projects will always be subject to obstacles and interruptions. Sometimes there will be challenges in mobilizing labor, sometimes material supplies will be delayed, sometimes one must chase government agencies for approvals, and sometimes internal decisions also take time. But Flow Management limits the impact of these interruptions and bottlenecks, reduces unnecessary firefighting so that managers have the time to find solutions to recover delays, and keeps projects moving towards completion. Projects can be done in half the time, and we can double the rate of project completion.
Applying the principles of Flow Management to projects is not a pie in the sky. This approach is based on the Theory of Constraints, formulated by an Israeli scientist, Dr. Eliyahu Goldratt. In India, companies like NTPC, GRSE, L&T, and VARDHAMAN FABRICS have tried it and shown that better results are possible in projects. Now we just need to scale up the use of Flow Management across the industry.
One of the main reasons for Japan's growth was widespread adoption of Toyota Motors' Total Quality Management approach based on Dr. Deming's theory. One of the main reasons for America's growth was the widespread adoption of Henry Ford's mass production method. Similarly, Flow Management can be the basis for India's success in projects and India's growth. If Japan could become known for having the best quality, after decades of "Jap crap", India can also show the world how projects are completed on time with speed.
About the Author
Sanjeev Gupta is Founder and CEO of Realization Technologies, a pioneer and leading provider of SMART Project Delivery Systems. Under his leadership the company has delivered more than $7 billion of documented impact on its customers’ cash and profits. Some notable customers include the US Navy, Siemens and the National Thermal Power Corporation of India.