Crippling story of India's urban infra projects

Of the 538 projects examined, 294 suffered from cost overruns, 303 from time overruns, and 166 projects suffered both time as well as cost overruns.

With the announcement of 20 names to be developed as smart cities, the process of giving a facelift to crumbing urban infrastructure in certain pockets is set to begin yet again.

The Centre proposes to give Rs 200 crore (Rs 2 billion) to each of the selected cities in the first year and Rs 100 crore (Rs 1 billion) in subsequent years.

Each city will have a special purpose vehicle in place to implement the scheme.

Even as the work is about to begin to develop smart cities, it is high time we looked at how similar projects fared in the past.

A review of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) by two Indian Institute of Management (IIM) Ahmedabad scholars show the implementation was slow, resulting in several instances of time and cost overruns.

"It seems like the small and simple projects get done, whereas the complex projects are not performing as expected in terms of time and cost efficiency," write Vidhee Kiran Avashia and Amit Garg in a recently published report.

One of the handicaps of urban bodies when it comes to executing complex projects is the lack of executional capability, particularly in non-metro cities, to implement such projects.

The absence of trained manpower does not help either.

The IIM scholars examined around 500 projects across nine sectors related to urban infrastructure and governance and they found "the average completion rate in most of the sectors is 600-65 per cent. Only the heritage, parking and urban renewal projects show a lower rate of progress at five per cent, 40 per cent, and 53 per cent, respectively."

On key parameters of cost management and timely completion, urban renewal mission projects fared badly.

Of the 538 projects examined, 294 suffered from cost overruns, 303 from time overruns, and 166 projects suffered both time as well as cost overruns.

"A combined cost and time delay analysis indicates 36 per cent of the urban renewal projects suffer from both time and cost overruns," the authors argue.

The proportion of projects impacted both by time and cost overruns is even higher in some states.

In Uttar Pradesh and Maharashtra, for instance, there are as many as 55 per cent such projects.

In Karnataka, it stands at 40 per cent. Delhi seems to have done well on this parameter as only one of 23 JNNURM projects suffers from both cost escalation and delay in execution.

Experts say poor urban governance structure is to be blamed for the tardy implementation of JNNURM projects.

A 2011 planning commission report says: "A common refrain in urban governance is the problem of fragmented and/or overlapping institutional responsibilities... A large number of parastatals, including development authorities, water supply & sewerage boards, slum housing & development boards, public works department, etc have been performing various functions… The multiplicity of agencies providing various services in the urban sector has led to overlapping, ambiguity and wastage of resources."

Multiple agencies sometimes act at cross-purposes, causing considerable delays in routine work such as road repair, restoration of water pipelines or digging holes, say experts.

"A few years ago, at a construction site in south Delhi, a stretch of road caved in. It remained so for nearly a year as there was a fight among departments as to which one was responsible for this lapse. Finally, the urban development ministry had to intervene and bring all stakeholders together to undertake the repair work," said a Delhi-based commentator who stays in south Delhi.

According to Jaijit Bhattacharya, partner (cities and innovation) at KPMG, Mumbai and Chicago municipal corporations operate with almost identical amount of fund, but the structure of governance is very different in both the places.

"In the case of Chicago, you know the city mayor is responsible for all the work, but in the case of Mumbai, you don't know which agency is responsible for a particular piece of work."

He says poor urban governance is partly to be blamed for below-par performance of JnNURM. He adds the smart cities project, which he says is "an area-specific approach compared to the project-specific approach of the JnNURM" is also likely to suffer if the much-needed reforms are not introduced in urban governance model.

Incidentally, states were asked to reform urban governance structure to avail funds for JnNURM.

The IIM scholars cited above argue "the state governments, many of whom were reluctant to implement reforms but eager to get money from the Centre, undertook reforms 'on paper', and the Centre, faced with spending pressures, was willing to accept the 'on-paper' reforms as achievement of milestones required to release funding".