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The Hyderabad Outer Ring Road (HORR) Project: A Case Analysis of the Project
and Its Success
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Ramakrishna Nallathiga
National Institute of Construction Management and Research
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Ramakrishna Nallathiga
Associate Professor, School of Project, Real estate and Infrastructure Management, National
Institute of Construction Management and Research, Pune
Abstract
It is somewhat well laid down that the infrastructure development projects undertaken by
government agencies would require pooling large amount of technical, human and financial
resources. After 2006, the private sector has been looked upon to overcome the resource
constraints in the form of the Public-Private Partnership (PPP), which also leverages the
strengths of public sector. For quite some time now, the PPP has been considered as the way
forward mechanism to undertake the road infrastructure development projects in India.
However, as the PPP projects are developed technically no different from conventional
development projects, public authorities also point to the issues associated with PPP
mechanism in terms of higher costs of project development associated with procurement,
profit booked by private partner and potential costs of time-cost-quality issues. Yet, it is well
argued that private participation makes a significant difference when it comes to project
success in terms of different project dimensions.
This paper is an attempt to make an analysis of project success by performing a detailed case
study of Hyderabad Outer Ring Road (HORR) Project. The salient features of HORR project
are discussed in details in terms of project scope, structure, finance and implementation. The
case analysis reveals that the HORR project, in spite of its good conception on strategic and
technical grounds, met with implementation difficulties that affected project success, in terms
of the conventional measures of time, cost and quality. Yet, it is hoped that the HORR
project, with its broader concept of „Growth Corridor‟, would give rise to long term benefits
to Hyderabad metropolitan region that outweigh its costs. The paper concludes that urban
road development projects under the PPP model in India need careful conceptualisation,
detailing and implementation approach in order to become successful.
Key Words: Infrastructure development, Project Success, PPPs and Urban Road Project
1
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
1. Introduction
As India has been increasingly becoming urbanised in last few decades, large cities began
receiving disproportionately more population than small and medium cities (Kundu 2006).
Therefore, the share of urban population of large cities is on the rise and so also the demand
for infrastructure supporting the population and economic development. The availability of
good and efficient transportation system is essential for the movement of people and
economic goods in a city. This requires the creation of infrastructure that renders this
function and facilities that can be run on it (MGI 2010). Good city-wide infrastructure also
fosters trade and other linkages the city with region and promotes its development.
An important phenomenon associated with urbanisation in large cities is that the sub-urban
and peri-urban areas are growing more than central cities (Sivaramakrishnan and Kundu
2005). This is happening because the central city (or, urban core) is already very dense in
terms of population and traffic and it cannot accommodate much of incoming population.
Also, the peripheral areas (or, fringe areas) are a natural choice to incoming population as
they are closer to their home town/village. However, the various socio-economic and trade
ties between urban core and peripheral areas lead to the demand for transportation between
them as well as across/along the peripheral areas. Under such circumstances, urban ring roads
can provide connectivity and support running transportation services on them.
A ring road, orbital motorway, beltway, circumferential highway, or loop highway is a road
that encircles a city so as to streamline the inner-city traffic flow through better circulation
and connectivity between various nodes as well as by serving as a bye-pass for highway
traffic (Road Traffic Technology 2013). Ring roads are an important means of achieving
transport connectivity and higher traffic speeds, thereby, reducing environmental impacts
such as traffic congestion, air and noise pollution and better traffic circulation (Pharande
2015). Given the multiple benefits of such ring road projects, it is imperative for the cities to
develop them rather than wait for the clean-up of mess due to land development and traffic
growth. Realising the same, Indian cities began to undertake the development of ring roads –
some cities have begun early while some others are catching up.
2
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
However, in order to be effective, the ring road projects have to be taken up well ahead and
completed as fast as they can be, so that the project costs are minimised and project benefits
are reaped early. Most of the Indian cities have authorities for urban development and
management, which develop ring roads according to their master plan and timelines therein.
The development of ring road as a project, however, requires many skills apart from
administering works. This includes abilities to – conceptualise project and activities, raising
capital for development, scheduling project activities, coordinating with authorities,
supervising project implementation, adhering to timelines and costs, achieving quality and
specifications and so on. Concentrating on such a variety of tasks with may give huge
pressure on the urban authorities and may give rise to the risk of project not becoming
successful. Therefore, it is held that partnering with private sector may lead to better chances
of project success than otherwise. Whether this can be achieved in practice is left to empirics.
It is widely held that Public - Private Partnership (PPP) is the way forward for developing
road infrastructure projects, which require huge public funds apart from other requirements
mentioned above (Nallathiga and Shah 2014). Although PPPs leverage private sector
strengths so as to complete projects within budget and timelines, it is also argued that PPP
projects load on the costs of private engagement and have high finance costs, thereby
jeopardizing their adoption (Harris and Tadimalla 2008). It is also held that PPP projects are
good at keeping tabs on time but not costs (Rajan et al 2014). In India, several road sector
projects suffer from delays in project completion and cost escalation, to which urban road
projects may not be exception (Nallathiga and Shah 2014). It is reported that urban road
infrastructure projects are complex to feature overruns in time and cost (Agale et al 2015).
In this background, it is attempted in this paper to examine whether such PPPs deliver in the
case of urban infrastructure projects such as ring roads. Most of the literature on PPPs in
roads in Indian context is concerned with highways and large road development projects and
scant attention is paid to urban road projects. Therefore, Hyderabad Outer Ring Road
(HORR) project, a major urban ring road project in Hyderabad has been chosen for
performing a detailed case analysis, which is based on the secondary information available
from multiple sources. The next two sections perform narrative summary or description of
the case study project and then an analysis of the project success and shortcomings has been
made before drawing the conclusions.
3
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
2.1 Introduction
The erstwhile Government of Andhra Pradesh (GoAP) had proposed improving some of the
major infrastructure facilities in the capital city –Hyderabad. One of them was the
construction of an orbital road linkage to decongest traffic flow on existing major arterial
roads. The Hyderabad Outer Ring Road (HORR) is an initiative in that direction, which
promoted by the Hyderabad Metropolitan Development Authority (HMDA). The HMDA
established the Hyderabad Growth Corridor Limited (HGCL) as a Special Purpose Vehicle
for the implementation of ORR project.
The HORR project is viewed as a „Growth Corridor‟, as the aim of it is to achieve the growth
as well as development of well planned and well connected urban settlements and satellite
townships around the central city in the Hyderabad Metropolitan Area (HMA). Some of the
salient features of the HORR development project include (HMDA 2012):
The proposed road corridor was designed as 8 lane fully access controlled expressway
with 2 lane service roads on both sides (the link road connecting ORR is of 6 lanes).
The RoW of 150 m (however in Phase-I, it is 125 m wide) with the main expressway
covering about 66 m and the balance for providing ramps at interchanges, service
roads wherever necessary, utility ducts, rail corridor, etc., based on requirement.
A design speed of 120 kmph (Ruling) with 100 kmph absolute minimum speed that
gives minimum time for travel.
No at-grade intersections and the provision of suitable interchanges like cloverleaf,
diamond type for National and State Highways and other important urban roads.
4
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
central city of Hyderabad. Further, to augment the traffic circulation, 33 radial roads were
proposed to be developed that connect the city to the ORR (Road Traffic Technology 2013).
The HORR would provide linkage/connectivity to newly established Hyderabad International
Airport located at Shamshabad, which is 35 km away from the city. Figure 4 shows a sketch
of the HORR alignment as depicted on the Draft Development Plan of HMA. While HMA is
the metropolitan area governed by the HMDA, the central city of Hyderabad is governed by
the Greater Hyderabad Municipal Corporation (GHMC).
The HORR project is also a strategically important urban infrastructure project and, therefore,
the experience of it will serve as a guide for the successful completion of other upcoming
urban infrastructure projects. The Hyderabad ORR proposes to bring-in the following several
advantages to HMA (HMDA 2012):
5
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
The HORR Project was proposed to be developed in two major Phases (Road Traffic 2013):
Phase I covers the 22 Km road stretch between Gachibowli Junction and Shamshabad
NH-7 Junction, which was revised upwards to 24 Km. The four lane ring road under
Phase I was developed and opened for traffic in November 2008 and the remaining four
lanes were also completed and opened in July 2010. The PVNR Expressway connecting
the city to the Shamshabad international airport was also developed during this phase as a
radial road project connecting the HORR; it was opened for traffic in October 2009. This
phase of the project was developed using the conventional construction contracts. Table 2
shows the road stretches developed under the Phase I.
Phase II covers the remaining 137 Km covering Narsingi-Kollur-Patancheru-Medchal-
Shameerpet-Turkayamzal-Shamshabad parts of Hyderabad. This development phase was
further sub-divided into Phase II-A and II-B, given the long length of road to be built.
This development phase was proposed to be developed under BOT-Annuity model of
PPP. The HGCL was created on December 26, 2005 as a Special Purpose Vehicle (SPV)
to develop and operate the HORR project under the India Companies Act, 1956. The
Phase II A and B were planned to be completed in 2010 and 2012 respectively, but they
are yet to be fully completed. Some stretches of them, however, have been opened for
traffic from 2012 onwards. Table 2 shows the road stretches developed under Phase II.
6
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
The initial HORR project cost estimates as well as modes of finance are shown in Table 3.
7
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
The cost recovery mechanism was not well envisaged in the project since its inception. In
fact, the project appraisal report itself stated clearly that the project was not strong on
financial parameters but justifiable on the counts of social, economic and other benefits. The
entire development of Phase I was done at the cost of HMDA funds, or in other words, from
the public exchequer. The Phase II development was envisaged under BOT-Annuity, which
involved grant payment during construction (paid in four instalments) and annuity payments
(of 25 instalments) to be made by the HMDA to the concession partners (GoAP 2012). The
HMDA proposed the levy and collection of toll tax on the HORR as well as the PVNR
expressway, but it was not approved by the Government. The realisation of inevitable levy of
toll tax came much later, when there was no money left with the HMDA for making loan
repayments to Banks and JICA. The government finally allowed the HMDA to levy and
8
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
collect toll tax on the ORR (Indian Express 2015). The levy and collection of toll tax on
PVNR expressway was cleared by the Government in 2010 (ToI 2010).
The construction work of Phase I of the ORR project was awarded as conventional contracts
to two different contractors through international competitive bidding under two packages.
This ensured that the ORR construction work matched world class construction in terms of
quality. The Phase II of the ORR was proposed to be developed as PPP project. Further, as
the project costs were large, the road development was awarded in multiple packages to
different firms while keeping in mind their appetite and also to promote competition.
The HORR project implementation of Phase II-A was proposed under BOT- Annuity model.
The concessionaires were selected through a competitive bidding process and were given 15
year concession contract, which includes an estimated construction period of 30 months. The
construction work under Phase II-A was divided into five contract packages and awarded to
five different EPC contractors. Due to the problems faced in Phase II-A, the project
implementation in Phase II-B was sought under Joint Venture (JV) model and the contractors
were given EPC contracts. The construction work under Phase II-B was also divided into six
contract packages and awarded to three different contractors.
Table 4 shows the summary of contracts awarded in the various project phases.
An important aspect of a road development project and its success is land acquisition
(Nallathiga 2009). A gigantic project like the HORR faced a great amount of challenge on
9
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
this front. A total amount of 5,142 acres of land covering 83 villages was required for the
HORR. Out of this, there 590 acres were Government‟s own land and 312 acres belonged to
Forest department, which could be to be transferred to HMDA for road development. This
leaves land acquisition of 5,142 acres from private land owners and much of it was envisaged
through conventional channel involving monetary compensation payment to land owners.
The amount land required for HORR in two Phases was estimated as below (Net Resources
International 2012):
Phase I, covering the 22 Km stretch of ORR, required the total land of 750 acres, out
of which the private land was 500 acres;
Phase II, which covers the remaining 137 Km, required land acquisition of about
5500 acres out of which the Government land is about 1000 acres.
The land required for the HORR project was sought to be acquired by passing General
Award. The Government of AP had approved the Compensation Package for the Project
Affected Families of the Phase II, Land Acquisition, vide, GO Ms No. 14, IID(2), dt.
18.12.06. The normal provisions of the Land Acquisition Act 1894 were being observed for
determining compensation amounts. Compensation was sought to be paid to land owners
with a clear title. For the losers of Houses, the Rehabilitation measures are being worked out
based on the Resettlement & Rehabilitation (R&R) Policy 2005 of the GoAP, which is one of
first kind to bring compensating for the loss of structures, assets and livelihoods under the
rehabilitation programme of large development projects1 (GoAP 2005).
The land acquisition, however, did not follow a smooth path2. The land owners
initially protested against the acquisition of their land; some large influential land owners
were even able to force the HMDA to make changes to HORR alignment. The price of land
under acquisition was to be based on „current market transactions‟ of land, which did not
reflect the correct market price of land. Therefore, land owners protested against the
compensation award made by the HMDA. Subsequently, the matter was raised to the State
Government, which formed a State Level Nodal Committee (SLNC) for fixing the award of
compensation for land. The SLNC recognized the merit of the argument and raised the
compensation to be paid to land owners across all stretches of land for HORR ranging from
1
In fact, the Land acquisition and Rehabilitation & Resettlement Bill, 2011 came much later but it has more
comprehensive in coverage in terms of the assessment of compensation and R&R.
2
A more detailed assessment can be found in Nallathiga et al (2014)
10
Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
40% to 100%. The HMDA formed a separate cell and developed a data base of land parcels
to be acquired for better record keeping and raised the compensation to be paid. Land
acquisition picked up much thereafter and construction work began. Yet, there are some land
parcels under dispute, either due to compensation award not completed or due to court cases
filed by land owners/ interested parties (Nallathiga et al 2014). This proved to be very
difficult aspect of the project to handle, and it contributed significantly to the time delays in
the execution of HORR project and resulted in concomitant cost overruns. Whereas, in other
States like Gujarat such hurdles are overcome through land pooling schemes like TPS
mechanism for acquiring land from its owners (Ballaney and Patel 2009).
3. Conclusions
This paper began with an exposition of PPPs becoming the way forward for
infrastructure development (particularly road infrastructure) to be examined through a case
study of an urban ring road project in India. The HORR has some good features – especially
in the role played in the traffic dispersal, improving the connectivity and promoting regional
development. It comes at a time when such projects are needed for the development of
Hyderabad metropolitan area i.e., it is designed to cater to the future well ahead of time.
However, the implementation of the HORR project has been conceived and achieved
different altogether. The Phase I of the project was somewhat simple, small and well
specified. As a result, the implementation of Phase I was achieved well within budget and
timelines using conventional EPC contracts. The Phase II of the project was implemented
under PPP but met with little or no success. The Phase II was complex and did not have good
implementation and financing arrangements. Land acquisition for the HORR project met with
difficulties and, therefore, it suffered from huge delays and large cost overruns. However, the
HORR project is a larger „corridor project‟ that would give a boost to residential development
through satellite townships as well as to industrial development through various SEZs;
therefore, these may give rise to more benefits in future and its long term success.
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Paper included in the Proceedings of International Conference on Construction, Real estate,
Infrastructure and Project (ICRIP) Management 2017 held at NICMAR Pune on November 10-11,
2017 as a book entitled Urban Planning and Infrastructure Management published by NICMAR-Pune
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