Operations Management

The Delhi Metro Project

Effective Project Management in the Indian Public Sector

- A Case Study

Compiled by:

Baldeep Singh

Charu Pundir

Prachi Dongre

Prasoon Garg

Sneha Kumari

Vandana Bharti

Yogesh Mundra
 THE DELHI METRO PROJECT

INTRODUCTION TO THE CASE:

The Delhi Metro project gave Delhi a world-class mass rapid transit system. More
importantly, it stood out from most other public sector projects in India in that it was
completed on schedule and within the budgeted cost.

The case describes the organization and planning of the project and highlights the steps taken
by the DMRC to ensure the successful completion of the project. It also explains how the
DMRC managed the various stakeholders like the central and state governments, the
contractors, and the citizens of Delhi, to ensure that the project was implemented smoothly.
The case ends with a brief discussion on the future plans of the DMRC.

LEARNINGS

 Understand the preliminary activities to be taken up before a large infrastructure

project can be started
 Appreciate the significance of the role of a project manager in project execution
 Understand the importance of the right work culture in successful project
management
 Recognize the importance of managing the various stakeholders in a project
 Appreciate the difficulties involved in the execution of large infrastructure projects in
developing countries, and how these can be overcome.

FACTORS FOR SUCCESS

The Delhi Metro Rail Corporation Ltd (DMRC) faced many problems and challenges during
the construction of the metro. However with the effective project design and a we-mean
business culture, it was able to overcome all these hurdles. The organizational culture was
based on punctuality, honesty and a strict adherence to deadlines. The DMRC successfully
managed the various stake holders in the project like the general public, government bodies,
etc. and also ensured that the project was environmentally safe.

Sreedharan was appointed as a project manager and managing director of the DMRC. He was
a technocrat and had a long stint in the Indian railways. During his service he had earned a
reputation for completing major projects on time and within the budget. A motivated team of
professionals was selected by him.
Unlike other public sector organizations in India, the DMRC opted for a lean structure. It had
just two departments- project organizations, and operation and maintenance.

The candidates selected for the project, was sent abroad for training by DMRC.DMRC
opened its own ‘Metro Training School’ in New Delhi.

To ensure that DMRC does not face any property disputes, like other major infrastructure
projects in India do, so GOI enacted the Delhi Metro Act. The act which spelt out the rules
for the local authorities superseded the local municipal laws of Delhi and also lower courts
were barred from issuing stay orders.

In order to control costs, the total expenditure of the Delhi Metro was split into three broad
heads- manpower, energy and materials including maintenance. To control manpower costs,
DMRC employed only 45 persons per kilometer of track, a number that was close to the
international norm. To keep down energy cost, DMRC entered into a special agreement with
the Delhi Transco ltd. To source power for the project at a very low rate. DMRC used
Primavera Project Planner 3.0 for project planning and monitoring. The resource planning
module of the software alerted users if there was an excess or shortage of resources and the
cost planning module provided a complete cost break up for the project.[

DMRC appointed a special quality assurance team independent of the field executives, to
ensure quality in construction.

Several Multinational engineering corporations from France, Germany, and Spain etc worked
on the project to secure the best technology available globally.

FUNDING OF THE PROJECT

The GOI and GNCTD formed the DMRC under the companies act to construct the Delhi
Metro. The significant portion of the project cost was funded through a soft loan provided by
the Japanese Govt. through Japan Bank International Corporation (JBIC). The rest was
contributed by GOI and GNCTD through equity. Funding was not an issue in the case of the
Delhi Metro project because it was settled even before the project commenced.

Of the project cost, 28 percent was financed by the equity, subscribed to equally by the GOI
and GNTCD. The two agreed to give interest free subordinate loans to cover the cost of land
acquisition, which was expected to be 5 percent of the total project cost.64 percent project
cost was to be provided by the Overseas Economic cooperation fund(OECF) which later
became JBIC.
PROJECT IMPLEMENTATION

Construction work on the project commenced on October1, 1998 . The entire project was
divided into three lines. Further these lines were divided into sections.

PARTICULARS LENGTH STATIONS

SHAHDARA-RITHALA 22.06 18
VISHWA 11 10
VIDYALAYA-
CENTRAL
SECRETARIAT
BARAKHAMBA- 32.1 31
DWARKA SUBCITY

PROJECT TEAM

Sreedharan was appointed as the project manager and MD of DMRC in 1997,by 1998,
DMRC was able to recruit only 100 people, around 70% of the senior staff was on deputation
from IR.Sreedharan selected a motivated team of professionals whom he regarded as
fundamental to the success of the project. The DMRC opted for a lean structure and had two
departments, namely –Project organization, and operation & maintenance. The team consists
of experts in the field of civil, electrical, communications engineering. The training to the
team was provided by the Hong Kong‘s Mass Transit Railway Corporation (MTRC) and later
DMRC open a ‘Metro Training School’ at Shastri Park. The corporation aimed to project an
image of efficiency, courtesy and “we mean business” attitude. The entire corporate culture
was based on integrity

PROBLEMS

Despite assurances that the DMRC would enjoy autonomy, it faced political pressure not only
in the recruitment process, processes, promotions, and contract awarding but also in land
acquisition.

DMRC also had to ensure that the project did not cause much inconvenience to the general
public. It faced challenges like relocating a large number of utilities like water pipes,
sewerage lines, telephone and electric cables, to facilitate the construction work.

The DMRC also faced the difficult task of relocating the people evicted from properties
acquired for the project. It had to built temporary accommodations for the people who were
to be relocated.

With the Delhi Metro Act coming into force, the DMRC faced few legal problems in
acquiring properties. About 400 cases were filed against the DMRC on this issue, out of
which only 100 were pending as of 2006.
In order to lessen the difficulties for the common people by the construction work, alternate
traffic plans for the road was constructed in advance.

DMRC had to ensure that the construction sites were entirely covered, with no soil or dirt
being allowed to spread outside. During the construction stage, special efforts were made to
minimize construction noise and pollution. DMRC used silent generators at work sites and
also used light shields to reduce glare from work lights at night.

Another challenge that the DMRC faced was the severe dearth of parking facilities at its
metro stations. Many of its parking lots were full and in some areas, the municipal authority
that owned the Land around the metro stations did not allot it sufficient space for parking
facilities.

MANAGING THE STAKEHOLDERS

The stakeholders included the governments, contractors, the funding agencies and the general
public. Considering that the Delhi Metro was constructed mostly with the Japanese funds,
DMRC put in special effort to maintain good relations with the JBIC officials. It made it a
point to invite JBIC officials to the inauguration events of various metro sections.

DMRC also ensured that it paid the contractors, whom it called ”associates” on time.It was
able to complete most of the project within the budget mostly by limiting corruption. The
project was finished ahead of schedule on certain sections given by the contractors on utility
diversion and surface road traffic management.

OUTLOOK

The delhi metro project had provided a stimulus to the GOI and the state governments to
improve the public transport infrastructure in other cities in India. With the DMRC
assimilating the metro technology from its international partners, it now has the capability to
build and manage projects in other Indian cities.

The Delhi Metro project was successful in reducing pollutions levels and vehicular traffic.
Street level traffic fell by as much as 50% in the areas where the metro operated.

The DMRC earned revenues of Rs.1.50 billion in the financial year ended march 2006, in
comparison to the Rs.720 million earned in the previous year.

It earned additional income by providing consultancy services to organizations and cities,

both in India and overseas.
OPERATIONAL ASPECTS OF THE DMRC

PARTICULARS 2004-05(Rs IN MILLION) 2003-04(Rs IN MILLION)

Revenues( income from 720 -
operations, consultancy)
EXPENDITURE 520 -
LOSS after adding 760 320
depreciation, interest and
other cost