THE DELHI METRO PROJECT

EFFECTIVE PROJECT MANAGEMENT IN PUBLIC SECTOR

INTRODUCTION

The need for a reliable public transportation was felt in Delhi for a long time. A comprehensive traffic and transportation study completed in 1990 highlighted the urgent need for a rail-based transit system comprising a network of underground elevated and surface corridors to meet the traffic demand projected for 2021. To make this dream a reality , the Delhi Metro Rail Corporation Limited (DMRC) was registered on 3rd May 1995 and it is solely responsible for the construction and operation.

Reason

Population of over 1 million. More registered vehicles than Mumbai, Kolkata & Chennai put together. Automobiles contributing to more than two thirds of the total atmospheric pollution. High rate of road accidents More than 35 studies recommended Mass Rapid Transit System.

Challenges

DMP is the biggest urban invention in India since independence in 1947

Project has to be executed in very difficult urban environment

Being the capital city, all actions under close scrutiny of VIPs Project implementation period compressed from 10 years to 7 years Metro being constructed to world class standards with frontline technologies Expertise and technology not available in the country.

The Delhi Metro Project

Second project in country after Kolkata Metro:1984. A 50:50 joint venture of GoI and GNCTD DMRC incorporated under Companies Act 1995 Duration of completion of Phase 10 years by the end of 2005 Get approved by GoI in Sept 1996 (after civic organizations recommendations) P-I to connect Delhis business, education and shopping districts. Total land needed 340 hectares (58% govt., 39% private agriculture and 3% private urban land) P-I consists 3 Lines, total length 56 km, 50 stations (10 underground) and 3 maintenance depots.

Line
Line 1 Red Line Line 2 Yellow Line Line 3 Blue Line

Length of Line
22km 11km 23km

Route
Shahdara to Rithala Vishwa Vidyalaya to Central Secretariat Barakhamba to Dwarka

Funding the Project

GoI and GNCTD arranged the all capital required. Initial estimation of cost in 1996 Rs 60 billion

Revised estimation cost in 2002 was Rs 89.27 billion

Final cost of project approx Rs 99 billion with Rs 7 billion saving 2.2 million passenger/day to become the project viable later revised to 1.5 million passenger/day Economic IRR 21.4% Financial IRR 3% (low IRR some minister suggested to drop the project) Social sector project can benefit the regional economy in more than one ways.

Cost Structure
S. No. Source of Fund % of total cost Remark

1
2 3 4

Equity
Interest Free Loan JBIC Property Development

28%
5% 64% 3%

Equally subscribed by GoI & GNCTD

Land Acquisition Time Sliced Soft Loan Commercial activities

Repayment period 30 years including 10 years grace period.

Debt to equity ratio 2:1 Exchange rate risk bore equally by GoI and GNCTD.

Sources of Revenues: fares, property development, taxes on local public.

Property Development: Shopping Mall, IT Part, Multiplex, Restaurant and Stores etc. This project was exempted from custom and excise duties.

The project team

Mr. E. Sreedharan was appointed as project manager and managing director in Nov 1997. A technocrat retired from IR in 1990. Earned reputation for completing the project on time and within budget. 70% of senior staff hired on deputation from IR DMRC opted lean structure. Effective contract awarding and procurement process (to tackle with time, cost and corruption) Contract awarding process transparent and simple & fair and just Removed subjectivity from tender evaluation.

Contd

Had two departments: project organization and operation & maintenance Experts required from: Civil, electrical and communications area etc.

Young 18-30 years motivated team of professionals personally interviewed by MD.

Faced skill shortage problem everyone was new to metro project No technical institute of such kind in the country. Suitable candidates sent HongKong MTRC for training. Metro Training School at Shastri Park

Unique work culture: hard working, dedicated and professionally competent

The Project Plan

Individual accountability. Daily monitoring of progress. Weekly reviews and targets. Delhi Metro Act, 2002 Superseded Delhi Municipal Laws. Lower courts barred from issuing stay orders. Dedicated team of lawyers to prevent property disputes.

Cost centers Manpower. Energy. Material & maintenance.

Road Blocks

Low Financial IRR prompted second thoughts on the project

Criticism due to inability to recruit, 70% were deputed from Indian Railways
Lack of experience & specialized experts in Civil, Electrical & Communication Engineering Loss of Rs 5 million if one day lost Difference of opinion on gauge to be adopted

Critical Success Factors

We mean business attitudes.

Efficiency, courtesy & integrity in corporate culture.

Corruption free Contract Awarding System &

Procurement Process.

Autonomy in decision making. Advance planning in utility diversion, minimizing public inconvenience.