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Executive Summary
We travelled more than 8,500 km by road, air, and railway and visited various road projects
across North, South, East, and West India. We met developers, contractors and sub-
contractors executing projects at a cumulative cost of ~INR 65 bn. Our mission was to find
answers to the following pertinent questions:
Land acquisition continues to remain the single biggest road block hampering
developers. Lack of clear land titles, protests over land compensation and
lackadaisical attitude of state government authorities are major causes for delays.
Most developers indicated that execution time of projects could be cut by up to six
months by timely land acquisition. Similarly, getting timely approvals from railway
and forest departments is very difficult due to the cumbersome process involved.
Many projects commissioned in the past had been delayed due to the above
mentioned issues. However, developers have learnt from past mistakes and have
started facilitating coordination within various government departments by hiring
retired officials. As a result, many projects that we visited were running ahead of
schedule; also, cost/time overruns, if any, in future projects may not be substantial
and are likely to be less than in past projects.
We were positively surprised by the fact that resources (manpower, equipment, raw
materials, financing or sub-contractors) were easily available. Even if there is any
temporary resource crunch, the entrepreneurial spirit of contractors ensures that
these issues are taken care of. Also, with multiple resource providers (in terms of
equipment manufacturers, banks and other financial institutions), timeliness and
cost efficacy of the supply is also reasonably ensured.
Over FY09-10, the government has initiated many steps to ensure that the pace of
project award has picked up. This leaves execution issues as the principal irritant in
improving the pace of road project development. While enhanced developer
involvement, good resource availability and increased government efforts have
emerged as a positive, some more action is required to speed up the approvals
process. We believe if the regulatory side of approvals is taken care of, ramping up
execution will not be too challenging.
Contents
We travelled more than 8,500 km by road, air and railway and visited various road projects
across North, South, East, and West India. We met developers, contractors and sub-
Visited road projects contractors executing projects with a cumulative cost of ~ INR 65 bn. Apart from interacting
across the country to with project managers and engineers, we also met some bankers financing these road
understand ground level builders.
execution issues
What was the scope of projects covered?
We have tried to cover the widest possible array of road projects in terms of geography,
project cost, mandate of project (toll/annuity/EPC) and mode of execution (developer /
sub contractor). This was to ensure that we do not restrict ourself to any one particular
kind of project and interact with a wide spectrum of industry participants. To better
understand execution issues across the industry, we tried to diversify the type of
projects visited.
Between 1951 and 2006, while India’s vehicle population posted a CAGR of close to 11% and
freight and passenger traffic carried by road posted 10% CAGR, the total road length
registered a mere 3.9% CAGR with the National Highway (NH) segment increasing at a
minuscule 2.2% CAGR.
Also, the quality of roads is abysmal. The Global Competitiveness Report 2010-11 ranks
Pace as well as quality of
road length addition in India at a dismal 90th spot as far as quality of roads is concerned, way below
the country has been neighbours China (53rd), Sri Lanka (55th) and Pakistan (72nd).
disappointing
This shows that the pace as well as quality of road length addition in the country has
remained tardy over the years. While things have definitely improved, particularly in the NH
segment, since the start of the National Highway Development Programme (NHDP), we have
still fallen short of targets. This can be attributed to: (i) slowdown in the pace of project
awards in 2006-08 due to regulatory issues and recession; and (ii) execution issues on road
projects as manifested in cost and time overruns.
Over FY09-10, the government has initiated many steps which have enhanced the
attractiveness of road projects for developers and ensured pick up in the pace of project
awards. With most regulatory issues being sorted out and ~ 26,000 km of projects to be
awarded over the next 4-5 years under NHDP, we believe project award is unlikely to be
a major dampener going forward (even if pace of project award may not be uniform).
This leaves execution issues on road projects as the principal irritant in improving the
pace of road development.
How big an issue is execution and what are the costs involved?
As per the government, ~68% of projects undertaken by the National Highway Authority
of India (NHAI) so far have been delayed (includes both completed and under
Most road projects
witness time/cost implementation projects).
overruns
The World Bank had carried out a time and cost overrun analysis on on-going and
completed national highway and state highway contracts a couple of years ago. The
results of the study are given below:
The study indicates that 90% of all contracts had a time overrun of more than 25%;
46% had a cost-overrun of more than 25%. The cost overrun figures for completed
contracts do not include a large portion of pending claims and arbitration orders. As per
Execution is a big estimates, ~ INR 100 bn is locked in disputes between the government and contractors.
concern in road
development
Thus, execution remains a major issue in road development; the final costs of road
project implementation are much higher than initially envisaged.
1. Regulatory issues
• Land acquisition
• Utility shifting and other local clearances
• Other approvals like forest, railways etc.
2. Resource availability issues
• Manpower availability
• Raw material availability
• Availability of financing
• Equipment availability
• Sub-contractors’ availability
Our trip was aimed at getting to the root of the execution issues listed above.
Land acquisition
How big is this problem?
As per World Bank, on an average, it takes 50% more time than scheduled to hand over
Land acquisition is the encumbrance-free land to contractors for national highway projects. Also, according to a
biggest issue in road
survey of 190 infrastructure projects facing delays, 70% were delayed due to land
development
acquisition problems. This indicates that land acquisition is arguably the biggest hurdle
afflicting road development.
Fig. 2: Delayed due to reluctance of farmers to hand Fig. 3: Problems due to protest over demolition of
over land structure
Source: Edelweiss research
What are the relevant regulations?
Land acquisition for development projects in India happens through the Land Acquisition
Act (LAA), 1894. However, land acquisition for national highways is carried out under a
separate law known as the National Highway Act (NHA), 1956.
State governments sometimes constitute a specific law for land acquisition (land
acquisition in India is a Concurrent subject as per the Indian Constitution which gives
state governments the right to legislate on the matter).
Also, this means that NHAI is dependent on the district administration for the land
acquisition process. Since NHAI has no control on district administration (for
which land acquisition is not a priority issue due to other responsibilities),
the entire process becomes dependent on the proactiveness of district
officials. Sometimes, local officials are transferred, which again hampers the
process.
These units coordinate with local officials to ensure that the process of land
acquisition is smooth. Our interaction with developers reveals that there definitely
has been improvement on the ground level with the setting up of such cells.
However, in case district administration officials are not dynamic and cannot handle
various problems which emerge from time to time with regards to land acquisition,
the entire process is still delayed. Indeed, developers raised serious concerns
regarding the motivation levels of local authorities.
• Fragmented land holdings: The fragmented nature of land holdings in rural areas
means that a large number of landowners need to be compensated for their land.
According to data from the Ministry of Agriculture, 62% of farmers have land
holdings of less than one hectare. This creates problems in land acquisition.
Fig. 5: Land acquisition delayed due to nearby farm Fig. 6: Land acquisition stuck due to dispute over
land compensation amount
Source: Edelweiss research
• Lack of clear land titles: Unclear land titles and absent/incomplete revenue
records in villages are the biggest constraints in timely land acquisition. The process
gets bogged down due to the problem in finding the rightful owner of the land. This
is because land records are generally outdated, inaccurate and/or incomprehensive.
Lack of clear land titles This gives rise to frequent disputes, which result in litigation. This is a problem
and inadequate DPRs which no amount of NHAI/developer involvement can solve. For e.g., news reports
create hurdles
suggest that land acquisition progress in Jharkhand had been hit due to inadequate
land revenue records reflecting ownership; the maps were as old as 1912 and the
state government is now developing land records by way of physical verification.
Similarly, in case there has been an informal division of land amongst family
members, it is not reflected in records of the revenue department. Also, in case the
land belongs to tribals, the acquisition process further suffers since there is
restriction on sale of land from tribals to non-tribals.
The NHA, 1956, provides for compensation based on: (a) market value of the land
on the date of publication of 3A notification; (b) extra payments for trees, crops,
houses, or other immovable properties; and (c) payments for damage due to
severing of land, residence, or place of business.
A lot of discretion is vested with state authorities during the entire process and,
many a times, there is lack of clear cut procedures for the same. This results in
grievances against authorities which delays actual possession of land by the
government.
Over the past couple of years, land prices in some parts of rural India have
increased sharply due to expansion of rural roads and improvement in
accessibility. This has resulted in many landowners demanding higher
compensation than the official acquisition rate.
Also, sometimes, there is a dispute between state and central governments over
the manner of compensating affected land owners. This is also because many
states have their own land acquisition and rehabilitation laws, which differ from
NHA, 1956.
This means that even after publication of 3D notification signifying the acquisition of land
by the government, the valuation of the land, approval of the same, disbursement and
physical possession of the land by the developer takes a long time. In theory, the land
acquisition is complete as soon as the relevant government notification is issued;
however, in practice, developers have to wait for a long time in getting unencumbered
access to the land.
To this extent, developers have become involved in the land acquisition process.
This includes hiring retired officials (earlier involved in land acquisition) to ensure
smooth running of the process. In fact, we came to know of instances where
developers have themselves acquired certain stretches of land which were proving to
be problematic so as to ensure speedy completion of the land acquisition process.
• Developers indicate more efforts from state government could help: While
most developers indicated that NHAI emphasis on land acquisition has improved,
they also highlighted that developer involvement is not the panacea of all problems;
Developers want more
efforts from state beyond a particular level, land acquisition progress ultimately depends on the level
governments of state government involvement. They highlighted that states where authorities are
proactive (Gujarat, Rajasthan) are the best places to work. On the other hand,
projects in certain states like West Bengal, Kerala, Uttar Pradesh, Orissa etc.,
continue to face problems. Thus, overall while there has been some progress on the
land acquisition front, it is sporadic in nature and still depends on developer
involvement.
• Land acquired is not continuous but piecemeal: Developers indicated that many
a times, land parcels acquired are not continuous , i.e., they are piecemeal and at
quite a distance from each other. This creates problems in execution since it leads to
increase in inefficiencies due to less than optimal utilisation of equipments.
Our view
We believe that while the land acquisition process has improved, many issues remain to
be tackled before pace of road development picks up. Our key learning from the visit is
as follows:
With developers lending a helping hand to the government, project execution was
on the right track for most BOT projects we visited. This leads us to believe that
cost/time overruns in future BOT projects may not be substantial and is likely to be
lesser than in past projects.
required for any project includes the portion of the land for existing road as well, i.e.,
for a four laning project, the RoW includes the land of the existing 2 lane project.
As a result, a substantial quantity of land required is available upfront. For e.g., the
RoW of ~40-45 m required for a 4 lane road includes the existing 2 lane road
(usually 10 m wide). Thus, any figure with respect to land acquisition progress
needs to be considered in the proper perspective.
Recent news articles suggest that government’s efforts on the land acquisition front
have resulted in improvement. News articles point that:
NHAI took possession of 3,022 hectares in Q1FY11. This is almost half the size
of the total land possessed (6,244 hectares) by NHAI in 2009-10 which itself
was a huge improvement over the 3,120 hectares acquired in 2008-09 and
3,684 hectares acquired in 2007-08. The total land acquired by NHAI was at a
relatively higher level at 5,513 hectares in 2006-07.
Under section 3G of the NHAI Act, which makes the government liable to pay
compensation to the land owner, NHAI has issued notification for 2,204 hectares
in Apr-Jul 2010, compared with 3,605 hectares in the previous fiscal.
Out of the total 60,500 hectares land required for various stages under the
NHDP, the government has managed to acquire around 25,000 hectares.
Enhanced support from While NHAI and the roads ministry are doing all they can to improve the land
state governments is key acquisition process, the big kicker can come only if the respective state
to speedier road
governments pull up their socks and improve coordination at the ground level. In
execution
this context, the signing of state support agreements (SSAs) by 24 states and Union
Territories with the roads ministry is a step in the right direction. The agreement
empowers the concessionaire with access to the site and right of way in accordance
with the provisions of the respective concession agreements without hindrance from
any government agency or person claiming it.
The proposed National Highway Amendment Bill is being keenly watched with
regards to changes in the regulation regarding national highways. News reports
suggest a couple of important recommendations as per the draft bill.
If a planned road is abandoned, the original owner will reserve the right to buy
back the land by returning the money paid by the government for purchase.
Further, the owner will not have to pay the appreciation price but only that
received when he or she sold the land.
Currently, the land price is calculated based on the average price of all land
sales in the area in the past three years. The new mechanism proposed,
however, takes into account the top 50% values of land sale in three years.
It is also proposed that the person who sells the land to NHAI should get
solatium for better rehabilitation and resettlement. It is proposed that the land
owner gets 60% of the agreed sale price of the land as compensation for
displacement in addition to the land price.
Land acquisition will be It is proposed that a time limit of three months be imposed for the aggrieved to
an important parameter approach an arbitrator in the case of land sale. The current form of bill places
in determining the
success of the 20 no such time limit, leaving it open ended. The arbitrator will also be required to
km/day initiative give a decision within six months.
A World Bank study highlighted had indicated that on an average, shifting of electrical
utilities took about 33 months, telephone utilities about 31 months and water utilities
about 29 months, against the planned target of about 18 months for all these utilities—
more than a year of delay.
Fig. 7: Problems in shifting of power lines Fig. 8: While tree cutting has been completed, power
lines still needs to be shifted
3 Blasting permissions
4 Approvals from village panchayat for installation of crusher, batching plant,
asphat plant etc
Agencies involved
For utility shifting, developers need to coordinate with various government departments
like the telecom department, the local municipal board and local bodies for water and
power maintenance.
Lack of proper
coordination between
govt departments delays For other local clearances, entities involved are the village panchayats/municipal board,
utility shifting District Collector, Pollution Control Board and other government bodies.
Lack of proper coordination between the implementing agency and respective utility
departments
In every NHAI or state highway project that we visited, there was an issue with a railway
Getting approval from over bridge (ROB) or with regards to area under the forest department. Getting approval
railways or MoEF is a
tough task for from railways or the Ministry of Environment and Forests (MoEF) is a tough task for
developers developers. An approval for cutting trees can take up to 30 months. Similarly, approval for a
railway over bridge (ROB) from railways can take 15-18 months.
Road projects which pass through a national park or sanctuary require the approval of
the National Board of Wildlife (NBW) even for the very first step like undertaking a
The process for survey.
environmental clearance
can take up to a year
News reports suggest that there is a lack of a standard procedure for clearance of such
projects and the matter has been raised before an Empowered Group of Ministers
(EGoM), which is expected to meet shortly to prepare the required norms for such
projects.
Apart from the central government represented by the MoEF, developers have to face
additional conditions imposed by the forest department in the state government.
For environmental clearance, the proposal needs to be submitted at the feasibility stage
itself. A complete assessment of the environmental impact is done and the project is
examined by an expert committee. The whole process can easily take up to an year.
In the recent past, many projects have been stuck due to delay in approvals in one of
the above parameters. For e.g., news reports suggest that only recently, the standing
committee of NBW, rejected NHAI’s proposal to divert 85 hectares of forest land for four-
laning in an 85 km stretch on national highway No. 6.
Our view
After interacting with project managers, we believe that railways and forest approvals
are emerging as major choke points. Even the proactive efforts of NHAI or developers
usually fail in front of these departments since they follow their own procedures which
usually take time.
Fig. 9: Project delayed due to construction of an ROB for which permission was
pending for long
We had a chance to examine delays due to ROBs firsthand. In a project, which has been
under implementation for the past four years, the entire road widening part of the
project has been complete for some time now. The only portion where work was still
pending were a couple of ROBs.
Fig. 10: Project stalled due to delays in approval for Fig. 11: Project delayed due to delays in approvals
cutting trees from forest department
Similarly, the process for environmental clearances involves a number of NGOs; a single
objection from them can cause a major delay. Sometimes, project alignment itself has to
be changed to accommodate demands of the forest department.
After looking at the regulatory approval scenario, we now focus our attention on resource
availability issues i.e., the ease of building asset base in terms of manpower, equipments,
raw materials, financing and execution multipliers (sub-contractor). Our interaction with
project execution personnel pointed out a few positives which we have listed below:
Scarcity of quality
manpower resources at
middle management Quality manpower resources at middle management level are scarce
level We observed that there is a scarcity of experienced and good quality manpower
resources at the middle management level (civil engineers with 10-15 years of
experience). Contractors attributed this to the migration of civil engineers to IT
companies (starting from the mid 1990s). As a result, there is a shortage of skilled
professionals at the middle management level. Also, most contractors believed that the
shortage is likely to emerge as a big issue going ahead with the large scale up in
infrastructure spending planned in the coming years. However, unskilled or semi skilled
manpower is not an issue.
We believe contractors have also realized the benefit of developing their own talent base
to cope with the anticipated increase in human resource crunch going ahead. Recent
news flow suggests that Gammon India has started its own training center in Mysore
with a view to create a pool of skilled workforce trained in various skilled disciplines
including masonry, plastering, scaffolding, carpentry, electrical work, painting and
plumbing.
Fig. 12: Fixed asset base is easy to expand Fig. 13: Equipment availability is not a concern
Also, raw material constraints are few; in fact, resources mobilisation was in full swing in
practically all locations that we visited even before the work at the site was
started/scheduled to start. Even in areas where there were some issues with raw
material availability, contractors had the foresight of planning for this beforehand.
Fig. 14: Raw material is easily available Fig. 15: No problems in raw material supply
For e.g., in Haryana where the state government has imposed a ban on mining of major
minerals in Faridabad, Gurgaon and Mewat districts for 10 years, alternate supply
arrangements from Rajasthan were already in place. This ensured that project
implementation was not affected.
Fig. 16: Sub-contractors have good quality asset base Fig. 17: Sub-contractors have adequate technical
acumen
These sub-contractors also had their own laboratories for ensuring the quality of
work being undertaken.
When it comes to the selection process undertaken by developers for choosing sub-
contractors for any project, the asset base and past work are crucial parameters.
win-win situation for both parties involved as sub-contractors get to enhance their
execution capabilities and also learn from project management skills of experienced
developers; for developers, the benefit is in the multiplier effect brought in by sub-
contractors.
Fig. 19: Sub-contractors have built up execution capabilities and asset base
over the years
Funding not an issue: We enquired about the ease of availing financing for
purchasing equipments etc. Here again, sub-contractors indicated that they were
not facing any shortage. They had relationships with multiple banks and fund
availability was not an issue.
Our view
We believe there is no shortage of resource availability, be it manpower, equipments,
raw materials, financing or sub-contractors. Even if there is any temporary resource
There is no shortage of crunch, the entrepreneurial spirit of contractors ensures that these are taken care of
resource availability, be adequately. Also, with multiple providers of these resources (in terms of equipment
it manpower, equipment,
manufacturers, banks and other financial institutions etc.), the timeliness and cost
raw materials, financing
or sub-contractors efficacy of supply is also reasonably ensures. One more positive thing is that even the
small sized entities have access to these resources; also, these resources are not
geographically concentrated. What this means is that if the regulatory side of approvals
is taken care of, ramping up execution will not be too challenging.
We visited a number of projects being implemented on cash contract basis. The primary
difference between these projects and BOT projects lies in the mode of funding; while cash
contracts are funded by the government, in BOT projects, the developer has to tie up the
Most cash contracts financing i.e., in BOT projects, developers’ own money is at stake. As is natural, the
continue to get delayed commitment towards avoiding cost/time overrun is higher in BOT projects.
It was not surprising to find that almost every cash contracting project that we visited was
running behind schedule. Since there is no incentive for contractors to get involved in the
process of land acquisition and other regulatory approvals, most contractors adopt a laidback
attitude with regards to cash contracts. They were content with religiously documenting their
machine/labour idle time for the purpose of claims adjustment at a later stage. The entire
responsibility for getting regulatory approvals in this case lies with the client (NHAI/State
PWD etc). The process is rarely completed in time due to bureaucratic hurdles. Thus, cash
contracts continue to get delayed. As is natural, the chances of legal disputes at a later stage
in such projects are also much higher.
Fig. 20: Project stalled due to delays in land acquisition Fig. 21: Project stuck due to delays in utility shifting
The delay in cash contracts is also due to the fact that the incentive payment for an early
completion of a cash contract project is minuscule as compared to those for BOT projects
(bonus annuities or early toll collection). Hence, contractors are also not proactive in
completion of cash contracts on time.
Data from NHAI corroborates our hypothesis. Of the 136 projects which were running late
w.r.t. their original implementation schedule at Sep 2010 end, only 28 were on BOT basis
(toll or annuity), balance were all cash contracts.
It needs to be kept in mind that only ~ 9% of projects in the NHDP work plan for future
(approved last year) are proposed to be completed under the EPC mode. This means that
future delays in NHAI projects may be lesser than the past due to smaller share of cash
contracts. However, for state government roads and district roads which continue to be
implemented on EPC basis, there is no such ray of hope.
Over FY09-10, the government has initiated many steps to ensure that there is a pick-up in
the pace of project award. We believe project award is unlikely to be a major
dampener going forward; this leaves execution issues as the principal irritant in
improving the pace of road project development.
Our interaction with developers and other project execution personnel has convinced us that
there are quite a few positives when it comes to road project execution. Enhanced developer
involvement, good resource availability and increased government efforts are likely to ensure
that the execution on road projects is likely to improve going ahead. However, regulatory
constraints continue to stifle efforts to build 20 km/day of roads. We believe if the regulatory
side of approvals is taken care of, ramping up execution will not be too challenging.
Dhule-Palasner project
Key project specific details:
Client: NHAI
The project starts from the city of Dhule. At Dhule, NH-3 crosses National Highway 6
(NH-6) which is a busy national highway that runs through Gujarat, Maharashtra,
Chhattisgarh, Orissa, Jharkhand and West Bengal. NH-6 passes through the cities of
Surat, Dhule, Nagpur, Raipur, Sambalpur, Kolkata, running over 1,949 km from
Hazira to Kolkata.
Moreover, since the project passes through a stretch which has forests, clearance
from MoEF was required. This took some time.
Local resistance led to design changes: Since the project passes through an
urban area, there was a demand from the local population to include certain
underpasses which were earlier not part of the original scope of the project. This
issue has been sorted out now. The changes have been incorporated and the
additional cost to be incurred has also been approved by the client.
Project designed keeping future needs in mind: The project has been designed
keeping in mind the expected traffic growth in the future. As a result, even though
the project will be a 4 lane road after completion, various structures such as flyovers,
bridges etc., which are being built will have 6 lanes. We believe this is a step in the
right direction to ensure that the project can handle the increase in traffic ahead and
that future capacity expansion will not be difficult.
Fig. 24: Execution underway on a major bridge Fig. 25: Construction in full swing on a bridge across
a river
Fig. 26: Execution on track after resolution of land Fig. 27: In spite of heavy traffic, construction is ahead
acquisition issues of schedule
The progress on the project is commendable considering that the stretch lies on a busy
route. There was heavy traffic on the road; despite this, construction was in full swing.
Crushers, wet mix plants, batching and asphalt plants were in operation; similarly,
machines like excavators, pavers, graders etc., were also working.
Client: Hyderabad Growth Corridor (HGCL), an SPV formed for development for the
Hyderabad outer ring road by the state government.
Fig. 28: Outer ring road project in Hyderabad city Fig. 29: Project stretch (Cyberabad expressway)
Major portion of project completed: Work on majority of the project stretch has
been completed. Construction is still going on a small stretch of the road.
Fig. 30: Completed portion of the expressway Fig. 31: Work going on a small stretch of road
Land acquisition problems delays project: The project has been delayed due to
land acquisition problems. Our interaction with project personnel indicated that
majority of the work has been completed. However, land acquisition problem for a
small stretch of land has meant that the work is incomplete on that portion of the
project.
Fig. 32: Project stalled due to land acquisition issues Fig. 33: Progress hampered by delays in land
acquisition
Utility shifting: Apart from land acquisition, the project progress was also
hampered by delays in utility shifting. This happened due to delay in getting
approval for shifting power transmission lines.
Fig. 34: Shifting of power transmission lines delayed Fig. 35: Utility shifting hampers project completion
project execution schedule
The developer has been coordinating with HGCL for getting the approval for this purpose.
Timely land acquisition could have avoided the delay: The project has been
delayed by more than three months due to delay in land acquisition/utility shifting.
To put things in perspective, an identical project on the same road by the
same developer has been completed six months ahead of schedule i.e.
Hyderabad Expressway is a 13 km stretch of Hyderabad ORR from Bongulur to
Tukkuguda. This project (again an access controlled 8 lane expressway) being
undertaken by a consortium headed by Gayatri Projects has been completed 6
months ahead of schedule. This was possible due to timely handover of land
required for the project.
Key learning: Despite being close to an urban area which raises its own set of
execution challenges, the developer has been able to build a good quality road
ahead of schedule when RoW was available; however, when land acquisition/utility
shifting is delayed, the project is delayed too despite the best efforts of the
developer.
Pimpalgaon-Nashik-Gonde project
Key project specific details:
Land acquisition and utility shifting a key test: Since the project passes
through the city of Nashik, land acquisition and utility shifting have emerged as a
key test for the developer. We surmise that many small commercial establishments
will have to be shifted to get the land required for road widening.
Management of existing traffic will be the key: Since the project passes
through a heavy traffic density area, developers have to undertake the construction
work along with managing existing traffic. The project also contains an elevated
corridor for traffic to bypass the underlying city congestion.
Execution happening on both sides of the road: The existing road is 2 lane. Due
to heavy growth in traffic, it is being directly widened to 6 lanes (instead of the
more usual 2-to-4 laning in the first part and 4-to-6 laning thereafter). As a result,
construction is being carried out on both sides of the road. Despite the challenging
task, we believe the developer was carrying out work admirably. We did not see any
disruption in traffic; work was going on smoothly.
Fig. 38: Land acquired for widening on both sides of road Fig. 39: Construction in full swing
Raw material availability enhances efficiencies: The project benefits from easy
and cost effective raw material availability as the sources of raw material are close
to the project site. This has in turn led to smooth resource mobilization. Ashoka
Buildcon has two captive RMC plants with a capacity of 60 and 120 cubic meters per
hour which are being used in execution of the project (Source: IPO prospectus).
Fig. 40: Adequate asset base helps in resource Fig. 41: Convenient raw material availability near
mobilisation project site
Project progress on track: In spite of the project lying on a busy route which brings
traffic management into the picture, execution was on track. Construction was going
ahead at full speed, aided by easy raw material availability and adequate resource
mobilisation. Land acquisition challenges have been adequately met with good progress
on land parcels located within the city. As a result, construction on the project is
progressing satisfactorily.
Project scope: The project is concerned with improvement of the Ranchi ring road
(Sec III, IV, V and VI). It involves design, engineering, finance, procurement,
construction, operation and maintenance of 6 lane divided carriageway on BOT
(annuity) basis. The length of the project is 36.2 km. The concession period is 17.5
years (including construction period of 30 months).
Ranchi ring road is part of the Jharkhand Accelerated Road Development Programme
(JARDP) which involves development of select road stretches in the state of
Jharkhand. The total length covered under the programme is 1002 lane km; of this,
phase I involves 3 projects (Ranchi ring road, Ranchi to Patratu road and Patratu to
Ramgarh road) spread over 466 lane km while the balance comes under phase II.
Significance of the project: The project aims to ease traffic congestion in and
around the city of Ranchi, the capital of the mineral rich state of Jharkhand. Ranchi
boasts of a number of industrial facilities which are located in and around the city.
With rapid growth in trade, commerce, and industry in the city, the traffic has
jumped sharply.
Fig. 42: Location of the project Fig. 43: Ranchi ring road
Well qualified EPC contractor(s): The EPC contractor(s) engaged in the project
are well qualified—both in terms of having a substantial equipment base and
technical/human resources. This has helped in the smooth implementation of the
project. The plant/machinery deployed at the site included batching plants,
excavators, graders, compactors, tippers, pavers, rollers, transit mixers, crushers
etc.
Fig. 44: Excellent asset base with EPC contractors Fig. 45: Equipment strength not lacking in case of
contractors
Fig. 46: Work on structures is going on Fig. 47: Execution is progressing as per schedule
Key learning: In case the state government is actively involved, getting regulatory
approvals becomes easy. Also, regular project monitoring and review along with
intensive developer involvement is the key for a project being on the right track.
This, when supported by well qualified contractors, leads to smooth project
execution.
NOTES:
NOTES:
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1,400
Date Company Title Price (INR) Recos
1,250
16-Nov-10 IVRCL Weak quarter; strong 133 Buy
Infra order book the only silver
1,100 lining; Result Update
20-Nov-09 20-May-10 20-Nov-10 12-Nov-10 Man Steady revenue growth; 339 Hold
Infraconst. margins decline;
EW Construction Index Nifty Result Update
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