Top 10 Reasons of Delays and Disputes in Infrastructure Projects in India

Category: Technology

With the present emphasis on creating physical infrastructure, massive investment is planned in the Infrastructure sector in India. However, Infrastructure projects in India are infamous for Delays and Disputes. There are significant time and cost overruns in projects. Projects across different government employers suffer from cost overrun of 50-100 %, primarily due to Delays. Several studies and surveys are conducted to look into reasons and their relative impact on these delays and disputes. With our extensive experience in project and claims management, We grouped several overlapping factors into 10 major reasons and then analyzed their relative contribution to Delays and Disputes. Result of the analysis is presented as below: Delay in handing over Right of Way / Site Poor Scope and Interface Management by Owner/Engineer Delay in Payments by Owner/Engineer Slow Decision Making by Owner/Engineer Incorrect Contracting Practices by Owner/Engineer Scope & Specification related Ambiguities in tender documents Pre-bid design/estimation errors by the contractor Inadequate Construction Planning & Management Practices by contractor External factors – Unexpected / Unforeseen Events External factors – Force Majeure 1. Delays in handing over Right of Way / Site : It is not at all surprising to find Top reason of the delay is Delay in handing over Right of Way / Site to the contractor due to unpredictable and lengthy land acquisition process coupled with politically motivated agitations and equally lengthy inter-departmental permission processes in India. 2. Poor Scope and Interface Management by Owner/Engineer: The Second most frequent reason for delays and disputes is unavailability of work fronts due to poor interface management among various agencies and contractors involved in the project. It is noted that generally scope breakdown (work packaging) is based on only size manageability without clear scope distribution & interface matrix (RACI) and Master Implementation Program, it results in many scope omission / duplication and too many interfaces which in turn results in many scope addition / deletions during construction. 3. Delay in Payments by Owner/Engineer: The Third most frequent reason for delays and disputes in infrastructure projects is delayed payment to contractors. There are several legitimate reasons ranging from fund allocation blues for Govt. funded projects to poor payment terms in the agreed contract. 4. Slow Decision Making by Owner/Engineer: One of the most common reason of delays across the sectors and industries as experienced by us in performing delay analyses is excessive time taken by the owner / Engineer in review and approvals of technical as well as non-technical deliverables multiplied with too many rounds of commenting and revisions. There are instances where a critical design document approval process has taken >1000 days! Unbelievable but true!! There are many reasons for slow decision making but the most contributing reason found in our analyses is (a) lack of collaboration among various disciplines, departments with bureaucratic structure and multiple agencies both internal & external working in silos and (b) non-availability of timely and correct information for effective decision making. A Smart Engineering Document Management System Integrated with Project Communication and Interface Management Systems is an absolutely necessity for successful project delivery. 5. Incorrect Contracting Practices by Owner/Engineer: This is the top most contract related reason which creates frequent disruptions during execution is poorly written and/or incomplete and/or heavily one-sided contract. This leads to cascading delays due to stoppage of work or pace slow-downs. Our Analyses have found several reasons out of which most frequent ones are: Lack of staff experience for contract management and adoption of wrong type of contract standards leads to poorly written and/or incomplete documents. Many times we receive a tender document for consulting services actually amended from a standard tender for construction works. We find that it has any clauses which are not applicable for consulting work and does not have many clauses which are mandatorily applicable to consulting services. Unreasonable Contracting Risk perceptions leads to heavily one-sided contract document Tendency to transfer all the risks on the contractor Tendency to pass on interfacing responsibility on the contractor Tendency to cover up all unknowns within scope of the contract “Simply passing risks and complexities on to the contractors does not actually mitigate them. Ultimately, it only affects outcome of the Owner’s Project adversely”