PLAN IMPLEMENTATION AND MINITORING
Introduction 21.1 The Seventh Plan proposes to emphasise the need for improvement of project formulation, sanction, implementation and monitoring in development planning of all Sectors. Weaknesses in these aspects need to be corrected in order to optimise the efforts to achieve the Plan objectives of productivity and efficiency. The first area which requires attention is the formulation and implementation of specific projects and programmes. The nature of the problems and the required solution differ for large investment projects in sectors such as industry, minerals, power, transport, communication and irrigation and for developmental programmes in the field of agriculture, rural development, village and small industries, social welfare, education, health, etc. Hence the changes required in the modalities of formulation and implementation are dicussed separately for these two broad categories of activities. The second area which deserves closer attention is the monitoring of implementation. Finally, effective implementation will require changes not merely at project or programme level but also in management structures in government and public enterprises. These three broad areas are dealt with in what follows.
Implementation of Large Investment Projects 21.2 The Plan includes a large number of investment projects in the fields of industry, railways, ports, power supply and irrigation. The factors leading to the problem of tardy implementation of these projects arise both at the stage of formulating and sanctioning of the projects as well as during the implementation stage.
21.3 There has-been a trend towards acquiring capital assets in increasing quantities, without regard to the availability of funds and the economic and commercial benefits to be derived from such investments. In some sectors the volume of sanctioned projects in the pipeline is very large relative to the availabitlity of funds and the anual rate of completion. As a result, cost and time overruns are inevitable as available funds are allocated among such a large number of projects. The existence of too many unifinished projects in the pipeline also leads to a rise in capital-output ratio. The position with regard to three critical areas is given in Table 21.1.
Table 21.1
Project Pipeline and Rate of Completion
Sl. Project Magnitude Addition Number
No of projects in of years
approved 1984-85 required
and under to comp-
implementa- lete app-
tion at roved pro-
the begin- jects at
ning of 1984-85
1984-85 rate of
completion
1 2 3 4 5
1. Power:
Generation capacity
in MW 34126 3080 11
2. Railways:
Kilometerage of new
lines 2654 201 13
3. Major and Medium Irrigation:
Thousand hectares of
Potential 15940 820 19
This trend will be curbed by the strategy being followed in the Seventh Plan of concentrating on completion of projects as the first priority and stricter criteria for new investments.
Project Formulation 21.4 Projects have often been formulated on insufficient data and assumptions regarding input supplies and infrastructural facilities which have proved unrealistic. The underlying cause for this is the absence of long-term plans for these enterprises in regard to the strategy and direction of growth. This has also resulted in attempting comprehensive and ambitious projects for expansion of capacity without equal emphasis on replacement and upgradation of existing equipment and technology. To correct prevailaing imbalances, these sectors need to have long-term plans for the development of technology, raw material and other input resources, surplus generation
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and investment and management development which could be continuously implementd through smaller and manageable projects in a phased manner. This also implies the need for continuity in the corporate top management as well as continuity of persons and policies in the administrative economic ministeries concerning these sectors.
Pre-planning for implementation 21.5 Apart from the lacunae in project formulation, the trend has been to take up pre-planning activities such as preparation of feasibility reports, alternative technical choices, preparation of detailed project reports and similar activities in sequence after their approval at each stage; the obvious course of working in tandem or dovetailing sequential stages has not been followed. This has been remedied to some extent by a recent decision to clear Central Projects in two stages so that after the first-stage clearance, activisation can proceed and there is no uncertainty. It is also essential that investment approvals are only given after certain basic investigations with regard to geology, site conditions, technology, input quality and availability and markets are completed. It is therefore proposed that suitable standards for such investigations will be specified in all major services as a precondition for ministerial approval.
Decision-making 21.6 Delay in decision-making aggravates implementation problems that arise later. Not only are the estimates out of date before formal sanction is given and budget allocations made, but it also gives rise to a frequent tendency to enlarge or modify the scope of the project. It is necessary, therefore, to freeze the basic technical and equipment parameters at the sanctioning stage. It necessarily implies much more rigorous preparatory work on the choice of process and equipment than evidenced so far. In fact, in projects in the public sector which have been successfully implemented, this condition was met.
21.7 Delays occur in many stages, namely, (a) at the enterprise level when a proposal from a unit is to be approved by the corporate headquarters; (b) at the Government level when it goes to the administrative Ministry, the Committee of Secretaries (PIB) and some- times even the Cabinet. The solution to this problem lies in either reducing the levels by better delegation or by stipulating a time limit so that projects are sanctioned within the validity period of the estimates.
Funding 21.8 Inadequate flow of funds in fact has been a cause for delay of large projects, compounding further the problem of sharply rising cost estimates. The practice of annual allocation of Plan funds is one of the reasons for these upsets. It is suggested, therefore, that in this Plan period at least for projects which have critical importance, and affect the output of many other sectors, the flow of funds for the entire Plan period should be assured. Whilst this may be easier for projects in the Central sector, it may be difficult in the State sector (e.g., power projects) where the resources position may fluctuate widely from year to year. However, even here certain projects need to be earmarked for assured funds.
Project Organisation 21.9 Project management capability varies a great deal from enterprise to enterprise. It is necessary to have a competent project management organisation in the charge of a project manager with assigned responsibility, directing and coordinating all aspects of the project from construction to commissioning. It is also necessary that along with a project proposal there must be a plan showing how the project is proposed to be implemented in regard to the project organisation, bid packaging, contracting strategy and assessment of agencies available for executing specific aspects of the work such as civil works, utilities, structurals, erection, supply of equipment, etc.
21.10 In the work being carried out in projects by the various agencies at the project site, control of arrival of equipment and material and their storage and distribution needs a high degree of coordination which can only be done by a strong project organisation.
Contracts 21.11 Award of contracts and the execution of these contracts have proved to be a major bottleneck in implementation of large projects. A contracting strategy is necessary for each project, taking into accout the manageable span of control and coordination by the enterprise project management, the type of contractors' capacity which can be mobilised, the sequencing of work front and the degree of effective competition that is consistent with the overall gain for the project in terms of time and total project cost. A range of choice is thus available between total turnkey to direct sub-contracting by the project authorities for all items of construction and supply. It is possible for example to make up suitable packages of work for which the total contract can be given to a competent firm, leaving to it the work of sub-contracting and the responsibility of coordination.
21.12 Such an approach will need also some modifications in the rigid procedures for evaluation, award of contracts, and terms of payment now prevailing in the public sector. Although some modifications have been introduced, the basic approach to select the lowest tenderer and the fear of post-audit objections continue to militate against speedy execution of good quality work and the overall economy of the project. In order to overcome
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this the institution of empowered committee at appropriate levels, as was followed in the case of successful projects like Kudremukh, ONGC, Space Projects, etc, is recommended for selected projects of critical importance.
Construction Capacity 21.13 In a very number of projects already on the ground and to be undertaken in the Seventh Plan, an estimate of the project construction capacity in the country in areas like civil engineering, utilities, structurals and erection, transmission, towers, cable laying, etc., needs to be made. Similarly, the upgradation of technology in some of these areas is also necessary for speedy execution. The Planning Commission propose to take some initiative in this matter.
Coordination 21.14 Coordination of various agencies responsible for equipment and material supply has also proved a critical problem. Proper assessment of capacity, timely placement of contracts and payments terms are critical in this regard. The project organisation needs adequate authority for quick and flexible settlement of such issues. Coordination is also necessary at inter-sectoral level; for example, in the case of power plants with coal supply and railway transport. While some of these can be coordinated at the local level, very often coordination is necessary at the inter-ministerial level and at the State Government level. The current system of resolving such issues is through the administrative ministry as well as through the quarterly inter-ministerial reviews. The effectiveness of these mechanisms has to be improved so that they do not overlap and are seen to be effective in finding satisfactory solutions of the problems on the ground.
21.15 Special arrangements may be necessary for monitoring and coordination in the Eastern region where a large number of improtant projects, such as the rehabilitation of steel plants, coal and mining projects, power projects, etc., is likely to be sanctioned during the Seventh Plan. The problems in this region are many because the infrastructure is one of the oldest. This is compounded by large- scale unemployment and industrial sickness which are manifest in problems of industrial disputes with contract labour, requiring the State Government's intervention.
Use of Consultants 21.16 A number of consultants specialised in different fields are now available in the country, both in the public and private sectors. They are sucessfully associated with the preparation of feasibility reports, detailed project reports and project engineering. The consultants are also being used for drawing up tender specifications, tender evaluation, inspection of equipment, supervision of construction and erection, certification of bills and quantities of work and similar work which helps the project manage- ment. The role of these consultants is, therefore, of great importance in quick and economical execution of projects. Nevertheless, the client organisations must also build up the capability to use consultants to their best advantage.
Implementation of Development Programmes 21.17 Development programmes in the field of agriculture, rural development, village and small industries, social welfare, health and education differ substantially from the large investment projects described in the previous section. They do have some investment component mainly in the form of buildings and other construction; but the dominating components are rather different. In some cases it is staff expenses, in some others subsidies for specific purposes, while in a few cases it is promotional activity. Generally, the facilities set up are not revenue-earning and even current expenditure is financed from the budget. In many cases, the effectiveness of the programmes in terms of end result depends largely on the response of private households and enterprises. Hence the problems of formulation and implementation are quite complex and not readily amenable to managerial solutions at the programme level.
21.18 Development programmes, unlike large investment projects, are geographically diffuse and are implemented simultaneously at a large number of locations. They often require simultaneous action by more than one department at the local level. Most important, this effectiveness depends to a large extent on the response of the local community. Development programmes also require a local imput at the formulation stage. Standard schemes designed at the State or Central Secretariat level will not be able to take into account the diversity of conditions to be found in our country and rigid norms may defeat the purpose of many of the programmes. Hence a measure of local flexibility in working out the details of each scheme is necessary. The geographically diffuse nature of development programmes makes it difficut to control implementation from a central level. Hence leak- ages and misappropriation tend to take place. Greater local involvement can play an important role in reducing these abuses.
21.19 The Seventh Plan is based on the premise that the key to effective implementation of development programmes is local involvement. Hence it proposes to secure this by taking effective steps for decentralisation of planning and for involving local and voluntary agencies in Plan implementation. The specific steps proposed are dealt with below.
Decentralisation of Planning 21.20 The need for decentralisation of planning and development administration below the State level has
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been recognised for some time, particularly in the context of agricultural and rural development programmes. But the ideas relating to decentralised local-level planning have been somewhat nebulous and the progress in the various State somewhat halting. Though Zila Parishads and Panchayat Samitis have been established in several States, the actual decentralisation of political and administrative authority has been generally of a limited nature. Nor have sufficient arrangements been made in the organisation of technical administrative personnel at the State level and below to facilitate decentralisation. The lack of adequate machinery for decentralised planning and admi- nistration thus continues to be a critical weakness in the existing system.
21.21 With the introduction of a variety of new programmes for rural development requiring close coordination with other departmental programmes in the rural areas, the need for decentralisation of planning and development administration to the district and block levels has become imperative. In June 1982, the Planning Commission addressed the States, urging them to take steps towards four important aspects of a decentralised district level planning setup. These are :
(a) Effecting functional decentralisation: This involves indentification of the exculsive functions that must be planned and implemented at the district level. This procedure will help in defining the role of District Planning in the Multi-level Planning structure.
(b) Effecting financial decentralisation: This is necessary in order that the District Planner is clearly aware of the funds likely to be available for district development.
(c) The establishment of appropriate planning mechan- ism at the District level: This would include the setting up of District Planning Boards Councils with appropriate composition, and strengthening of the planning machinery at the district level.
(d) Establishment of appropriate budgeting and reap- propriation procedures:
21.22 The above measures have been emphasised by the Planning Commission in the context of the formulation of the Annual Plans, with the result that many States have taken steps to disaggregate, districtwise, the divisible outlay of the State Plans and to introduce corresponding administrative decentralisation measures.
21.23 The States of Maharashtra, Gujarat, Karnataka and Uttar Pradesh in particular have carried out the disaggregation of plan funds from the State level to the district level in accordance with a formula weighted in favour of backward districts. On the basis of the work done in these States, it appears that approximately 30-40 per cent of the State Plan funds go towards funding the district level schemes. For further allocating the divisible funds among the districts, the formula adopted by them gives weightages to certain relevant factors like population, level of development and special problems of the district.