19. in the past, there has been considerable under-estimation of the management implications of large projects as well as of programmes of development in different fields. To built up competent managers, who know their own job and nave the ability to lead, is one of the key tasks in every sector of th Third Five Year Plan. For the most part, these men must be found from the middle grades of personnel within each organisation supplemented, to the extent possible, from other sources. Both within the Government and in projects, there has been greater pressure at the higher levels, and enough attention has not been given to the development of the middle grades of personnel. This object can be achieved if persons from these grades are given a great- er snare of responsibility in day to clay work and have the opportuni- ty of gaining experience in the higher functions of management. Along with this, within each project, it is essential to establish the practice of consultation and exchange of views as between different levels within the organisation as well as at each appropriate level.

20. Work in projects as well as in important programmes has frequently. suffered because of rapid transfers of officials. For tasks of any importance, it is essential that the responsible offi- cials should not only be selected with care and suitably trained, but should also remain long enough to grow to the lull measure of their responsibility. In any major key assignment a period of less than five to ten years is rarely sufficient for producing large results. Frequently, in service transfers the factors which are taken into consideration are not of the first importance from the standpoint of public interest or the success of the undertaking. Transfers may sometimes injure both continuity of operations and the morale of organisations whose work at the present stage of development is nearly always of a difficult and poineering character. There should be no hesitation in assuring the reasonable expectations of promotion to persons who are required to continue on the jobs hold by them in pursuance of public policy.

21. Large numbers of well-equipped public enterprises in differ- ent fields which are being developed throughout the country have facilities for arranging training on an extensive scale. In this respect, there is room for a much more positive approach than has been adopted hitherto. Wherever possible, each large project in the public sector should have a well-organised training

ADMINISTRATION AND PLAN IMPLEMENTATION 149

programme for apprentices, etc. supported by institutional training at polytechnics or other appropriate centres.

V

ECONOMY IN CONSTRUCTION

22. In many fields of development, construction costs account for a substantial proportion of the expenditure. There is considera- ble scope for saving on construction costs if attention is given to certain elementary aspects. While each major construction has its own special features, there are five groups of factors which specially influence costs :-

(1) Planning, investigations including those of raw materials, designs, specifications including those for equipment, detailed estimates, and preparation of the project including phasing of its component elements for optimum results, and financial returns ;

(2) Essential preliminaries for construction like staffing, land acquisition, communications, housing, policy and procedure for procurement of plant, equip- ment, stores, etc. ;

(3) Choice of construction agency, whether departmen- tal contract, labour co-operatives, voluntary organisa- tions, etc. and system of contract, coda] contract or work order ;

(4) Contract procedures such as security deposits, earnest moneys, issue of materials, procedure for pay- ments, interval between execution of work and payment, deviation from original specifications or scope and claims for extra items ; and

(5) In the administrative set up, delegation of pow- ers, place of Accounts Officer vis-a-vis Chief Engineer, responsibility and the adequacy of support, trust and authority vested in the principal executive to discharge that responsibility.

With due care and supervision, it should be possible in most cases to avoid unjustified excesses over estimates of costs as well as delays in keeping to the time-schedule for completing the work.

23. The question of securing economies in construction has been considered in consultation with Central Ministries and State Govern- ments and there is general agreement on the following measures: -

(1) Before a project is undertaken, there should be adequate planning of all aspects of the project, spe- cially investigations, including those concerning mate- rials for construction, and a detailed project report giving layout of works, details of equipment, phasing of component units of the project, cost estimates, finan- cial returns, etc.

(2) Simultaneous steps should be taken to arrange for essential preliminaries of construction, namely, land acquisition, housing, communications, recruitment of staff and laying down proedures for procurement of plant and equipment and stores, and materials budgeting should be undertaken in detail;

(3) Adequate workshop facilities should be provided for installing machinery and for repairs and overhaul during construction. The workshop should also provide training facilities for mechanical, electrical and other personnel required for operating construction machinery;

(4) In planning for mechanised construction, the need for largescale employment being an essential objective of the Plan, a careful balance must be struck between use of manual labour and machine; the use of machinery should be restricted to only those works which, if done by manual labour, would be unduly delayed or would become much more expensive, or which are impossible of execution through manual labour;

(5) A careful assessment should be made of the spare parts required for construction machinery and other stores, and provision should be made accordingly so that, on the one hand, the work is not held up for want of essential stores and spares being available when required and, on the other, there is no unnecessary accumulation of inventories ;

(6) A central design organisation should be set up for the project if it is of sufficient magnitude or for a group of projects of smaller magnitude, which will prepare detailed designs, field plans, specifications of machinery and of civil works, including specifications for materials of construction. This organisation should also prepare designs for buildings and lay down norms regarding space utilisation;

(7) Buildings should be planned and designed on the basis of functional needs. Cost reduction can be fur- ther secured consistently with these needs by putting up temporary or semi-permanent construction to the extent possible. With optimum space utilisation, standardisa- tion, suitable type designs, prefabrication, adoption of improved techniques and control or elimination of items which are not essential for the functional needs of the building. considerable economies can be effected;

(8) Choice of construction agency, system of contract and contract procedures are the most important factors, besides planning and design, which determine the ulti- mate cost of the project. The agency of construction can be departmental, or through

150 THIRD FIVE YEAR PLAN

contractors or voluntary organisations and labour co- operatives. In the case of non-departmental agencies, the work can be awarded on a codal contract or a work order system. A judicious choice between the agency of construction and the system of contract will bring about appreciable cost reduction. Departmental construction and construction through voluntary construction agencies and labour co-operatives will avoid unnecessary depend- ence on contractors and also divert the profits from the individual to the community. Voluntary organisations and labour co-operatives should be encouraged and work awarded to them on the work order system as far as possible;

(9) Promptness in payment of running as well as final bills is one of the most important factors in cutting down costs. Monthly on-account payments should be a normal feature. Claims for extra items, unless approved in advance, Should be definitely rejected;

(10) Training of personnel for purposes of improving skills and productivity should be an integral part of the construction organisation;

(11) In the interest of continuity and building up of expertise, transfers of essential technical personnel from construction should be avoided even though such action may militate against departmental rules or con- ventions, and the interests of such personnel safeguard- ed within the construction organisation;

(12) A `Cost Reduction Unit' should be established in each major construction project as a part of the con- struction organisation under the exclusive control of the Chief Engineer of the project. Its functions will be to carry out work studies, continuously analyse factors affecting costs, recommend suitable adjustments from time to time in materials, techniques, procedures and organisation, evaluate the results of such adjust- ments and keep a watch on progress in achieving econo- mies in construction costs;

(13) A pool of technical advisers for each type of undertaking should be maintained at the Centre who, with the background of their experience and knowledge and the further pool of knowledge made available to them by the design and construction organisations and the cost reduction units, will advise on the technical, economic and administration aspects of the project and also serve as a clearing house of information. As far as possible expenditure on this pool should come out of the savings in cost secured through its advice; and

(14) For each major project, a comprehensive completion report should be prepared giving the entire history of the project, including mistakes which occurred and risks taken, remedial measures adopted and lessons drawn, so that this report may serve as a reference book and guide to engineers charged with the execution of similar projects in the future. The preparation of the comple- tion report should be begun while the works are in progress, and events fresh in memory and the report completed, as far as possible, simultaneously with or soon after the completion of the project. Technical bulletins dealing with various aspects of design, and construction should also be prepared at the same time.

24. It has been suggested to States that they might set up inter-departmental committees to watch progress in achieving economies in construction costs. A number of States have already set up such committees. A committee on these lines is also being constituted at the Centre. Through the establishment of such machinery for following up the various suggestions mentioned above, it should be possible to insist that when a development programme or project comes up for general approval the construction element is also, fully considered. This will further secure that construction programmes in each field are phased so as to lead to the largest measure of economy.

VI

IMPLICATIONS FOR PLANNING

25. As the Second Five Year Plan progressed from year to year, it was felt that with greater anticipation and more accurate statisti- cal and economic intelligence some of the problems might have been dealt with differently. In the first phase of the Plan, the decline in foreign exchange reserves might have been spread over a longer period, and the consequent reductions in foreign exchange allocations might have been less drastic in relation to power development and the production of fertilisers. The considerable lags which occurred in the Utilisation of irrigation from large and medium irrigation projects could have been reduced. The shortages and imbalances re- cently reflected in the difficulties of coal transport could have been countered in advance to a greater extent. Finally, the intensity of fluctuations and the rise in prices during the Past two years might have been moderated. These are instances of the interdependence between the balance of Payments and the internal price levels, of the scheme of investments and the resulting outputs, and of developments in the related sectors of industry, transport and power. They point to the much larger dimensions of the problems of management, planning and implementation which are inherent in the design, structure and phasing of the Third Five Year Plan.

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26. These problems arise not only at the national level and in the sectors of modem industry, transport and power, but are also reflected in turn in the greater responsibilities thrown upon the plans of States. In many sectors the role of planning in the States is wholly complementary to that of planning at the national level and problems at the State level also become more complex.The line of communication between planning for the country as a whole and for each district, block and village is a long one; to be able to preserve the broad national priorities while seeking to adapt the Plan in its myriad forms to the conditions and needs of each area and each community is no small objective. Against this background, a fresh view has to be taken of the ways in which the machinery and the process of planning at various levels may be improved, evaluation made more incisive, and planning equipped with better statistical and other tools. These are problems to be considered further in consultation with the Ministries at the Centre and the State Governments. Some of the principal directions in which the existing schemes and organisation of planning may be strengthened may be briefly indicated.

27. Unlike the earlier phases of planning, large projects in industry, transport, power and other fields, which involve complex technical and economic problems and vast amounts of expenditure, have now an increasingly important place in national planning. As the body entrusted with responsibility for planning at the national level, the Planning Commission will endeavour to keep in touch with the working of large industrial and other enterprises and assist Ministries and States with objective analysis and reporting from the wider considerations of the national economy as a whole. From this angle the Planning Commission's own work and that of the Committee on Plan Projects and the Programme Evaluation Organisation are being reviewed. It will be necessary to ensure close collaboration with various statistical agencies and also to enlarge the scope of the economic and social research to be undertaken both directly and through universities and other centres of learning.

28. In collaboration with the Ministries and the States considerable improvement will need to be effected in the present system of reporting upon projects, flow of information at intervals short enough to be meaningful, and assessment of current trends. Too frequently in the past. reports on progress have lacked focus and have not brought to light current weaknesses or helped to anticipate problems requiring action at different levels.

29. Large burdens are being placed on planning organisations in the States. States are called upon to interpret national objectives, translate them in terms of the needs, resources and possibilities open to them, carry the Plan to the remotest points, and find ways of mobilising local resources and enthusiasm. Within the limits of its tasks as conceived thus far, the machinery for planning in the States has served well. It has enabled Departments to undertake the responsibilities assigned to them with coordination being provided by the Chief Minister and a Cabinet Committee and, at the official level, by the Planning Department and the State Development Commissioner.

The crucial role of State plans in fulfilling the economic and social objectives of the Third Plan has been described earlier. During the next three years States will also participate in the drawing up of a longterm plan of development for the country on the lines explained in Chapter II. This plan is intended to present the general design of development for the country as a whole over the next 15 years or so. It will be based on a study of the resources and possibilities of different parts of the country and will seek to bring them together into a common frame. This is a task of great complexity, as it is of great promise, and there will be need for close and continuous collaboration between various agencies at the Centre and in the States, especially those responsible for planning, as well as leading institutions in the country engaged in scientific, economic and social research. From this aspect as well as the implementation of the Third Plan and the preparation of the Fourth, it will be necessary for States to consider the lines along which the existing arrangements and machinery for planning at the State level should be further strengthened.

30. The introduction of democratic institutions at the district and block level and the role of Panchayats at the village level are held rightly to offer the means for mobilising the manpower and other resources of the people throughout the country. Yet, this momentous change itself places much greater responsibility upon Departments at the State level, technical and other officials at the district level and extension workers in the blocks. The success of the Plan, as of Panchayati Raj itself, will depend upon a correct approach to various problems being adopted from the start both by the representatives of the people and the official agencies. The right approach to these problems is vital for fulfilling the targets of the Plan in many key sectors. This aspect is considered further in the Chapter on Community Development.

31. Finally, in the plans hitherto formulated urban areas have not been actively associated. It is envisaged that in the next phase of planning, as many towns and cities as possible and, at any rate those with a population of 100,000 or more, should come into the scheme of planning in an organic way, each city mobilising its own re- sources and helping to create the conditions for a better life for its citizens. The necessary preparation for this should begin early in the Third Plan.