PLAN IMPLEMENTATION AND EVALUATION
Introduction 19.1 The success of a plan lies in the effectiveness with which the projects and programmes are executed and the efficiency and productiv- ity levels at which various enterprises operate. The nature and prob- lems of implementation of large investment projects, which are mostly in the infrastructure and industry sector, differ from those of devel- opment programmes which are mostly in the field of agriculture, rural development and other social sectors. While sector specific implemen- tation problems are broadly covered in the respective chapters, the focus in this Chapter is on some of the common and general steps to be taken to improve efficiency in the process of formulation, implementa- tion, monitoring and evaluation of projects and programmes.
Implementation of Projects 19.2 Delays in project implementation not only affect their contribu- tions to the economic growth and result in the wastage of scarce resources but also lead to a reduction in the employment potential to be generated on the completion of these projects. The timely comple- tion of large investment projects, particularly in the infrastructure sector, is important for improving the production performance of many other sectors. A large proportion of public sector investment on projects in the Eighth Plan will be for the development of physical and social infrastructure. In the interest of overall growth and international competitiveness, it is necessary to minimise the time and cost over-run of the projects and programmes.
19.3 As on 1st January 1992, there were 307 Central sector projects, each costing Rs. 20 crores or more with total anticipated cost of Rs. 94,500 crores, which were being monitored by the Ministry of Programme Implementation. Of these, 201 projects had cost over-run with respect to the original estimates and 165 projects, to the extent of 35% in aggregate, with respect to latest approved cost. As many as 189 projects had time over-run with respect to their original schedule and 182 projects had time-over-run even with respect to the latest ap- proved schedule. Thus, about two-thirds of the major projects under implementation are facing the problems of time and cost over-run. The status of State projects, mostly in power and irrigation sectors was generally worse.
19.4 The factors responsible for time and cost over-runs are mainly:
(a) Inadequate investigations and project formulation Frequent changes in scope and revision of drawings due to inadequate project prepara- tion;
(b) Delay in clearances from various regulatory agencies;
(c) Delay in land acquisition;
(d) Delay in activities such as supply of equipment by suppliers;
(e) Inadequate release of funds;
(f) Management problems such as personnel, labour and contractor dis- putes, mismatch of equipment, etc.; and
(g) Unforseeable reasons such as adverse geo-mining conditions, natural calamities, etc.
Inadequate Project Formulation 19.5 Often projects are found to have been poorly formulated because of inadequate field investigation, lack of adequate data, inadequate analysis of inadequate attention to environment, forest and rehabili- tation aspects. Time and cost over-runs inherently get built into a poorly formulated project from the beginning, if the project parame- ters are not properly determined or time and cost and understated and the project, during implementation, runs into problems many of which could have been foreseen and avoided. As a result, the scope of work, equipment requirement quantum of construction work, location and other parameters, also change. The introduction of two stage clearance procedure introduced in 1985 for the Central sector projects costing Rs. 20 crores or more in some of the important sectors was meant primarily to improve the quality of project formulation so that after the first stage clearance, the project authorities could take up detailed investigations and analysis, obtain necessary clearances such as environment and forests, get budgetary quotations and then submit a properly formulated project
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with reasonably firm physical and financial so that later the changes in scope and design would be minimum. However, in practice, these procedures have been adequately followed in preparing the projects.
19.6 During the Eighth Plan, it is proposed to enforce two-stage ap- proval procedure, issue clear and sector specific guidelines for project feasibility studies, strengthen the project appraisal mecha- nism and take up only those projects which have been properly investi- gated and formulated.
Investment Approval of Projects 19.7 The approval procedures are often long drawn and take considera- ble time. In the Eighth Plan, it is proposed to identify all new projects and programmes which would be taken up during each year and work out their detailed time schedules, including their approvals by various Government agencies, and from the forest and environment point of view. These schedules should take into account the required time for each agency and also the fact that some of these clearances can be processed simultaneously rather than sequentially. Even after the investment clearance, there are a large number of clearances often as many as 50 which a public sector project many have to seek from Gov- ernment and other authorities at various levels. During the Eighth Plan, it is proposed to streamline the clearance procedures. With two- stage approval procedure, it is possible that some of these clearance, such as for land acquisition, could be processed simultaneously while the detailed feasibility report is being prepared and some funds could also be committed for acquisition of land, technology and knowhow.
19.8 It is also proposed to enhance the limit for delegation of powers and streamline investment approval procedures. In order to give more autonomy to public sector enterprises, powers to sanction new invest- ments upto Rs. 50 crores and replacements upto Rs. 100 crores, provid- ed there is provision in the Plan, have been delegated to those Cen- tral enterprises which have gross block of Rs. 200 crores and above and which have signed a Memorandum of Understanding (MOU) with the government. The Public Investment Board has been reconstituted. Re- vised guidelines for the preparation of detailed feasibility reports mentioned earlier are also expected to facilitate quicker and better appraisal by providing all the required information at one place. A Data Bank on projects appraised in the past is being developed in the Planning Commission which is expected to help in improving the ap- praisal of projects. The criteria and parameters to be used for ap- praisal are also being re-examined. In addition, it is intended to streamline the investment approval procedures and minimise the delays in the system.
Availability of Funds 19.9 There is little merit in starting a number of projects without the requisite financial resources in sight. An important step in the Eighth Plan will be to attach first priority to the completion of on- going projects which have made significant progress in implementation and only after meeting their requirements any commitments for new projects will be made. This will ensure accrual of benefits from the investments.
19.10 As far as possible, the funding pattern of the projects would need to be specified. In some sectors, such as Railways, Irrigation, etc, where there are more sanctioned projects than can be fully imple- mented due to the resource constraints, a strict prioritisation will have to be done for selecting the projects which can be funded fully for early completion. there is need to keep a shelf of projects ready. On the basis of past experience, it seems likely that the cost of some projects included in the Plan might increase beyond the estimates. It would be necessary, either to find more resources for them or drop them depending on their priority, economic viability and their overall social costs and benefits. Such adjustments will continue to be made at the time of the formulation of annual plans.
Planning of Implementation and Management 19.11 In many cases, implementation of projects is initiated without full and detailed planning, covering the physical work effort, time required for various activities, matching of the input and equipment requirements with the availability constraints, linkages with other projects/activities, etc. There are only a few projects which have clear resource-based PERT or CPM charts specifying different areas of activity, their time phasing, the precise responsibility for different work items and the monitoring system. Inadequate time is often provid- ed for essential preliminary activities like design, technology col- laboration, calling for tenders an their evaluation. There is also unrealistic assumption as to the time required for all clearances, placement of orders, deliveries by
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suppliers, transportation, erection and testing. In the Eighth Plan, it is proposed to ensure detailed and realistic planning for these aspects so as to help in anticipating various problems and making provision for necessary corrective action.
19.12 Effective project management, including monitoring and correc- tive action in time will be encouraged through incentives, rewards, recognition, etc. Use of consultants for both planning and supervision of implementation as well as monitoring will need to be encouraged so as to help the project managers to improve efficiency, effectiveness and quality of implementation. The project manager will be given full autonomy and be accountable for proper project implementation and his commitment ensured through a system of incentives and disincentives.
Time and Cost Over-runs 19.13 There are a few elements of cost over-run, such as fluctuation in foreign exchange rates, changes in statutory duties or price rise due to inflation, that may be considered to be beyond the control of the project authorities. It is proposed that during the Eighth Plan, cost over-runs due to these factors should be separated and for these, the project authorities may not be required to go to the Government or the approving authorities for revised approval. However, any other cost over-run which may be due to delay, changes in scope and physical quantities of work, initial understation of cost, all of which are generally within the control of project authorities, may have to be fully explained in the revised cost estimates and responsibility fixed for the same before the revised cost is approved by the Government. Similarly, in the case of the over-run, if there is any delay because of Government decisions or circumstances beyond the control of project management, such as natural calamities, this should also be separated, while the other delays which are normally within the control of the project authorities, including those due to their consultants, suppli- ers, contractors, would need to be suitably explained in the same manner as cost over-run.
Ex-Post Evaluation of Projects 19.14 It is proposed to undertake case studies of some selected projects which have been completed without delay and within cost and those which have suffered time and cost over-runs. The results of these evaluation studies are to be utilised for improving the formula- tion, appraisal, planning and implementation of projects in future.
Efficiency in Operation
19.15 While efficiency during implementation/construction of projects lies in minimising the time and cost overruns and completion of projects as per specifications, the efficiency of operation relates to the achievement of the physical targets of production of goods and services of quality with minimum cost of operation. Efficiency of operation should inter alia help to generate the desired financial surplus which can then is invested in other projects/development programmes. The main areas for operational efficiency would be as follows:
i. More effective labour participation in management, training of workers, improvement in working conditions in order to improve the productivity of the workers significantly;
ii. Maximising the utilisation of the existing capacity through not only proper upkeep and preventive maintenance but also the optimum deployment of equipment. In this context, in some projects, debottle- necking schemes may be taken up for increasing capacity utilisation. In many public sector undertakings there may be a mismatch of capacity between different plants or sections and some minor adjustments may be needed in such cases in some sections or progress. Necessary studies will be undertaken to maximise utilisation of all equipment through suitable reorganisations;
iii. Minimising energy consumption, which is high in almost all the sectors. Significant reduction in energy consumption will automatical- ly lead to cost reduction. To introduce changes in technology to remove bottlenecks may call for adjustments in equipment;
iv. Review of consumption of other inputs per unit of output besides reduction in the rate of rejections in the engineering industries, better by-product utilisation in chemical industries and similar improvements;
v. Laying down of targets specifically for efficiency measures in respect of use of energy and other major
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inputs, machine use and plant-use. Certain broad efficiency parameters will be constantly watched for each industry and a more detailed system of efficiency monitoring will be introduced in request of selected projects.
vi. Apart from the reduction of direction production cost by various measures mentioned earlier, the burden of overheads also needs to be reduced.
vii. Adoption of proper inventory management system, as many a enter- prises, particularly in the service sector, carry excessive invento- ries which lock up resources;
viii. Increasing use of management techniques such as value analysis, maintenance planning, standard costing, budgetory control, etc., for improving the physical performance and reducing costs.
Management Consultancy Development 19.16 Many public sector organisations, including public utilities, have already set up efficiency and productivity improvement norms and in-house management consultancy units. During the Seventh Plan, the in-house management consultancy units set up in three State Electrici- ty Boards, i.e., U.P., M.P. and Tamil Nadu, on a pilot basis, have demonstrated the usefulness of such services in identifying and analy- sing management problems besides serving as an effective in-house problem solving mechanism and creating better efficiency environment in the respective organisations. Following the encouraging results, three more in-house management consultancy groups have been estab- lished in Punjab State Electricity Board and A.P and Maharashtra State Road Transport Corporations. Similar in-house services can be estab- lished by large public utilities which require management improvement. These effects towards inhouse problem solving and efficiency improve- ment will be encouraged. In addition, the management consultancy profession will need to be developed with adequate training and other inputs, so as to provide required inputs for improving management of projects and programmes at all levels. Voluntary professional bodies like the Institute of Management Consultants of India (IMCI) can play a useful role in the orderly development of management consultancy profession in the country.
Implementation of Programmes 19.17 A majority of development programmes in sectors such as agricul- ture, rural development, social welfare, health and education, etc. involve inputs in the form of manpower, implements, credit, etc. apart from some construction of buildings etc. Most of these programmes are people/beneficiary oriented and involve efforts at local/areas levels for effective implementation without leakages in the delivery system.
19.18 The main deficiencies in the implementation of these programmes have been:
i. Wrong selection of beneficiaries/type of assistance, without con- sidering their needs, capabilities and skills;
ii. Lack of flexibility, Straight - Jacket guidelines issued centrally often ignore local needs, situations and variations;
iii. Inadequate delivery mechanism, pilferages, malpractices etc.
iv. Lack of coordinated approach, with many sectoral organisations working independently for different components of the programmes.
v. Lack of commitment on the part of agencies/agents responsible for the delivery of the programmes.
19.19 During the Eighth Plan, it is proposed to initiate of steps to overcome these deficiencies and to ensure effective implementation of the programmes, achievement of targets and realisation of intended benefits by the beneficiaries. Some of these are as follows:
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i. Strengthening the people's bodies at local levels, i.e., District Boards and Gram Panchayats.
ii. Integrated area development approach by bringing about a conver- gence of all the sectoral agencies concerned at micro-level.
iii. Involvement of beneficiaries in the implementation of the pro- grammes through organisation of beneficiaries and/or Panchayats.
iv. Introducing flexibility in the programmes by giving more autonomy to the local bodies and Panchayats to plan according to the needs and resources available at the local area level.
v. Handing over the management and supervision of local service cen- tres like health centres, schools, etc., to District Boards and Pan- chayats.
vi. Greater involvement of voluntary agencies who have the abilities to demonstrate and innovate, provide technology and training and act as support mechanism to local level institutions.
vii. A concerted effort to involve and train officials as well as non- officials, not only to bring about required skills for planning and implementation but also the inculcate required attitudes and impart necessary knowledge about the management of programmes at local levels.
ix. Devising effective system of monitoring and evaluation which moni- tors the programmes more in terms of ultimate benefits then of expend- iture incurred or inputs used. For example, the ultimate benefits of the family welfare programme is reduction in birth rate, while the targetting and monitoring is done in terms of couple protection rate. This needs to change.
x. Introduction of better delivery system through self-managed organi- sations.
Project and Programme Sustainability 19.20 In addition to effect implementation of the projects and pro- grammes, it is also necessary to make adequate provision for ensuring their sustainability so that the intended benefits in the form of goods and services and coverage of beneficiaries are in fact generated with required quality, various assets created are adequately main- tained and the anticipated life of the projects and programmes is achieved. To ensure proper sustainability of projects and programmes, following aspects may be considered:
i. The project/programme design should include the parameters which bring out clearly as to how the project output in the form of goods and services will be sustained during its operation, how various assets will be maintained and quality ensured. The project/programme costs should include both the capital components as well as operating and maintenance components required for sustaining the output.