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Transcript of Delhi gurgaon expressway-project
Delhi-Gurgaon Expressway
ldquoDELHI-GURGAON EXPRESSWAYrdquo PROJECT
Submitted to
Prof Vinay Auluck
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Acknowledgement
We would like to take this opportunity to thanks Prof Vinay Auluck for her continuous help
and guidance during this completion of our group projectrdquoDelhi Gurgaon Expresswayrdquo
Without her encouragement and rich knowledge in the subject We would like not have been
successfully complete this project report
We would like to thank Kunal sir to provide us useful information to complete our project
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Purpose of the project-
The Delhi-Gurgaon region has the highest density of vehicles in India As a commercial hub
of Northern India it is already on one of the busiest traffic arteries in the National Highways
network
The DelhindashGurgaon section of highway carries more than 150000 passenger car units
a day
Delhi has one of the highest per capita incomes in India and also has the largest number of
motorized vehicles The DelhindashGurgaon section of highway carries more than 150000
passenger car units a day and this is likely to increase by over 7 per annum The expressway
will be a great improvement allowing the travel time between Dhaula Kaun in New Delhi and
Haldirams Resort in Gurgaon to be cut from the current one hour down to 15 minutes The
project comprises the widening and conversion of the Delhi to Gurgaon section of the
National Highway (NH)-8 into a six- to eight-lane access-controlled highway on a Build
Operate and Transfer (BOT) basis
This project is actually part of the larger Golden Quadrilateral (GQ) Project which is the
largest expressway project in India It is the first phase of the National Highways
Development Project (NHDP) and consists of building 5846km of four- to six-lane
expressways connecting Delhi Mumbai Kolkata and Chennai The 28km road section runs
from Rao Tula Ram Junction in Delhi (143km) and ends on the outskirts of Gurgaon (42km)
The project road lies partly in Delhi (between 143km and 2396km) and partly in Haryana
(between 2396km and 42km)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Project Definition- The Expressway
Introduction
An eight lane toll expressway between Gurgaon and New Delhi scheduled to become
operational in 2007 end will provide non-stop connectivity to the International Airport and
Dhaula Kuan in Delhi over a distance of 28 kilometers (18 miles) and includes 7 flyovers and
5 underpasses along the stretch The 28km Delhi to Gurgaon expressway is one of the most
important road construction projects currently underway in India The road is being
constructed by the Delhi Development Authority (DDA) the National Highways Authority of
India (NHAI) the Central Road Research Institute (CRRI) and the Haryana Urban
Development Authority (HUDA)
The Expressway from Delhi would start from Rao Tula Ram Marg via Palam Mahipalpur
kapashera Udyog Vihar Kendriya Vihar IFFCO Chowk South City Sector 31 Jharsa and
finally ending at Hero Honda Chowk in Haryana
The project is now expected to be extended by 3km due to a design change which
incorporates a new eight-lane section from Dhaula Kuan to Rao Tula Ram Marg The project
which started construction in June 2003 has already been delayed more than once due to legal
problems over land acquisition and compensation for buildings having to be demolished and
is now expected to be completed by 2007 end
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway Slow traffic like city buses and two-wheelers will
be able to ply on the 10 level lanes that will run under the elevated section The expressway is
likely to cut down travel time from the present 60 minutes to 20 minutes
This will be one of the most modern toll plazas in the world It will be setting up 32 toll
counters and anticipate an average waiting time of five seconds per car Toll plazas will be set
up for incoming traffic at the Indira Gandhi International Airport and at the Delhi-Haryana
border Each flyover intersection will have provision for access and exit to the expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Driving down the Delhi-Gurgaon expressway at night is going to be a different experience
once the National Highway Authority of India (NHAI) is through with its project The
expressway with world-class powerful lighting double the illumination level of any highway
in the country will open for commuters in phases by the end of this year Twenty-metre-high
octagonal poles and 1000-watt light fixtures all imported from Dubai are being installed at
present These are being used for the first time in India on any highway said officials of
JPDSC the company in charge of the Rs 20-crore project
The completion of the 28 km Delhi-Gurgaon express highway which is well past its July
2005 deadline has moved from being a capital fantasy to a capital disappointment However
road ministry sources reveal that a project upgrade of over Rs 220-crore - designed to make
this stretch one of the best expressways in the world - may make it worth the wait The
project which was to cost Rs 555 crore to build is witnessing an over 60 increase in costs
and is now scheduled for completion in December 2007
JAYPEE-DSC Ventures Ltd is about to finish construction work on the Delhi-Gurgaon
access controlled highway project on NH-8 connecting Delhi with Gurgaon The expressway
totaling a length of 2770 kms with 6 flyovers and 5 under passes was scheduled to be
completed by November 2005 The project started from junction of NH-8 with Rao Tula Ram
Marg and ends at km 4200 of NH-8 in Haryana The total length of the Project Highway is
277 km Out of this 2233 km would be widened to 8 lanes and balance 537 km would be
widened to 6 lanes
The project also includes nine flyoversover bridges to provide signal free flow of traffic on
the main National Highway Besides this there will also be signal free access to Domestic and
International terminals of the Indira Gandhi International Airport Adequate provision has
also been made for safe passage of Pedestrians by providing four pedestrian subways and two
foot over bridges at different locations The highway provides important links to the western
ports and the North Indian markets as well as the newly developed townships and localities
such as Dwarka
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Benefits of Expressway
Reduction in travel time From 65 minutes to 20 minutes
Saving in fuel Rs 8000 crore per annum
Less pollution
Less road mishaps
Faster safe comfortable journey
India on the expressway map
Easy and uninterrupted access to IGI airport
No intersections
Highway patrolling
Salient Features of Expressway
1 Cost Rs 555 Crore (projected) Rs 775 crores (actual)
2 Length 2770 Km
3 Number of lanes 86
4 8-lane portion 2233 Km
5 6-lane portion 537 Km
6 Number of fly-overs 7
7 Number of underpasses 5
8 Length of service road 4684 Km
9 Median strip width 40 meters
10 Paved shoulder width 170 meter
11 Completion month July 2005(projected) Deecember 2007 (actual)
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Acknowledgement
We would like to take this opportunity to thanks Prof Vinay Auluck for her continuous help
and guidance during this completion of our group projectrdquoDelhi Gurgaon Expresswayrdquo
Without her encouragement and rich knowledge in the subject We would like not have been
successfully complete this project report
We would like to thank Kunal sir to provide us useful information to complete our project
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Purpose of the project-
The Delhi-Gurgaon region has the highest density of vehicles in India As a commercial hub
of Northern India it is already on one of the busiest traffic arteries in the National Highways
network
The DelhindashGurgaon section of highway carries more than 150000 passenger car units
a day
Delhi has one of the highest per capita incomes in India and also has the largest number of
motorized vehicles The DelhindashGurgaon section of highway carries more than 150000
passenger car units a day and this is likely to increase by over 7 per annum The expressway
will be a great improvement allowing the travel time between Dhaula Kaun in New Delhi and
Haldirams Resort in Gurgaon to be cut from the current one hour down to 15 minutes The
project comprises the widening and conversion of the Delhi to Gurgaon section of the
National Highway (NH)-8 into a six- to eight-lane access-controlled highway on a Build
Operate and Transfer (BOT) basis
This project is actually part of the larger Golden Quadrilateral (GQ) Project which is the
largest expressway project in India It is the first phase of the National Highways
Development Project (NHDP) and consists of building 5846km of four- to six-lane
expressways connecting Delhi Mumbai Kolkata and Chennai The 28km road section runs
from Rao Tula Ram Junction in Delhi (143km) and ends on the outskirts of Gurgaon (42km)
The project road lies partly in Delhi (between 143km and 2396km) and partly in Haryana
(between 2396km and 42km)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Project Definition- The Expressway
Introduction
An eight lane toll expressway between Gurgaon and New Delhi scheduled to become
operational in 2007 end will provide non-stop connectivity to the International Airport and
Dhaula Kuan in Delhi over a distance of 28 kilometers (18 miles) and includes 7 flyovers and
5 underpasses along the stretch The 28km Delhi to Gurgaon expressway is one of the most
important road construction projects currently underway in India The road is being
constructed by the Delhi Development Authority (DDA) the National Highways Authority of
India (NHAI) the Central Road Research Institute (CRRI) and the Haryana Urban
Development Authority (HUDA)
The Expressway from Delhi would start from Rao Tula Ram Marg via Palam Mahipalpur
kapashera Udyog Vihar Kendriya Vihar IFFCO Chowk South City Sector 31 Jharsa and
finally ending at Hero Honda Chowk in Haryana
The project is now expected to be extended by 3km due to a design change which
incorporates a new eight-lane section from Dhaula Kuan to Rao Tula Ram Marg The project
which started construction in June 2003 has already been delayed more than once due to legal
problems over land acquisition and compensation for buildings having to be demolished and
is now expected to be completed by 2007 end
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway Slow traffic like city buses and two-wheelers will
be able to ply on the 10 level lanes that will run under the elevated section The expressway is
likely to cut down travel time from the present 60 minutes to 20 minutes
This will be one of the most modern toll plazas in the world It will be setting up 32 toll
counters and anticipate an average waiting time of five seconds per car Toll plazas will be set
up for incoming traffic at the Indira Gandhi International Airport and at the Delhi-Haryana
border Each flyover intersection will have provision for access and exit to the expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Driving down the Delhi-Gurgaon expressway at night is going to be a different experience
once the National Highway Authority of India (NHAI) is through with its project The
expressway with world-class powerful lighting double the illumination level of any highway
in the country will open for commuters in phases by the end of this year Twenty-metre-high
octagonal poles and 1000-watt light fixtures all imported from Dubai are being installed at
present These are being used for the first time in India on any highway said officials of
JPDSC the company in charge of the Rs 20-crore project
The completion of the 28 km Delhi-Gurgaon express highway which is well past its July
2005 deadline has moved from being a capital fantasy to a capital disappointment However
road ministry sources reveal that a project upgrade of over Rs 220-crore - designed to make
this stretch one of the best expressways in the world - may make it worth the wait The
project which was to cost Rs 555 crore to build is witnessing an over 60 increase in costs
and is now scheduled for completion in December 2007
JAYPEE-DSC Ventures Ltd is about to finish construction work on the Delhi-Gurgaon
access controlled highway project on NH-8 connecting Delhi with Gurgaon The expressway
totaling a length of 2770 kms with 6 flyovers and 5 under passes was scheduled to be
completed by November 2005 The project started from junction of NH-8 with Rao Tula Ram
Marg and ends at km 4200 of NH-8 in Haryana The total length of the Project Highway is
277 km Out of this 2233 km would be widened to 8 lanes and balance 537 km would be
widened to 6 lanes
The project also includes nine flyoversover bridges to provide signal free flow of traffic on
the main National Highway Besides this there will also be signal free access to Domestic and
International terminals of the Indira Gandhi International Airport Adequate provision has
also been made for safe passage of Pedestrians by providing four pedestrian subways and two
foot over bridges at different locations The highway provides important links to the western
ports and the North Indian markets as well as the newly developed townships and localities
such as Dwarka
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Benefits of Expressway
Reduction in travel time From 65 minutes to 20 minutes
Saving in fuel Rs 8000 crore per annum
Less pollution
Less road mishaps
Faster safe comfortable journey
India on the expressway map
Easy and uninterrupted access to IGI airport
No intersections
Highway patrolling
Salient Features of Expressway
1 Cost Rs 555 Crore (projected) Rs 775 crores (actual)
2 Length 2770 Km
3 Number of lanes 86
4 8-lane portion 2233 Km
5 6-lane portion 537 Km
6 Number of fly-overs 7
7 Number of underpasses 5
8 Length of service road 4684 Km
9 Median strip width 40 meters
10 Paved shoulder width 170 meter
11 Completion month July 2005(projected) Deecember 2007 (actual)
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Purpose of the project-
The Delhi-Gurgaon region has the highest density of vehicles in India As a commercial hub
of Northern India it is already on one of the busiest traffic arteries in the National Highways
network
The DelhindashGurgaon section of highway carries more than 150000 passenger car units
a day
Delhi has one of the highest per capita incomes in India and also has the largest number of
motorized vehicles The DelhindashGurgaon section of highway carries more than 150000
passenger car units a day and this is likely to increase by over 7 per annum The expressway
will be a great improvement allowing the travel time between Dhaula Kaun in New Delhi and
Haldirams Resort in Gurgaon to be cut from the current one hour down to 15 minutes The
project comprises the widening and conversion of the Delhi to Gurgaon section of the
National Highway (NH)-8 into a six- to eight-lane access-controlled highway on a Build
Operate and Transfer (BOT) basis
This project is actually part of the larger Golden Quadrilateral (GQ) Project which is the
largest expressway project in India It is the first phase of the National Highways
Development Project (NHDP) and consists of building 5846km of four- to six-lane
expressways connecting Delhi Mumbai Kolkata and Chennai The 28km road section runs
from Rao Tula Ram Junction in Delhi (143km) and ends on the outskirts of Gurgaon (42km)
The project road lies partly in Delhi (between 143km and 2396km) and partly in Haryana
(between 2396km and 42km)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Project Definition- The Expressway
Introduction
An eight lane toll expressway between Gurgaon and New Delhi scheduled to become
operational in 2007 end will provide non-stop connectivity to the International Airport and
Dhaula Kuan in Delhi over a distance of 28 kilometers (18 miles) and includes 7 flyovers and
5 underpasses along the stretch The 28km Delhi to Gurgaon expressway is one of the most
important road construction projects currently underway in India The road is being
constructed by the Delhi Development Authority (DDA) the National Highways Authority of
India (NHAI) the Central Road Research Institute (CRRI) and the Haryana Urban
Development Authority (HUDA)
The Expressway from Delhi would start from Rao Tula Ram Marg via Palam Mahipalpur
kapashera Udyog Vihar Kendriya Vihar IFFCO Chowk South City Sector 31 Jharsa and
finally ending at Hero Honda Chowk in Haryana
The project is now expected to be extended by 3km due to a design change which
incorporates a new eight-lane section from Dhaula Kuan to Rao Tula Ram Marg The project
which started construction in June 2003 has already been delayed more than once due to legal
problems over land acquisition and compensation for buildings having to be demolished and
is now expected to be completed by 2007 end
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway Slow traffic like city buses and two-wheelers will
be able to ply on the 10 level lanes that will run under the elevated section The expressway is
likely to cut down travel time from the present 60 minutes to 20 minutes
This will be one of the most modern toll plazas in the world It will be setting up 32 toll
counters and anticipate an average waiting time of five seconds per car Toll plazas will be set
up for incoming traffic at the Indira Gandhi International Airport and at the Delhi-Haryana
border Each flyover intersection will have provision for access and exit to the expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Driving down the Delhi-Gurgaon expressway at night is going to be a different experience
once the National Highway Authority of India (NHAI) is through with its project The
expressway with world-class powerful lighting double the illumination level of any highway
in the country will open for commuters in phases by the end of this year Twenty-metre-high
octagonal poles and 1000-watt light fixtures all imported from Dubai are being installed at
present These are being used for the first time in India on any highway said officials of
JPDSC the company in charge of the Rs 20-crore project
The completion of the 28 km Delhi-Gurgaon express highway which is well past its July
2005 deadline has moved from being a capital fantasy to a capital disappointment However
road ministry sources reveal that a project upgrade of over Rs 220-crore - designed to make
this stretch one of the best expressways in the world - may make it worth the wait The
project which was to cost Rs 555 crore to build is witnessing an over 60 increase in costs
and is now scheduled for completion in December 2007
JAYPEE-DSC Ventures Ltd is about to finish construction work on the Delhi-Gurgaon
access controlled highway project on NH-8 connecting Delhi with Gurgaon The expressway
totaling a length of 2770 kms with 6 flyovers and 5 under passes was scheduled to be
completed by November 2005 The project started from junction of NH-8 with Rao Tula Ram
Marg and ends at km 4200 of NH-8 in Haryana The total length of the Project Highway is
277 km Out of this 2233 km would be widened to 8 lanes and balance 537 km would be
widened to 6 lanes
The project also includes nine flyoversover bridges to provide signal free flow of traffic on
the main National Highway Besides this there will also be signal free access to Domestic and
International terminals of the Indira Gandhi International Airport Adequate provision has
also been made for safe passage of Pedestrians by providing four pedestrian subways and two
foot over bridges at different locations The highway provides important links to the western
ports and the North Indian markets as well as the newly developed townships and localities
such as Dwarka
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Benefits of Expressway
Reduction in travel time From 65 minutes to 20 minutes
Saving in fuel Rs 8000 crore per annum
Less pollution
Less road mishaps
Faster safe comfortable journey
India on the expressway map
Easy and uninterrupted access to IGI airport
No intersections
Highway patrolling
Salient Features of Expressway
1 Cost Rs 555 Crore (projected) Rs 775 crores (actual)
2 Length 2770 Km
3 Number of lanes 86
4 8-lane portion 2233 Km
5 6-lane portion 537 Km
6 Number of fly-overs 7
7 Number of underpasses 5
8 Length of service road 4684 Km
9 Median strip width 40 meters
10 Paved shoulder width 170 meter
11 Completion month July 2005(projected) Deecember 2007 (actual)
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Project Definition- The Expressway
Introduction
An eight lane toll expressway between Gurgaon and New Delhi scheduled to become
operational in 2007 end will provide non-stop connectivity to the International Airport and
Dhaula Kuan in Delhi over a distance of 28 kilometers (18 miles) and includes 7 flyovers and
5 underpasses along the stretch The 28km Delhi to Gurgaon expressway is one of the most
important road construction projects currently underway in India The road is being
constructed by the Delhi Development Authority (DDA) the National Highways Authority of
India (NHAI) the Central Road Research Institute (CRRI) and the Haryana Urban
Development Authority (HUDA)
The Expressway from Delhi would start from Rao Tula Ram Marg via Palam Mahipalpur
kapashera Udyog Vihar Kendriya Vihar IFFCO Chowk South City Sector 31 Jharsa and
finally ending at Hero Honda Chowk in Haryana
The project is now expected to be extended by 3km due to a design change which
incorporates a new eight-lane section from Dhaula Kuan to Rao Tula Ram Marg The project
which started construction in June 2003 has already been delayed more than once due to legal
problems over land acquisition and compensation for buildings having to be demolished and
is now expected to be completed by 2007 end
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway Slow traffic like city buses and two-wheelers will
be able to ply on the 10 level lanes that will run under the elevated section The expressway is
likely to cut down travel time from the present 60 minutes to 20 minutes
This will be one of the most modern toll plazas in the world It will be setting up 32 toll
counters and anticipate an average waiting time of five seconds per car Toll plazas will be set
up for incoming traffic at the Indira Gandhi International Airport and at the Delhi-Haryana
border Each flyover intersection will have provision for access and exit to the expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Driving down the Delhi-Gurgaon expressway at night is going to be a different experience
once the National Highway Authority of India (NHAI) is through with its project The
expressway with world-class powerful lighting double the illumination level of any highway
in the country will open for commuters in phases by the end of this year Twenty-metre-high
octagonal poles and 1000-watt light fixtures all imported from Dubai are being installed at
present These are being used for the first time in India on any highway said officials of
JPDSC the company in charge of the Rs 20-crore project
The completion of the 28 km Delhi-Gurgaon express highway which is well past its July
2005 deadline has moved from being a capital fantasy to a capital disappointment However
road ministry sources reveal that a project upgrade of over Rs 220-crore - designed to make
this stretch one of the best expressways in the world - may make it worth the wait The
project which was to cost Rs 555 crore to build is witnessing an over 60 increase in costs
and is now scheduled for completion in December 2007
JAYPEE-DSC Ventures Ltd is about to finish construction work on the Delhi-Gurgaon
access controlled highway project on NH-8 connecting Delhi with Gurgaon The expressway
totaling a length of 2770 kms with 6 flyovers and 5 under passes was scheduled to be
completed by November 2005 The project started from junction of NH-8 with Rao Tula Ram
Marg and ends at km 4200 of NH-8 in Haryana The total length of the Project Highway is
277 km Out of this 2233 km would be widened to 8 lanes and balance 537 km would be
widened to 6 lanes
The project also includes nine flyoversover bridges to provide signal free flow of traffic on
the main National Highway Besides this there will also be signal free access to Domestic and
International terminals of the Indira Gandhi International Airport Adequate provision has
also been made for safe passage of Pedestrians by providing four pedestrian subways and two
foot over bridges at different locations The highway provides important links to the western
ports and the North Indian markets as well as the newly developed townships and localities
such as Dwarka
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Benefits of Expressway
Reduction in travel time From 65 minutes to 20 minutes
Saving in fuel Rs 8000 crore per annum
Less pollution
Less road mishaps
Faster safe comfortable journey
India on the expressway map
Easy and uninterrupted access to IGI airport
No intersections
Highway patrolling
Salient Features of Expressway
1 Cost Rs 555 Crore (projected) Rs 775 crores (actual)
2 Length 2770 Km
3 Number of lanes 86
4 8-lane portion 2233 Km
5 6-lane portion 537 Km
6 Number of fly-overs 7
7 Number of underpasses 5
8 Length of service road 4684 Km
9 Median strip width 40 meters
10 Paved shoulder width 170 meter
11 Completion month July 2005(projected) Deecember 2007 (actual)
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Driving down the Delhi-Gurgaon expressway at night is going to be a different experience
once the National Highway Authority of India (NHAI) is through with its project The
expressway with world-class powerful lighting double the illumination level of any highway
in the country will open for commuters in phases by the end of this year Twenty-metre-high
octagonal poles and 1000-watt light fixtures all imported from Dubai are being installed at
present These are being used for the first time in India on any highway said officials of
JPDSC the company in charge of the Rs 20-crore project
The completion of the 28 km Delhi-Gurgaon express highway which is well past its July
2005 deadline has moved from being a capital fantasy to a capital disappointment However
road ministry sources reveal that a project upgrade of over Rs 220-crore - designed to make
this stretch one of the best expressways in the world - may make it worth the wait The
project which was to cost Rs 555 crore to build is witnessing an over 60 increase in costs
and is now scheduled for completion in December 2007
JAYPEE-DSC Ventures Ltd is about to finish construction work on the Delhi-Gurgaon
access controlled highway project on NH-8 connecting Delhi with Gurgaon The expressway
totaling a length of 2770 kms with 6 flyovers and 5 under passes was scheduled to be
completed by November 2005 The project started from junction of NH-8 with Rao Tula Ram
Marg and ends at km 4200 of NH-8 in Haryana The total length of the Project Highway is
277 km Out of this 2233 km would be widened to 8 lanes and balance 537 km would be
widened to 6 lanes
The project also includes nine flyoversover bridges to provide signal free flow of traffic on
the main National Highway Besides this there will also be signal free access to Domestic and
International terminals of the Indira Gandhi International Airport Adequate provision has
also been made for safe passage of Pedestrians by providing four pedestrian subways and two
foot over bridges at different locations The highway provides important links to the western
ports and the North Indian markets as well as the newly developed townships and localities
such as Dwarka
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Benefits of Expressway
Reduction in travel time From 65 minutes to 20 minutes
Saving in fuel Rs 8000 crore per annum
Less pollution
Less road mishaps
Faster safe comfortable journey
India on the expressway map
Easy and uninterrupted access to IGI airport
No intersections
Highway patrolling
Salient Features of Expressway
1 Cost Rs 555 Crore (projected) Rs 775 crores (actual)
2 Length 2770 Km
3 Number of lanes 86
4 8-lane portion 2233 Km
5 6-lane portion 537 Km
6 Number of fly-overs 7
7 Number of underpasses 5
8 Length of service road 4684 Km
9 Median strip width 40 meters
10 Paved shoulder width 170 meter
11 Completion month July 2005(projected) Deecember 2007 (actual)
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Benefits of Expressway
Reduction in travel time From 65 minutes to 20 minutes
Saving in fuel Rs 8000 crore per annum
Less pollution
Less road mishaps
Faster safe comfortable journey
India on the expressway map
Easy and uninterrupted access to IGI airport
No intersections
Highway patrolling
Salient Features of Expressway
1 Cost Rs 555 Crore (projected) Rs 775 crores (actual)
2 Length 2770 Km
3 Number of lanes 86
4 8-lane portion 2233 Km
5 6-lane portion 537 Km
6 Number of fly-overs 7
7 Number of underpasses 5
8 Length of service road 4684 Km
9 Median strip width 40 meters
10 Paved shoulder width 170 meter
11 Completion month July 2005(projected) Deecember 2007 (actual)
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Catering to very high traffic volumes to the tune of 120000 vehicles per day and having 20
intersections along its 28 kilometer long stretch the present four lane National Highway (NH-
8) between Delhi and Gurgaon faces acute congestion all the time leading to considerable
loss of time and fuel besides causing abnormal pollution in the area It is in fact one of the
busiest arteries on the National Highway network NHAI (National Highway Authority of
India) has therefore assigned top priority to the construction of this expressway which has
started developing foundations now and is expected to be opened in end 2007
The expressway is not a simple and small project Starting from Km 143 in Delhi near Rao
Tularam Marg and ending at Km 420 in Gurgaon Service roads provided on both sides of the
expressway are mostly 75 metres wide and amount to 4684 km length These will be used by
the two-wheelers The median strip width on the expressway is 40 metres Most of the
expressway (82 per cent) is eight-laned while the balance (18 per cent) is six-laned Rs
27500 crore is to be spent annually for two years if the expressway is to be completed in
time Significantly there will be no intersections and all the 20 intersections existing at
present will be taken care of
Delhi is the most prosperous and one of fastest growing economies in India Its economy
grew at a CAGR of 10 per cent between 1994 and 2003 In addition to being the national
capital Delhi is the principal business and commercial centre in northern India It is well
complemented by industrial areas in the National Capital Region such as Gurgaon Faridabad
and Noida
Project Parameters-
Progress of the Expressway -The construction work of Delhi-Gurgaon Highway is in
progress Main reasons for delay in work are change of scope of work delay in transfer of
Government land and delay in financial closure of the project They were scheduled to be
completed by 12072005 as per original schedule Current status of construction of each
flyover as on 30th June 2006 is as under
Sl No Flyover Work Completed
1 Rao-Tula-Ram- Marg-Palam Flyover 40
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2 Mahipalpur-IGI Flyover 92
3 Rajokri Flyover Completed
4 Udyog Vihar Flyover (Gurgaon) 80
5 Iffco Chowck Flyover (Gurgaon) 84
6 South City Flyover (Gurgaon) 85
7 Sector-31 Flyover (Gurgaon) 88
8 Jarsa Flyover (Gurgaon) 90
9 Rajeev Chowk Flyover (Gurgaon) Completed
Once completed the elevated sections will only allow vehicles capable of 80kmh to 100kmh
speeds Local and slow moving traffic will have to use lanes running under the elevated
sections The 47km of service roads will be able to cater to local traffic without interfering
with the through traffic of the expressway
Requirements of the Expressway
Expressway construction demands meticulous planning and a number of agencies are required
to coordinate when such a complicated expressway having so many flyovers and underpasses
is planned to be constructed Besides the parent government department and the construction
agency technical arrangements for the detailed design and engineering of roads and flyovers
are to be made proof consultants are to be hired traffic estimates are to be made commercial
policy is to be decided tolling strategy is to be finalized to the finest details and operation and
maintenance plans are to be formed and approved
Delay in the project- The project has been considerably delayed by the concessionaire and
the sub-contractors are working at just half the speed they should be progressing at the
project is under close watch We are persuading the concessionaire to complete work in six
months as the delay is causing inconvenience to the public The 277 km long expressway was
originally scheduled to be completed in July 2005 by the consortium but the deadline was
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
revised to December 2007 after several changes in plans were requested by the Delhi and
Haryana governments But NHAI officials fear the project might run right into 2008 ldquoThe
delay in the project is due to the slow progress by the concessionaire and also due to rains
which was not taken into accountrdquo said a senior NHAI official Improvement of facilities
extension of the flyovers lengths subsequent cost escalation and the usual suspect
bureaucratic apathy have been cited as the causes responsible for the delay
Cost-
The NHAI does not spend a penny on the construction of the Delhi-Gurgaon expressway
Normally projects are based on the value of the government grant to be received In this case
rather a substantial amount of Rs 6106 crore has been paid to the government by the
company that is constructing the expressway This has happened for the first time that an
authority of the government has been paid for allowing a company to build an expressway by
spending Rs 555 crore on it from its own pocket
Financing the Expressway
The Kolkata-based SREI International Finance is participating in the financing of the Rs
54750-crore Delhi-Gurgaon Expressway project the section being a part of the Golden
Quadrilateral project of the Union Government Hudco is providing a term loan of Rs 200
crore SREI which is financing the project to the extent of Rs 25 crore is participating along
with State Bank of Mysore (Rs 30 crore) Punjab National Bank (Rs 30 crore) and Jammu amp
Kashmir Bank (Rs 15 crore)
Two companies namely Jaiprakash Industries and DS Constructions have formed a joint
venture Jaypee DSC Ventures Ltd (JDVL) to execute the expressway The joint venture has
not only taken up the execution of the expressway but has paid Rs 6106 crore to the NHAI
for awarding it the project to construct maintain and draw toll tax for a period of 20 years
The firm seems to be on a sure footing to earn in the long run and the NHAI as well as the
country has nothing to lose Nor will be the users who will save time and fuel in lieu of
paying the toll The fuel saving alone on account of coming up of this expressway is
estimated to be Rs 8000 crore per annum
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Implementation Arrangements
Project Management
NHAI will be the Executing Agency for the Project The Project is implemented by two
specially created PIUs (Project implementation unit) PIUs should be adequately staffed
which should be completed within two months of loan effectiveness and in any case prior to
the award of civil works contracts under the Project whichever is earlier Two general
manager level staff are assigned as project directors one for each PIU who would be assisted
by threefour deputy general managers or managers each responsible for one contract
package or a BOT component An additional deputy general manager or manager is assigned
for each of the PIU for overseeing resettlement activities and also handling grievances to be
filed by the public including project affected persons and NGOs An accountantfinancial
management specialist is assigned for each PIU
Consulting Services
Given the length of project highways NHAI decided to engage two consulting firms as
project engineers to ensure adequate construction supervision of civil works With the
expanded power of the engineer as adopted in the Western Transport Corridor Project NHAI
will continue to ensure objective and transparent processing of contract variations NHAI will
also engage another consulting firm of similar function for the BOT component NHAI has
engaged consulting firms using quality- and cost-based selection for full technical proposals
Contractors
This project was awarded to the consortium of Jaiprakash Industries Ltd (JIL) and DS
Construction Ltd (DSCL) and is being implemented by Jaypee DSC Ventures Ltd a SPV
Company formed for the purpose The project was awarded on the basis of a negative grant
where project contractors have actually agreed to pay the Government Rs 610m for the right
to operate the toll access to the new expressway Ms Rites Ltd and Sheladia LR Kadiyali are
an Indian-US joint venture also involved in the construction of parts of the expressway
project
Project Performance Monitoring and Evaluation
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
While the Delhi-Gurgaon highway being built to ease movement of traffic on the crucial
National Highway-8 is still to be completed even after the lapse of at least a couple of
deadlines here is some good news for those using National Highway-24 connecting Delhi
with the neighbouring townships of Ghaziabad and Noida The Delhi Government has started
widening its stretch between Noida Mor and Ghazipur in East Delhi This part of the highway
had seen the volume of traffic increase by leaps and bounds over the past two years Keeping
in mind the growing number of vehicles on National Highway-24 due to upcoming housing
complexes at Noida Indirapuram Vaishali Vasundhara and Kaushambi the plan is to widen
the entire stretch up to Indirapuram so that movement of traffic could be eased With help
from the supervision consultants NHAI will monitor and evaluate project performance
Primary monitoring indicators to be used by NHAI and percentage of roads without
discernable congestion to measure capacity expansion international roughness index to
measure the riding quality of the project roads travel time to measure increased efficiency
for passenger transport freight for trucking service to measure reduction in transport costs
traffic fatalities to measure increased road safety and length of highway sections to be
developed by the private sector to measure the extent of private sector participation
Project Supervision and Review-Soon after the loan approval of the Project a project
inception mission was fielded to start project implementation The Government and NHAI
will periodically review the Project to assess and evaluate its scope implementation
arrangements benefit monitoring progress and achievements NHAI undertook a midterm
project review in May 2004 to evaluate the project scope design and implementation
arrangements identify changes needed since project appraisal assess implementation
performance against project performance indicators review resettlement operations review
and establish compliance with the legal covenants identify problems and constraints and
recommended changes in project design or implementation
Operation and Maintenance- For the past few years NHAI has been in accelerated
construction mode with less attention being paid to OampM As more highways are constructed
and placed in service OampM is becoming an increasingly important agenda for NHAI Newly
created assets need to be appropriately sustained and their ROW kept clear ie free from
encroachment To explore possible operational approaches to best address OampM issues
NHAI has initiated programs for corridor management units (CMUs) (Please see annexure-
fig1)
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Assessing amp Managing Risk-
Hurdles on the highways -Though the work in the Capital has been delayed by a few
months senior PWD officials say they would complete their stretch by 2007 as it is also
crucial for their preparations for the Commonwealth Games-2010 The PWD has started
constructing over-bridges and widening the highway in stretches Recently the Delhi
Government had also given permission to cut some trees coming in the way of the project
which was one of the main reasons behind the delay
Project Completion Risk
Liquidated Damages are a part of the Concession Agreement and the responsibility for timely
completion rests entirely on the Concessionaire Damages are linked to achieving each Project
Milestone (as against completing entire Project) The damages will be paid by the
Concessionaire at the rate of Rs 1 lac per day for each project milestone and an amount
calculated at the rate of 001percent of the total Project Cost per week for the entire Project
No form of Corporate Guarantee provided
Concessionaire has the right to commence construction at its own risk
Independent Consultant to be appointed in consultation with the Concessionaire
Market Risk
No Issue of a notification restricting the plying of Commercial TrafficHeavy Vehicles
on the existing stretch of NH-8 during the entire life
Development of any alternate road to the Bypass restricted
Operating Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Consortium Members to maintain minimum 26percent equity stake in the SPV during
the entire concession period
In case of Concessionaire event of default 90percent of outstanding dues of the lenders
would be met by NHAI
Legal Risk (Change in Law)
Terms of CA would be modified by NHAI to bring the Concessionaire in substantially the
same commercial and financial position as it was prior to the change in law in case the effect
of the said change in law is greater than Rs 10 million In case NHAI does not do so it would
be termed as NHAI event of default and in terms of the CA all lenders outstanding dues
would be paid by NHAI
Force Majure Risks
All insurable Force Majure Events would be covered through suitable insurance
policies
In case of other FM events the compensation provides for a) senior lenders dues b)
12 times dues of subordinated lenders c) Equity compensation to protect nominal
value of 15 times equity (but the actual return depends on inflation) d) negative grant
amount paid by the Concessionaire
NHAI to provide Revenue Shortfall Loan to the Concessionaire in case the shortfall is
due to an IndirectDirect Political Event of Force Majure
Commercial Risk
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
In case of termination due to Concessionairersquos default all his rights and obligations
will automatically stand assigned to NHAI (who may assign this to another
Concessionaire)
For the purpose of financing the concessionaire has the right to transfer and assign its
rights and interest in the Project and to create security interest in the CA for the benefit
of the lenders
No form of Revenue shortfall loan provided
Political Risks
If CA is terminated due to NHAI event of default or due to Force Majure Event the lender
shall have the first charge on such sums payable by NHAI to the Project
Safety measures undertaken
Delhi-Gurgaon Expressway can be reckoned as the most impressive scheme underway As per
the studies conducted by RITES consortium on behalf of NHAI a volume of 120 lakh
vehicles per day has been observed on the Delhi-Gurgaon road This is expected to rise by 75
per cent per annum till 2007 and by 6 per cent per annum thereafter When an expressway is
constructed on such a busy road it is compulsory to take extra safety measures to prevent
speed accidents For this there are no any sharp curves on the expressway embankments
should not be too high all fixed objects such as trees are isolated and the movement of two-
wheelers and pedestrians is regulated in a strict manner
Resolving Conflicts-
The project has hit roadblocks due to conflicts among the Haryana government Haryana
Urban Development Authority (Huda) and Delhi Development Authority (DDA) leading to
change in scope of the project Sources said that at least 10 modifications were made in the
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
original design which escalated the cost by up to Rs 200 crore They also pointed out that
demands made by bodies like Huda and DDA regarding connected projects played a role in
the delay As 18 km out of the total 27 km length of the expressway falls under Haryana
permission for land acquisition was sought from the state government Since NHAI was
implementing the project it could not refuse lsquorequestsrsquo from Haryana government for creating
underpasses intersections and other such modifications on the project route A case in point is
the ongoing stalemate on creating an underground trumpet interchange on the Kapashera
NH-8 junction This lsquorequestrsquo was made by DDA to NHAI in July 2003
Assessment of OutcomeStatus of ProjectIts success or failureImpact on
organization-
Started in January 2003 it was earlier scheduled to be ready by April 2005 but now itrsquos
official that the deadline has been extended to 2007 end ldquoThe delay in the project is due to
the slow progress by the concessionaire and also due to rains which was not taken into
accountrdquo said a senior NHAI official Improvement of facilities extension of the flyovers
lengths subsequent cost escalation and the usual suspect bureaucratic apathy have been cited
as the causes responsible for the delay As for Mahipalpur flyover the work is almost 80
over But here experts say the remaining work may take another six months to complete
According to them this flyover cannot be opened to public till a loop is created to carry traffic
towards the international airport And construction work on this loop say sources can begin
only when a strip of land measuring 150-odd meters from Radisson Hotel upto the petrol
pump near Shiv Murti is acquired for construction of a service road
The expressway which was to cost an estimated Rs 555 crore will now cost about Rs 710
crore The Rao Tula Ram Marg to Palam flyover will take the most time instead of the
earlier proposed two 84-metre flyovers each at a cost of Rs 8 crore a 19-km-long elevated
flyover is to be constructed at a cost of Rs 110 crore The sudden increase in cost made worse
by the delay in reimbursement and relocation of utilities has stretched matters Public utilities
need to be shifted along the RTR-Palam stretch a religious structure needs to be demolished
and trees need to be cut down and traffic diversions have to be planned An additional hot mix
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
plant of 240 TPH has already been set up two cranes of 180 tons have been bought
exclusively for the RTR-Palam Intersection construction besides two additional concrete
batching plants of 60 cubic meters and 30 cubic meters per hour have been installed Till date
over Rs 650 crore have been invested into the project
Flyovers amp Intersections
The expressway involved the design and construction of the following flyovers which
included precast segmental superstructures Pre-Stressed Concrete (PSC) voided slab
superstructures and cast-in-situ PSC continuous superstructures
Rao Tula Ram junction -three lanes
Palam junction - three lanes
Mahipalpur junction - eight lanes
Radison IGI junction - four lanes
Rajokri junction - eight lanes opened in 2006
Shankar Chowk HUDA Chowk - eight lanes
IFFCO Chowk - eight lanes 90 completed will open by December 2007
Small flyover near IFFCO Chowk - eight lanes
South City junction - eight lanes 90 complete will open by December 2007
Jharsa junction - eight lanes 90 complete will open by December 2007
Rajiv Chowk - eight lanes opened 2006
Although the project has achieved most of its milestones but it will still be considered a
failure because bad estimation of the project cost which will exceed by almost Rs210-225
crores Also a number of changes had to be incurred during its implementation phase The
project which started construction in June 2003 scheduled to be ready by April 2005 has
already been delayed and is now expected to be completed by 2007 end The total cost of the
project is estimated to be Rs 710 cr covering total length of 2770 km The original cost of
the project was around 550 cr which was later increased to Rs 200 due to change in scope of
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
work The prestigious Delhi Gurgaon Express Highway will be operational by Dec 2007 This
will considerably reduce commuting time between Delhi Gurgaon from present 60 minutes to
20 minutes The NHDP has been a success not only in building Express highways to strict
quality specifications but also in technologically upgrading the road construction industry
itself
Financial Analysis
Method used to evaluate the financial viability of a proposed project by assessing the value of net cash flows that result from its implementationIncludes calculation ofndash Costsndash Benefits
Costs can be divided intondash Total Transportation Costs
Construction cost Maintenance Cost Road User Cost
ndash Economic and Financial Costs Benefits can be divided into
ndash Tangible Benefits--Intangible Benefits
Methods of Financial Analysis Net Present Value Method Internal Rate of Return Method Benefit Cost Ratio Method
Acceptance Criteria for BOT Projects The NPV for the project should be positive The financial IRR should have a value greater than the discount rate The BCR for the project should be greater than one
Delhi ndash Gurgaon Expressway
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
1048698 Project Details1 Cost Rs 755 Crore 2 Length 2770 Km3 Number of lanes 864 8-lane portion 2233 Km5 6-lane portion 537 Km6 Number of fly-overs 77 Number of underpasses 58 Length of service road 4684 Km9 Median strip width 40 meters10 Paved shoulder width 170 meter11 Completion month July 2007
Financial Costs
Capital Costsndash Construction Costsndash Maintenance CostsCosts are computed first in financial terms based on market pricesMarket prices are often distorted due to market imperfections govt policies and regulationsThe predicted construction costs of the project was 550 crores but due to delays in the project it rose to around 750 croresMaintenance costndash Periodic Maintenace Cost = Rs 150 crores every 5 yearsndash Regular Maintenance Cost = Rs 50 crores anually
COST STRUCTURE OF DGEW
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Construction of Maintenance CostYear Construction Cost Operation and Maintenance Most Total Cost2004 1500000000 15000000002005 2250000000 22500000002006 2250000000 22500000002007 1500000000 15000000002008 150000000 1500000002009 154500000 1545000002010 159135000 1591350002011 163909050 1639090502012 168826322 1688263222013 173891111 1738911112014 179107844 1791078442015 184481080 1844810802016 190015512 1900155122017 195715978 1957159782018 201587457 2015874572019 207635081 2076350812020 213864133 2138641332021 220280057 2202800572022 226888459 2268884592023 233695112 2336951122024 240705966 240705966
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2025 247927145 2479271452026 255364959 2553649592027 263025908 2630259082028 270916685 2709166852029 279044186 2790441862030 287415511 2874155112031 296037977 2960379772032 304919116 3049191162033 314066689 3140666892034 323488690 3234886902035 333193351 3331933512036 343189151 3431891512037 353484826 3534848262038 360125451 3601254512039 365421569 365421569
Periodic Maintenance Cost
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Financial BenefitsRevenue with Maximum Toll
TollYear Truck Bus Car Total Revenue Discounted Revenue2006 2007 2008 804000 341700 1742100 176449500 1058697002009 844200 358700 1829200 185264500 1111587002010 886500 376720 1920600 194538700 1167232202011 930750 395590 2016700 204266400 1225598402012 977400 415310 2117500 214481350 1286888102013 1026150 436050 2223400 225195500 1351173002014 1077450 457810 2334500 236447600 1418685602015 1131450 480760 2451300 248288350 1489730102016 1176600 499970 2549300 258207450 1549244702017 1223700 520030 2651300 268545050 1611270302018 1272600 540770 2757300 279275450 1675652702019 1323600 562360 2867600 290450600 1742703602020 1376550 584970 2982300 302078700 1812472202021 1431600 608260 3101600 314152100 1884912602022 1488750 632740 3225700 326724150 1960344902023 1548450 657900 3354700 339790250 203874150
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
2024 1610250 684250 3488900 353375000 2120250002025 1674750 711620 3628500 367518950 2205113702026 1725000 733040 3737300 378548400 2271290402027 1776750 754970 3849400 389898700 2339392202028 1830000 777580 3964900 401589300 2409535802029 1884900 801040 4083900 413650900 2481905402030 1941450 825010 4206400 426054600 2556327602031 1999650 849830 4332600 438839300 2633035802032 2059650 875330 4462500 452001800 2712010802033 2121450 901510 4596400 465557100 2793342602034 2185200 928540 4734300 479530900 2877185402035 2250750 956420 4876300 493916950 2963501702036 2257050 959140 4890000 495305650 2971833902037 2310000 981580 5004800 506924300 3041545802038 2362950 1004190 5119600 518557400 3111344402039 2415900 1026630 5234300 530171050 318102630
Financial Appraisal
The annual stream of financial costs and benefits has been computed over the analysis periodNet Present ValueAll costs and benefits in future years are discounted to the year of analysis using the adopted discount rate The future stream of discounted costs is subtracted from the future stream of discounted benefits This can be represented by the following formula
NPV = PV(Benefits) ndash PV(Costs)If NPV gt 0 then the project is deemed to be financially justified
Financial Viability1048698 The financial viability of a project is assessed in terms of Financial Internal Rate of Return (FIRR) and the Net Present Value (NPV)1048698 For the Delhi Gurgaon Expresswayndash FIRR = 826ndash NPV = -22456 croresndash BC = -074
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Sensitivity Analysis
Sensitivity Analysis is done for following three casesndash Case I Increase in project cost by 10 ndash Case II Decrease in revenues by 10 ndash Case III Increase in project cost and decrease in revenue by 10Results of three cases are as followndash Case I FIRR=948ndash Case II FIRR =894ndash Case III FIRR=883
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
Conclusions
Financial analysis of the project gave the FIRR to be 826 which is less than the discount rate of 10 and also the BC ratio came out to be less than 1
According to the acceptance criteria of a BOT the project is deemed to be financially non viable
As per sensitivity analysis results the increase in costs by 10 decrease in benefits by 10 and both these cases the IRR is nearly about 9 So project is very less sensitive to the increase in cost and decrease in benefits
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
BIBLIOGRAPHY
Books- ldquoProject Management-A Managerial Approachrdquo Meridith Jack R amp Mantel Jr
Samuel J
International Project Management Bennet Lientz amp Katherine Rea
Project Management for Business amp Technology-John M Nicholas
Websites- wwwtribuneindiacom200320031218sciencehtm
wwwgurgaonscoopcomstory2005661205996042
wwwgurgaonscoopcomstory2004729219291452
timesofindiaindiatimescomarticleshow1143201cms
wwwsreicommedia_delhtm
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi
Delhi-Gurgaon Expressway
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k ndash
wwwprojectsmonitorcomdetailnewsaspnewsid=8346 - 18k
enwikipediaorgwikiGurgaon
wwwhinducom20060101stories2006010114090300htm
citiesexpressindiacomfullstoryphpnewsid=125359 - 43k
wwwfinancialexpresscomfe_full_storyphpcontent_id=114988 - 57k
wwwthehindubusinesslinecom20020420stories2002042002081700htm - 12k
timesofindiaindiatimescomarticleshowmsid-1327764curpg-3cms - 47k ndash
newsgurgaon-propertiescomdelhi-gurgaon-highway-zipping-into-2006 - 25k ndash
wwwroadtraffic-technologycomprojectsdelhi-gurgaondelhi-gurgaon1html -
wwwthehindubusinesslinecom20030927stories2003092700470600htm - 14k
Indian Institute of Planning amp Management ndash New Delhi