IIM KOZHIKODE – PGP 17

Delhi Metro vs. Kochi Metro

Project Management Perspective

GROUP 04

Sanjeet Kumar PGP/17/042

Sushant Kumar S PGP/17/053

Rahul Thanugula PGP/17/055

Sreekanth P S PGP/17/115

Tasleem Fathima J PGP/17/054

2014Group 4 – Section A

ContentsIntroduction....................................................................................................................................................3

Reason for project initiation...........................................................................................................................3

Identification of Stakeholders........................................................................................................................4

Risks involved................................................................................................................................................5

Impact assessment..........................................................................................................................................6

Budget and Timing........................................................................................................................................6

Project management tools and methodologies used......................................................................................6

Analysis and Recommendations....................................................................................................................6

Stakeholder analysis...................................................................................................................................6

Risk analysis............................................................................................................................................10

Recommendations on project management tools and mechanisms.........................................................13

Conclusion...................................................................................................................................................13

Appendix......................................................................................................................................................14

References....................................................................................................................................................17

IntroductionFor our end term project report we have selected the topic “Delhi Metro vs Kochi Metro” to compare the two similar projects using various project management concepts learned in class. The reason for selecting this topic for our report was to find how these two projects which were similar in many aspects but the levels of success greatly vary in the end. The reasons include poor understanding of differences in geographies, political situations and cultures. For example, the approval of Kochi Metro took almost 7 years because of local government’s conflict with central government. Even after the Kochi Metro started it couldn’t reach as much pace as Delhi Metro due to geographical, climatic and cultural differences. Case in point, the habitation in Kochi is too close with congested roads as opposed to Delhi. This was the reason for many delays in project. It was also found that careful analysis was not carried out for payback of both the metros. More importantly lessons haven’t been learnt in the case of Kochi Metro from Delhi Metro. We will provide details of two projects and carry out an analysis using various project management techniques.

Reason for project initiationDELHI METRO:

Delhi Metro project was taken up by Government of India for three main reasons. First reason is to improve the public transportation in industrially growing National Capital Region. As Delhi was expanding in all the directions it was becoming very difficult for the existing public transport systems to cater the needs of the people. There was a great need for rapid transport system which will carry millions of daily commuters of Delhi and adjacent regions. Second reason was pollution caused by individual vehicles. During the mid 1990’s the population of vehicles was increasing tremendously in Delhi. Reports suggests that the number of vehicles in Delhi is comparatively equal to vehicles in Mumbai, Chennai and Kolkata put together. This has raised a concern regarding huge vehicular pollution that might bring if suitable measures were not taken on time. Third reason was to implement a world class metro rail system in Delhi which is the national capital of India. The government wanted this project to be at par with metro systems of other cities existing at that point like Tokyo, London etc. This was primarily the reason why Delhi Metro got more attention than Kochi Metro.

Owing to these needs, in 1995, Government of India and Great National Capital Territory of Delhi formed Delhi Metro Rail Corporation (DMRC). Both GOI and GNCTD funded the project through equity. Dr. E Sreedharan was appointed as Managing Director of DMRC and Project Manager in 1997. Construction started in 1998 and the First Line of DMRC was completed within three years of construction. The new line was inaugurated by Shri. A.B. Vajpayee, then Prime Minister of India in 2002. Currently Delhi Metro Operates with six coloured lines and one airport express line with cumulative length of 193.2 KM. Delhi Metro is known to be one of the most successful government projects in the post-independence period of India.

KOCHI METRO:

The main reason for Kochi Metro was to improve the public transport in Kochi, which was the largest city of the State Kerala. Government was also taking other measures like improving bus transportation and also looking for the options like boat transport but they were not sufficient to improve the conditions of transportation in Kochi. Moreover, the roads connecting Aluva and Ernakulam were becoming congested. The reason was because of the rapid commercialization taking place in Kochi. Congestion was also leading to frequent road accidents on Kochi roads. This demanded a fast and effective transportation. For this reason Kerala Government had to initiate the requirement for a metro project in 2005. Any city which exceeds the population of 2 million can initiate such proposal.

Unlike Delhi Metro, Kochi Metro was not the project which was in the interests of Central Government and due to the political differences between Kerala Government and Central Government the project was not approved till 2012 when another government came in to power in Kerala. By that time Dr. E. Sreedharan was appointed as the project mentor for Kochi Metro after the success of Delhi Metro. But there were instances where differences ascended between Dr. E. Sreedharan and the Kerala government.

Moreover the project also suffered because of climate of Kerala where rains last for five to six months. And adding to this were labour related problems because Kerala’s labour laws were different compared to the State of Delhi and also the unions are much stronger in Kerala. We will now look at the stake holders involved in both the projects in next section and discuss about the projects in detail in subsequent sections.

Identification of StakeholdersDelhi Metro

The Delhi Metro Rail Corporation Ltd. (DMRC) Central Government of India Government of the National Capital Territory of Delhi (GNCTD) Delhi Transport Corporation (DTC) Governments of Uttar Pradesh & Haryana The consortium comprising ROTEM (formerly KOROS), Mitsubishi Corporation and

Mitsubishi Electric Corporation – Machine suppliers Bharath Heavy Movers Limited (BHML), the Indian coach builders KSHI JV and IMCC, the lead design consultants Japan Bank for International Cooperation (JBIC) The citizens of Delhi

Kochi Metro

Kochi Metro Rail Ltd. (KMRL) Government of Kerala Kochi Citizens Agence Francaise de Developpement Alstom – Coach manufacturers Central Government of India The Indian Institute of Architects (IIA) - Design consultant

Era Infra Engineering (EIEL) - Construction Contractor

Delhi vs Kochi Metro – Comparison and Learning

Parameters Delhi Metro Kochi Metro

Cost 29700 crores 3733 crores

Length 190 km 25 km

Projected Ridership(lacs per annum)

2.76 (2006)3.05 (2007)3.06 (2008)

(2016-17) 3.82(2020-21) 4.68(2025-26) 5.39(2030-31) 6.01

Passenger Fare 7 per passenger (avg) 7.5% above DMRC 2009 price

Operating Cost 700 cr (2009) 109 cr (projected)

The above table gives a comparison of the Kochi metro project with the Delhi metro project in terms of the scale and budget. The most important point to be noted here is the amount of learning transferred from the Delhi metro project to the Kochi metro project. Just looking at the budgetary and project planning part, we observe that Delhi metro, even after 8 years in operation, still runs in losses. The forecasts for the cash flows have failed because of the huge error in the projection of the expected ridership of the metro service. The actual ridership for the years 2006-209 remained at 20-25% of the projected figures. This impacts the cash flows of the project heavily and is an important leaning that should have been passed on to the Kochi metro project. While this should have resulted in a more in-depth study for this projection this time round, the projected figures for Kochi metro seem even more improbable on the face of it. Kochi, being much smaller in population and much lesser distance being covered by the metro, has more projected ridership than that of Delhi. With these projections, Kochi metro project report suggests that it would reach breakeven in the third year itself. The revision of the projections to accommodate for the Delhi metro observations will not only affect the projected cash flows, but also all the financial stakeholders and the feasibility of the project in principle.

Risks involvedBoth the projects are highly visible and impact the public greatly. Because they are very complex and

large in nature a number of risks affect each project. Ideally, during the planning phase all the risks have

to be accounted for and contingency plans have to be created for each of the risks.

We have categorized the risks into three parts – Pre implementation risks, risks that occurs during

implementation and post implementation risks. In this section we will be discussing only those risks that

were considered by the project committee during the planning phase.

The pre implementation risks considered are

• Delays in land acquisition

• Obtaining government permits and approvals

• Delay in financing clearances

• Delay because of resistance from other bodies

The potential implementation risks identified are:

• Delay in obtaining finances

• Delay because of resistance from labor bodies – this seems to have been considered only in the

Delhi metro case because the management of laborers was contracted out to an external agent

through the tendering process [9]

The post implementation risks identified are:

• Risk of accidents during testing

• Transition / handover risks

• Risk of lower demand leading in increase of debt repayment time

• Operational risk after rollout

Some of risks are common to all the phases and are mostly external risks not under the control of the

project team.

Economic risks

o Rise of interest rate

o Financial crisis

o Increase in cost

Force majeure risks: Natural calamities

Political risk: Interference causing delays and complete closure of project

Risks due to impacts of the project on the environment

Agency Capability

Public Confidence and Support

The risks, primary risk bearer, whether the risk was considered during planning, the inferences and

comments are summarized in the Table 1 of Appendix.

Impact assessmentThe impacts of these large scale projects affect the landscape, environment and society to a large extent.

The most important impacts are as follows

Change of Land Use, Loss of trees, Impact on Historical/Cultural monuments, Soil erosion, pollution and

health risk at construction site, Traffic Diversions, Risk to existing Buildings, Impact on Water Quality,

Oil Pollution, Noise and Vibration, Accidental Hazards, Water Supply problems, Metro Station Refuse

and Visual Impacts. The positive impacts are – Traffic congestion reduction, Quick service and safety,

less fuel consumption, Employment opportunities and Reduction in air pollution

The extent of the impact depends on the local conditions hence; some of the impacts affect the Kochi area

more than the Delhi area. The differences and the reasons for the differences of the impact are

summarized in Table 2 of Appendix.

Budget and Timing

Project management tools and methodologies used

Analysis and Recommendations

Stakeholder analysis

Delhi Metro

Stakeholder Roles and priorities

The Delhi Metro Rail Corporation Ltd.

(DMRC)

Successful completion of the project with

budget, scope and time constraints

Central Government of India Urban transportation development in Metro

cities

Government of the National Capital

Territory of Delhi (GNCTD)

Urban transportation development of the union

territory; Land allotment with minimum impact

on citizens; Minimum environmental impact

Delhi Transport Corporation (DTC) Newer routes to metro station and reduced

traffic congestion and peak load

Governments of Uttar Pradesh & Haryana Transportation development; Land allotment;

Minimum environmental impact

The consortium comprising ROTEM

(formerly KOROS), Mitsubishi Corporation

and Mitsubishi Electric Corporation –

Machine suppliers

Timely availability of material and equipment

Bharath Heavy Movers Limited (BHML),

the Indian coach builders

Creating coaches devoid of technical hassles

KSHI JV and IMCC, the lead design Minimum design related issues

consultants

Japan Bank for International Cooperation

(JBIC)

Return of the loan amount within the time

period

The citizens of Delhi Hassle free transportation system; Land

acquisition related problems; pollution

Kochi Metro

Stakeholder Roles and Priorities

Kochi Metro Rail Ltd. (KMRL) Successful completion of the project with budget,

scope and time constraints

Government of Kerala Urban transportation development of the Kochi; Land

allotment with minimum impact on citizens;

Minimum environmental impact

Kochi Citizens Hassle free transportation system; Land acquisition

related problems; pollution

Agence Francaise de Developpement Return of the loan amount within the time period

Alstom – Coach manufacturers Creating coaches devoid of technical hassles

Central Government of India Urban transportation development in Metro cities

The Indian Institute of Architects (IIA) -

Design consultant

Minimum design related issues; Establish IIA as a

design consultant

Era Infra Engineering (EIEL) -

Construction Contractor

Construction of project without any delays or

overshooting the budget

Risk analysis

In the previous sections we have seen the risks that have been considered during the planning phase.

Below are some of the risks that should also have been considered to better manage the project:

Delay in choosing who is going to execute and forming the project team

This is important because when DMRC was selected for implementing the Delhi Metro

there was no issue. However, in the case of Kochi Metro case many members of the

KMRL (Kochi Metro Rail Ltd.) and other ministers opposed the move to award the

project to DMRC and handing the project to Dr. E. Sreedharan stating that it is too much

concentration of power with a single person. This should have been anticipated and

accounted in the risks considered during planning.

Delays because of tendering and choosing contractors

There is always a delay while tendering and choosing contractors in such big projects

because the decisions are not just based on low cost but also quality, available capacity

and future perspective of the chosen contractors. In the Delhi metro case the government

tendering process was carried on which came with the expected delay. However, in the

case of Kochi metro additional complexity was encountered because E. Sreedharan

wanted to bypass the normal tendering process for some of the requirements because he

thought that the same contractors as used in the case of Delhi Metro project can be used

to avoid delays. This caused internal debate and turmoil causing delay in the project.

Additionally the tension between KMRL and DMRC caused delays in other tendering

processes.

Supplier risk – delays and quality conformance

It is not directly evident whether this risk was considered in the case of Delhi Metro and

Kochi metro. But, the RFP for Independent Quality and Safety Consultant issued by

DMRC for Kochi metro indicates that they could have hired a contractor to check the

quality of the supplied materials to ensure overall quality. It is unclear whether supplier

delays were accounted for during planning.

Material risk – quantity and quality variance

This risk causes delay due to the difference between the expected quantity and quality

requirement and actual quantity and quality requirement. The same RFP s above can be

used to tell that quality risk was accounted for but quantity risk.

Delay because of resistance from labor bodies

In the case of Delhi metro there was a RFP for independent labour management service

provider. However, in the case of Kochi there was no such tender. Also, the

unpreparedness of the DMRC and KMRL to deal with the labor turmoil indicate that they

have at worst ignored and at best underestimated this risk. Some of the Labor turmoil

caused as much delay as 45 days and required intervention from the national labor

department and related authorities.

Delay and rework risk due to weather

Metro work has to be completely stopped of slowed down drastically during the monsoon

season. The monsoon in Delhi lasts only from July to Mid September whereas in Kochi it

lasts from June to October end and in some areas till November indicating that much

more delay should have been expected in the case of Kochi metro than the Delhi metro.

This does not seem to have been accounted for from the statements made the project team

who told that they would complete the first phase of the project by 2015. Also Kochi area

is more prone to cyclones which cause further delay.

Delay due to public agitation and resistance from other bodies

In the case of Kochi metro project the roads are very narrow causing much more traffic

diversion and congestion problems than in the case of Delhi metro project. This caused

more public agitation in Kochi. According to a news article by The Hindu - “Activists of

CPI (M) and others blocked metro work sites in Kaloor on Monday, May 6 2014,

protesting against the inordinate delay by the State government, the Kochi Metro Rail

Limited (KMRL) and the district administration in widening narrow roads along the

metro alignment” [8]. The protesting groups demanded for better and wider roads. This

would obviously cause delay in the ongoing metro project in Kochi but this risk does not

seem to have been anticipated and accounted for during the planning.

Even though the same organization DMRC (Delhi Metro Rail Corporation) had been

responsible for implementing both the projects under the supervision of Dr. E.

Sreedharan the risks probability and the consequences differ because of local factors.

The risk probability and consequence matrix is given in the Exhibit 1 of Appendix. For the risk IDs refer

the Table 1 of Appendix.

Some of the risks are in the different zones for the two projects. These are:

Risk ID 1: Delays in land acquisition

Only 0.33 hectares of DDA land had to be acquired for Delhi Metro whereas 16 hectares of land use is

changed for Kochi Metro. Even more private land is expected to be acquired as the project progresses in

the case of Kochi metro.

Risk ID 5: Delay in choosing who is going to execute and forming the project team

The internal tension between DMRC and KMRL cause delay. This problem was there in Delhi Metro

project.

Risk ID 6: Delays because of tendering and choosing contractors

The difference of opinion between E. Sreedharan of DMRC and other members and members of KMRL

caused the delay whereas; in the case of Delhi Metro no such problem was there.

Risk ID 10: Delay because of resistance from labor bodies

This is a red zone risk in case of Kochi metro project where as an yellow zone risk in Delhi metro project.

Risk ID 11: Delay and rework risk due to weather

Kochi metro project is definitely likely to be affected and there is a high consequence hence a red zone

risk in Kochi metro project but yellow zone risk in Delhi Metro project.

Risk ID 12: Delay due to public agitation and resistance from other bodies

Expected in the case of Kochi metro because of environmental and traffic congestion impact during

implementation but low impact. Green risk in Delhi because mostly barren lands were affected.

Recommendations on project management tools and mechanisms

Conclusion

AppendixTable 1:

Table 2 – Impact assessment

Note: K – Kochi Metro or Kochi Area, D- Delhi Metro or Delhi Area

Exhibit 1

Consequ

Likelih

Consequ

Likelih

Kochi MetroDelhi Metro

Referenceshttp://www.kochousephchittilappilly.com/view-blog/291/KOCHI_METRO-_The_Way_Forward/

http://post.jagran.com/search/kochi-metro-rail-project

http://www.mathrubhumi.com/english/news/kerala/labour-issues-kochi-metro-md-sent-letter-to-labour-

commissioner-138939.html

http://timesofindia.indiatimes.com/city/kochi/Under-fire-from-public-Kochi-Metro-gets-into-the-act/

articleshow/40246754.cms

http://www.railnews.co.in/author/rail/page/122/

[1]http://www.newindianexpress.com/states/kerala/LA-Confident-KMRL-gets-Govt-Nod-for-Direct-

Acquisition/2014/04/30/article2196587.ece

[2] http://articles.economictimes.indiatimes.com/2012-10-28/news/34766810_1_e-sreedharan-kochi-

metro-elattuvalapil-sreedharan

[3] http://www.updatekerala.com/opinion/interview/tom-jose-kochi-metro/

[4] http://www.mathrubhumi.com/english/news/kerala/kochi-metro-centre-state-denied-dmrc-s-demand-

118531.html

[5] http://www.mathrubhumi.com/english/news/kerala/kochi-metro-centre-state-denied-dmrc-s-demand-

118531.html

[5] http://www.thehindu.com/news/cities/Kochi/dmrc-to-meet-prospective-coach-suppliers-for-kochi-

metro-today/article5861645.ece

[6] http://kochimetro.org/wp-content/uploads/2013/08/RFP_iqsm-KMR-final-version.pdf

[7] http://timesofindia.indiatimes.com/city/kochi/Labour-issues-halt-work-at-Kochi-Metros-casting-

yard/articleshow/27872853.cms

[7] http://timesofindia.indiatimes.com/city/kochi/Protests-derail-Metro-45-work-days-Rs-18-crore-lost-in-

process/articleshow/29516458.cms

[8] http://www.thehindu.com/todays-paper/tp-national/tp-kerala/protest-against-traffic-snarls-along-

kochi-metro-alignment/article5980968.ece

[9] www. delhimetro rail.com/otherdocuments/474/final_tender_doc_lms.pdf