Flow management limits the impact of these interruptions and bottlenecks, reduces unnecessary fires so managers have time to find solutions to catch up on delays, and keeps projects moving toward completion.
The Union Budget 2022-2023 should leave no doubt in anyone’s mind about India’s ambitions. The ambition to provide electricity and water to every home, the ambition to create new jobs for 100 million people through MAKE IN INDIA, and the ambition to increase India’s GDP 10 to 15% each year. And why not? After all, we have enough people to buy domestically made products, enough domestic people to make those products, and a government that is willing to make big investments. India undoubtedly has the potential to realize all these ambitions.
But there is a big difference between potential and actual results. To convert potential into concrete results, we must adopt new ways of managing infrastructure projects. Specifically, ways to increase the flow of projects. Industry as well as government agencies need to step up their game. In the budget, India’s construction companies will get more such projects worth Rs 1 lakh crore. But instead of just increasing the rate at which we start these projects, we also need to complete them at a faster rate. However, according to the government’s Ministry of Statistics and Program Implementation (MoSPI), projects in India above Rs 150 crore have an average delay of 47 months. Their March 2021 report highlighted that there had been no improvement in this delay from 2014 to 2021. And it wasn’t just delays; these projects also cost 20% more than their initial budget.
Lest we get carried away with the chastisement of India’s managers and bureaucrats, let us realize that even in the rest of the world, in developed countries, infrastructure projects are not being completed on time. According to McKinsey, infrastructure projects costing more than $100 million (Rs 750 crore) globally have an average backlog of 35%. According to the 53rd Annual Conference of Associated Schools of Construction, 98% of projects in the United States are delayed (interestingly, in Africa only 75% are delayed). And this is the situation where 10 billion dollars (7.5 trillion rupees) is spent every year globally on project management software and dashboards.
The problem is that we have to execute projects much better than the rest of the world. Not only do our projects need to be on time but at twice the speed so that we can take road construction from 35-40 km per day to 70 km per day. This can only happen overnight by applying the principles of Flow Management to projects.
Projects will always be subject to obstacles and interruptions. Sometimes there will be challenges in mobilizing manpower, sometimes supplies of materials will be delayed, sometimes you will have to chase government agencies for approvals, and sometimes internal decisions also take time. But flow management limits the impact of these interruptions and bottlenecks, reduces unnecessary interventions so that managers have time to find solutions to catch up on delays, and keeps projects moving towards completion. Projects can be completed in half the time and we can double the completion rate of projects.
Applying the principles of Flow Management to projects is not a pie in the sky. This approach is based on the theory of constraints, formulated by an Israeli scientist, Dr. Eliyahu Goldratt. In India, companies like NTPC, GRSE, L&T and VARDHAMAN FABRICS have tried it and shown that better results are possible in projects. Now we just need to extend the use of flow management to the whole industry.
One of the main reasons for Japan’s growth has been the widespread adoption of Toyota Motors’ Total Quality Management approach based on Dr. Deming’s theory. One of the main reasons for the American growth was the widespread adoption of Henry Ford’s method of mass production. Similarly, flow management can be the basis for the success of Indian projects and India’s growth. If Japan could become known for having the best quality, after decades of “Japanese crap”, India can also show the world how projects are completed on time with speed.
About the Author
Sanjeev Gupta is founder and CEO of Realization Technologies, a pioneer and leading provider of SMART project delivery systems. Under his leadership, the company has generated over $7 billion in documented cash and profit impact for its clients. Some notable customers include the US Navy, Siemens, and the National Thermal Power Corporation of India.