Resource crunch including skilled and unskilled labour was identified as one of the biggest stumbling blocks before a potentially booming EPC industry.
The 12th Five Year Plan offers Rs 17.08 lakh crore of construction opportunity. And even as interÂnationalisation knocks on India's doors, high attÂrition and lack of labour-even skilled labour-persists. Thanks to governments in traditionally underÂserved but overpopulated regions such as Bihar, Orissa and Bengal-from where labour typically migrates en masse to where the action is-developmental and infrastructure projects are coming up aggressively. The government-sponsored MGNREGA, which guarantees employment in rural areas, is another reason.
The two-day India EPC Conference 2011, held last month in Mumbai, addressed the theme “Risk, Cost, Quality and Efficiency in Infrastructure Projects”, and identified skilled, unskilled and professional labour force as one of the biggest concerns facing the infrastructure industries. Sessions in the technical and business aspects of engineering, procurement and construction (EPC) in infrastructure also addressed how environmental and legal hurdles can be handled; why cost overruns and failÂure in maintaining schedules are often a result of delays in engineering approvals, site handover and modificaÂtions during project execution; how the bidding frameÂwork can be improved to include qualitative considerÂations; why competitive contracts often do not provide for superior quality equipment that may cost more, etc.
Delegates, who ranged from the power, oil & gas, transport & logistics and other industries, shared their experiences with the forum. Cost and time efficiency feaÂtured prominently in the discussions.
In his keynote address, Conference Chair Rohit Modi, Deputy Managing Director, Gammon India, said that among India's characteristic problems is hanÂdling young professionals in an age of growing entreÂpreneurÂship and impatience. Outlining the history of EPC, he said some string-tightening will happen in the near future for the industry even as the industry has evolved from minimisation of costs of hedging of risks.
A report published jointly by Infrastructure Today and Ernst & Young (E&Y), “EPC: Driving Growth Efficiently”, was released on the occasion. Introducing it, E&Y's Partner, Transaction Advisory Services, Sushi Shyamal observed that although some large EPC comÂpanies have seen up to 20 per cent growth in their order books and revenues, that growth was not reflected in profits. He said cost and time overruns, inflation, reguÂlatory bottlenecks, aggressive bidding and resource conÂstraints-including skilled labour-were causes that may be attributed to this discrepancy between top and bottom lines.
Speakers reiterated the long-term benefit of adopting high quality in all three areas of EPC and urged devÂelopers and owners to insist on higher threshold quality standards. Borrowing from their own companies' expeÂriences in international markets, they said that India has a long way to go before systematising the EPC processes. In a detailed discourse on the legal aspects of EPC, legal experts took the delegates through potential risks and recourses.
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