Dr A Sivathanu Pillai, President, PMA India
Recently, a report released by the government suggests that around 366 out of 1,361 projects have been delayed.
What are the integrated and sustainable solutions that can help avoid time and cost overrun in project execution? Firstly, proper estimates of time, cost, and scope is needed. That said, we should recognise project management as an independent competence, separate from the technical qualifications and experience of the project professional. To control delays, we need people who manage the projects to be competent in project management techniques and best practices. This calls for establishing a standard for project management competence across industries atall levels. Active patronising by the Government of India and the industries is imperative by recognising project management certification as a mandatory requirement for all project-related roles and positions.
Do you see any upsides and downsides in the current contractual agreements in India? What,in your opinion, can regulators do to mitigate the risks? Today, we find more awareness and increased project management knowledge. IPMA and other such institutions are doing a great job in taking project management expertise in a structured way. This exercise invariably covers the essentials of contract management too. Compared to earlier days, the current day contractual agreements are much better. So, I see an upward trend, but still there is a long way to go as the knowledge has to be applied and put to actual use. Also, lakhs of professionals are yet to get formal project management training and certifications. The risks that can happen due to the limitations on contract management can be overcome only by reducing the limitations and making the contracts and contract management more effective. The regulators can mitigate the risks by making it mandatory for all those engaged in project management to acquire international certifications in project management.
What is the impact of project delays on cost for completion, manpower, depreciation, inflation, foreign exchange fluctuation, etc., to cite a few? The effect of project delays on total project cost on completion, manpower cost, etc. can also be quantified by IPMA's EVM or earned value methodologies. At regular intervals of time, we can assess the actual project cost incurred and how much more is needed to complete the project on time. The uncertainties of foreign exchange rates definitely affect the project cost, when there are time delays in projects having global stakeholders. If any of the required materials are to be imported for a project at the required time intervals, the material cost element in the project totally depends on the foreign exchange rate prevailing at the time of making the payments. Unless the transactions are in Indian Rupees, the effect of foreign exchange rate variation on projects cannot be avoided. The changes due to depreciation and inflation over a period of time are somewhat predictable and therefore, can be taken care in project costing. However, with substantial time delays, these can go haywire and can affect the project costs.