The key differentiator between completion and excellence

Which do we prefer—that projects are systematically completed in time within costs, or that they thrive under a bright leader who can transform it beyond what it is meant to be? Companies, governments, corporations and independent bodies that have shown exceptional leadership have thrived. Is this the reality in India? But is quiet bureaucratic efficiency a more sustainable solution? Shashidhar Nanjundaiah debates.

The impressive structure and operations at GMR Rajiv Gandhi (Hyderabad) International Airport (GHIAL)  is a hallmark of passionate and effe­ctive leadership. On the other hand, the often-compared Bengaluru (soon-to-be Kempegowda) International Airport (BIAL) is an example of quiet efficiency, built with brick and mortar. Both of them were awarded on Public-Private Partnership (PPP), and both have won accolades in their own right. Unlike popular—and perhaps visual—perception, the current built-up areas of BIAL (14.50 lakh sq ft) and GHIAL (11.33 lakh sq ft) are comparable.

The similarities, though, end there. As is widely acknowledged, BIAL was planned to be built in stages to accommodate up to 1.5 crore passengers per year. With the exponential growth in the flow of traffic, BIAL’s actual and planned capacity in Phase 1 were almost iden­tical, forcing planners to go back to the drawing board and plan for additional capacity to accommodate 1.7 crore passe­ngers. After the completion of the second phase, the terminal will accommodate 3.6 crore passengers.

GHIAL, on the other hand, built its first phase to accommodate 1.2 crore passengers as against its current flow of only 84.4 lakh. The terminal’s second and third phases will aim at increasing the total capacity to 4 crore passengers. The Hyderabad airport, like the GMR-led Terminal 3 at Delhi, is acclaimed as aesthe­tically superior.

The ownership pattern in the two airports is interesting, and a correlation can be drawn between them and the patterns of leadership may have mattered in how the airports were built and are operated. GHIAL’s ownership is divided as follows, with 74 per cent private equity:

• GMR Group (63 per cent)
• Malaysia Airports Holdings Berhad (11 per cent)
• Government of Andhra Pradesh (13 per cent)
• Airports Authority of India (13 per cent) and

BIAL, on the other hand, has more evenly distributed stakes between the two lead holders:

• GVK (43 per cent)
• Siemens Project Ventures GmbH (26 per cent)
• Unique Zurich (5 per cent)
• Karnataka State Industrial Investment and Devel­opment Corporation (13 per cent)
• Airports Authority of India (13 per cent)

Up to August last year, GVK’s stake was 29 per cent, but bought up 14 per cent from Siemens, which until then, held 40 per cent of the stake. Although the reasons for the buyout may be business-related, what this change meant in strategy was that the focus of ownership shifted to an Indian developer specialising in infrastructure.

After the change, GVK promptly announced expansion plans for BIAL worth Rs 5,000 crore. As a recent (August) achievement, Bangalore can now handle the world’s largest aircraft, the Boeing 747-8i and A380. Unlike GMR-operated Delhi and Hyderabad, which are already “Code F compliant”—capable of receiving the largest aircraft—as certified by Director General of Civil Aviation (DGCA), Bangalore caught up only recently.

How is this a factor of leadership change? Bangalore’s airport is built for efficiency and designed for speedy procedures. The architecture, too, reflects a sense of businesslikeness and cut-to-the-chase efficiency. Hyderabad’s airport is full of frills. The domes are fancy, the architecture friendly and the baggage technology sometimes a step ahead—in short, something more than faceless efficiency has clearly gone into making the airport—a sense of personal ownership characterising warmth rather than clinical processes.

Hyderabad airport also triggered a healthy compe­titiveness that sparked citizens of that city to applaud the airport’s swifter completion. Bangalore, on the other hand, preferred not to compete but to pace itself steadily, ensuring checks and balances were in place.

Freedom to operate

Delhi Metro is perhaps the most visible example of leadership making a difference at the execution level. E Sreedharan, the much-acclaimed architect of the system, recognised that good leadership from conceptualisation through completion of a project would make for an efficiently completed, effectively executed project. One of the correlations that Delhi Metro evidenced has been that between leadership and operational independence. Such freedom from government and political inter­vention—painstakingly ensured in advance—was a critical tilting factor in the project. It was a true case where the government did its job of clearances and approvals, as the metro rail project achieved its objective in record time.

However, is executive leadership something to be celebrated? Experts believe that obtaining clearances and approvals, and managing procurement and construction is a regular part of problem-solving in the implementation of any project. Why, then, should it be such an exclusive club?

Perhaps the answer lies in the legendary “Indian conditions” of operations, including but not limited to the layers of opaqueness and red tape that shrouds India’s bureaucracy. Shaking off the inertia in govern­ment (and even private) sectors requires an extraordinary effort—whether it is closely following up with liaison agents or making calls to top officials or plain old palm-greasing. India’s leadership often works on the proverbial Old Boys’ Network, and without a top person’s involvement in the process, the bureaucracy often does not find obligated to understand imperatives of cost and time overruns.

Partner management

But perhaps the most important roadblock that project leaders must manage is external coordination, mostly between government agencies. The sponsor-developer liaison is often strained—as evidenced in the Delhi Metro’s Airport Express line in recent months—and it seems only a leader can recognise how to unknot the knot. In that case, the DMRC and Reliance Infra went about on technology that was ill-advised by the developer—at the behest of the sponsor, RInfra claims.

Along with Delhi Metro, GMR-led Delhi airport’s swanky Terminal 3 has quickly become a new iconic structure for the nation. Yet this year, GMR announced that it would be unable to make nay money from the terminal unless airport development fees were raised nearly 800 per cent. The government retorted, and in whispers, asked why it was necessary to build the airport in such a “lavish” style. A simple airport would have sufficed if the developer’s financial projections had warned them of continuing losses. The arbitrating authority, the Airports Economic Regulatory Authority (AERA) has recommended a 333 per cent hike, but said both the regulator and the government were in charge of the individual users’ interest. Interestingly, of course, airlines and users of airport infrastructure are not happy either, since they claim the fees are already high and it would be difficult to cope with what would now be among the highest fees in the world—smacking of inefficiency rather than of need.

The Comptroller & Auditor General (CAG) has castigated the government on matters such as how land was granted at cheaper rates to the concessionaire. Such ill-informed remarks smack of the characteristic blinkered auditor’s view of the business, and business leaders—as do bureaucrats, increasingly—often lament that it is difficult to do business in innovative ways if checks and balances do not inform themselves of the philosophy and the rationale behind infrastructure projects, and that the comprehension may be as myopic as cancelling developmental projects because of faulty selection processes.

Complexity also arises in other ways from government involvement in infrastructure projects. The public-private dilemma means that both parties must at once be aware of both the commercial and socio-developmental goals of infrastructure—and the inherent tussle between the two objectives. Such tension is perhaps necessary in the ultimate resolution that benefits the public at large, the project must be viable and the model sustainable. Perhaps innovative leadership alone can help, most of which, of course, is transformational in nature.

It is not without some rationale that the Maharashtra government recently debated on whether to hold a majority stake in each infrastructure project on PPP. This debate was sparked off from a recent metro bridge collapse, killing a worker. While the argument for the debate is to have better control over the operation of a project, there is a no-brainer to consider that it is not ownership but inefficiency—and corruption—that are responsible for safety issues and delays. Environ­mental and other clearances have rampantly put a plug on many important projects—the most impacted being dams, railway track construction and mining in green areas.

The question, therefore, is whether, in a country whose most impressive infrastructure has been built with transformational leadership, transactional effi­ciency can coexist. Perhaps, until India’s bureaucracy, auditing and implementing agencies clearly understand their role in PPP and other partnership projects, leader­ship will continue to be a critical factor in infrastructure project delivery.