To
The Prime Minister
Republic of India
Prime Minister’s Office
New Delhi - 110 001
Sub: National Highways Development Project (Golden Quadrilateral and North-South, East-West Corridors). A dream project of unparalleled importance to the Nation but in reality a great loot of public money because of very poor implementation at every state.
Hon’ble Sir,
Through this letter, I wish to draw your kind attention towards great lapse in the implementation of above project. Since such letters from a common man are not usually treated with due seriousness, I wish to clarify at the outset that this letter is being written after careful thought by a very concerned citizen of the country who is also very closely linked with the project. I request you to kindly go through my brief particulars (attached on a separate sheet to ensure secrecy) before proceeding further.
Instead of writing at length, I would be very specific and to the point highlighting the areas where there have been great lapses and would suggest certain remedies to the best of my abilities. I have been posted both at NHAI, HQ and at site on NH-2 Projects and therefore my direct experience is with NH-2 Projects (World Bank Funded). However, the story is almost same with all other projects which are under implementation and would be no different for forthcoming Projects unless we take certain corrective measures immediately. I have gone through most of the files (even closed ones) dealing with NH-2 projects (their design consultancy, procurement of civil contractors, selection of supervision consultants, the mobilisation of contractors and consultants, etc.). The areas of concern are highlighted below:
Preparation of detail project reports (DPRs) by the Design Consultants
The DPRs prepared by the design consultants are in very poor shape and cannot be implemented in the field without major modifications. It appears that the design consultants have made the designs and drawings with little consideration for the actual ground conditions and the same have been accepted by NHAI without any scrutiny. The proof consultants (deployed for checking DPRs submitted by Design Consultants) appear to have done only cosmetic work and it appears that the officers in NHAI have not even opened the final DPRs submitted by the consultants before putting the works to tender. The result is that the DPRs, on the basis of which tenders have been called, are like garbage. When the problems are being noticed in DPR at the implementation stage and the design consultants are being requested to clarify them, we are getting a very cool and negative response from them. This is contributing to delay in the implementation of projects.
A good DPR is one of the foremost requirements for the smooth implementation of the Project and we are faltering at the very initial stage. In the present system there appears to be no accountability on the part of Design Consultant. To ensure this, we should evolve a system whereby the design consultant can be made accountable for any problem in the implementation of DPR and their consequent implications in terms of time and cost overruns. A system of insurance may be devised to address this issue. The Design Consultant may be asked to keep his establishment at site in the initial stage of implementation of project, so that any design issue may be addressed speedily. Alternatively, we may link substantial portion of payment of Design consultants to the implementation of DPR in the field. Another way may be to award design consultancy (for preparation of DPR) and supervision consultancy (to supervise the execution of project) to the same consultancy firm so that any discrepancy noticed in DPR at the execution stage is corrected by the same firm. We may deliberate further to arrive at the most suitable option.
Procurement of civil contractors
The process of procurement appears to have been completely manipulated and hijacked by the big contractors. Many contractors are submitting forged documents to justify their technical and financial capabilities to execute the project. The big contractors have been able to get all sorts of help (including even the most secret information and documents) from the officials in NHAI and even the note sheets carrying approval of chairman have been leaked outside. (This mostly appears to have been done by lower officials and supporting staff). Little thought has been given to the ability & sincerity of some of the contractors to do the work they have quoted for. The three striking examples are awards of NH-2 to M/s Centrodorstoy of Russia, M/s China Coal of China and M/s LG of South Korea which are all working like commission agents by collaborating with local incompetent and inexperienced firms and trying to get the work done through them. M/s Progressive Constructions Ltd is another contractor which appears to have completely manipulated the system to get the award of 2 projects on NH-2. This company is not organised on professional lines and it is run like a family business. They get one work and assign it to one relative, the second is assigned to another and the story goes on.
There is an urgent need to have a fresh look at the whole procurement process and utmost care needs to be exercised at the time of selection of contractors. The whole process should be made more transparent and any official found colluding with the contractors should be severely punished.
Mobilisation of Contractors and Mobilisation Advance to them
NHAI officials have shown great hurry in giving mobilisation advance to the selected contractors (no surprise, as the commission to officials for award of work are linked to the contractors getting their first mobilisation advance). In some cases the contractors have been given mobilisation advance just a day after signing the Contract Agreement. The entire mobilisation advance of 10 per cent of contract value (which goes up to Rs 40 crores in certain cases) has been paid to the contractors within a few weeks of award of work but there has been little follow-up to ensure that they are actually mobilised at site with the same pace. The result is that the entire mobilisation advance remains lying with contractors (or get diverted in their other activities) for months — a way for contractors to make easy money and for client to loose interest charges on them. Most of the contractors have not mobilised even up to 50 per cent, a year after getting their mobilisation advances.
Similar diversion or idling of funds are taking place in case of equipment advances to the contractors, another 10 per cent of the contract value. In many cases, the equipment is not being purchased and, even if purchased, is being used somewhere else. The contractors are getting customs and excise duty exemptions on most of the road construction equipment. However, because of laxity on the part of NHAI, the contractors in many cases are buying equipment on behalf of or for other parties and appropriating a portion of the excise/custom duty exemptions in their pocket.
We need to be vigilant and careful in giving advances to the contractors. The advances are given to the contractors to mobilise them quickly in the interest of project and therefore the same should be linked to their actual mobilisation at site. The advances should be given in installments and the release of next installment should be made dependent on utilisation of the previous installment. A strict vigil and audit needs to be done to ensure that the advances are used by contractors for quick mobilisation and are utilised in the same project for which they are being given.
Selection of Supervision consultants and Design consultants
The concept of supervision consultancy is a step in very right direction and the amount spent on them (roughly 2-3% of the cost of civil works) is a good investment. But here again we are faltering at the implementation stage.
There is a big fraud in the selection of Supervision/Design consultants which mainly depends on their technical manpower. To get the consultancy work, the consultants are proposing to deploy well-qualified and senior professionals in their technical proposals (many times their qualification and experience are being forged and NHAI officials are not taking any pain to ask for the documentary proof in support of their claims).
Many a times, the same professional figures simultaneously in technical proposals forwarded by many consultants and NHAI officials are doing little to discourage it. However, once that work is awarded to them, they are invariably coming with the request for replacement of their proposed personnel with professionals of much less qualification & experience.
To our shame, we in NHAI are giving least resistance to this trend and the proposals for replacement of professionals are being approved freely. The curriculum vitae of professionals are invariably being fabricated and manipulated by consultants to get approval, as the NHAI officials are not asking for any documentary proof in support of the qualification & experience claimed. Instead they are abetting this crime.
The consultants in first instance come with the replacement CV to have an informal discussion with the officials. However, once they are given the feeling that the same can’t be approved on file, the CV of same man is properly fabricated (in connivance with NHAI officials) and submitted formally and the approval is granted. This is the state of affairs.
The end result is that the consultants propose to deploy the most qualified, experienced and senior men in their organisation (or outside their organisation) to get the work and, once awarded the work, replace them by much inferior persons. They propose the same senior team to get another work and repeat the same story of replacement and the drama goes on.
This way, the consultants are completely manipulating the system. The well-qualified persons in head offices of consultancy firms are thus being used simply to get the work, but they are not being sent to the site, where they are being proposed to be deployed. The field units of these consultancy firms are instead being asked by their Head offices to look for the required personnel. The result is that many key professional posts are lying vacant for months or are being filled by unqualified person. In all these, it is the project which ultimately suffers.
This whole drama can be very easily checked provided we have the will. It is all the more easy in the totally computerised system at NHAI. A few steps outlined below will go a long way in remedying this ill.
(i) No consultant should be allowed to propose the deployment of same professional in more than one technical proposal.
(ii) It should be ensured that the same person is not proposed to be deployed by more than one consultancy firm.
(iii) It should be ensured that the person proposed by a consultancy firm is actually working in the firm or is having a bond with the firm to work in the project if the firm is awarded the project.
(iv) Replacement should be approved only under very extraordinary circumstances and a penalty should be imposed on the firm for their inability to deploy the proposed professional.
(v) All documentary proof in support of the qualification & experience claimed by a person should be asked.
In summary, it should be ensured that the supervision consultants deploys a well qualified & experienced team for proper supervision of the work. This becomes all the more important, because the supervision consultant (known as Engineer in FIDIC contract document) has been given immense powers & responsibilities under FIDIC conditions of contract which we are following.
The problem of subletting or subcontracting
The NHAI is going for International Competitive Bidding to procure the most competent Civil Contractor for execution of its projects. The works are usually being awarded at high cost and the contractors are assuring the best quality in the execution of projects. However, when it comes to the actual execution of works, it is found that most of the works (sometimes even up to 100 per cent) are being sublet or subcontracted to small petty contractors who are not at all capable to execute such big projects and ensure the quality of construction assured by the Civil Contractors. As a result, the entire process of shortlisting & pre-qualification of contractors and International Competitive Bidding are being nullified and what we are getting are the numerous petty contractors working at site and making a mockery of the prestigious project. The main Civil Contractors who have been awarded the work by NHAI are doing all these under the veil of labour contract which is permissible under the Contract Agreement. But in reality, they are getting most of the work done through numerous small petty contractors (main contractors are supplying only a few critical equipment & materials) at 50-60 per cent of the price quoted by them and the rest 40 per cent of contract price is being pocketed by them without much effort. In the process, the main contractors are working just like commission agents.
I would like to mention here that the above phenomena of subletting and subcontracting is known to all from top to bottom but every one is maintaining a studied silence. It would not be inappropriate to say that all these mouths have been shut by these big contractors who are manipulating the system and individuals alike. These petty contractors are bringing poor equipment & material, giving a big setback to the progress & quality of work. The main contractors are least bothered about the timely completion of projects (and penalties, if they are unable to finish the work in time) as they are quite sure of getting time extension by manipulating the individuals. They have already started fabricating spurious claims to make grounds for time extension and cost overruns. If this issue of subcontracting is not taken up with urgency, the entire project will be a very big failure both in terms of quality of construction and timely completion.
This issue cannot be expected to be tackled by field units of NHAI as the decision to sublet the works are being taken by Head offices of the contractors & not their field units. To address this, the top administration in NHAI has to take up the matter aggressively with the top management of contractors.
NHAI organisation & office system
It would not be inappropriate to say that there is no system in NHAI, there are only individuals. There is an urgent need to review and restructure the office procedure and office set up including the file system. Record keeping is very poor and it would be difficult to trace even the most important papers after some time.
The entire organisation is almost based on sourcing people on deputation basis. There is a need to have some permanent cadre strength in NHAI. In its zeal to maintain a lean and thin organisation, one Accounts officer/Manager (Finance) is allotted to two Project Implementation Units spaced around 200-300 kms apart, which is a mere nonsense. There is an immediate need to deploy one Accounts Officer/Manager (Finance) in each PIU, which have to manage projects of around Rs.1,000 crores.
The earlier we take up these issues, the better it is for the health of NHAI. If some well-planned measures are not taken soon, the NHAI as a system is headed for big failure.
As a concerned citizen of the country, I have brought these issues to your notice for your kind intervention and necessary action. Looking at the enormity of public fund involved in the project, the matter needs your urgent attention.
I have written all these in my individual capacity. However, I will keep on addressing these issues in my official capacity in the limited domain within the powers delegated to me. If any elaboration/clarification is needed on above issues I would be glad to render all my assistance in the interest of this very prestigious National Highways Development Project, which is undoubtedly the biggest ever project undertaken in India after independence.
Thanking you,
Your sincerely.
