CW examines the crests and troughs of 2016, and offers concrete suggestions to turn the lows into highs in 2017.
2016 promises to be remembered as the year of demonetisation. Certainly, the initiative has slowed project execution and the growth momentum. Contractors have been busy, making arrangements on site to open bank accounts for workers and switching to online payments for petty supplies. Want of upfront cash has also slowed down the movement of goods.
But it´s not all bad. In the long run, real-estate companies expect demonetisation (and the Real Estate Act) to help move to full cheque payments and greater transparency; this, in turn, may attract institutional capital and boost international investor confidence in India.he Indian real estate sector has historically bee As we usher in 2017, let´s also not forget the government initiatives prior to demonetisation that set a brisk pace of development across key sectors. So, here is a look at the crests and the troughs of 2016, with some solid suggestions to turn the lows into highs.
ROADS & HIGHWAYS
The year 2016 saw a switch in the modus operandi.
´In FY2016, almost 72 per cent of projects were awarded on the engineering, procurement and construction (EPC) route, which helped revive road construction,´ says Santosh Rai, Head-Transport Sales, HCC. ´In FY2017, the focus has shifted to the hybrid annuity model (HAM) and build-operate-transfer (BOT) toll-based contracts with only about 33 per cent of the total annual target expected to be awarded on the EPC route.´
´2016 has seen a fair number of awards of highway projects on the hybrid model; we bagged one such project,´ shares Vinod Agarwal, Managing Director, GR Infra Projects. ´Competition in the EPC project segment has gotten stronger.´
Major policy announcements included ´An NHAI plan to build 50,000 km of road worth Rs 17 lakh crore over the next five to six years and MoRTH´s plans to construct 7,000 km of national highway worth Rs 80,000 crore under the Bharatmala Paryojana Scheme,´ says Rai. ´Other positive initiatives were upfront land acquisition, expediting MoEF approvals and awarding projects only after the availability of 80 per cent ROW.´
Recommendations by Vinod Agarwal
Recommendations by Santosh Rai
The year 2016 saw the Smart City mission kick off with successive announcements naming 60 target cities. Some of these have been quick to get off the mark. ´Several target smart cities have already identified the SPV leader and consultant and some have even received an initial tranche of funds from the Central Government,´ says R Srinivasan, Vice President & Head, Smart World & Communication, L&T Construction.
All this is bringing huge collaborative opportunities for cutting-edge technologies and services in core infrastructure services. ´With some cities having started tendering out packages for smart security, smart communication and telecommunications and smart infrastructure solutions, L&T´s Smart World business unit, which has emerged as one of the fastest growing within the L&T portfolio, is well positioned in this sector,´ adds Srinivasan.
´With a strong and equal play of operational technology and information technology in smart cities, our focus areas will be IT, data centres, connectivity, intelligent building management systems and data centre infrastructure management solutions,´ says Kanwaljeet Kukreja, Business Development, Energy & Smart Cities, Schneider Electric, India. ´Energy optimisation, analytics and citizen service improvement are also on our radar.´
Things promise to get better. ´We expect the tally to increase to 100 in the next few years,´ says Kukreja. And Digital India is making progress too. ´We´re seeing a push for the creation of a digital backbone connecting all the panchayats, with execution having begun on the leftover panchayats of the earlier scheme,´ says Srinivasan.
Recommendations by R Srinivasan
Recommendations by Kanwaljeet Kukreja
Follow clarity of vision and execution strategy by collaborative implementation by all stakeholders so that the government can swiftly incorporate the lessons that are bound to arise as a result of our economic and socio-cultural diversity in the future strategy.
The rail sector is on the right track. The consensus is that it is flush with funds for development, resulting in a project bonanza and prompt payments to contractors. ´We saw zonal railways and their PSUs invite lots of tenders this year - more than in previous years - for new infrastructure projects like doublings, new lines, private sidings, etc,´says Kulmeet Singh Chhabra, Director, Projects, ISC Projects. ´Plenty of tenders are being floated for the replacement of old wooden sleepers with concrete sleepers, much-needed upgrade for safety, lower long-term maintenance costs and creation of employment opportunities,´ says Ashok Mehta, Chairman and Managing Director, Metcon India Realty & Infrastructure. To enhance efficiency and transparency,´Many of these tenders were offered via a new online tender system,´ adds Chhabra.
Plenty of decisions taken in 2016 bode well for experienced, high-performing contractors.´The Indian Government has decided to pay landholders four times the market price to speed up land acquisition,´ says Mehta. ´Projects to connect the West, the Northeast, the North and South, to promote development in remote regions, and rail line modernisation projects in Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Bihar, etc, are coming up. A dream freight corridor project is happening. Introducing bullet trains in future will help reduce the pressure on road traffic and ease out aviation traffic.´
Recommendations by Ashok Mehta
Deploy young qualified managerial talent, in addition to bureaucrats and conventional engineers, to share the load of engineering teams, ensure time-bound project execution, innovative approaches, better management of land acquisition, and the faster resolution of local problems and issues between departments and contractors.
Make provisions for banks to lend vigorously to the infrastructure sector, to both agencies and contractors. In particular, speed up the issue of bank guarantees, funds to contractors with a proven track record but not only on the basis of their balance sheet.
Recommendations by Kulmeet Singh Chhabra
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