Building Smart

According to McKinsey, construction holds the dubious honour of having the lowest productivity gains of any industry. The reasons attributed to this include continued use of labour instead of technology; lack of consolidation; and the fact that builders are still averse to using technology even though architects increasingly espouse it.
Technology is becoming key: The MoRTH is trying to escalate the pace of execution from 25 km to 40 km per day; the Prime Minister’s PRAGATI project, where he reviews projects worth Rs 9 trillion, is regularly laying stress upon speed of execution of metro projects, power plants; and there is a race for implementing affordable housing projects in line with the PMAY, for which incentives are being provided to developers and buyers.

In fact, L&T, Shapoorji Pallonji and NCC have qualified for a number of such projects and these are being executed using technologies like MIVAN. Design and engineering, too, are gaining importance as cities are considering master planning, which will bring tools of urban planning into play. Pre-engineered buildings, prefab and shuttering systems are being deployed like never before. Road building companies are completing projects to earn bonuses by advancing completion deadlines. What’s more, the smart cities mission has advocated the use of technology in planning, administering and maintaining assets for cities. This has encouraged the use of IoT devices, GPS systems, RFID, digital systems, advanced CCTV, Wi-Fi, waste-to-energy management, tracking devices, data management, e-governance and so on.

With the advent of technology comes the need for capacity building, where procurement, engineering, architecture and design departments need to upgrade themselves. Inability to upgrade these skills will lead to flaws in bidding documents, specifications, withdrawal of tenders and failures in generating interest in tenders. This, in turn, would lead to delays in project execution. (Delays in projects cost our nation over Rs 500 billion per annum.)

Clearly, the world is changing and India is transforming. Globally, 3D printing is being used to build flats. Modular buildings, like the one built by a Chinese company that built 57 stories in 19 days, are setting new benchmarks. Just as smart phones are being sold all over India even though so many parts of the country do not have access to electricity, we will have to pursue the dialogue to convert India into a smart nation even though gaps exist in basic delivery of services.

Do visit SM@RT URBANATION on March 22-23, 2018 at HICC, Hyderabad and experience, observe and connect with the smart solutions that are changing our lives – and our nation.

Build infra, ban construction

As the smog settles, we will be able to see beyond the smokescreen. And the picture does not look too different yet, despite major efforts in keeping our spirits soaring by our PM who is on overdrive in screening favourable optics, one after another. Once the winter chill wanes, financial thrills may take over because the political (as well as the polluting particulate) dust will not settle easily. The Budget will be more about taxation as exemptions will end and the government will step up its easy money source: Service tax. The statistical jugglery that has confounded economists as to how the scales of our GDP changed (the base year was changed to 2011-12 from 2004-05 in January by the Central Statistics Office) has killed the pulse of the GDP number. The other numbers do not indicate an uptick as yet.

In a way, the courts have come to the rescue of the automobile industry after punishing it for its contribution to pollution. A notification to come into effect in January would seek to retire roughly 3.4 million commercial vehicles (CVs) older than 15 years from the Indian roads. Vehicular pollution contributes to 20-25 per cent of the pollution in the city. CVs contribute to nearly 74 per cent of the air pollution caused by all vehicles in the city. This will be a win-win for both the residents of the cities and the CV sector. The other silver lining emerging is the advent of commercial mining. The coal ministry has identified about six coal blocks for allotment to public sector units (PSUs) for commercial mining. Mining activity coupled with the phase-out of old CVs will be a big bonanza for the CV industry. FDI in construction-development projects fell by over 38 per cent during the year ending March 2015 to $758 million compared to $1,226 million in FY14.

FDI flow has remained weak this year with just $34 million of investments in the April-June quarter of this fiscal. The poor pick-up in the inflow is owing to the slow approval process. Despite the ´ease of doing business´ initiative, even the CM of Maharashtra is struggling to break the mafia impasse that stonewalls the approval process and runs an extortion racket under his nose. Even the Environment Ministry approvals have not improved and remain contentious. In a way, this is good, as cities barely have any capacity to carry the weight of high-rise towers. Ideally, construction in cities with a population over 5 million should be banned until and unless the municipal corporation can provide proof of the capacity per capita in terms of ability of the city to handle traffic, sewerage, and provide water and power.

These cut-off capacities should be published on their websites permanently and should be sacrosanct in implementation, or else all – Pune, Ahmedabad, Hyderabad, Chennai, Bengaluru, Kolkata and Mumbai – will follow Delhi in becoming dangerous cities. (Already, 13 of the world´s 20 most polluted cities are in India.) Delhi is bathing in dust as construction debris and dust are contributing to 45 per cent of the pollution in the city. So while the CM of Delhi is at his wits´ end over the odd-even car scheme, the real culprit goes unchecked. A city administration must develop city infra projects to raise the capacities of services before giving a nod to growth. As metro projects progress in a dozen Indian cities, as roads projects accelerate to reach 30 km per day, and as real estate construction gathers momentum to build even higher towers dotting the skyline, we need to set a framework so that the growth of a city is not at the cost of the life of its citizens.

After setting new benchmarks in infrastructure and construction publishing and then inorganically assuming leadership in engineering too, ASAPP is on the move again. In 2016, it aims to fortify its leadership in all three ICE sectors, namely infrastructure, construction & engineering. Its latest digital product DezignGenie.com will be relaunched early 2016. Its digital abilities are being scaled up and its brands will soar new heights. Its events too will accelerate into a new stratosphere. ASAPP has donned a new name in keeping with its mission to be an ´information brands´ company.

Toasting the fighters

We are not out of the woods yet. Eight core sectors – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity – slowed to 1.1 per cent in July after a growth of 3 per cent in June, mainly on account of low expansion in coal output and contraction in steel, crude oil and natural gas production, all hinting at weakness in industrial recovery. AM Naik, chairman of engineering and construction conglomerate L&T, expressed his anguish publicly, and maintained that any recovery was at least a year away.

While Naik may be right, the roads sector has definitely rebounded, to about 13 km a day from just 3 km when the NDA took over, as per the ministry´s website. The government plans to sanction 20,000 km of projects in the coming three years and the target for the year to March 2016 has been set at 8,000 km. Seven top road builders have raised Rs 10,700 crore by way of bonds, paving the way for finance to the debt-stressed sector. Bonds come at a cost of 11 per cent and can be serviced, provided tolls commence within the timeline. Recent easing of policies, including allowing companies to exit projects and getting environmental clearances in time, have helped improve the climate.

Raising finance overseas has been the route many companies like ITNL have followed. The global scenario, though, is not too smooth with Caterpillar planning to cut up to 10,000 jobs by 2018 and JCB cutting 400 jobs in the UK. The Chinese residential property market, which contributes tremendously to the GDP, continues to remain under pressure. In the Middle East, too, the pressure on oil prices has rubbed off on public-sector spending, with the award of new construction projects having slowed down.

In the light of this global upheaval, India remains an attractive option. During Prime Minister Modi´s visit to the US, American CEOs implored him to step up the pace of reforms. Once he´s back, he will jump into the Bihar elections, but will have to sharpen his ability on seeing through bills of reform. For instance, the plan to build 50 non-frill regional airports has been revived. The logic to accelerate connection of the hinterland is unquestionable. However, roads take their own time and larger investment; a quicker way would be to deploy air taxis on economically run airports. Creation of these ´air corridors´ can accelerate economic growth.

Similarly Union Minister for Roads, Highways and Shipping Nitin Gadkari has been a strong proponent of the use of inland waterways and a bill is in the works. There is a proposal to offer 850 ports along major rivers to transport coal to the private sector. This will create new opportunities in logistics and is likely to bring in Rs 4,000 crore of private investments apart from saving sizeable freight costs. The smart cities mission, in which nearly two dozen countries are showing interest, also has great potential to revive the urban construction scenario. However, all this will require good footwork on the floor of Parliament.

Meanwhile, a flock of nimble-footed construction companies are emerging, who are moving stealthily and strengthening their order-books. Many of them are small and new. These and others who have retained their conservative approach are in the reckoning to grab the business as it is likely to unfold. Our 13th Construction World Annual Awards will celebrate these winners on October 16, in Mumbai. So while the third quarter gets underway along with the hopes of a better festive season, we will raise a toast to the fighters who managed to score on a rough turf.