Kathmandu University School of Management

Internship Report

Identification of causes of delay in UAR/02 project to devise a management package for solution
As part of the requirement for MBA Programme Internship Programme Code: PWM 703

Internship Employer Melamchi Water Supply Project Baneshwor, KTM, Nepal

Work Supervisor Mr. Babu Ram Thapa Thapa, Deputy Team Leader, PMC Interns Smita Sharma, Soniya Gautam,

Jan30th, 2011

COPYRIGHT
All rights reserved

All rights reserved. No part of this report may be reproduced or transmitted in any form or by any means now known to be invented, electronic or mechanical, including photocopying, recording, or by any information storage or retrieved system without the written permission from the author except for the brief inclusion in a review.

COPYRIGHT 2011 Kathmandu University School of Management

DECLARATION We, the undersigned, declare that the project report is a result of our own research carried out on behalf of Melamchi Water Supply Project in the year 2010 - 11. It has not been previously submitted to any other University and is not a reproduction of any other research report (if any) of its kind undertaken previously.

Smita Sharma 09331, MBA 2009-2011

Soniya Gautam 09332, MBA 2009-2011

Kathmandu University School of Management

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RECOMMENDATION LETTER

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ACKNOWLEDGEMENT
We would like to express our earnest appreciation to Kathmandu University School of Management for providing us the opportunity to go through internship and gain exposure to the practical world which is the stepping stone of our career ahead. We highly appreciate our lecturers, professionals, and the staff members of Melamchi Water Supply Project for providing us unceasing and countless suggestions regarding the course of study. We extend our sincere gratitude to Mr. Narendra Prasad Baral, Superintendent Engineer; Mr. Babu Ram Thapa, Deputy Team Leader, Project Management Consultant III; Mr. Mahendra Nath Sharma, Technical Director, TACE Consult P. Ltd; Mr. Daya Ram Thapa, Chief Project Management and Implementation, Marushin Shitaka Construction Co. INC and all other concerned staffs for creating generous and helpful environment, providing valuable explanations and enduring our shortcomings and mistakes during our stay at MWSP. Our sincere gratitude also goes to Ms. Chetna Thapa, Senior Officer, Roads Board Nepal; Mr. Deepak K.C., Senior Division Engineer, DOR Lalitpur Subdivision; Mr. Vishnu Prasad Shrestha, MMM Group; and all others involved in different road construction projects that have provided us their valuable views regarding our research. Further, we would like to show our appreciation especially to Mr. Sabin Bikram Pant-Internship Coordinator, Mr. Krishna Ram Khadka- Internship Supervisor, Mr. Binod K. Shrestha and all other faculty members of Kathmandu University School of Management for providing regular guidance, support and feedback to make the internship productive.

Sincerely, Smita Sharma Soniya Gautam

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EXECUTIVE SUMMARY
Melamchi Water Supply Project (MWSP) is a donor funded project, sown in 1988, with an objective to alleviate the chronic shortage of potable water in Kathmandu Valley by diverting 170 MLD of fresh water from the Melamchi River. The project includes construction of various infrastructural components such as water diversion tunnel, water treatment plant, new access road, upgrading of existing access road, bulk distribution system, rehabilitation of Kathmandu valley distribution system network and management of waste water. The organization incorporates a large team with expertise in diverse fields like engineering, legal, finance, administration, procurement and other specialized disciplines- consultants and contractors. This report basically highlights about our internship at Project Management Consultant component of the organization. PMC is the most integral part of MWSP with a responsibility to form liaison with different components of the project. It emphasizes on attainment of the predetermined milestones through its persistent supervision, consultation and assessment of all the components. As interns, specialized in Project Management, the key responsibility given to us was to identify and understand the factors that have caused persistent delay in UAR/02 project even after undergoing time extension of a total of 380 days at two instances. UAR/02 is the only route of transportation to the camp site office at Melamchi Pul Bazar and hence is crucial for the entire project. In the process, we were exposed to all the concerned agencies, functions of diverse personnel of MWSP and other concerned agencies, actual project environment, and other components of MWSP that are directly linked with UAR/02 to observe the consequences of delay. The exposure and research on UAR/02 aided much to our understanding of project management and the impact of the surrounding environment on the project and vice versa which will definitely help us in our career ahead. Results from the research indicate that UAR/02 has been delayed due to recurrent obstructions from the community, ineffective management practices of the employer and contractor, slow working procedure of the concerned government agencies, and some external factors which are beyond an individuals control. Moreover, both technical as well as non-technical errors have resulted in time overrun of the project. Hence, the research aims to provide a solution package to reinforce the monitoring and control mechanism of MWSP that would facilitate in avoiding such problems in its future construction projects primarily in that particular area. v

Project Salient Features

Name of the project Contract Identification number Location Employer Major Donors Design Consultant Supervision Consultant Contractor Type Length Standard Surfacing Original price New contract price Variation works Upgrading access road (UAR/02 ) MDS/UAR/02 Lamidana to Melamchi Pul Bazar MWSP ADB & GON NORPLAN SIDef TACE JV Maruchin Shitaka Tundi JV Upgrading of existing road 23.05 Km* with variation Feeder Road Standard (4.5 m wide single lane with passing- bays Double Ottaseal NRS 435 million NRS 472 million* with variation work MWSDB Office extension Slide removal in AAR & GAAR River protection work in MAR Upgrading additional road of 0.85 Km to Melamchi Bazar 15 May 08 580 days 220 days*without monetary compensation 160 days* without monetary compensation 90%* in terms of contract price 86% 960 days (100%) Waiting for ADBs approval for time extension Earthwork Construction of Longitudinal and cross drainage Construction of retaining structure Construction of road pavement including sub-base, base and sealing Environment impact mitigation Aggregates Sand RCC pipes Stones Cement Bitumen

Commencement Date Original Completion Time 1st Time extension 2nd Time extension Physical progress on 31st Dec 10 Financial progress on 31st Dec 10 Time past on 31st Dec 10 Current status Activities

Materials

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TABLE OF CONTENTS
COPYRIGHT DECLARATION RECOMMENDATION LETTER ACKNOWLEDGEMENT EXECUTIVE SUMMARY SAILENT FEATURE OF UAR/02 LIST OF TABLES LIST OF FIGURES LIST OF APPENDIX LIST OF ACRONYMS i ii iii iv v vi ix ix ix x

PART ONE: INTRODUCTION 1.1 Background 1.2 Goals/Objectives of Internship 1.3 Roles/job performed in the internship 1.4 Roles of Departmental Head 1 2 2 3

PART TWO: INTRODUCTION OF THE ORGANIZATION 2.1 Background of the organization 2.1.1 Objectives of the organization 2.1.2 Scope of the project 2.1.3 Major projects 2.1.4 Organizational Structure 2.1.5 Operational Management 2.2 Analysis of the Organization and its environment 2.2.1 SWOT Analysis 2.2.2 PESTEL Analysis 5 7 8 9 11 12 16 16 18

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PART THREE: PRESENTATION OF MAJOR PROJECT UNDERTAKEN 3.1 Introduction 3.1.1 Background 3.1.2 Need and Rationale of the study 3.1.3 Objectives of the study 3.1.4 Scope of the study 3.1.5 Limitation of the study 3.2 Conceptual Framework 3.2.1 Literature Review 3.2.2 Conceptual Framework 3.3 Research Methodology 3.3.1 Sample and Sampling 3.3.2 Instruments 3.3.3 Data Collection 3.4 Presentation and Analysis of the Project 3.4.1 Data Analysis 3.4.2 Findings 3.5 Conclusion and Recommendation 3.5.1 Conclusion 3.5.2 Recommendation 23 23 24 25 26 27 27 27 30 34 34 34 36 36 36 58 60 60 61

PART FOUR: REFLECTION OF INTERNSHIP

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REFRENCES

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APPENDIX

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LIST OF TABLES Table 2.1: Profile of Current Members of MWSDB Table 2.2: List of roads under MWSP with their contractors Table 3.1: Sample Profile of the respondents LIST OF FIGURES Fig 2.1: Organizational Structure of MWSP Fig 3.1: Ishikawa diagram Fig 3.2: Contribution of the factors arising from donors side in causing delay Fig 3.3: Contribution of the factors arising from employers side in causing delay Fig 3.4: Contribution of the factors arising from consultants side in causing delay Fig 3.5: Contribution of the factors arising from contractors side in causing delay Fig 3.6: Contribution of the factors arising from communitys side in causing delay Fig 3.7: Contribution of the factors arising from gov/local bodies side in causing delay Fig 3.8: Contribution of the factors arising from force majeures side in causing delay Fig 3.9: Time appraisal and monitoring package LIST OF APPENDIX APPENDIX- I: Project Life cycle APPENDIX- II: Work Schedule of UAR/02 APPENDIX- III: Questionnaires APPENDIX- IV: Data Analysis APPENDIX- V: Limitation of Project appraisal and monitoring Package APPENDIX- VI: Proposal for the final Project APPENDIX- VII: Minutes APPENDIX- VIII: Project Site Map and Photograph ix 12 33 43 44 47 49 53 55 56 66 11 16 33

LIST OF ACRONYMS
AAR ADB CDC CDO DSC EIA EMP FIDIC GDP GoN INGO JBIC JICA KUKL KUSOM MAR MBA MDS MLD MoF MPPW MWSDB MWSP NDF NORAD OPEC PESTLE PIU PMC PMU PRP RAP SIDA SSDS SUP SWOT UAR Adit Access Road Asian Development Bank Compensation Determination Committee Chief District Officer Design and Supervision Consultant Environmental Impact Assessment Environmental Monitoring Program Federation Internationale Des Ingenieurs Conseils Gross Domestic Product Government of Nepal International Non-Government Organization Japan Bank for International Cooperation Japan International Cooperation Agency Kathmandu Upatyaka Khanepani Limited Kathmandu University School of Management Main Access Road Masters in Business Administration Melamchi Diversion Scheme Million liters per day Ministry of Finance Ministry of Physical Planning and Works Melamchi Water Supply Development Board Melamchi Water Supply Project Nordic Development Fund Norwegian Agency for Development Organization of Petroleum Exporting Countries Political Environmental Sociological Technological Legal and Economic Project Implementation Unit Project Management Consultant Project Management Unit Public Relation Program Resettlement Action Plan Swedish International Development Agency Safeguard and Social Development Support Social Upliftment Program Strength Weakness Opportunity and Threat Upgrading Access Road

Part One INTRODUCTION

1.1 Background Internship has become one of the major requirements for a student irrespective of ones specialization - medicine, engineering, or management. It is the initial step towards ones professional life. As such for the partial fulfilment of the MBA Program at KUSOM, we are required to go through intensive internship in an organization. Hence, the report has been prepared based on the experience and knowledge gained during the internship period. The objective of internship is to acclimatize students to the real working scenario by providing them an opportunity to work as an employee in a particular organization. This experience helps students to understand the system, structure, procedure, strategy, activities, and culture of the organization. It also helps to know the practicability of the learnt theories and their implication. The report summarizes our internship at MWSP, the only drinking water project of Nepal. It is being implemented by the GoN as the most viable long-term alternative to ease the chronic water shortage situation within the Kathmandu Valley. The Project is designed to divert fresh water, about 170 MLD initially and 510 MLD in future, to Kathmandu Valley from the Melamchi River through 26.21 km long tunnel. MWSP is expected to cover parts of five districts of the country including Kathmandu, Bhaktapur, Lalitpur, Sindhupalchowk and Kavrepalanchowk. As interns we worked in the Project Management Consultant under the supervision of the Deputy Team Leader. PMC is the most integral part of MWSP with a responsibility to form liaison with different components of the project. PMC emphasizes on attainment of the predetermined milestones through its persistent supervision, consultation and assessment of all the components of MWSP. At PMC, we were exposed to the functions and responsibilities of a consultant team with frequent interaction with the members of its other divisions.

1.2 Goals/Objectives of Internship The goal of undergoing internship in MWSP is to acquire enough experience to understand how a project is managed which would help later to start as well as pursue a profession in Project Management. MWSP is believed to be the stepping stone of our career where we perceive to head an INGO after 3-4 years of service as an assistant to a Project Manager or a Consultant in one of the existing projects. The objectives set for the internship program are as follows: To understand how theories are applied in practical field To understand how the overall project functions To know the system, working culture and management of a public organization of Nepal To get acquainted with the relationship between different components of a project To know the dependency as well as consequences of a project on its surrounding environment To adapt to the real working scenario To learn how to work within several constraints that are not described in the theoretical studies To get acquainted with a wide array of national and international associates of MWSP which would facilitate in starting a career after internship 1.3 Roles/Jobs Performed in the Internship Research based on UAR/02 The first research was conducted to identify the causes of delay in UAR/02 section of MWSP. We were given the responsibility of designing a research and collecting information to address the problem. The research was very essential for MWSP as only 87% of the physical works has been completed with 82% of financial expenditure by 30 September, 2010. MWSP required a survey to be conducted with all the parties involved in the road construction project. The survey was expected to be genuine and devoid of 2

any bias so that the factual source of problem would be uncovered and essential solutions would be devised to avoid such circumstances in the future. The research was conducted through questionnaire followed by in depth interviews with the employer, consultant and the contractor involved in the UAR/02 project. Questionnaire: Questionnaires was devised to assist the respondents to express their views regarding the Research Problem. The questionnaire was developed based on the reviews of the past reports of MWSP and literature review of papers on the Research Problem. The theme of questionnaire was to unveil the prime guilty party and the major activities that resulted in delay. In Depth Interview: In depth interviews were then conducted to seek information on the consequences of the faulty activities and also their suggestions to avoid such instances in future based on their past experience. 1.4 Roles of Departmental Head Mr. Babu Ram Thapa, our internship Supervisor, is the Deputy Team Leader of Project Management Consultant of MWSP. His career in MWSP started since the inception of PMC III on July 2009. PMC III operates as a component of Lahmeyer International GMBH in association with Total Management Services and Butwal Power Company Ltd. The key functions of Mr. Thapa as a consultant include the following: (a) Handle and plan the technical and financial management, cash disbursement, and audit the issues arising from the various activities of the project (b) Coordinate with all associates such as contractors, consultants, donors, management relating to overall management and supervision so as to provide full range of services in interdisciplinary topics (c) Maintain effective communication and consultation with all stakeholders (d) Monitor compliance of all components with the implementation, legal, financial and technical requirements of the project (e) Undertake monitoring and evaluation of performance and outcomes against the targets

(f) Examine ADB and other donors regulations and GoNs legislations on using funds, procurement of goods and consultant/contractor selection procedures (g) Coordinate with the Procurement Specialist and PIU in all procurement activities to ensure timely implementation of agreed the plan (h) Support PIU in financial management, preparation of budget of all subprojects and allocation of funds to subcomponents (i) Set up supervising and monitoring mechanism to facilitate management of subprojects and enhance the flow of information through frequent communication procedures so that problems will be realized timely (j) Conduct training programs for PIUs staffs in project management, financial management and other relevant topics to projects activities (l) Prepare periodic reports for MWSDB and donors on monthly basis

Part Two INTRODUCTION OF THE ORGANIZATION

2.1 Background of the Organization The Projects history dates to 1988 when a basic prefeasibility study was undertaken to investigate out-of-valley water resources. Diverting water from Indrawati River, the closest water source to Kathmandu Valley, appears logical while observing a map. However, the option was ruled out due to lower elevation of the river, about 500 meters below, from the valley which would result in high-pumping costs in the later phase. Nevertheless, the full feasibility study conducted in 1992 showing that the development of Melamchi River, followed by later developments of adjacent Yangri and Larke rivers, was feasible in all aspects- technical, social, environmental, economical, and financial. Further, it was found to be the least-cost solution to address the anticipated water shortage in Kathmandu Valley in future. Finally Melamchi Water Supply Development Board was formed, comprising of the secretary of Ministry of Physical Planning and Works as chairperson, a representative from each of Ministry of Finance and Ministry of Water Resources, the mayor of Kathmandu Metropolitan City, and a full-time Executive Director, in September 1998 to materialize the project. The project finally came into being and began implementation in 2001. Project costs were estimated at $464 million in 2000. The project was to be financed by the GoN ($90 million), ADB ($120 million), JBIC (Yen 5,494 million), JICA ($18 million), NDF (SDR 7.2 million), NORAD, OPEC ($13.7 million), SIDA, and the World Bank. However, the withdrawal of three co-financing development partners for the project namely the World Bank, NORAD, and SIDA, resulted in a shortfall of $133 million in the originally projected cost of $ 464 million as priced in 2000 AD. The shortage of fund required project restructuring, mainly in the financial and institutional segments. After restructuring in 2001, the project has now been revised to a total of $317.3 million with Completion Date of June 2013. The revised cost is now jointly funded by the following agencies as: ADB (Loan 1820-NEP) - $137 m, JBIC - $ 47.5 m, JICA - $18 m, NDF - $10.5 m, OPEC - $13.7 m, and GoN - $ 90.6 million. 5

Nevertheless, in 2007, after six years of implementation, GoN and other funding partners felt necessity to change the scopes of project implementation arrangement by splitting MWSP into the following two distinct projects: (i) Melamchi River Water Diversion Project covering all project activities in Melamchi Valley including constructions of water diversion tunnel and water treatment plant at Sundarijal under MWSDB as Melamchi Water Supply Project. (ii) Kathmandu Valley Water Supply and Sanitation Project comprising water distribution activities in Kathmandu Valley under Kathmandu Valley Water Supply Management Board as Kathmadu Upatyaka Khanipani Limited. Further, the revised MWSP comprises of three subcomponents namely - Melamchi Valley Subproject (Subproject I), Kathmandu Valley Subproject (Subproject II), and Project Support (Subproject III). These components are described below: a) Subproject I: Melamchi Valley Subproject Construction of Melamchi Diversion Scheme to carry out about 170 MLD of raw water from the Melamchi River into Kathmandu Valley through a 26.5 km tunnel Construction of about 43 km of access roads and upgrading of about 29 km of road to assist construction of the project facilities and their maintenance Construction of a water treatment plant with an initial capacity of at least 170 MLD and expandable to about 510 MLD to treat the Melamchi River Water Development and implementation of a social upliftment program, including - a) buffer zone development, b) health, c) education, and d) income

generation/community development b) Subproject II: Kathmandu Valley Subproject Rehabilitation and improvement of distribution networks at primary, secondary, and tertiary levels, house connections, rehabilitation and improvement of existing water supply system including intakes, transmission lines, water treatment plants and service reservoirs

Construction of a bulk distribution system comprising service reservoirs strategically located in the Kathmandu Valley and bulk water supply pipelines leading to the reservoirs from the water treatment plant in the pipeline

Undertaking improvements of waste water system in a phased manner Development of a shallow ground water well at Manohara within the Kathmandu Valley to extract, treat, and distribute about 20 MLD of water in Kathmandu valley

c) Subproject III: Project Support Development and implementation of i) resettlement action plan; and ii) Environmental Management Plan to mitigate direct and indirect project impacts, including a) hygiene education, b) public relations programs, c) social and environmental monitoring program undertaken by a panel of domestic experts, and d) a groundwater monitoring program Provision of support to carry out various project administration activities, including PMU operations, design and construction supervision, social and environmental activities and training provision of incremental administration and operation costs 2.1.1 Objectives The goal of the project is to alleviate chronic shortage of water in Kathmandu Valley on a sustainable long-term basis, and thereby improve health and well-being of its inhabitants, particularly the poor. Further the project also aims a reliable, affordable, consumer oriented and sustainable potable water supply and sanitation services in the Kathmandu Valley. The objectives of MWSP include the followings: To improve the water-supply system of Kathmandu Valley To provide access to clean and safe water supply ensuring good health sanitation To establish efficient water supply networking system on a sustainable basis

To reduce water pollution through establishment of sewer treatment plants

and waste water

To improve river ecology, religious sites, and cultural ghats located at river banks by augmenting water flow in Bagmati river and its tributaries

To augment the depleting ground water sources of the valley

2.1.2 Scope of the project MWSP was designed to cover a wide array of scope which range from improvement of nations infrastructure and lifestyle of people to reformation of policy, practices and systems of domestic institutions. The project has four major functions as stated below: a) Infrastructure Development MWSP is involved in three segments of infrastructure development namely (i) construction of 26.3km long tunnel from Melamchi River to Sundarijal, new access road (25 km), water treatment plant with an initial capacity of 170 MLD and provision for expansion to 510 MLD at Sundarijal, bulk distribution system; (ii) upgrading of access road (28 km); (iii) rehabilitation of Kathmandu Valley distribution system network and management of waste water. b) Social and Environmental Support MWPS undertakes Social Upliftment Program to mitigate its direct as well as indirect impact, and to channel benefits to Melamchi Valley on a long-term basis to improve the living conditions of that area. It includes health, education and community development, buffer zone development, rural electrification, and income generation. c) Institutional Reforms The Project has introduced several institutional reforms for enhancement of efficient management of drinking and waste water in Kathmandu Valley. A regulatory body for water supply and sanitation has been formed with the endurance support of MWSP. Private sector management of urban water supplies from source to consumer, and sewerage from consumer to outfall has been introduced. KVWA has been established to

provide comprehensive water resource management in the valley including that for groundwater, surface water, domestic water supply, and irrigation. d) Project Implementation Support The project also facilitates and supports the implementation of the various components through MWSDB. The board is responsible for overall project management and coordination of works under the various sub-components. The operational body for the project implementation support comprises of the Project Management Unit of MWSP with government counterpart staffs, and several international and domestic consultants. The consultants provide assistance to PMU in carrying out project administration activities including monitoring of construction supervision, social and environmental compliance, contract management, and project accounting. 2.1.3 Major projects The core projects of MWSP are Water Treatment Plant and 26.21 km Diversion Tunnel. Water Treatment Plant has undergone bid evaluation procedure and is awaiting bid acceptance. Current works on tunnel include construction of portals at the inlet (Melamchi River) and outlet (Sundarijal). followings: Temporary coffer dams at the Melamchi and Ribarma Rivers Portals to diversion tunnel at Ambathan, Gyalthum and Sindhu excavated at 18.4 m2 cross sectional area Gate valve arrangements at portals, spillway/bypass flushing system to Bagmati River and other control works at downstream, portals and Sundarijal Tunnel Flushing system at Ambathan adit River training and intake at Ribarma with de-sanding basin Pipeline (of 1.6 m dia.) from tunnel portal to WTP, length approximately 235m Other additional works comprises of the

The ancillary projects of the organization include access road, camp site office and social support.

(i) Access Road The access roads refer to the roads used to visit different Adit points (project sites) including main intake. This includes construction of about 43 km of access roads and upgrading of about 29 km of existing roads making it easy to visit project sites round the year. These are described in brief below: Adit Access Road (AAR) refers to the roads that reach to different Adit points of the tunnel which include Sindhu Adit (Bahunepati Sindhu Adit ,15.4 km), Gyalthum Adit (Patichaur to Gyalthum Adit, 4.2 km) and Ambathan Adit (Timbu Main Intake at Ambathan Adit) Main Access Road (MAR) refers to the road from Melamchi Pul Bazar to Timbu with a length of 18 km including 10 bridges. Upgrading Access Road (UAR) include upgrading of Jorpati-Sundarijal road (6.0 km), Jorpati Gokarna-Narayantar and Lamidanda - Melamchi Pul Bazar Timbu (feeder road 22.2 km). In addition to the above roads, the road package also includes: Maintenance of Lamidanda-Timbu feeder, headworks access road and the four Adit Access Roads-Sundarijal, Sindhu, Gyalthum and Ambathan Construction of approximately 235 m length of road as an extension of the Sundarijal AAR up to Sundarijal Portal Construction of approximately 45 m length of road to access the Sindhu Adit portal (ii) Camp Site Office Further, MWSP incorporates construction, operation and management of Camp Site Office at Melamchi Pool Bazar (main camp) and other camps at Ambathan Adit, Gyalthum Adit, Sindhu Adit and Sundarijal Adit. This also includes camp facilities to (Employer/Engineer) such as power supply, telecommunication/internet, water supplies, sanitation/sewerage disposal, garbage; camp roads; buildings; structures; security;

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accident and emergency; safety; fire equipment; welfare; laundry and recreation facilities as agreed in the contract. The package also covers procurement of various equipments, vehicles needed for project implementation and bearing of its operational cost including fuel, periodic maintenance to both employer and project engineer. (iii) Social Support MWSP is providing social support through its SSDS campaign with a separate consultant unit to facilitate the community with diverse privileges in order to mitigate the negative impact of the project. 2.1.4 Organizational Structure MPPW is the executing agency and MWSDB is the implementing agency for the project. The management structure of MWSDB includes representatives from diverse institutions required to support the activities of MWSP. The current profile MWSDB is shown below: Table 2.1 Profile of Current Members of MWSDB
Position Chairman Member Member Member Name Mr. Dip Basnyat (Secretary, Ministry of Physical Planning) Mr. Tanka Mani Sharma (Joint Secretary, Ministry of Finance) Mr. Ananda Pokhrel (Chief, Kathmandu Metropolitan City) Mr. Chandra Bahadur Thapa (Chairman, Hyolmo Sindhu Melamchi Valley SUP Implementation Committee) Mr. Hari Pd. Sharma ( Executive Director, Melamchi Water Supply Development Board)

Member Secretary

The functions of MWSDB are as follows: Execution of the Melamchi Drinking Water Project Formulation of project-specific policy decisions Approval of the detail program and estimate relating to the project Call national and international level competitive bid to execute the project 11

Inspect functions of the project to give directions to concerned person for correction Appoint consultant and employees as required Carry our other functions as prescribed by the GoN, and Report to the Government through MPPW

MPPW

MWSDB Board of Directors

Senior Level Steering Committee

Executive Director

Deputy Executive Director PIU

Deputy Executive Director PMU

Engineering Unit

Finance Unit

Engineering Unit

Safeguards Unit

Admin Unit

Legal Unit

Procurement, Planning, Communications & Information Unit

Project Implementation Unit (PIU) (Melamchi Valley)

Project Management Unit (PMU) (Kathmandu)

Figure 2.1 Organizational Structure of MWSP The organizational structure is vertical where authority and decision flow in downward direction and information flow in upward direction. The project is conducted from the head office at Minbhawan, Kathmandu with the leadership of the Executive Director followed by two Deputy Executive Directors, each for PMU at the head office and PIU at the implementation site. 12

Project Management Unit There are five major divisions under PMU i.e. Administration, Procurement, Finance and Accounts, Engineering and Legal. Further, PMU also coordinates with line agencies like MPPW, National Planning Commission, Ministry of Finance and other government bodies for different services and support required for implementation of the project. All activities related to communication with Donors, Experts and Specialist including reporting and maintaining a balance among government, donors and other stakeholders working in different sectors of MWSP are the responsibilities of PMU. Project Implementation Unit PIU refers to the Melamchi Camp site office which is responsible for implementation of construction activities of MWSP. It provides administrative and managerial services to the contractors. It also facilitates the local bodies to execute various project related services under SUP. PIU coordinates and reports to PMU for further support to assist the project activities at the site. 2.1.5 Operational Management Procurement of work and services MWSP has a separate Procurement Department which is responsible for procurement of the required consultant and contractor for different components following the FIDIC Guidelines. Currently, the project has procured 3 consultant units (PMC, Design and Supervision Consultant, Safeguard and Development Support Consultant) and 3 different construction contractors through bidding procedure. The conceptual and technical complexity of the project has demanded for international bidding to ensure the availability of advanced technology and ideas. The procurement process starts with the Invitation to Bids where bidders are informed about the issuance of bid documents. The eligible bidders then collect, fill and submit the bid documents. Procurement Department analyzes the submitted bids to select the lowest evaluated responsive bid and sign the Contract. With the acceptance of contract, the responsibility of work and service is transferred to the respective contractor or consultant, which marks the beginning of the implementation phase. 13

Construction The implementation phase includes construction of road, camp and tunnel by the contractors under the guidance of the project consultants. i) Consultant There are three consultant units in the present scenario of the project. They are illustrated below: a) Project Management Consultant Lahmeyer International GmbH, Germany in association with Total Management Services and Butwal Power Company, Nepal is the ongoing PMC at MWSP. The focus of PMC services includes strategic decision making, implementation and management of project performance, risk management, cost control and scheduling. It also assists MWSDB to maintain and improve an enabling environment for staff to arrive at prudent, efficient, effective and timely decisions based on sound international and national practices, procurement guidelines and engineering principles. PMC ensures that the project achieves highest standards of compliance in environmental, social, resettlement and other similar safeguards activities by highly skilled, experienced and well trained consultant staff, monitoring and improving management systems. b) Design and Supervision Consultant MWSP has three DSCs for providing guidance in construction of tunnel, road and water treatment plant. DSC POYRY, Consortium of Poyry Infra Oy, Poyry Environment Oy and Hifab International Ltd. in association with Multidisciplinary Consultants (P) Ltd. is responsible for supervision of tunnel with respect to progress, quality of materials and work, measurements of quantities, costs, and legal aspects related to the contracts. DSCNippon Jogesuido Sekkei (NJS) Co. Ltd. in association with Binnie Black and Veatchi International Ltd., Mott MacDonald International Ltd., and Nepal Consult (P) Ltd. provides required engineering services at all stages of the construction of WTP. Sustainable Infrastructure Development Foundation (SIDeF)-TAEC Consultant P. Ltd (Joint Venture) is responsible for construction supervision of the Upgrading Access Road and Lamidanda Melamchi (Pul Bazar) road (MDS/UAR/02). 14

c) Safeguard and Development Support Consultant Safeguards and Social Development Support in JV of Integrated Consultants Nepal (ICON) and Consolidated Management Services (CMS) Nepal (P) Ltd is the SSDS consultant. Major activities on this program are to support safeguard, social upliftment program, environmental monitoring, public relation and resettlement (SUP, EMP, PRP, and RAP). ii) Contractor MWSP has procured 3 different contractor described below for construction of road, tunnel and camp site offices. a) Tunnel The Joint Venture of China Railway 15 Bureau Group Corporation and China CMIIC Engineering Corporation (CRCC-CMIIC JV) of the Peoples Republic of China is the contractor for tunnel construction. The latest progress of the contractor is almost 5% of the total work. b) Road Road construction is categorized into three different headings based on the nature of work. These include main access road, adit access road and upgrading access road where numerous contractors are involved. The latest progress for road includes completion of the main access road and adit access road while the work of upgrading access road is ongoing. The contractors for road construction are mentioned below: c) Camp Site Office The construction, operation and management of camp site office at Malamchi Pool Bazar (main camp) and other camps at Ambathan Adit, Gyalthum Adit, Sindhu Adit and Sundarijal Adit is conducted by Gauri Parbati-Danfe-Siruwa-Sanaula JV. The works of camp site office has already been completed.

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Table 2.2 List of roads under MWSP with their contractors

Name of Road Project MDS-MAR-21/22 MDS-UAR/02 Contractor Involved Mahalaxmi & JV / Lok Bir-Dapche & JVess Road Marushin Shitaka Tundi Jv - Lamidanda - Melamchi Pul Bazar Upgrade Poppu-Jyoti Jv- 2Km upgrading of Jorpati - Rarayantar Kokarna Temple Road CCECC-Sharma-Lama JV-Sindhu Gyaldhum Adit Marga Surya-Jaya OM-DS Construction JV - Sundarijal Adit Access Road From Timbu to the intake adit Status Complete Ongoing

MDS/UAR/07

Complete

MDS-AAR/02 MDS-AAR/03

Complete Complete

MDS-AAR/01

Complete

2.2 Analysis of the Organization and its environment 2.2.1 SWOT Analysis Strength 1) Strong image, profile and positioning of the project. 2) Most viable long term opportunity to ease chronic water shortage of the valley. 3) High and crucial demand of the projects outputs. 4) Strong financial position due to positive perception of wealthy and renowned international donors. Weakness 1) Delay in construction of tunnel and other construction works. 2) Failure to make optimum utilization of project. The total capacity of the project is to divert 1.012 billion liters of water daily to the valley. However, the current project aims to divert only 170 million liters which is insufficient to meet the demand prevailing during the completion time of the project. 3) Generation of negative impact on local people. Temporarily settlement of large number of labors in the construction site has increased crime and the construction 16

works has polluted the environment. Thus the peaceful integrity of local community has been endangered. 4) Failure to conduct proper campaign for the project to create public awareness and to generate ownership of MWSP among public. 5) Failure to incorporate a hydropower component which would also lessen the current electricity crises and increase the economic benefit of project. 6) Generation of negative impact on general public of Nepal due to slow progress of work. Opportunity 1) The proposed tunnel could be used as a transit route for passage of surplus water from both the Melamchi and Langtang areas into the reservoir of Kulekhani Hydropower Project which usually suffers from acute water shortage. 2) MWSP can be developed into Multipurpose project including the following: Hydropower: Increasing water diversion from 170 million liters daily to 1.012 billion liters daily would enable establishment of two hydropower projects- a 35megawatt project downstream of convergence of the three rivers and a 190megawatt project on the lower Bagmati. Sewerage: The surplus water, once evacuated into the Bagmati, would clean the heavily polluted river. Irrigation: It can also be used as irrigation project to supplement the 13,000 hectares of land in Rautahat and Sarlahi districts. Threats 1) Deployment of alternative sources of water in the valley such as ground water, rain water, tank water. 2) Lack of proper drainage and drinking water pipes in Kathmandu valley. The distribution network suffers from 70 (the World bank data) percentage water leakage. The major threat is the immediate requirement of rehabilitation of this system.

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3) MWSP is huge infrastructure development project. It not only requires huge development cost but also demands huge maintenance cost. And, the lack of certainty of fund as maintenance cost in future is threat for MWSP. 4) Political instability and changing political ideology resulting in numerous problems in operation of work is a major threat. 5) Lack of coordination among various concerned government agencies is a threat to integrity of the project and its board. 6) Frequent strikes and riots at the local level is the existing as well as probable threat. 7) Pressure from community at the construction site is also a threat to projects integrity. 2.2.2 PESTLE Analysis The project is highly affected by many variables of the societal and task environments. Five forces namely Political-Legal, Economic, Socio-Cultural, Technological and Environmental have been influencing both the short and long term objectives of MWSP. Each of the forces with their influences on the project is shown below: Political-Legal Environment The political / legal force has a huge impact on the operation of MWSP, and profoundly affects its strategic formulation and execution. This force mainly relates to the laws, regulations and political situation of the country. A stable political and legal environment enhances smooth and uninterrupted work of the project. The variables of political-legal environment include tax law, law relating to rebate, environmental impact assessment, land acquisition and resettlement act, etc. The volatility in government and struggle for power has led to instability at policy level (MWSDB) of the project. Adverse political environment has hindered prosperity of MWSP and hence degraded its performance. Political interference is also being exercised in the form of labor union, call offs, strikes, pressure for nepotism etc. which has continuously obstructed the construction works.

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Further, regarding the legal aspect, approval of all concerned agencies is very essential for carrying out the work. However, frequent delay in approval from the agencies has imposed constant challenge to the project. To solve the problem, transparent government policy on tariffs should be made which would be known to consumer and the funding agencies. Second, an independent regulatory body should be made to monitor the implementation of policy and in particularly make decisions when tariff revision is requested. Economic Environment Economic conditions include factors such as interest rates, inflation rates, unemployment rates, economic growth, business cycle stage, labor cost, GDP trends, money supply, discretionary income, infrastructure quality, wage/price controls, etc. With a prolonged life span of MWSP, the effect of these factors has gone severe. Further, Nepal relies on foreign assistance for about 50 percent of its annual development expenditures. The persistent budget deficit of the country has caused the inflow of funds to finance foreign and local cost components of development projects. Likewise, the proposed level of local cost financing in MWSP is only 29% because of GoNs weak revenue generation capacity. The facts mentioned above have affected the annual disbursement of fund from GoN. Despite the financial hardship, government accords top priority to MWSP as it is aimed to alleviate the chronic water shortage in Kathmandu Valley. The Government is expected to be able to meet the average annual contribution of counterpart funds estimated between $5 and $12 million for the project. However, local financing assistance by external project co-financers is required to supplement the Governments contribution, and is justified given the large domestic cost component of the project. Socio-Cultural Environment Every organization operates in the society and is affected by the social and cultural factors. The extent of influence of such factors is higher in an infrastructure development project as it works in the proximity with community. Such projects are affected by the

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people's beliefs, values and attitudes. So understanding the view and wants of the local people is crucial, as they can either ease the work or provoke hindrances. MWSP has suffered massive social problems due to its failure to ensure sufficient supply of water, required in the Melamchi Valley for livelihood of the local community and ecosystems, after completion of the project. The risk of reduction of water flow leading to closing of existing irrigation canals, and loss of traditional employment for water mill workers and fishermen has further aggravated the scenario. Further, issues regarding compensation, and demands for additional construction works and employment from local people has caused a major hindrance for carrying out the project. On a larger scale, MWSP has unwittingly promoted social injustice. This is because more than 70 percent of the countrys Tenth five-year budget on water and sanitation has been solely allocated to the MWSP. Hence, while the project will benefit only 10 percent of countrys population, the debt is to be shouldered by all Nepalese. Further the scenario is deteriorated by the failure of MWSP to make sincere efforts to obtain prior consent of local people to ensure effective and meaningful participation in decision making process. Technological Technological forces refer to the skills, systems, and invention in the field of technology. It incorporates the aspects that make an organization perform its activities efficiently and effectively via the use of modern technology. In construction industry there is a constant pressure to upgrade and maintain technology in order to suit the demand for superior quality infrastructure development. Nevertheless, MWSP has not faced this sort of problem as it is the executing body for the project and hires expertise to conduct the implementation works. MWSP has hired contractor and consultant through International Competitive Bidding (ICB). Being chosen from open competition among competitive bidders, the selected contractor and consultant are highly qualified with advanced technology. MWSP has hence used the technologies of standard level.

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Environment The infrastructure development project has enormous impact on environment. To mitigate the negative impact, government and general public demand such projects to conduct environment impact mitigation programs. Like other infrastructure projects, MWSP also has significant impacts on the environment. The project has undergone Environment Impact Assessment during the feasibility study stage in accordance with the Environmental Protection Regulation of Nepal. The report showed that the locality around MWSP construction site is directly and indirectly affected by the work of the project. Impacts from the construction and operation of the main and adit access roads, transmission line, quarry and borrow pits includes erosion and landslides, siltation and sedimentation, spoils generation and their disposals, degradation of agriculture land, disruption of irrigation canal and cutting of trees. The impacts of tunnel construction includes: instability of the slopes, vibration, damages to the houses, disruption of water flow along tunnel route, and landslides, river pollution and turbidity due to disposal of oil and slurry disposal. Excavation of construction materials, aggregate crushing, drilling, blasting, quarrying and plying of vehicles produces hydrocarbons, CO, CO2, SO2, NOX, TSP, H2S and CH4 etc. Plying of trucks in non metallic roads produces huge amount of dust along with increasing the level of noise pollution. Intense vibration during blasting triggers cracking of houses and collapsing of structures within 3km from blasting point. Further, a total of 2815 trees have been removed from the project sites which has severely affected the habitat of birds. The construction activities have also destroyed the breeding sites of fish. To deal with such issues MWSP has separated adequate contingency funds to cover the costs of compensation and to conduct environment mitigation programs. The environment mitigation activities conducted by MWSP are - aforestation program with Department of Forestry, compensating the owner whose trees were cut down and providing consultation and support to the community forest user group. MWSP is also taking control measures to protect water quality and aquatic life, both in tributary streams and in the Melamchi River. The runoff control measures, has made 21

mandatory provisions for contractor to reduce sediment loads from all MDS construction sites to water sources. The mitigation measures include construction of side drains and culverts, minimization of removal of vegetation, storing of scraped top soil, prohibition of erection of electric pole in steep slope, prohibition of excavation from wet channel of the river, treating of liquid waste from construction site and camps. To minimize the effects of tunnelling and other construction activities, measures such as controlled blasting, concrete lining of tunnel surface to prevent water leakage, use of designated land for muck disposal, compaction, development of drainage networks and top soil application over the surface of muck disposal area, avoidance of construction during monsoon, prohibition of disposal at the drainage line, minimization of the use of heavy vehicles, and use of existing sites for mining of aggregates is done as per the recommendation in EIA. Hence, MWSP is compelled to comply with the environment mitigation measures mentioned above and the compliance is ensured by EIA.

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Part Three PRESENTATION OF MAJOR PROJECT UNDERTAKEN

3.1 Introduction One of the major problems encountered with large infrastructure projects worldwide is that of time and cost over-runs. Similarly, completing road construction projects on time and within budget has been a chronic problem in Nepal. Delays give rise to disruption of work, loss of productivity, late completion of project, increased time related costs, inconveniences to the public and third party claims and abandonment or termination of contract. Delays result from a number of causes such as design error, poor coordination, inadequate scope, weather damages, and other project changes. Such delays can be minimized only when their causes are identified. Hence the project entitled Identification of causes of delay in UAR/02 project to devise a management package for solution is developed with an intention to contribute in understanding one of the most prevailing problems of MWSP that has affected the entire project. 3.1.1 Background As an infrastructure development project, MWSP requires rigorous transportation of resources- material, equipment and manpower back and forth the construction site. However, some sites completely lack road facility while the others possess inconvenient facilities. Hence, apart from its main purpose- water diversion scheme, MWSP has been involved in construction of new access roads as well as upgrading of the existing problematic access roads. Among the various roads, our project focuses on upgrading of the existing UAR/02 road which is a 22.2 km single lane road from Lamidanda to Melamchi Pul Bazar. It is the ongoing road construction project which has caused immense stress to MWSP due to its prevailing problem of time overrun. Further, MWSP requires upgrading of the existing main access road (Melamchi Pul Bazar Tundi) as well as that of the three adit access roads. These roads are currently track openings to facilitate transportation to the project sites for tunnel construction. However, the condition of these roads is poor and MWSP 23

would in future require their upgrading to facilitate easy transport of resources- human as well as equipments. The scenario with UAR/02 is very devastating as it has been obstructed regularly by the public. Moreover, the reason for such obstruction lies underneath the management of the project from its initial phase. There exist several forces surfacing at different phases of the project which needs to be recognized. Hence, this project aims to explore all the stages of the projects lifecycle to identify where and what have caused delay in UAR/02. This would help MWSP to plan effectively for its future projects on upgrading of the currently existing track openings. Identification of the factors causing delay would benefit in the following ways: First, MWSP would uncover the major source that contributed to delay and hence, devise plans, policies and programs to avoid such instances in its other construction projects. 3.1.2 Need and Rationale of the Study The rationale of the study is that MWSP would understand one of its crucial problems associated with delay in road construction project. Delay of UAR/02 is an immense loss to the project, its donors and the local community. UAR/02 is a fundamental component of MWSP as it is linked to the inlet and all the three portals of the diversion tunnel and is also the only path for transportation to the camp site office at Melamchi Pul Bazar. Hence, the delay of UAR/02 has obstructed the construction of tunnel. Further, as the research is undertaken among all the concerned parties (employer, contractor and consultant) of UAR/02, the information derived from the study can be used by MWSP to know its strengths and weaknesses as well as develop or improve its practises, policies, and programs to prevent such occurrence in near future. It would also be a basis to decide on two issues that are yet to be resolved (i) contractors claim for financial compensation for delay and (ii) the project teams request to ADB for further time extension and release of additional fund. In fact, the report would present a comprehensive picture of the problems associated with road construction projects in Kavrepalanchowk and Sindupalchowk districts, which would assist MWSP in (i) 24

upgrading of the existing main access road and three adit access road tracks to reach the tunnel portals at Ambathan, Gyalthum and Sindhu and (ii) constructing a sealed gravel road to the inlet of tunnel which is not available currently. Moreover, the readers would gain familiarity with MWSP, its output and outcome, and the problems faced by the project. It also provides insights to the general readers about the real scenario and problems that are likely to be encountered in road construction projects. The study also adds new dimensions to our learning process by providing us with the opportunity to explore our research potential beyond the theoretical knowledge provided in class. Decision Problem Should MWSP revise its practices, plans, and programs regarding the infrastructure development project especially road construction which is required to reach the project sites? Research Problem To identify the source causing delay in UAR/02 To determine the major factors contributing to delay of road construction project in that particular area 3.1.3 Objectives of the Study The research has been carried out for MWSP. It is a part of the internship program for partial fulfilment of the MBA degree from KUSOM. The main objective of the study is as follows: To gain practical understanding of a real project with reference to an infrastructure development project To correlate theoretical knowledge of research with practical experience gained at workplace To gain professional experience as a researcher in one of the mega projects of Nepal

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Primary Objective To prepare a report for MWSP analyzing one of its most prevalent problems.

Secondary Objective To identify the source causing delay in UAR/02 To determine the major factors contributing to delay of road construction project in that particular area To understand the effects of delay in UAR/02 To provide management solution for MWSP to address the existing problems associated with delay To devise a control package for MWSP to address as well as control time overrun problem in future construction projects. 3.1.4 Scope of the Study The study focuses on understanding the source and its underlying factors that have caused delay in UAR/02 project through interaction with the major entities (employer, contractor and consultant) of the project. The study also aims to provide recommendation for improving the practices of MWSP regarding its other construction projects especially road construction. This would facilitate MWSP to avoid such impediments in future as it may be involved in construction of additional roads to facilitate its main project. Further it would also be a basis to make decisions on the two current issues namely (i) the financial compensation claimed by contractor for delay and (ii) request to the donor, ADB to release additional fund required for UAR/02. The study also intends to devise a package for control along with a questionnaire for identification of the causes of delay which would facilitate the monitoring and control mechanisms of road construction projects of MWSP.

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3.1.5 Limitations of the study The limitations of the study include the followings: 1. The study is based on the scenario of Kavrepalanchowk and Sindhupalchowk districts. 2. Inference from research is based on a limited sample size. 3. The access to resources was limited due to confidentiality. 4. The study was conducted for the first time for MWSP so it reflects the current scenario and not the trend. 3.2 Conceptual Framework 3.2.1 Literature Review In Total Project Management Book, P K JOY has mentioned general causes for overruns in Chapter 2, An introduction to project overruns and the techniques to combat them. He has listed the potential factors causing overrun in six different phases of a projectpre- feasibility study, evaluation, technology selection and engineering, contracting and procurement, construction and start up. He mentioned that delay in land acquisition, delay in forest and environmental clearance, lack of infrastructural facilities, selection of incompetent consultant are some of the factors causing delay in Pre-feasibility study phase. Inadequate project study, political influence in site selection, consultants and project authorities inadequacies leading to wrong economic studies, misleading fund flow statements etc are factors causing delay in evaluation phase. Poor or outdated technology acquisition, delay in completing detail engineering, lack of design date, absence of engineering schedule, inefficient procedure for scrutiny, approval and transmittance of drawings and specifications are factors causing delay in technology selection and engineering phase. Delays, slipshod preparation of bid documents, the practice of accepting lowest quotation irrespective of the vendors quality and/or contractors competency, delay in the opening of letters of credit and issuance of various guarantees to foreign suppliers etc are the factors causing delay in contracting and procurement phase. Delay in contractors mobilization, poor planning by contractor, belated clearances, indecision and delayed decision making, 27

delay in replacement suppliers are some the factor causing delay in construction phase. Absence of commissioning specialist, failure of equipment and parts, design changes, defects in erecting and installations are some of the factors causing delay in start-up phase. Weak project team, indecision, lack of managerial talents, absence of personal accountability and commitment, lack of awareness of money value of time, poor quality awareness, inadequate controls and ignoring of warning signal are the factors that can cause delay generally in all phases. Chan and Kumaraswamy (1996) surveyed on Contributors to construction delays in Hongkong as seen by clients, contractor and consultants, and examined the factors affecting productivity. The results of their research indicate that the five principal and common causes of delays are: poor site management and supervision; unforeseen ground condition; low speed of decision making involving all projects team; client initiated variations; and necessary variation of works. These causes were categorized into the following into eight groups: (i) project-related factors include project characteristics, necessary variations, communication among the various parties, speed of decision making involving all project teams, and ground conditions; (ii) client-related factors include those concerned with client characteristics, project financing, their variations and requirements, and interim payments to contractors; (iii) design team-related factors include design team experience, project design complexity, and mistakes and delays in (producing) design documents; (iv) contractor-related factors include contractor experience in planning and controlling the projects, site management and supervisions, degree of subcontracting, and their cash-flow; (v) materials related factors include shortages, materials changes, procurement programming, and proportion of off-site prefabrication; (vi) labor factors related include labor shortages, low skill levels, weak motivation, and low productivity; (vii) plant/equipment related factors include shortages, low efficiency, breakdowns, and wrong selection; and (viii) external factors include waiting time for approval of drawings and test samples of materials and environmental concerns and restrictions. Mezher and Tawil (1998) conducted a survey on Causes of delays in the construction industry in Lebanon from the viewpoint of owners, contractors and

architectural/engineering firms. It was found that owners had more concerns with regard 28

to financial issues, contractors regarded contractual relationship the most important, while consultants considered project management issues to be the most important causes of delays. Abd. Majid and McCaffer (1998) studied the factors of non-excusable delays that influence contractors performance. They classified the main causes of non-excusable delays according to the source of occurrence, and then identified the factor contributing to those causes. They classified the factor of causes of non-excusable delays into twelve groups: material-related delays; labor-related delays; equipment-related delays; financialrelated delays; improper planning; lack of control; subcontractor-related delays; poor coordination; inadequate supervision; improper construction methods; technical personnel shortages; and poor communication. Odeh and Battaineh (2002) conducted a research entitled Causes of construction delay: traditional contracts based on 28 well recognized causes of delay in Jordan categorized under eight major groups: client related factors, contractor related factors, consultant related factors, material factors, labor and equipment factors, contract factors, contractual relationship factors and external factors. These factors were ranked based on the calculation of relative importance index from the view point of contractors and consultants. The study has indicated that owner interference, inadequate contractor experience, financing and payments, labor productivity, slow decision making, improper planning, and subcontractors are among the top ten most important factors causing delay. The study recommended that the situation can be improved by: enforcing liquidated damage clauses and offering incentives for early completion; developing human resources in the construction industry through proper training and classifying of craftsman; adopting a new approach to contract award procedure by giving less weight to prices and more weight to the capabilities and past performance of contractors; and adopting new approaches to contracting such as design-build and construction management (CM) type of contracts. S. M. Vidalis (2002) conducted a research titled Cost and time overruns in Highway construction based on the data of 708 highway projects within the Florida Department of Transportation over the years (1999-2001). This paper includes types of delay, causes 29

of cost and time overruns, parties involved in causing delay and key factors in reducing delays. The finding of the paper has revealed that mainly delay occurs at design phase and there are four types of delay - excusable or non-excusable, concurrent or nonconcurrent, compensable or non-compensable, and critical or non-critical delays. The research revealed that 39% of delay and 29% of cost overrun were attributed from errors and omissions in plans and modifications. Plans and modifications include changes in construction blueprints, specifications, and materials quantities/quality. And 34% of delay and cost overruns occur due to changed conditions. Changed conditions are caused by failure in detection of bad soil, environmental problems, and preparation of drawings which do not match actual site conditions. The research has also mentioned that consultant, staff and third party are primarily involved in causing delay of about 55%, 32% and 13% respectively. Further, this paper also mentions that development of goals before the start of planning, improvement of quality of design plans, use of experienced staffs and consultants, enhanced coordination with government agencies, better management of utilities help to reduce delays. Ibnu Abbas Majid (2006) conducted a research entitled Causes and effects of delays in Aceh construction industry in Malaysia. The study reveals that the top ten most important factors that contributed to the causes of delays include insufficient numbers of equipment; inaccurate time estimate; monthly payment difficulties; changes orders; inaccurate cost estimate; poor site management and supervision; inadequate modern equipment; shortage of construction materials; incompetent project team; improper project planning and scheduling; and contractors financial difficulties. Contractor-related delays was ranked the most significant groups that cause delays, followed by equipmentrelated delay, client-related delays, material-related delays, finance related delays, consultant-related delays, external-related delays, and labor related delays. Time and cost overrun were the common effects of delays in construction projects. The study focuses on describing the different types of construction delays and the factors that contribute to the causes of delays. The study also shows that the delay scan be minimized only by identification of the causes and the factors leading to delay.

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3.2.2 Conceptual Framework Bramble and Callahan (1987) have defined delay as the time during which some part of the construction project has been extended or not performed due to an unanticipated circumstance. Some projects are only a few days behind the schedule while some are delayed over a year. Delay is the late completion of works as compared to the planned schedule or contract schedule. It is a situation when the contractor, consultant, and client jointly or individually contribute to non-completion of project within the stipulated or agreed period. The duration of a construction project is an important factor to be set forth while entering into a construction agreement. However, compared to other industries, it is difficult to complete a construction project in which many construction trades participate and numerous unknown variables exist. The problem is more evident in the traditional types of contracts in which the contract is awarded to the lowest bidder- the awarding strategy of majority of public projects in developing countries including Nepal. The types of delays and their causes need to be analyzed in order to determine and solve the Research Problem. Delays can occur at different phases of a projects lifecycle due to two major causes namely technical and non-technical. The delivery of construction projects are performed mainly using traditional processes where specialization of professional organizations including architects, engineers, speciality contractors have adopted a segmented rather than an integrated of type of process. Majority of the projects are based on design-bid-build (DBB) system typically consisting of discrete project specification/feasibility/preliminary design, outline design, consents and land acquisition, detailed design and procurement, construction and handover/operation phases. A brief description of a road construction project lifecycle is given in the Annex I. Abd Majid and McCaffer (1998) classified delays into three classes - (a) Excusable delays with compensation, (b) Excusable delays without compensation, and (c) Nonexcusable delays. Excusable delays are those not attributable to the contractors actions or inactions, and typically include unforeseen events. Excusable delays with compensation are caused by the clients actions or inactions where the contractors are entitled to time extension as well as monetary compensation. Excusable delays without compensation are where neither the client nor the contractor is deemed responsible. Here, 31

contractors are warranted with only time extension since there are no grounds for damages. Non-excusable delays are delays which result from the contractors or subcontractors actions or inactions. The client could be entitled to liquidated damages for such delay. Delays can be minimized when their causes are identified. Identification of the factors that contribute to delay has been studied by numerous researchers in several countries. These range from factors inherent in technology and its management, to those resulting from physical, social, and financial environment. A total of fifty one factors in seven groups of causes of delays have been used for the survey to collect information from the targeted respondents. These groups of causes include- (i) Donors related delay (with three factors), (ii) Employer related delay (with ten factors), (iii) Consultant related delay (with nine factors), (iv) Contractor related delay (with sixteen factors), (v) Community related delay (with five factors), (vi) Government/Local bodies related delay (with three factors), and (vii) Force Majure related delay (with five factors). Figure 1 show the entire picture incorporating groups and delay causing factors that are used in research to determine which of them contribute highly to the current situation of UAR/02 project. Most of the road construction project endures delay at different phases which is determined by the nature of work and location of construction site which could be dealt tactfully with proactive preparation. Hence, the research is aimed to uncover the underlying sources of problem that could arise in MWSPs other road construction works in Sindupalchowk district.

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3.3 Research Methodology 3.3.1 Sample and Sampling The concerned parties- employer, consultant and contractor of UAR/02 were taken for the study. Non-Probabilistic sampling, which relies on personal judgement of the researcher, was used to select the respondents. Among different non probabilistic sampling techniques, Judgemental sampling was used where the chief of the concerned agency parties- Employer, Consultant and Contractor were selected for the research. At the same time, information was collected from the concerned officials of the project as well as community leaders and members. Table 3.1 Sample Profile of the respondents
Respondent Category Employer Company Position No. of respondent 1

Melamchi Water Supply Project TAEC Consult P. Ltd Marushin Shitaka Construction Co. INC.

Deputy Executive Director, PIU

Consultant Contractor

Technical Director Chief, Project Management and Implementation

1 1

3.3.2 Instruments The study is based on both qualitative and quantitative survey using two instruments for data collection- questionnaire and in-depth interview. The questionnaire was developed, based upon the requirement of the project, after studying and making observation of a few road construction projects. Further, in-depth interview was conducted to substantiate the survey by extracting relevant information on the topic. Books on Project Management and Research Technology, Reports of MWSP, Articles and Research Papers on delay in road construction project and Guidelines were reviewed for designing the conceptual framework and developing the questionnaire for survey. The study provided general idea on the possible factors causing delay in road construction projects. Four different sets of questionnaire belonging to two groups were devised. Group A 34

consists of quantitative questionnaire devised for the employer, consultant and contractor of UAR/02 to identify the most probable factors of delay. Group B consists of three sets of qualitative questionnaires developed for the above mentioned respondents to understand the implication of delay caused by different factors. These questionnaires are discussed below in brief: 1. Group A The questionnaire was devised using likert scale to analyze the extent to which each of the factors had contributed in causing delay in UAR/02. The questionnaire includes different causes of delay arising from seven different sources involved in the project as mentioned below: a. Donor: It includes three potential factors which arise from the side of donor and contribute to delay. b. Employer: It includes ten potential factors which arise from the side of Employer and contribute to delay. c. Consultant: It includes nine potential factors which arise from the side of Consultant and contribute to delay. d. Contractor: It includes sixteen factors which arise from the side of Contractor and contribute to delay. e. Community: It includes five potential factors which arise from the side of community and contribute to delay. f. Government/ Local Bodies: It includes three potential factors which arise from the side of Government/ Local bodies and contribute to delay. g. Force Majeure: It includes five potential which arise due to Force Majeure and contribute to delay. 2. Group B These questionnaires were developed to provide a basis for conducting in-depth interview with the employer, consultant and contractor of MWSP as a part of the qualitative

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research. The interview was intended to provide insight and understanding of the consequences created by each of the delay causing factor. 3.3.3 Data Collection The research is aimed to collect both the primary as well as secondary data. Questionnaires and in-depth interview were designed to collect primary data while reports of UAR/02 were reviewed to abstract secondary data in order to facilitate the findings. Close- ended questions with an open option to extract additional views from the respondents were used. Also frequent interaction with the respondents, visit to the camp site office and project sites, observation, informal conversation with the public and camp site officers were used for collecting information. 3.4 Presentation and Analysis of the project The collected data were analyzed using MS Office. MS Excel was used for graphical presentation and interpretation of data. 3.4.1 Data Analysis This part is presented in two sections- the first section deals with the analysis of the project life cycle of UAR/02 to identify the phase where problems leading to delay emerged and the second section analyzes the stakeholders to reveal the sources and underlying factors that contributed to delay. A. Analysis of project life cycle This section focuses on analysing the different phases of project to screen where the factors causing delay have emerged. The analysis is segmented into four parts in accordance to the different phases of project lifecycle. These include project specification/feasibility/preliminary design, detailed design and procurement, consents and land acquisition, and construction phases with exception of the outline design and handover phases. UAR/02 did not require outline design phase as the project was intended to upgrade the existing track which was unreliable for persistent use. Further, it has also not yet reached the handover phase.

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1) Project specification/feasibility/preliminary design No specific problems were generated during and because of the first phase of the project. 2) Detailed Design It is the phase where the problems leading to delay were sown. The detailed design prepared by NORPLAN, the design consultant, was based on the Cadastral Map of the Department of Survey under Ministry of Land Reform and Management. The design was inappropriate as compared to the existing track especially at a stretch of 9.7-10.5km in Sipaghat where the design did not reveal the actual track. Hence, issues were raised for that stretch of land regarding transfer of ownership and compensation which was followed by law suit claiming for compensation against use of private land by the project. This has led not only to delay in completion of UAR/02 but has also caused incur of heavy physical and material loss. 3) Consents and land acquisition It is the phase where almost all issues leading to delay belong. MWSP has faced uncountable problems due to the late consent procedure of concerned government agencies as well as that of the community members belonging to project affected areas. The reasons behind slow consent procedure of government agencies include slow review mechanism of MWSP, slow approval mechanism of MWSDB and then slow decision making process of the government agencies like Ministry of Forest and Finance (especially Department of Custom). Similarly, slow consent procedure of the community arose due to incongruity of the attitude of the public and MWSP regarding the project. The slow consent mechanism resulted in deferral of succeeding activities leading to delay of the entire project. Further, land acquisition is the most prevalent nuisance which has not only caused delay but also degraded the image of MWSP. Frequent obstructions rose due to land issues for the segments which did not align on the existing track and also for those aligned on the track. Delay in land acquisition was caused due to hesitance from three partiesconcerned government agencies, MWSP and local community. The concerned government agencies were sluggish in their procedures regarding land measurement and 37

valuation which later caused delay in MWSPs compensation process and also resentment among the community against the project. All these led to frequent disturbances in work, recurrent change in program schedule and price escalation. 4) Construction The implementation phase had to abide with all the problems that were generated in the preceding phases. Moreover, additional serious problems emerged during this phase which have significantly postponed the completion time of UAR/02. This section analyzes the construction phase by assessing the program schedules proposed at different periods with evaluation of the actual scenario based on site visit. Work Schedule Analysis This part deals with the analysis of the program schedule proposed by the contractor with reference to the three versions of updated program schedules devised at different period to identify the stages which are delayed. Work Schedule 1 The facts and figures listed in the first Work Schedule indicate that the project was envisioned to be completed within December 2009. Brief descriptions of timings are given below: 1. Section A (Km 0+000 to 7+000): This section was scheduled to be completed by December 31st but was not been accomplished. 2. Section B (Km 7+000 to 14+000): This section was scheduled to be completed by December 31st but was not been accomplished. 3. Section C (Km 14+000 to 23+000): This section was scheduled to be completed by December 31st but was not been accomplished. Work Schedule 2 The actual scenario was contrary to the plan and only a certain portion of works was accomplished. The schedule was updated with extension of time so that it is completed by July 2010.

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1. Section A (Km 0+000 to 7+000): This remaining work of this section was scheduled to be completed by August 31st but was not been accomplished. 2. Section B (Km 7+000 to 14+000): This remaining work of this section was scheduled to be completed by August 31st but was not been accomplished. 3. Section C (Km 14+000 to 23+000): This remaining work of this section was scheduled to be completed by August 31st but was not been accomplished. Work Schedule 3 The schedule was further updated with second extension so that the remaining works after July 2010 would be accomplished by December 2010. The works to be done in this extended time period are mentioned below: 1. Section A (Km 0+000 to 7+000): Dispute Management, Structures (2 culverts, 500 m3 retention wall), Pavement (Subgrade 0.25km, Subbase 0.25km, Base 1.5km, First Ottaseal 1.5km, Second Ottaseal 1.6km). This section was scheduled to be completed by November 21, 2010 and has been successfully accomplished. 2. Section B (Km 7+000 to 14+000): Dispute Management, Structures (Earthwork 4km, L-drains 4km, X-drains 5 nos, 400 m3 retention wall in 4km), Pavement (Subgrade 4km, Subbase 4km, Base 4km, First Ottaseal 4km, Second Ottaseal 7km). This section was scheduled to be completed by December 26, 2010 but has not been accomplished. The details of the segments that are not completed is discussed in the next section Project site Analysis. 3. Section C (Km 14+000 to 23+000): Dispute Management, Structures (Earthwork 1.5km, L-drains 1.5km, X-drains 5 nos, 1400 m3 retention wall in 1.5km), Pavement (Subgrade 1.5km, Subbase 1.5km, Base 2.3km, First Ottaseal 2.3km, Second Ottaseal 9km). This section was scheduled to be completed by December 26, 2010 but has not been accomplished. The details of the segments that are not completed is discussed in the next section Project site Analysis. 39

The details of the Work Schedule for December 2009, July 2010 and December 2010 are included in the Annex II. Current Status of UAR/02 The project has yet progressed as foreseen by the third Work Schedule. Hence the concerned parties have proposed the donor, ADB for another extension of time along with additional release of fund to cover the anticipated cost overrun. The list of the remaining works after December 2010 is as follows: Earth work for back cutting is complete in 18 km length of the road (0km 7km, 10.5km-15km and 16km- 22.2km section). Earth work started in the long stopped section of km 7 to 9.7 km. Some structures are being done but some structures are being stopped partially by locals. Construction of drain, masonry, gabion, culverts are mostly complete in 18 km stretch of the road sections: a) 0-7km; b) 10.5-15km; c) 16-22.2km. 1st layer of ottaseal is constructed in 15 km length. 2nd layer Ottaseal is complete in 8 km section. Road pavement works (sub-grade, sub-base, base and Ottaseal) are continuing slowly due to cold weather and work stoppages exist in a) km 5-7; and b) km 10.5-11.5. Works stopped/partially allowed at a) km 7-9; b) km 9.7-10.5; c) km 10.5-11.5; d) km 14.2-14.5 and e) km 15.1-16.1.

Project Site Analysis During the field visit, we observed that the construction work is completed in section A whereas in some stretches of section B and C, work has not yet commenced or stopped. We found that the reasons for stoppage of work at these places are of diverse nature. These reasons are discussed below based on observation and interaction with the MWSP camp site staffs and local people: 1. Issue related to additional costs The construction is not started at km 7 to 10.5; km 14.2 to 14.5 and km 15 to 16 due to Guthi Land issue. The local, who have been cultivating the Guthi/public land for years,

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are demanding more compensation than that decided by the Compensation Committee headed by the Chief District Officers. Further work has not started at the stretches of km 9.7 to 11.3 and km 17 to 18. The issue is related to new demands for compensation on lands aligning on the existing road track. The land had been earlier given by the public for constructing the track without any compensation. The problem is more pronounced in Sipaghat area (Km 9.7 to 11.3) where the public have filled case in Court against the project for use of private land. The litigation is under consideration by the Court. In addition to the compensation for land required for the project, the local community are found to be claiming for trees and other flora of hills that are being destroyed. We evidenced one such instance where the local were creating a chaos for cutting a tree from the hill for earthworks at a stretch of km 19 claiming for compensation. 2. Demand for high masonry wall Further, demand for high masonry walls was also observed to be a cause for delay. We observed that the project has constructed high walls beyond the amount mentioned in BOQ on both- valley as well as hill- sides of the road. Local people are obstructing work to pressurize the project to construct high walls covering the entire cut slope which is technically not feasible. At one place we observed that the wall has been constructed very high which seems awful. The local people at Melamchi Bazzar (km 22), Dhakal Khahare (km 18), Bahunipati (km 16-18) and other areas have stopped the work demanding masonry walls parallel to the row of their houses. 3. Unwillingness to transfer property (land/house) ownership We also observed that the land owners have not transferred the ownership and are continuing to cultivate even after receiving compensation for their land. Further, the local people are refusing to give up their houses for which they have received compensation. 4. Irrational demands Frequent local disruptions due to excessive demands of employment, construction of longer or new access roads, river diversions, temples, and donations to schools/clubs have caused difficulty in smooth implementation. 41

5. Growth of crusher plants in the area Further, we observed that more than seven number of crusher plants are being operated along this road. This has increased traffic rate as well as damaged the road. We felt that such uncontrolled axle overloaded tippers from these crushers has shortened the life of the road. It has also caused problem for construction of new pavement layers and damaged the newly constructed drains and masonry structures. Our concern was verified by the Axle load survey conducted by the Department of Roads. It showed that the overloading is persistent in UAR/02 which reveals that the traffic of trucks is more than double the legally allowable limit. The photographs of the project site are included in ANNEX VIII.

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B. Analysis of stakeholders of the project This part analyzes in detail, all the stakeholders associated with the project to identify the sources that have led to delay along with their underlying factors and the extent of their contribution in causing delay in UAR/02. The details of the data analysis are included in the ANNEX IV. 1. Donor Analysis of the donors involvement shows the respondents have same view regarding the two factors namely Inadequate fund release and Late release of fund. They consider that these factors have very low contribution on delay as the donors are providing adequate fund at the right time as agreed in the contract. However, contrary to the other parties who consider very low contribution, the consultant thinks that the factor Slow approval mechanism has very high contribution on delay. This is due to the persistent hesitation of ADB to approve the loan for UAR/02 road over a period of four years. Here, the employer and contractor are found to be indifferent to this issue as it belongs to the period prior to signing up of the contract.

Fig 3.2: Contribution of the factors arising from donors side in causing delay

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2. Employer Analysis of the employers competence shows that some drawbacks were displayed, in both the practise and management of resources, which led to delay in the project. Each of the factors arising from the employers side and contributing to delay is discussed below:

Fig 3.3: Contribution of the factors arising from employers side in causing delay a) Frequent Change of project Manager The employer, consultant and contractor have different views on the factor Frequent change of Project Manager. The employer considers this factor has low contribution. The consultant justifies his rating of medium contribution by putting forward the statement Organization is affected by personal memory along with institutional memory and MWSP is no exception to it. Moreover, the contractor has rated very low contribution as his interaction with MWSP is via the consultant and is not affected by change in the management leader. b) Ineffective planning The employer considers that the Ineffective planning has very low contribution whereas the consultant and contractor consider that this has medium contribution on delay. Ineffective planning especially for land acquisition and compensation to local people is 44

the major drawback. MWSP has failed to foresee the complexities of land acquisition issues that may arise later and hence, did not take any initiative to settle these issues during the lag period of four years (2004-2008). c) Variation/Change order The employer and consultant showed consensus in stating that the factor Variation/ change order has medium contribution as the given additional works like slide removal, extension of MWSP office and river training would require extra time. However, the contractor rated as high contributing as he had to contribute sufficient time than estimated due to the variations. d) Slow approval mechanism The employer has stated that the factor Slow approval mechanism has low contribution on delay. However, the consultant and contractor show consensus in stating that the factor has very high contribution. The slow nature of approval mechanism is due to the fact that MWSP is a public organization where consents from many and diverse sectors have to acquired before providing approval on any issue. e) Delay in Land acquisition The employer considers Delay in Land acquisition has medium contribution whereas the consultant and contractor consider that it has very high contribution on delay. The process of land acquisition is still not complete. It should have been done before commencement of construction works as there was ample time during the lag phase of four years. f) Slow compensation procedure to public The employer considers Slow compensation procedure to public has medium contribution whereas the consultant and contractor consider that it has very high contribution in causing delay. The employer justifies his rating by stating that certain rules and procedure should be followed for compensation which may take a couple of weeks. But the local people do not want to follow the procedure and want their compensation demands to be fulfilled instantly at the site. This is the reason for high rating of consultant and contractor who have been obstructed by the public on the compensation issues. 45

g) Slow rebate procedure All the respondents have shown consensus on the factor Slow rebate procedure stating that it has very low contribution. This is because none of the equipment/machineries were imported for UAR/02 project. h) Delay in payment The employer and consultant state the factor Delay in payment has low contribution in causing delay by justifying that there has been some instances of late payment to the contractor. However, the contractor considers that it has high contribution as the payment has been delayed for about five times till date. This has in turn affected his payment to the labor/subcontractor/supplier. i) Ineffective coordination The employer considers the factor Ineffective coordination has low contribution whereas the consultant and contractor consider that it has high contribution in causing delay. They believe that employers ineffective coordination with public has resulted in the pronounced severities regarding the issues on land acquisition and compensation payment. j) Passive monitoring and feedback All the respondents have shown consensus regarding the factor Passive monitoring and feedback by stating that it has low contribution in causing delay of UAR/02. It indicates that employer has regularly monitored the progress by making it mandatory for each of the contractual parties to submit monthly progress report. Further, the employers agency also prepares monthly report based on the reports provided by the contractor and consultant. 3. Consultant Analysis of the consultants competence shows that some drawbacks were displayed especially in the detailed design and its related activities which have contributed significantly in the delay. Each of the factors arising from the consultants side and contributing to delay is discussed below:

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Fig 3.4: Contribution of the factors arising from consultants side in causing delay a) Frequent change in design specification The employer, consultant and contractor consider that the factor Frequent change in design specification has very low contribution in causing delay. It indicates that the preexisting track was used as the main frame for the design of the UAR/02 with no frequent changes in the design except for one prime location at Sipaghat. The design prepared by NOPRPLAN did not align with the existing track in the Sipaghat area where some changes had to be incorporated to match the alignment. b) Inaccurate time estimation The employer and consultant have shown consensus in stating that the factor Inaccurate time estimate has medium contribution in causing delay. They assume that the time estimation done by design consultant, NORPLAN did not consider the likelihood of occurrence of the obstructions that have been faced in reality and hence, did not include any contingency period. However, the contractor considers that the factor has very low contribution by stating that the time estimation was accurate and the job would have been accomplished within the stipulated time given that there were no such disturbances.

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c) Inaccurate cost estimation All the respondents have same opinion that the factor Inaccurate cost estimate has very low contribution in causing delay. It indicates that the cost estimated by the design consultant was accurate and hence, it has not significantly affected the progress of UAR/02. d) Inaccurate quantity estimation The employer considers that Inaccurate quantity estimate has low contribution whereas the consultant and contractor consider that it has very low contribution in causing delay. It indicates that the quantity estimated by the design consultant was approximately correct. e) Lack of timely inspection All the respondents have same view that the factor Lack of timely inspection has very low contribution in causing delay. It indicates that the supervision consultant has regularly inspected the progress of UAR/02. f) Delay in document processing The employer and contractor show consensus in stating that the factor Delay in document processing has low contribution whereas the consultant considers that it has very low contribution in causing delay. It indicates that the supervision consultant of UAR/02 has shown adequacy in processing the documents on time. g) Delay in instruction delivery The employer considers that Delay in instruction delivery has low contribution whereas the consultant and contractor consider that it has very low contribution in causing delay. It indicates that the employer and contractor have no complaints about the delivery of instruction from the consultant. h) Inappropriate price adjustment The employer considers that Inappropriate price adjustment has very low contribution as price adjustment in the contract is based on the standard formula which approximately addresses the problems of inflation. The consultant and contractor consider that it has 48

medium contribution in causing delay. It means that these clauses have proved to be inappropriate in some instances particularly during Olympics 2008. Hence, it is also a cause for resulting delay in the project as the contractor may consider postponing the progress to avoid such instances which may lead to immense loss for his agency. i) Poor coordination The employer and consultant consider that Poor coordination has low contribution whereas the contractor considers that it has very low contribution in causing delay. It indicates that the coordination of the consultant was better with the contractor than the employer. 4. Contractor Analysis of the contractors competence shows that the drawbacks displayed in three sectors namely labor, equipment and practice led to delay in the project. Each of the factors arising from the contractors side and contributing to delay is discussed below:

Fig 3.5 Contribution of the factors arising from contractors side in causing delay a) Delay in payment to the Supplier/Labor/Subcontractor The employer and consultant have stated that the factor Delay in payment to the Supplier/Labor/Subcontractor has medium contribution. The slow payment by the contractor has resulted in frequent abandonment of works by the labor leading to 49

requirement of extra time in periodic labor mobilization. However, the contractor does not accept this and state that the factor has low contribution as the payment was not frequently delayed. Moreover, it happened only when the employer had in turn delayed the payment to the contractor. b) Financial hardship The employer and consultant have shown consensus in stating that the factor Financial hardship of contractor has medium as there were instances of late payment the concerned parties. However, the contractor does not accept this and state that the factor has very low contribution as he had been managing fund adequately through different sources like banks. c) Shortage of material The employer has stated that the factor Shortage of material has low contribution while the consultant thinks that it has medium contribution which was evident during the period of fuel scarcity in the country. Moreover, the contractor also agree on the context and state that the factor has low contribution in causing delay. d) Poor quality of construction material All the three concerned parties have agreed that the factor Poor quality of construction material has low contribution in causing delay. The materials procured by the contractors agency were of appropriate quality as agreed on the contract. e) Imported construction material All the three concerned parties have agreed that the factor Imported construction material has low contribution in causing delay. The materials used were generally procured from local sources and hence did not require additional time for deployment. f) Shortage of skill labor The employer has stated that the factor Shortage of skill labor has medium contribution whereas the consultant thinks that it has very high contribution in causing delay. The shortage of skill has resulted due to exodus of labor for foreign employment. Moreover, the contractor has agreed with the employer and emphasized that the law requires certain 50

percentage of the total labor must be hired from the local community who display profound lack of appropriate skills. g) Slow mobilization of labor The employer has stated that the factor Slow mobilization of labor has high contribution whereas the consultant thinks that it has very high contribution in causing delay. They show consensus in stating that contractor has required extra time for procurement of human resource which may have resulted from discontentment of the labor due to slow payment or lack of sufficient local labor. However, the contractor does not accept this fact and state that the factor has very low contribution on delay. h) Inefficient labor productivity The employer has stated that the factor Inefficient labor productivity has high contribution whereas the consultant thinks that it has very high contribution in causing delay. Further, the contractor state that the factor has medium contribution. They show consensus in stating that the procured labor displayed poor productivity resulting in slow progress of works. i) Absenteeism The employer has stated that the factor Absenteeism has low contribution whereas the consultant thinks that it has very high contribution in causing delay. Further, the contractor state that the factor has medium contribution. The occurrence of frequent festivals has promoted the shirking behaviour of labours leading to prolonged absence from work. This is one of the persistent problems faced by the contractor which has affected the entire schedule of the project. j) Strike All the respondents have show consensus in stating that the factor Strike has very low contribution in causing delay. k) Insufficient number of equipment The employer has stated that the factor Insufficient number of equipment has very high contribution whereas the consultant thinks that it has high contribution in causing delay. 51

They show consensus in stating that contractor had deployed few equipments especially carriers which may have resulted from occupancy of resources in other projects. However, the contractor does not accept this fact and state that the factor has very low contribution on delay. l) Frequent equipment breakdown The employer has stated that the factor Frequent equipment breakdown has medium contribution whereas the consultant thinks that it has high contribution in causing delay. The factor would have affected as the contractor had deployed insufficient quantity of equipments and the breakdown of one would have a significant impact. However, the contractor does not accept this fact and state that the factor has very low contribution on delay. m) Shortage of equipment parts The employer has stated that the factor Shortage of equipment parts has low contribution whereas the consultant thinks that it has medium contribution as the shortage of spare parts of the scarcely deployed equipments have considerable impact on progress of works. However, the contractor does not accept this and state that the factor has very low contribution on delay. He acclaims that the spare parts were not required as there were no significant instances of equipment breakdown. n) Obsolete equipment The employer and contractor show consensus in stating that the factor Obsolete equipment has very low contribution whereas the consultant thinks it has low contribution in causing delay. This shows that the equipments used by the contractor were modern and updated. o) Slow reporting mechanism The employer has stated that the factor Slow reporting mechanism has medium contribution whereas the consultant thinks that it has high contribution in causing delay. This reflects inefficiency in contractors management practice which has significantly affected the working procedure of both the consultant and employer. However, the

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contractor does not accept this fact and state that the factor has very low contribution on delay. p) Slow response to suggestion The employer and consultant show consensus in stating that the factor Slow response to suggestion has high contribution in causing delay. Both the parties agree that the contractor has often displayed slow response to suggestions, which were made especially for improvements. This practice of contractor is due to the fear of incurring additional costs. However, the contractor does not accept this and state that the factor has very low contribution on delay. 5. Community All the three parties have shown consensus in the fact that the local community is the source causing maximum problems which have led to delay of UAR/02. Each of the factors arising from the communitys side and contributing to delay is discussed below:

Fig 3.6 Contribution of the factors arising from communitys side in causing delay a) Prolonged transfer of land ownership All the concerned parties have agreed that the factor Prolonged transfer of land ownership has very high contribution in causing delay. The sluggish transfer of 53

ownership by the local people was due to their growing greed to extract large compensation from the project. It is the most prevalent and persistent problem of that community which has not only affected the UAR/02 project but has caused significant impact on MWSP as a whole. b) Irrational compensation demand All the concerned parties have agreed that the factor Irrational compensation demand has very high contribution in causing delay. The local people have occasionally demanded for irrational compensation which is beyond the limit of GoNs policy. This has prolonged the mechanism of land acquisition by the employer and hence that of handover of site to the contractor for construction. c) Demands for additional work All the concerned parties have agreed that the factor Demands for additional work has very high contribution in causing delay. The local people have frequently demanded for additional works, both related as well as unrelated to the UAR/02 project. These include high masonry walls; facilities for water supply, education and health; and wider roads which require additional time. d) Frequent disturbances in work All the concerned parties have agreed that the factor Frequent disturbances in work has very high contribution in causing delay. The local people have often caused disturbances in work by claiming for irrational, large and immediate compensation against all activities of the project. They have even caused frequent stoppage of work to pressurize the employer and GoN for fulfilling of additional demands as mentioned above. These activities have postponed UAR/02 by a significant period hence, leading to delay. e) Conflict at local level (Familial/Neighbor) The employer and contractor have agreed that the factor Conflict at local level (Familial/Neighbor) has very high contribution whereas the consultant thinks that the factor has high contribution in causing delay. The local people have involved in conflicts at the familial as well as neighbor levels, especially regarding compensation from the project, leading to frequent stoppage of works. 54

6. Government/Local bodies Analysis of the participation of Government/Local bodies in the project shows that they have displayed some drawbacks that led to delay. Each of the factors arising from these agencies side and contributing to delay is discussed below:

Fig 3.7 Contribution of the factors arising from government/local bodies side in causing delay a) Slow approval mechanism of Government institutions The employer and contractor show consensus in stating that the factor Slow approval mechanism of Government institutions high contribution whereas the consultant thinks that it has very high contribution in causing delay. The slow approval mechanism has caused delay in the land acquisition and compensation procedure and also resulted in discontentment of the public towards MWSP and its related projects. Hence it is also one of the major factors causing delay of UAR/02. b) Slow exempt of import duties and taxes All the respondents have show consensus in stating that the factor Slow exempt of import duties and taxes has very low contribution as none of the equipment/machineries were imported for UAR/02 project. 55

c) Political interferences at local level The employer has stated that the factor Political interferences at local level has high contribution while the consultant and contractor think that it has very high contribution in causing delay. It indicates that each of the parties is affected by the prevailing political interference in the area. It means that community leaders belonging to different political parties throw up different demands which makes it difficult for the project team to address and fulfil. 7. Force Majeure Analysis of the impact of Force Majeure in the project shows that some of the factors have led to delay of UAR/02. Each of the factors arising from Force Majeure and contributing to delay is discussed below:

Fig 3.8 Contribution of the factors arising from force majeures side in causing delay a) Bandh/Strike The employer has stated that the factor Bandh/Strike has very high contribution while the consultant and contractor think that it has high contribution respectively in causing delay. It indicates that the project has been influenced by the bandh/strike caused due to political 56

instability in the country. The regular working schedule of each of the concerned parties was disrupted by such disturbances leading to delay. b) Landslide All the respondents have shown consensus in stating that the factor Landslide has medium contribution in causing delay. It indicates that the project has been occasionally influenced by the landslides occurring in the monsoon season as the location of the construction site falls in the hilly region. c) Unexpected geological condition The employer has stated that the factor Unexpected geological condition has low contribution while the consultant and contractor think that it has very low contribution in causing delay. It indicates that the geological condition of the construction site was understood clearly and hence the project was designed in such a manner to avoid unexpected conditions. This factor has least contribution in causing delay of UAR/02. d) Inflation/Price fluctuations The employer has stated that the factor Inflation/Price fluctuations has low contribution while the consultant and contractor think that it has high and medium contribution respectively in causing delay. Actually price fluctuation is not a matter of concern to the employer as any fluctuation related to price is addressed by price adjustment clauses in the contract. However, if the price of any raw material increases excessively, the

contractor may suffer terribly. Hence, they try to prolong the contract period by emphasizing on other matters to avoid the loss that they incur due to inflation. MWSP has also encountered the same problem during the 2008 Olympics which was held in China when the price of steel (which is about 5% of total material cost) was hiked by three hundred percent. The contractor was evidenced to prolong the construction works to avoid the excessive loss that would have been incurred during that period. e) Weather condition All the respondents show consensus in stating that the factor Weather condition has very low contribution in causing delay. It indicates that the weather of the construction site has

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significantly less influence in causing delay as the program schedule for the entire project are predetermined based on all the seasonal changes. 3.4.2 Findings The following findings of the research are based on the analysis of the data and information collected from different sources: i) The slow approval of ADB for funding UAR/02 is the only drawback from the donors side that has contributed to delay. Had the decision been made in 2004, construction works would have been commenced earlier and the project would have been completed till date. ii) Second, ineffective management practices of the MWSP have significantly contributed to the deferral of the project. Failure to make verification of the detailed design by the employer is yet another cause for the delay. Further, inappropriate planning regarding land acquisition has also led to postponement of the project. Had the management acquired the land required for UAR/02 from public during the lag phase of four years (2004-2008), the project would have been completed within the stipulated period of 19 months with lesser severe hindrances. Also the inadequacy of the management to convince ADB or finding other alternative source for funding UAR/02 for a long period of four years is inexplicable. Similarly, had the project been engrossed in land acquisition procedure during the four years lapse, it would not have faced such impediments regarding expensive compensation claims and also would have currently executed construction smoothly without any lingering obstructions. Moreover, the policy and practices of compensation is observed to be problematic and hence has contributed in causing delay. The label of ADB as funding agency of UAR/02 has provoked local people of the project affected areas to demand for irrational compensation. This is due to their awareness and understanding of the generous compensation policy of ADB. However, the situation is contrary where the compensation rate is based on the valuation and records of District Land Administration Office (Malpot Karyalaya) with a certain percent raise in the actual value. This has caused discontentment in public who have displayed extreme hostility towards the project and its 58

team hoping to extract the highest possible payback. In addition, the compensation mechanism, practices and formation of the team is also not up to the mark. The Compensation Determination Committee of MWSP is headed by the respective CDO who cannot give much time on these issues as other factors fall on their higher priority list. This is also a reason why the compensation procedure of MWSP is slow. Further, other factors like slow approval mechanism of MWSDB, delay in payment to contractor, and ineffective coordination with public are also found to contribute in causing delay. iii) Moving ahead, the inadequacy of the design consultant, NORPLAN has caused some complexities at a certain stretch of UAR/02 namely Sipaghat VDC, where the design did not align with the actual track. The issue has been profoundly exploited by the public to fulfill their self-indulgent demands. iv) Further, the contractor is also found to be guilty on the issue. Lack of effective management regarding equipment, labor and practices of the contractor has contributed significantly in causing delay. This is further aggravated by the contractors frequent avoidance of instructions from the employer and consultant regarding augmentation of quantity of equipment and manpower as well as speed of work. Also the slow reporting practice, frequent breakdown of the scantily available equipments and poor control mechanism are also found to contribute in causing delay. v) Lack of positive attitude in the local community of the concerned area towards the project is one of the main causes for delay in UAR/02. It has been found that the local people have used the project to fulfill their personal prerogatives through claims for irrational compensation for their personal as well as communal properties that have been used by the project. However, the concern is not limited to compensation issue but it extends to the persistent obstructions like frequent stoppage of works, destruction of project properties and physical as well as mental assault of the project personnel for all the three parties employer, consultant and contractor. vi) Finally, irresponsiveness of GoN and the concerned authorities has been found to be contributing in causing delay. As the largest and most costly project of GoN, MWSP was expected to be fully supported and defended by the government. However, the experience was contrary, where the project had to endure utmost trouble due to the existing lack of 59

law and order in the country. The concerned authorities were inadequate in controlling riots as well as safeguarding the project team. Had the government endowed extra care and severity, MWSP would not have faced such assault and disgrace. Further, inadequacy of GoN in implementation of rules for control of traffic axel load and of uncontrolled growth of crusher plants in the area has affected the performance of MWSP. In addition, the slow working procedure of the government agencies has contributed significantly in the delay. Had the compensation procedure, handling of litigation in the court and other approval mechanisms been conducted timely, the severity of hostility and obstruction from the public would not have been that immense. vii) Among several force majure factors, bandh/strike due to political instability of the country and inflation of project inputs such as fuel and steel, which are beyond the control of the concerned parties, have contributed in causing delay. 3.5 Conclusion and Recommendation 3.5.1 Conclusion The research was indeed fruitful in understanding the real scenario of how UAR/02 is being managed within numerous constraints. It has provided insights on different aspects on which one should focus to avoid problems associated with delay in road construction projects especially in Kavrepalanchowk and Sindhupalchowk districts. The study has uncovered how UAR/02 has suffered from time overrun due to both excusable and non excusable delays. The excusable delays include obstructions caused by the community and ineffective management of employer and the non-excusable delays include the deferrals caused due to poor management practices of the contractor. Further, the survey has reflected how such an essential project has been neglected and deprived of sufficient support from the government. It is also inferred that undertaking an infrastructure project especially road construction can be problematic if authentic message, about different aspects of project like funding pattern, need and benefit, and compensation practices to the public, is not conveyed effectively to the community. The study also shows how a project that is adequately privileged, in terms of resource and facilities, can be hindered due to self-indulgent beneficiaries who, despite of supporting 60

the project, cause profound annoyance to gain personal advantage. Hence, a need for devising an effective system for addressing the loss of property and negative impacts of the project is felt. 3.5.2 Recommendation Delays in construction projects can be reduced through the joint efforts of stakeholders. Employers, designers/consultants, contractors, suppliers, donor, community, and the government should cooperate to provide the ambience necessary for efficient management. The following are some of the recommendations for MWSP specific to its road construction project: 1. Resolve the existing problem MWSP should try to resolve the compensation issues within two months (by February) through active participation in the CDC in order to accomplish its goal to complete the project within April 2011, if granted time extension by ADB. Further, if the task remains unfinished, then it should conclude the UAR/02 contract within April 2011 by curtailing the works. However, MWSDB has to assure the local people that the curtailed work would be undertaken through another contract if they would ensure cooperation. 2. Restructure the Compensation Determination Committee The team of CDC headed by the CDO includes Chief of Land Revenue Office, the LDO, representative from DDC, Project Manager (Resettlement Officer) and supervision consultant; along with representative from Hyolmo-Sindhu/Mandan Valley Committee and the affected person. The problem with such arrangement is inability of the team leader, CDO to provide enough time to address these issues. Hence, it would be better if the committee is instead headed by a full time representative from the CDO office so that quick and appropriate attention can be given to the issues. 3. Propose GoN for strict measures MWSP should request GoN to strictly enforce the legal load limit for trucks that pass through UAR/02 as the trucks from the crusher plant of the area, with twice axle load than the legally allowed, are damaging the newly constructed road pavement. Further,

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GoN should also control the rapid growth of crusher plants in the area. Currently, there are more than seven crusher plants on operation and a few are on the process. 4. Reinforce the Management practice Reinforcement of the management practice of MWSP would be better for the sustainability of the entire project. It can be achieved through delegating authority and emphasizing accountability of specific activities to the concerned personnel. This would facilitate the control mechanism as well as decrease the incidents of shirking of the projects officials. Further, developing human resource especially the construction engineers who usually lack managerial skills is yet another necessity. It can be achieved by offering training courses in scheduling, time and cost control, information systems, and management of human resources. 5. Public Participation Public participation in planning or policy formulation process would be helpful for MWSP for smooth execution of its future projects. It can be achieved through It would facilitate in the following ways: Learning about people's needs, attitudes, aspirations, desires, priority, possible contributions and help; Systematically evaluating the existing programs, policies, and services provided; Considering what actions are to be taken, services provided and projects undertaken so that the needs and problems of people are reflected; Avoiding bias in preparing plans (especially on judgment of land valuation); Understanding the effects of local people on various groups and organizations in the community; Creating a sense of belonging among all stakeholders; Bringing transparency to decision-making and thus reducing scope of obstruction.

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6. Implement the devised package for appraisal of new projects and monitoring of ongoing projects in conjunction with the existing appraisal systems and regulations. Time appraisal and monitoring package: The purpose of this package is to improve desk officers understanding of the project development process with special concern over initial project time estimates, or changes in these estimates. As such, it may be used alongside other documents including the progress reports to monitor as well as control the problems associated with time overrun. It will serve as a further tool within the overall evaluation framework for which the Project Management Consultant of MWSP has responsibility. The package will provide desk officers with a set of questions to ask and issues to consider when appraising project applications or when monitoring the ongoing projects. The various issues are based upon the preceding sections of the report which have identified the main factors that can lead to time over-run in road construction project in Kavrepalanchowk and Sindhupalchowk districts. They will assist in exploring the factors that can contribute to an ill conceived project being approved and to understand why an existing project is requesting additional time as well as grant during the implementation stage. The preceding diagram divides the project development cycle into six stages. For each stage, parallel groups of project interrogation questions are also included. These groups of questions are discussed in the following text as Risk Issues. When interrogating a project, desk officers should first establish the stage of development of a project and then use the relevant questions. The diagram also shows graphically how risk of time over-run, decreases as a project progresses. Risk Issue 1: Project Specification & Feasibility The key issues concerning the projects specification and feasibility relate to whether there is a need for the project and whether a time estimate (the maximum time required for completion) has been identified by the Employer. Simple questions should be asked such as: 63

 Where is the project being undertaken? What exactly does the project comprise? Why is the project being undertaken what is the demand? What previous phases have been undertaken and what phases are not included in the application (including time and cost estimates)? Is this project directly dependent upon any other projects? Who is undertaking the project and over what time period? Risk Issue 2: Outline Design At the outline design stage, the key issues are whether the size of the project matches the identified needs, or whether it is under-designed. It is important to establish how much more design work will be required and what role the contractor will have in this process. If time estimates are based on outline designs only, then the potential for time period to change is greater than if they had been finalized. For large projects it would also be appropriate for a Risk Assessment Study to have been undertaken by this stage. This would show that the project employer was aware that specific risks existed which could affect project life span. This would form the basis for understanding how much time would be required for completing the project. It should be possible for the appraiser to establish how the time estimate was calculated and what risks it covered. Risk Issue 3: Consents and Land Acquisition The appraiser should be aware of what stage the project employer has reached with regard to consents and land acquisition. A project can experience considerable delays which may affect costs if the appropriate planning, environmental and other consent procedures have not been adhered to. Regarding land acquisition, it is important that the appraiser is aware of whether all claims have been settled or if there are any appeals over compensation. If appeals have not been settled then there is a high probability that any original land acquisition costs will be an underestimate and more time would be consumed in settling the issue. 64

Risk Issue 4: Detailed Design At the detailed design stage, the procurement of contractors to undertake the construction work can take place. In some cases, appointment of contractors may precede the detailed design stage. The form of contract and the respective roles of project employer and contractor in bearing risk for the ultimate project cost and time are matters that desk officers should inquire about, especially where there appears to be uncertainty in this area. It is also important to establish that procurement regulations have been followed and that the contractor has relevant expertise and experience. Desk officers should check whether ground investigations have been undertaken. If these have not been done, then the risk of time over-run increases. Risk Issue 5: Project Construction During the construction phase, there needs to be a project management structure in place which allows frequent reporting of progress to be made between the contractor and the project employer. Most of the time over-run factors that can occur do so during the construction phase. The appraiser must therefore establish that the main risks taken into account in the time calculation are being managed on site. Risk Issue 6: Handover of Project The project sponsor should state when the project is scheduled to end. It should be clear whether the project will be complete and fully operational once the completion date has been approached, or whether further time has to be implemented. The limitations of the package are included in the APPENDIX V

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The Project Development Cycle

Project Specification & Feasibility Time

Risk Issues

What feasibility work has been undertaken? Has project employer experience of this type of project? Is the project dependent upon other phases or projects? Has a project manager been appointed? Has the donor approved for funding the project?

R i s k D e c r e a s e s

Outline Design

Does the outline design satisfy the specification? Who will be doing the detailed design? Do time estimates allow for changes to outline design? What risks are allowed for in the contingency?

Consents & Land Acquisition

Have relevant consents procedures been completed, including planning permission, EIA, operational licenses, public consultation? Has 70-80% of land been acquired and all compensation issues agreed with owners? What issues are outstanding from the above?

Detailed Design & Procurement

Is the outline design clear enough for detailed design and time estimation to be completed satisfactorily? Is the detailed design satisfactory as per the actual site condition? Has the contractor and consultant been procured on time? Has the project employer worked with this contractor before? Is the contractor reliable for sound financial and punctuality standing? Have ground conditions been properly investigated? Is the risk of time over-run dealt with in the contract? Is the funding in place to pay the contractor?

Project Construction

Are project management arrangements working? Are contractors arrangements for site management appropriate? Are payments to the contractor being made on time? Is the project currently on schedule and within budget? Are any of the risks identified in the contingency plan being experienced; how are these being dealt with?

Hand-over of Project

Is it clear in the contract exactly what works are required for completion of the project? Have handover procedures been established? What are the final payment arrangements?

Fig 3.8: Time appraisal and monitoring package

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Part Four REFLECTION OF INTERNSHIP

Through our experience, we felt that internship is in fact an important step for graduates who are in the verge of stepping into the real working world. It has provided us a platform to acquire enough experience to understand how a project is managed which will help us later to pursue a profession in Project Management. The exposure at MWSP to its different components has helped us to achieve the following objectives: a) To understand how theories are applied in practical field We learned about the application of total management process of a donor funded government project that includes (i) Management Concepts like Leadership, Decision making, Financial management, Accounting procedures, Human resource management, Management information system, Operation Management system and Corporate Social responsibilities and (ii) Project Management functions like project planning, implementation and monitoring/evaluation. We also understood how research techniques can be applied in actual settings by undergoing the final project. Further, preparation of proposal for the Final project, review of feasibility study of UAR/02, performance of impact analysis of social factors in UAR/02 are yet another instances of application of the learnt theories. b) To understand how the overall project functions With the numerous ongoing projects of diverse nature at different phases of life cycle, we had the opportunity to evidence how the overall project functions. We had a chance to review different projects namely (i) tunnel at the beginning of construction phase, (ii) water treatment plant at bidding phase, (iii) road at the conclusion of construction phase, and (iv) social upliftment project at execution phase. We also learnt about the procurement procedure of hiring consultant and contractor with reference to tunnel, road

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and social upliftment programs. Further, we evidenced how and what circumstances lead to price adjustments and variations order in MWSP components. c) To know the system, working culture and management of a public organization of Nepal We learnt how employees in an organization interact with each other. We evidenced professional behaviour in thier conduct and observed how hierarchical settings affect their behaviour. Further, we learnt how employees differ in terms of their conduct (punctuality), response towards us, and reaction to a particular situation. d) To get acquainted with the relationship between different components of a project We observed how the different departments- legal, finance, procurement, administration and engineering as well as different subprojects- tunnel, road and social upliftment are dependent as well as affected by each other. Further, we also learnt how inefficiency of one of the component influences the entire project with reference to the delay in UAR/02. e) To know the dependency as well as consequences of a project on its surrounding environment The final project conducted on UAR/02 revealed us how a project affects as well as is affected by its surrounding environment. It was found that the activities of MWSP are influenced by the legal, political, social, technological, and environmental factors. Moreover, the severity was profound in case of UAR/02 which in turn had influenced other components. f) To adapt to the real working scenario The experience as intern helped us to adapt to the working culture of MWSP where we had to exhibit professional behaviours like punctuality, reporting, formal interaction, and other communicative practices. g) To learn how to work within several constraints which are not described in the theoretical studies We learnt how a project has to function within several constraints with reference to UAR/02 project. The project has been struggling to progress by complying with all the 68

constraints especially those related with social issues. Moreover, these issues were found to the reasons for its slow progress. Hence, the case provided us an opportunity to evidence a diverse scenario that is not dealt with in our course plan. h) To get acquainted with multi cultural working environment We were acquainted with most of the associates of MWSP namely the consultants and contractors from different countries like China, Japan, and German. The experience helped us to get acquainted with the culture and working systems of melting pot organization. This would help us in the long run as the multinational organizations, which require adapting and working with people from different countries, are increasing in number.

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REFERENCES
Joy, P.K. (1993). Total Project Management: The Indian Context. Introduction to project overruns and the techniques to combat them; 25-27. Macmillan India Limited, New Delhi. Kumaraswamy, M.M & Chan, W.M. (1998). Contributors to construction delays. Construction Management and Economics.16:17-29 Majid, Abd. M. Z. & Ronald, M. (1998). Factors of Non-Excusable Delays That Influence Contractors Performance. Majid, I.A. (2006). Causes and effects of delays in Aceh construction industry. Civil Engineering. Universiti Teknologi Malaysia Mezher, T.M & Tawil, W. (1998). Causes of delays in construction industry in Lebanon. Engineering Construction and Architectural Management Journal; 5(3):251-60 Odeh, A.M. & Battaineh, H.T. (2002). Causes of construction delay: traditional contracts. International Journal of Project Management 20 (2002) 67-73 Singh, R. (2009). Delays and Cost Overruns in Infrastructure Projects: An enquiry into Extents, Causes and Remedies. Working Paper No.181, Department of Economics, University of Delhi Vidalis, S.M. & Najafi, F.T. (2002) Cost and time overruns in Highway construction. Department of Civil and Coastal Engineering, University of Florida, U.S.A.

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Contractor Labor Employer Employer Force Majeure Frequent change of Project Manager Selection of inappropriate consultant/ contractor Shortage of Skill Labor

Community

Bandh/ Strike

Gov/ Local Bodies Irrational compensati on demand Demands for Additional work

War/Conflict/ Political Governance Unexpected Geological Condition Unforeseen Ground Condition

Political interferences at local level

Slow mobilization Slow of labor compensation procedure to public Variation/ Slow resource Inefficient Change mobilization for Labor order consultant Productivit Lack of y Interference communication/ Coordination Low Inadequate Motivation Passive Monitoring fund /Morale & Feedback allocation Improper feasibility study Incapable representative Ineffective planning Weather Condition Slow decision making Delay in payment to Supplier/Lab or/Subcontra Slow response to suggestion Slow Approval Mechanism Delay in land acquisition Slow rebate procedure Delay in payment Occupation of manpower in other project
C O N S T R U C T I O N D E L A Y

Slow exempt of import duties and taxes

Prolonged transfer of land ownership Frequent disturbances in work

Inflation/Prices Fluctuation

Strike

Slow approval mechanism of gov institutions

Conflict at local level (Familial/Neighbors)

Absenteeism

Inadequate fund release

Frequent change in design specification Poor/Incomplete Drawing/Details Design

Inappropriate Price Adjustments Inaccurate quantity estimation

Insufficient Numbers of Equipment Frequent Equipment Breakdown

Shortage of material Late delivery

Slow approval mechanism

Inaccurate time estimation Inadequate Consultant Experience

Late release of fund

Inaccurate cost estimation Delay in design

Delay in document processin g Delay in instruction delivery

Poor procurement process

Inadequate contractor experience Slow reporting mechanism

Shortages of Equipment Parts

Poor Quality of Construction Materials Imported Construction Material

Poor inspection Poor coordination

Donor

Improper workmanship

Occupation of equipment in other project

Consultant

Financial hardship Consultant Contractor Other

Obsolete equipment

Escalation of Material Prices

Figure Ishikawa (Fish Bone) Diagram of causes of delay

Unreliable Supplier

Contractor Equipment Contractor Material

APPENDIX- I PROJECT LIFE CYCLE

Project Life Cycle:

P R O C U R E M E N T O F C O N T R A C T O R

Project specification and feasibility

Outline design F I N A N C E

Consents and land acquisition

Detailed design

Construction

Handover

Life cycle of the road construction project consists of following activities: Procurement of Contractors Project procurement involves selecting a contractor to undertake the construction of the project. The conventional approach to procurement of public sector projects involves advertising for firms to tender for the work. These invitations may be open to all companies or restricted to a shortlist of preferred bidders. All invitations for major projects in the public sector should be advertised in the Official Journal with the Public Procurement Directive. A contractor will submit a tender who sets out the skills and experience of the company in undertaking the particular type of project, their proposed approach to the construction task, and their estimate of

the cost of undertaking the work. Many projects nowadays involve the procurement of contractors on a design and build basis where the contractor submits a design and tender on the basis of a given specification. Some projects may also involve the contractor providing all or part of the finance for building the project and for operating it after completion. Various terms are used to describe these contracts; the most common being Design, Build, Finance and Operate (DBFO). Finance The financing of a project involves the arrangement of adequate funds to pay for the development and operation of a clearly defined project. In some cases it is also necessary to raise finance to cover maintenance and operation. For most projects, the main elements of finance will be: Development finance to pay for the feasibility and initial design stages; Construction finance to pay the capital expenditure; Contingency finance to allow for cost overruns and delays. The structure and form of finance will be influenced by the nature of the project. The source of funding for infrastructure project comes from government and donors. The structure and timing of financial provision may impose certain constraints on the design and scheduling of the project. Project Specification and Feasibility The first stage of the project cycle is the definition of what the requirement is and how it can be satisfied. This includes deciding on the size and quality of facility that is required. Different options will be discussed at this stage and evaluated in terms of broad cost estimates, expected operational performance and economic benefit. Preliminary cost estimates may be attempted at this stage. Cost benefit analysis, whether formal or informal, will follow initial specification of a project. The purpose is to test whether the project as specified will be economically viable or whether it will generate good value for money. Leaving such feasibility studies until after a project has started means that potential problems are not revealed in time to influence project planning. Although the economic and financial evaluation of the project is probably the most obvious element of the feasibility stage, external factors can play a major role in determining whether a project will proceed. The projects political context, its relationship with the local

community, the general economic environment, its location and the physical conditions in which it will be built, are the most important external factors. Outline Design Work will then be undertaken to develop the plans for the project. These plans will establish the general parameters of a scheme design and will include all the projects major components. The function of outline designs is to provide: The basis for the detailed design and accurate cost estimates of the scheme; The necessary information for the planning and land acquisition process. Consents and Site Acquisition Before construction work can start, the necessary consents and authorizations must be in place. The time taken to obtain these is probably the most unpredictable element of a large infrastructure project and can have a significant effect on the timetable and costs. In addition to institutional approval, consents may also need to be obtained for health and safety, water, sewerage, waste disposal, fire certification, gas, electricity and highways rights. Inadequate allowance for required consultation may lead to unforeseen delays in project implementation. Environmental Impact Assessment is now required for most large projects before consent is achieved. This also may take more time than anticipated. A project cannot proceed if the project sponsor does not own or have development rights for the land. With projects implemented by local government authorities, the compulsory purchase of land can be undertaken. The existing owners have to be compensated for the purchase and they can usually appeal against the sum offered. Appeals can be very time consuming, although in some circumstances projects may precede whilst the appeals are being heard. Detailed Design The detailed design of a project is used to assess the quantities of materials required and the actual construction work involved in implementing a project. Drawings and lists of quantities are then used to produce detailed project costs and to establish an implementation timetable.

The Construction Contract This involves the actual construction of the project. Contractors can be legally bound to undertake the work under a number of different contractual arrangements. Before a contract is agreed, a decision must be taken about the basis upon which the contractor will be paid. The factors which may affect the decision on payment method will include: The degree to which design information is available when contract documents are prepared; The institutional rules of the public sector funding parties; The nature and size of the project; The general economic context; The time period available to produce tender documentation; and The time available to undertake the work.

The following are some different methods of paying the contractor for the construction work: Fixed lump sum, with payment usually on completion; Target lump sum; Progressive payment according to tasks completed, (based on agreed rates for specified tasks or quantities of materials used); Progressive payment according to human resources expended, (based on an agreed schedule of hourly/daily rates). If the projects scope and specification has been very clearly defined, or a standard type of project is to be constructed, then the fixed lump sum may be used. The risk is passed fully onto the contractor and the project sponsor cannot usually intervene further in the project. With the target lump sum approach, the contractor prepares an estimate based on a defined scope of work. Before the project sponsor accepts this sum, there will be an agreement on the respective liabilities of the project sponsors and contractor, if the contract overruns on costs. The tasks completed or materials quantities approach involves measuring construction works according to agreed methods. When the works are priced, their totals plus an element for profit

and overheads, forms the contract price. This approach is flexible, can deal with change effectively and is used in valuing the work undertaken during the construction phase. If the estimate of quantities and contract value are to be realistic, the detailed design of the project must have been completed prior to commencement of construction. If the activities to be undertaken are known but neither the detailed design information nor the scope of the activities are, then a schedule of rates may be used. The contractor is paid, therefore, on the basis of unit rates that have been included in the tender. Usually, this method yields a higher project cost than the tasks/quantities approach because a higher contingency amount will need to be included to allow for the greater uncertainty involved. Project Handover A date for the handover of a project from the contractor to the project sponsor is usually included as an element of the contract. Many projects include financial penalties (or rewards) for late (early) completion of a project. A percentage of the total project costs may also be retained until the project sponsor is satisfied that the project has been completed as specified.

APPENDIX- II WORK SCHEDULE

APPENDIX- III QUESTIONNAIRE

Group A: It consists of quantitative questionnaire devised for the employer, consultant and contractor. Group B: It consists of three sets of qualitative questionnaires developed for the above mentioned respondents.

Group A
Questionnaire on factors that contribute to causes of delay in UAR/02 road construction. Objective of the Study: To identify the major causes of delay in road construction project.

Please, tick and fill in the blanks for your suggestions. Each scale represents the following rating: (5) = Very high contributing (4) = High contributing (3) = Medium contributing (2) = Low contributing (1) = Very low contributing. Category of Respondent: Employer/Contractor/Consultant Question: How do the following factors contribute to causes of delays in a UAR/02 Road Construction Project?

Category 1. Donor

Factors Inadequate fund release Late release of fund Slow approval mechanism

Remarks

2. Employer Frequent change of Project Manager Ineffective planning Variation/Change order Slow Approval Mechanism Delay in land acquisition Slow compensation procedure to public Slow rebate procedure Delay in payment Ineffective coordination Passive Monitoring & Feedback 3. Consultant Frequent change in design specification Inaccurate time estimation Inaccurate cost estimation Inaccurate quantity estimation Lack of timely inspection Delay in document processing Delay in instruction delivery Inappropriate Price Adjustments Poor coordination

Category 4. Contractor Finance Material

Factors Delay in payment to Supplier/Labor/Subcontractor Financial hardship Shortage of material Poor Quality of Construction Materials Imported Construction Material

Remarks

Labor

Shortage of Skill Labor Slow mobilization of labor Inefficient labor productivity Absenteeism Strike

Equipment

Insufficient Numbers of Equipment Frequent Equipment Breakdown Shortages of Equipment Parts Obsolete equipment

Other

Slow reporting mechanism Slow response to suggestion

5. Community Prolonged transfer of land ownership Irrational compensation demand Demands for Additional work Frequent disturbances in work Conflict at local level(Familial/Neighbors) 6. Government/ Local bodies Slow approval mechanism of gov institutions Slow exempt of import duties and taxes Political interferences at local level 7. Force majeure Bandh/ Strike Landslide Unexpected Geological Condition Inflation/Prices Fluctuation Weather Condition

Group B
First Set: Questionnaire for employer

Questions related to Employer 1) What were the reasons for slow approval mechanism of government institutions? .. 2) Which areas mentioned below was affected by slow approval mechanism of government institutions? A) Excess to site (B) Use of access road to site C) Site clearance (D) EIA approval E) Other.. 3) What were the reasons for slow exempt of import duties and taxes on materials/ equipments bought by contractor? A) Delay in request from contractor (B) Delay in document processing by MWSP Board B) Delay in document processing by concerned Government agency (D) Other. 4) What were the consequences of slow exempt of import duties and taxes on materials/ equipments bought by contractor? A) Delay in mobilization of resources (B) Additional expenses C) Price escalation (D) Other............... 5) A) C) E) What were the reasons for delay of land acquisition? Conflict with community people (B) Refusal for ownership transfer Excess demand for compensation (D) Lengthy government procedure Other

6) Which of the problems mentioned below were faced due to delay in land acquisition? A) Frequent change in program schedule (B) Price escalation C) Frequent disturbance in work (D) Worsening relationship with public E) Other 7) Which of the factors mentioned below caused the slow compensation procedure for land and other properties of public? A) Demand for unrealistic compensation (B) Lack of fund C) Conflict at local level (political/familial) (D) Other. 8) Which of the problems mentioned below occurred due to slow compensation procedure? A) Worsening relationship with public (B) Frequent disturbance in work C) Conflict at local level (D) Variation in the compensation amount E) Additional demand (F) Other.. 9) A) B) C) What were the reasons for extension of time? Variation in quantity of work included in contract Exceptionally adverse climatic condition Unforeseeable Shortage in availability of personnel/goods caused by epidemic events

D) E) F) G) H) I) J) 10) A) B) C) D)

Delay, impediments caused by employer Delay, impediments caused by sub-contractor Delay caused by government authorities Additional work demand by community Stoppage of work by community Failure to submit revised program and supporting report Extension of time due to adjustment for change in legislation (K) Other What types of variation was incurred? Scope of work: Quantity/Quality Price Sequence/timing of work execution Other..

11) What remedies were given for variations? A) Time extension .days B) Payment of cost % of contract price C) Others. 12) What problems were faced with the donors due to incurrence of variations? A) Poor image of employer (B) Hindrance in release of additional funds C) Impediments in consultation (D) Others. 13) Was the below mentioned activities conducted within the stipulated time? Also mentioned the reason for failure in timely completion. Activities Completion of feasibility study Arrangement of fund Procurement of contractor Procurement of consultant Acquisition of project site (land) Commencement of construction work Yes No Remarks (Why no)

Questions related to Contractor 1) Which of the issues regarding use of contractors plants and material was occurred? A) Removal of equipment from site without the approval of engineer B) Failure to give details of contractors equipment C) Failure to bring the equipment mentioned in the contract D) Other 2) Which of the issues mentioned below occurred in relation to use of employers equipment? A) Carelessness in operating, driving or directing it B) Failure to give notice to engineer of any defect and default of the equipment C) Other.

3) Contractor had poor coordination with A) Employers Personnel C) Personnel of legally constituted public authorities E) Local people

(B) Any other contractors employed by the Employer (D) Subcontractor (F) Other..

4) Which of the problems mentioned below occurred in connection with subcontractor? A) Prior consent of employer was not taken for appointment of subcontractor B) The quality of subcontractors work was not satisfactory C) Contractors failure to provide timely payment D) Refusal to take responsibility of subcontractors work (E) Other. 5) Which of the problems mentioned below occurred due to Contractors failure to adhere to safety of Site operations, methods of construction and Environment Impact assessment? A) Death and injuries of persons working on the Site B) Lack of protection to the public and owners of adjacent land C) Noise, Air pollution, Emission, surface discharges and effluent D) Other..

6) Which of the problems mentioned below rose during transport of goods? A) Disputes regarding the responsibility of packing, loading, transporting, uploading, storing of goods B) Failure to provide notice to engineer (C) Other. 7) Which of the problems mentioned below occurred in relation with work execution? A) Failure to submit details of arrangements and methods adopted for the execution B) Alteration to working way without notifying the employer C) Failure to assure the work quality with the requirement of contract D) Failure to submit sample of material and relevant information to engineer E) Contractors engagement in corrupt, fraudulent, collusive or coercive practices F) Lack of proper workmanship (G) Use of hazardous material H) Other.. 8) Which of the problems mentioned below occurred in relation to progress reports? A) Failure to supply monthly progress report (B) Manipulation of reports C) Lack of relevant suggestions to the current problems (D) Lack of information on potential threat E) Other.. 9) Which of the problems mentioned below occurred in relation to contractors labor? A) Lack of sufficient labor (B) Low payment (C) Unskilled Labor D) Evidence showing use of forced labor (E) Use of child labor F) Failure to give details of number and class of personnel G) Failure to provide necessary accommodation and welfare facilities H) Failure to comply with labor law (Mention the area of non compliance..) I) Other 10) Which of the restrictions mentioned below were imposed by contractor to employer? A) Restriction on access to all parts of site for inspection (B) Restriction to inspect and measure materials C) Restriction to inspect workmanship (D) Restriction to check the progress of work E) Other. 11) What remedies were provided to contractor for complying with frequent disturbances of work? A) Extension of time .days (B) Payment of cost % of contract price C) Other.

12) Which of the issues mentioned below occurred in relation to variations and adjustments? A) Contractor failed to respond engineers request to submit proposal for variation B) Other

13) Which of the problems mentioned below were raised in connection with the contract price and payment? A) Contractor failed to pay tax, duties and fees required to be paid B) Failure to submit breakdown of each lump sum price within reasonable time C) Other.. 14) Which of the problems mentioned below occurred for advance payment? A) Failure to receive performance security (B) Failure to receive guarantee equal to advance payment C) Failure to ensure that the guarantee is valid until advance payment has been repaid D) Failure to extend validity of guarantee until advancement has been repaid E) Other. 15) Which of the problems mentioned below occurred in relation to Interim payment certificate? A) Failure to provide supporting document along with statement which contractor consider himself to be entitled B) Manipulation of estimated contract value of work executed C) Failure to keep record of orders, receipts, cost and use of plant and machinery D) Other.. Questions related to Consultant 1) How was the estimation of time and cost done? A) Optimistic estimation (B) Realistic estimation C) Pessimistic estimation (D) Other. 2) Which problem(s) were faced during the detailed design phase of the project UAR/02? A) Difference of ideas from the feasibility study (B) Slow mobilization of resource C) Lack of regular meeting with the employer (D) Delay in Approval procedure of GoN E) Delay in Approval from funding agency (F) Other 3) Where was the planning of the Consultant ineffective? A) Program Schedule planning (B) Financial planning C) Monitoring Procedure planning (D) Other 4) Please select the party(s) with whom the consultant had poor coordination? A) Employer (B) Public (C) Donors D) Government agencies (E) Contractor (F)Other 5) What were the effects of slow resource (equipment and other logistic supports) mobilization by consultants? A) Delay in detailed design (B) Dispute & Litigation C) Others 6) What were the consequences of ineffective work execution of consultant? A) Delay on updating program schedule (B) Delay on settlement of Dispute & Litigation C) Delay on settlement of claims (D) Increase in cost E) Others 7) What were the drawbacks of consultant regarding dealing with community? A) Failure to inform employer in time about the demand of local people

B) Failure to give appropriate suggestion (C) Failure to convince the local people D) Other Questions related to Community 1) Which of the problem(s) arising from community are most difficult to handle? A) Prolonged transfer of land ownership (B) Irrational Compensation demand C) Emergence of additional demands (D) Frequent disturbances in work E) Conflict at local level (F) Others. 2) Was public consent taken before commencement of Project work? A) Yes (B) No

3) Was public participation implemented in the following phases of the project? Phase of project Survey Design Implementation 4) How important are the below mentioned factors (with respect to the community) for smooth implementation of road construction? Factors Public Consultation Public participation Corporate Social Responsibility Programs Good Public relation Grievance project Very important Quite important Important Less important Not important Yes Type of participation Labor Resource Meeting No

5) In which of the areas mentioned below should public be involved in? A) UAR/02 project planning (B) Resettlement planning (C) Compensation team D) Implementation team (E) Other. 6) Who can soothe the local people against their hostility for the project? A) Concerned Government agencies (B) Contractor C) Employer (D) Community leaders E) Other

Second set: Questionnaire for the consultants 1) Did the estimated (outline) design prepared for the donors serve effectively for the below mentioned purposes? Please tick on the table below. Purpose To be a basis for detailed design To be a basis for calculation of accurate time/cost estimates To provide information for planning and scheduling To provide information for land acquisition Yes No Remarks

2) How was the estimated (outline) design prepared as compared to the desired specifications of the UAR/02 project? (A) Satisfactory (B) Over designed (C) Under designed 3) A) B) C) D) E) F) G) Which problem(s) were faced during the detailed design phase of the project UAR/02? Difference of ideas from the feasibility study Slow mobilization of Equipment and other logistic supports (Stationery) for design by the employer Lack of regular meeting with the employer Passive monitoring & feedback mechanism of the employer Delay in Approval procedure of MWSP Board Delay in Approval procedure of GoN Delay in Approval from funding agency

4) Which factor(s) affected the Program Schedule of the project UAR/02? A) Structure & timing of financial structure (B) Approval period of MWSP Board C) Approval period of GoN (D) Seasonal (Climatic) variation E) Land acquisition period 5) Who were involved in preparation of the Program Schedule of the project UAR/02? A) Consultant (B) Contractor C) Employer (D) Other 6) How many times has the UAR/02 road design been modified till date? A) Once (B) Twice C) Thrice (D) Other. 7) When was the modification to road design done? A) During Approval phase B) During Construction phase 8) Which type(s) of modification was done? A) Extra work (B) Curtailment E) Change in quality & characteristic of work G) Other .

(C) Omission of work D) Diversion F) Change in sequence or timing of execution of works

9) Please rank (1-5) the below mentioned reason(s) for modification of the road design based on your experience in UAR/02 project. (1- for the most likely reason and 5- for least likely reason.) Reasons Failure in land acquisition Force Majeure Unexpected ground conditions Rank (1-5)

Demand from Public Inefficiency of contractor

10) Where was the planning of the employer ineffective? A) Procurement planning (B) Program Schedule planning C) Financial planning (D) Monitoring Procedure planning E) Others 11) Please select the party(s) with whom the employer had poor coordination? A) Contractor (B) Consultant C) Public (D) Donors (E) MWSP Board (F) Government 12) What are the effects of slow resource (equipment and other logistic supports) mobilization required for consultants? A) Delay in detailed design (B) Dispute & Litigation C) Claims from consultant (D) Others 13) What were the consequences of Passive Monitoring & Feedback of the employer? A) Delay on updating program schedule (B) Delay on settlement of Dispute & Litigation C) Delay on settlement of claims (D) Others 14) What problems arose due to selection of that particular contractor by the employer? A) Ineffective communication with public (B) Difficulty in resource mobilization C) Requirement of advanced technology (D) Conflicting working process with consultant E) Difficulty in compliance to countrys applicable law (F) Others.. 15) What are the reasons for Delay in acquisition of land ownership? A) Slow measurement procedure (B) Late valuation process C) Refusal for ownership transfer by public (D) Excess demand of compensation E) Others.. 16) Who is responsible for causing slow compensation procedure to public? A) Employers Resettlement Team (B) MWSP Board C) Public (D) Others.

17) What were the consequences of Delay in Payment to contractor? A) Termination of contract (B) Payment of huge interest C) Delay in resource mobilization (D) Dispute & Litigation E) Poor Image (F) Others. 18) What reasons caused slow approval mechanism of GoN? A) Late submissions by contractor (B) Slow review mechanism of MWSP C) Late approval mechanism of MWSP Board (D) Slow sanction mechanism of GoN E) Other.. 19) Who is responsible for slow procedure of rebate of import duty on imports of equipment/machineries by the contractor? A) Contractor (B) MWSP C) Income Tax Department (D) Other 20) How was the communication mechanism of the employer? A) Slow response to claims (B) Frequent conflicts with contractor C) Slow grant of authority to consultant (D) Late delivery of instructions by the Engineers

E) Late delivery of Base data G) Other..

(F) Late issuance of drawings/instructions

21) How important are the below mentioned factors (with respect to the community) for smooth implementation of road construction? Factors Public Consultation Public participation Corporate Social Responsibility Programs Good Public relation Grievance project Very important Quite important Important Less important Not important

22) Which of the problem(s) arising from community are most difficult to handle? A) Prolonged transfer of land ownership (B) Irrational Compensation demand C) Emergence of additional demands (D) Frequent disturbances in work E) Conflict at local level (F) Others. 23) Who can soothe the local people against their hostility for the project? A) Concerned Government agencies (B) Contractor C) Employer (D) Community leaders E) Others.

Third set: Questionnaire for Contractor 1) How much time would be required to prepare realistically costed bid for UAR/02? .. Months 2) How was the detailed design prepared as compared to the desired specifications of the UAR/02 project? (A) Satisfactory (B) Over designed (C) Under designed (D) Other 3) Which factor(s) affected the Program Schedule of the project UAR/02? A) Structure & timing of financial structure (B) Approval period of MWSP Board C) Approval period of GoN (D) Seasonal (Climatic) variation E) Land acquisition period (F) Other 4) Who were involved in preparation of the Program Schedule of the project UAR/02? A) Consultant (B) Contractor C) Employer (D) Other 5) What types of modification was done? A) Extra work (B) Curtailment (C) Omission of work E) Change in quality & characteristic of work F) Change in sequence or timing of execution of works G) Other (Please specify).

D) Diversion

6) Please rank (1-5) the below mentioned reason(s) for modification of the road design based on your experience in UAR/02 project. (1- for the most likely reason and 5- for least likely reason.) Reasons Failure in land acquisition Force Majeure Unexpected ground conditions Demand from Public Inefficiency of consultant Rank (1-5)

7) Which were the problematic element(s) for execution of the contract? A) Nature of the Site, including sub-surface conditions B) Hydrological and climatic conditions C) Extent and nature of work/goods necessary for execution of works and remedying of any defects D) Laws, procedures and labor practices of the Country E) Contractors requirements for access, accommodation, facilities, personnel, power, transport, water and other services F) Other 8) As per the Local Development Act you have to hire local labor. What problems were faced in case of local labor? A) Lack of sufficient labor (B) Unskilled Labor C) Non realistic demand (D) Expensive wages (E) Other 9) What were the reason(s) for extension of time? A) Variation in quantity of an item of work included in contract B) Exceptionally adverse climatic condition C) Unforeseeable shortage in availability of personnel/goods caused by epidemic events D) Delay, impediments caused by employer E) Delay, impediments caused by sub-contractor

F) Delay caused by concerned government agencies (Name them). G) Additional work demand by community H) Stoppage of work by community I) Extension of time due to adjustment for change in legislation J) Others. 10) Which type of possession of the construction site should have been given to the contractor to avoid delay in UAR/02 project? A) Partial possession B) Total possession (C) Other. 11) A) B) C) D) E) F) G) H) What were the reasons for contractors claims? Failure by employer to give right of access to, and possession of, all parts of site within time Delay by employer to issues drawing/instruction on time Suspension of work (or reduction of rate of work) by contractor Delay and/or incur of cost from rectifying loss or damage that is liable to employer Infringement for contractors manufacture, use, sale or import of any Goods, or design Failure to effect and keep the insurances as well as its policies by the employer Delay and/or incur of cost by reason of Force Majeure Other..

12) Please select the party(s) with whom the employer had poor coordination? A) Contractor (B) Consultant C) Public (D) Donors (E) MWSP Board (F) Government 13) What were the effects of Delay in acquisition of land (project site)? A) Frequent change in program schedule (B) Price escalation C) Frequent disturbances in work (D) Worsening relationship with public E) Others 14) How many times so far has there been delay in payment from the employer? A) No delay (B) Less than 5 times (C) 6-10 times D) 11-15 times (E) More than 15 times (F) Others 15) By how many days was there delay in payment from the employer after due payment date? A) No delay (B) 5 days C) 10 days (D) Other 16) What consequences did the contractor bear due to delay in payment from employer? A) Delay in payment to labor (B) Late mobilization of resources C) Loss of labors (D) Price escalation E) Others. 17) What were the effects of slow permits, licenses and approvals mechanism of GoN? A) Delay in mobilization of resources (B) Additional expenses C) Payment for liquidated damages (D) Others.. 18) Who is responsible for slow procedure of rebate of import duty on imports of equipment/machineries by the contractor? A) Contractor (B) MWSP C) Income Tax Department (D) Custom Office E) Clearance Agency (F) Others. 19) What were the consequences of Passive Monitoring & Feedback of the employer? A) Delay on updating program schedule (B) Delay on settlement of Dispute & Litigation C) Delay on settlement of claims (D) Poor control

E)

Others

20) How was the communication mechanism of the employer? A) Slow response to claims (B) Frequent conflicts with contractor C) Slow grant of authority to consultant (D) Late delivery of instructions by the Engineers E) Late delivery of Base data (F) Late issuance of drawings/instructions G) Other.. 21) How important are the below mentioned factors (with respect to the community) for smooth implementation of road construction? Factors Community Consultation Community participation Corporate Social Responsibility Programs Good Public relation Grievance mitigation project Very important Quite important Important Less important Not important

22) Which of the problem(s) arising from community are most difficult to handle? A) Prolonged transfer of land ownership (B) Irrational Compensation demand C) Emergence of additional demands (D) Frequent disturbances in work E) Conflict at local level (F) Others 23) Who can soothe the local people against their hostility for the project? A) Concerned Government agencies (B) Contractor C) Employer (D) Community leaders E) Others. 24) Please mention some of the unexpected ground problems faced during the project. ..

APPENDIX- IV DATA ANALYSIS

DONOR a) Inadequate fund release

Inadequate fund release 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inadequate fund release

b) Late release of fund

Late release of fund 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Late release of fund

c) Slow approval mechanism

Slow approval mechanism 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow approval mechanism

EMPLOYER a) Frequent change of Project Manager

Frequent change of project manager 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Frequent change of Project Manager

b) Ineffective planning
Ineffective planning 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Ineffective planning

c) Variation/ Change order

Variation/change orders 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Variation/ Change order

d) Slow Approval Mechanism

Slow approval mechanism 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow approval mechanism

e) Delay in land acquisition

Delay in land acquisition 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Delay in land acquisition

f) Slow compensation procedure to public

Delay in land acquisition 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow compensation procedure to public

g) Slow rebate procedure

Slow rebate procedure 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow rebate procedure

h) Delay in payment
Delay in payment 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Delay in payment

i) Ineffective coordination
Ineffective coordination 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Ineffective coordination

j) Passive monitoring & feedback

Passive monitoring & feedback 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Passive monitoring & feedback

CONSULTANT a) Frequent change in design specification

Frequent change in design 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Frequent change in design specification

b) Inaccurate time estimation

Inaccurate time estimation 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inaccurate time estimation

c) Inaccurate cost estimation

Inaccurate cost estimation 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inaccurate cost estimation

d) Inaccurate quantity estimation

Inaccurate quantity estimation 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inaccurate quantity estimation

e) Lack of timely inspection

Lack of timely inspection 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Lack of timely inspection

f) Delay in document processing

Delay in document processing 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Delay in document processing

g) Delay in instruction delivery

Delay in instruction delivery 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Delay in instruction delivery

h) Inappropriate Price adjustment

Inappropriate price adjustment 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inappropriate price adjustment

i) Poor coordination
Poor coordination 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Poor coordination

CONTRACTOR a) Delay in payment to Supplier/ Labor/ Subcontractor

Delay in paymnet to Supplier/Labor/Subcontractor 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Delay in payment to Supplier/ Labor/ Subcontractor

b) Financial hardship
Financial hardship 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Financial Hardship

c) Shortage of material
Shortage of materials 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Shortage of material

d) Poor Quality of Construction Materials

Poor quality of construction material 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Poor quality of construction material

e) Imported Construction Material

Imported construction material 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Imported construction material

f) Shortage of skill labor

Shortage of skill labor 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Shortage of skill labor

g) Slow mobilization of labor

Slow mobilization of labor 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow mobilization of labor

h) Inefficient labor productivity

Inefficient labor productivity 6 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inefficient labor productivity

i) Absenteeism
Absenteeism 5 4 3 2 1 0 Employer Consultant Contractor

` Fig: Absenteeism

j) Strike
Strike 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Strike

k) Insufficient numbers of equipment

Insufficient number of equipment 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Insufficient numbers of equipment

l) Frequent equipment breakdown

Frequent equipment breakdown 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Frequent equipment breakdown

m) Shortages of equipment parts

Shortage of equipment parts 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Shortages of equipment parts

n) Obsolete equipment
Obsolete equipment 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Obsolete equipment

o) Slow reporting mechanism

Slow reporting mechanism 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow reporting mechanism

p) Slow response to suggestion

Slow response to suggestion 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow response to suggestion

COMMUNITY a) Prolonged transfer of land ownership

Prolonged transfer of land ownership 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Prolonged transfer of land ownership

b) Irrational compensation demand

Irrational compensation demand 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Irrational compensation demand

c) Demands for additional work

Demands for additional work 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Demands for additional work

d) Frequent disturbances in work

Frequent disturbances in work 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Frequent disturbances in work

e) Conflict at local level (Familial/ Neighbors)

Conflict at local level 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Conflict at local level

GOVERNMENT/ LOCAL BODIES a) Slow approval mechanism of government institution

Slow approval mechanism of Government institutions 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow approval mechanism of government institution

b) Slow exempt of import duties and taxes

Slow exempt of import duties and taxes 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Slow exempt of import duties and taxes

c) Political interferences at local level

Political interferences at local level 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Political interferences at local level

FORCE MAJEURE a) Bandh/ Strike

Bandh/Strike 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Bandh/ Strike

b) Landslide
Landslide 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Landslide

c) Unexpected Geological Condition

Unexpected geological conditions 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Unexpected geological conditions

d) Inflation/Prices Fluctuation
Inflation/Price fluctuation 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Inflation/Prices Fluctuation

e) Weather Condition
Weather condition 5 4 3 2 1 0 Employer Consultant Contractor

Fig: Weather condition

APPENDIX- V Limitation of Time Appraisal and Monitoring Package

Limitations It is unlikely that the package will resolve all problems related to time over-runs. Nevertheless, by improving the ability of desk officers to probe projects where there is concern about the time structure or changes in time estimates, it is hoped that project employer will themselves be steered towards progressively better practice. This will ultimately be in the interest of the entire MWSP project as more robust time estimate of individual projects will indicate that it is less likely that additional time is required as well as focus of the employer will have to be diverted from other projects or programs, to cover and control over-runs. Use of the package will not eliminate the need to refer difficult cases to specialists when necessary. Nevertheless, when desk officers have become familiar with the principles and practices outlined in the package it may be that less frequent use of such specialist services will be necessary. Although every attempt has been made to prepare this package in a way that can be used across all road construction projects in Kavrepalanchowk and Sindhupalchowk districts, it is freely acknowledged that it may not be wholly appropriate to every aspect of the project development process in some areas. Nevertheless, the general principles of time and risk identification will have some relevance in all institutional settings. With careful judgment therefore, desk officers should be able to make use of the package in most situations that they will encounter. It is envisaged that the experience developed by desk officers and others in using this package will be used in the preparation of future revisions of the document.

APPENDIX- VI PROPOSAL FOR FINAL PROJECT

Proposal for Final Project Identification of causes of delay in UAR/02 project to devise a management package for solution 1. Background As an infrastructure development project, MWSP requires rigorous transportation of resourcesmaterial, equipment and manpower back and forth the construction site. However, some sites completely lack road facility while the others possess inconvenient facilities. Hence, apart from its main purpose- water diversion scheme, MWSP has been involved in construction of new access roads as well as upgrading of the existing problematic access roads. MWSP has encountered problem of time overrun in its road construction project especially in UAR/02. It is a 22.2 km single lane road from Lamidanda to Melamchi Pul Bazar which was to be upgraded to sealed gravel standard within a period of 580 days starting from 15 May, 2008. However, the project was obstructed due to various hurdles and was extended by 220 days to 24 July 2010 which has further been lengthened by 160 days till 31 December, 2010. Hence, the proposed project focuses on identifying the causes of delay in UAR/02. This would facilitate MWSP in understanding the factors that lead to delay in road construction, primarily in the Kavrepalanchowk and Sindhupalchowk districts, and further help in avoiding such circumstances in future. 2. Problem statement The management has been working hard to solve the problems. Despite these efforts, the progress in UAR/02 is sluggish. Hence, there is a need to understand the reasons causing delay which would help MWSP in undertaking other road projects in future. MWSP would require upgrading of the existing main access road (Melamchi Pul Bazar Tundi) as well as that of the three adit access roads which are in poor condition. These roads are currently track openings, to facilitate transportation to the project sites for tunnel construction. The proposed project which aims to identify the causes of delay in UAR/02 would facilitate to address the problem that is likely to occur in upgrading of the above mentioned roads.

3. Objectives To identify the source causing delay in UAR/02 To determine the major factors contributing to delay of road construction project in Kavrepalanchowk/ Sindhupalchow district To understand the effects of delay in UAR/02 To provide management solution for MWSP to address the problems associated with delay in road construction projects To devise a control package for MWSP to control time overrun problem in road construction projects 4. Theoretical framework Delays can be caused by different parties involved in a project. Further, a number of diverse factors, arising from each of these sources, contribute in causing delay in different extent. A total of fifty one factors belonging to seven groups of causes have been identified to collect information from the targeted respondents. These groups of causes include- (i) Donors related delay (with three factors), (ii) Employer related delay (with ten factors), (iii) Consultant related delay (with nine factors), (iv) Contractor related delay (with sixteen factors), (v) Community related delay (with five factors), (vi) Government/Local bodies related delay (with three factors), and (vii) Force Majure related delay (with five factors). 5. Scope of the project The study focuses on understanding the source and its underlying factors that have caused delay in UAR/02 project. The study also aims to provide recommendation for improving the practices of MWSP regarding its other construction projects especially road construction. This would facilitate MWSP to avoid such impediments in future as it may be involved in construction of additional roads to facilitate its main project. Further it would also be a basis to make decisions on the two current issues namely (i) the financial compensation claimed by contractor for delay and (ii) request to the donor, ADB to release additional fund required for UAR/02. The study also intends to devise a package for control with a questionnaire for identification of the causes

of delay which would facilitate the monitoring mechanism of road construction projects of MWSP. 5. Planned methodology The study will be based on both qualitative and quantitative survey using two instruments for data collection- questionnaire and in-depth interview. The questionnaire will be developed, based upon the requirement of the project, after studying and making observation of a few road construction projects. Further, in-depth interview will be conducted to substantiate the survey by extracting relevant information on the topic. The information and data will be collected from the concerned parties- employer, consultant and contractor of UAR/02. At the same time, information was collected from the concerned officials of the project as well as community leaders and members. 6. Limitations of the project The study is based on the scenario of Kavrepalanchowk and Sindhupalchowk districts. Inference from research is based on a limited sample size. The access to resources was limited due to confidentiality. The study was conducted for the first time for MWSP so it reflects the current scenario and not the trend.

Contribution Certificate Name of students Smita Sharma Roll No. 09331 Contribution in % 50%

Soniya Gautam Total

09332

50% 100%

APPENDIX- VIII PROJECT SITE MAP AND PHOTOGRAPH

APPENDIX- VII MINUTES OF MEETING

Minute of Group Meeting i) First Meeting Date Venue Time Team/Group members 23 October 2010 Soniyas Residence, Buddhanagar 10 am a) Smita Sharma b) Soniya Gautam Agenda/s 1. Brainstorming on the possible topics for the Final Project. 2. Selection of a few topics for the proposal.

Major discussion: i) Discussion on the possible topics that was relevant to the present context of MWSP.

Decisions: i) The proposed topics include Feasibility of e-bidding, development of Monitoring Plan for Water treatment plant, identification of problems in UAR/02 project.

Signature: Name: Smita Sharma

Signature: Name: Soniya Gautam

Minute of Group Meeting ii) Second Meeting Date Venue Time Team/Group members 30 October 2010 KUSOM Premises 12 am a) Smita Sharma b) Soniya Gautam Agenda/s 1. Preparation of the first draft of proposal.

Major discussion: i) ii) Discussion on how to proceed with respect to the concept of Research Technology. Discussion on the contents that has to be included in the proposal.

Decisions: i) ii) Selection of the relevant contents as per the requirement of the Internship Manual. Identified a need to undergo a survey of a number of other concerned agencies related to the title of the proposal.

Signature: Name: Smita Sharma

Signature: Name: Soniya Gautam

Minute of Group Meeting ii) Third Meeting Date Venue Time Team/Group members 8 November 2010 Smitas residence, Pulchowk 11 am a) Smita Sharma b) Soniya Gautam Agenda/s 1. 2. 3. 4. Devising conceptual framework Forming Research Methodology Preparation of questions for survey Preparation of time line for survey and selection of organizations for collecting information on the topic of study.

Major discussion: i) ii) iii) iv) Discussion on the concepts that are to be used in devising the questionnaire for survey. Discussion on how to proceed with the survey for data collection. Discussion on questions to be included for the study. Discussion on the organizations that can be approached for collecting information on road construction project.

Decisions: i) ii) iii) iv) Identification of the major sources leading to delay in road construction project. Use of questionnaire, in-depth interview and site visit to collect information Questions related to the all the concerned parties and different phases of project to be used for survey. Decision to visit at least five offices of Department of Road (DOR) and Butwal Power Company (BPC) for interrogation on the topic.

Signature: Name: Smita Sharma Minute of Group Meeting

Signature: Name: Soniya Gautam

iv) Fourth Meeting Date Venue Time Team/Group members 4 December 2010 Soniyas Residence, Buddhanagar 10.30 am 1. Smita Sharma 2. Soniya Gautam Agenda/s 1. Preparation of Outline of Report 2. Deciding major data to be included in the project Major discussion: i) ii) Discussion on the outline of final report. Discussion on data analysis section of the report.

Decisions: i) The outline of final report prepared was finalized. ii) Data analysis for a certain portion to be done to get approval from the supervisor.

Signature: Name: Smita Sharma

Signature: Name: Soniya Gautam

Contribution Certificate Name of students Smita Sharma Roll No. 09331 Contribution in % 50%

Soniya Gautam Total

09332

50% 100%

We certify that we have signed this certificate without any pressure and in the presence of all team members.

Name of the Student: Smita Sharma

Signature:

Name of the Student: Soniya Gautam

Signature:

Date: 30 January 2011

Condition of road at Km18+

Currently resolved issue of compensation for tree

Trucks in Queue due bad condition of road

Talking with local people

High retention wall

Work started after long stoppage

Stretch with Guthi Land issue

Ease of transporation via UAR/02

Local workers on duty

Works Completed

Contractors Site Camp Office

Crusher Plant