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NMIMS

School of Business Management


Summer Internship Report 2017

Name :- Mritunjay kumar dhamar

Roll Number :- F016

Faculty Mentor (NMIMS) :- Mr Hari Kumar Iyer


Summer Internship Project

On

Study of Rapid Metro System & Identification of Potential Key


Contractors

Submitted to: Submitted by:

Mr. Abhishek Shankar Mritunjay Kumar Dhamar


Vice President, Infrastructure Practice F- 016
Marsh India Insurance Brokerage Ltd. NMIMS
Executive Summary

The entire project deals with identifying business Opportunities in Infrastructure Sector. The scope
of the project is only up to the metro projects in India and the progress of all the metro projects along
with the expected completion date. The detailed study of the metros contains information such as:

1. Client name
2. Net Worth of the Project
3. Total distance (elevated and Underground)
4. Project status
5. Route Map of all the Metro Projects
6. No of Metro stations (elevated and Underground)

The Information is extracted out of 36 metros followed by the list of Contractors who are involved
in different types of works in different areas.

Based on the available information and few parameters, top 50 companies were shortlisted from the
list of more than 500. The assumption made is explicitly mentioned in the report along with the
criteria used to shortlist the companies. If the company was involved in more than 2 metro projects, it
was considered as an potential business opportunity and also if it was the subsidiary of any large
conglomerate, it was shortlisted considering its potential to get involved in future metro projects.

Further, from the list of top 50 contractors, its financial study was done which includes studying
its key financial ratios for the past 7 years (2010-2016). The key ratio includes

1. Debt to Equity Ratio


2. Current Ratio
3. Profit after Tax
4. Market capitalization per unit sales

After taking care of the financials, the top 24 companies were selected which were the most preferred
Companies for the business.
Another comparison was done among these 24 companies of their net worth. The reason for the
same was to target only top 10 construction companies and not more than that. If a company is
financially stable but cannot support large projects due to its financial Incapability, the company
makes less sense.
Not only the top 10 construction companies, but top 5 potential destinations for infrastructure
investment were also recommended, shortlisting them based on few criteria such as:

1. Ease of doing business


2. Government Policies
3. Government stability
4. Investment Potential
5. Need of Investment

The next task was the assessment of Risk Analysis of their potential business areas along with analyzing
the top 10 companies on the lines of their involvement in the other businesses which could be beneficial
for the Insurance company as a whole. Different domains/ industry involvement makes the client more
favorite as the scope of doing business is high as compared to the other companies. The last step was to
discuss about the Marsh value offerings along with its expertize and advantages.

The entire process was discussed in brief which helped to know the Marshs approach to the particular
business risks of any company.
Table of Contents

Content Page

Need of the study 4

Organization Overview 5

About Infrastructure 8

Research Methodology 9

Detailed Study of the Project 10

Findings and Calculations 11

Shortlisting of the companies 14

Identifying the Stakeholders 18

Category of Risks 19

Risk Mapping 20

Marshs Solution 23

Learnings and Recommendations 24

References 26
Need of the Study

Globalization, population growth and urbanization are placing considerable strains on Infrastructure
around the world. Advanced industrial economies like the United States and Western Europe are
focusing on replacement of their aging Infrastructure, but the developing world faces the more
difficult tasks of creating new transpotation, communication, water and energy to foster economic
growth.
The importance of Infrastructure as a key growth driver is well established and hence the project deals
with increasing business oppurtunities in Infrastructure sector for Marsh as an Insurance brokrage
firm.Since 2000 India has been a hot destination for Infrastructure sector and not only the domestic
companies but majority of the foreign infrastructure companies have shown interest to play a major
role. India is now a country of more than 1.33 billion people and the increasing population is creating
a lot of pressure on the existing resources. India needs more of such investments in infrastructure
sector, for which it is very important to identify the pottential firms who could play a major role in
shaping the countries infrastructure. For a Insurance brokrage companies like Marsh, a great
importance is given to these companies as these companies would be needing insurance for all their
business risks and finding the best product is a troublesome job for majority of them. Marsh, being the
market leader solves the problem of these companies by acting as an interface between an insurance
companies and the business clients. Marsh & McLennan Companies helps the client to assess their
potential business risks areas and thereby finds the best product after consulting the Insurance
companies.
Hence it was very important to study specifically about all the metros, their phases and the list of all
the contractors who have been involved with different types of works in different metros. The study
was more important because it helped Marsh to channelize its resources and focus on few important
clients in a more structured approach.
About the Organization

Organization Overview

Marsh and McLennan companies (MMC) is a U.S. multinational professional services, risk
management, and insurance brokerage firm with headquarters in New York. It helps clients identify,
plan for and respond to critical business issues and risks.

Marsh & McLennan is a diversified risk, insurance and professional services firm composed of:

Mission
Marsh & McLennan Companies is a professional services firm, committed to assisting their clients in
the protection and enhancement of value through advice and solutions in risk, strategy and human
capital.

Vision

To be widely recognized as one of the worlds elite business enterprises-the preeminent provider of
professional services.

To provide clients with the most valuable ideas, services and solutions.

To provide colleagues with opportunities to grow, contribute and thrive.

To achieve sustained growth in earnings.

To achieve significant and sustained growth in shareholder value.
About Marsh

Marsh is a global leader in insurance broking and risk advisory. Around 26,000 colleagues across the
world team with its clients to define, design, and deliver innovative industry-specific solutions that
help them protect their future and thrive. Insurance broking is Marshs primary business. Its
experienced professionals work with businesses to review its risks and existing mitigation strategies to
provide a customized insurance program based on clients unique needs.
Marsh is the world leader in delivering risk and insurance services and solutions to clients. It provides
global risk management, risk consulting, insurance broking, alternative risk financing, and insurance
program management services for businesses, public entities, associations, professional services
organizations, and private clients. It is organized by client, industry, and risk categories to facilitate
the global delivery of highly specialized products and services covering a wide spectrum of risks. It
provides global risk management, risk consulting, insurance broking, alternative risk financing, and
insurance program management services for businesses, public entities, associations, professional
services organizations, and private clients. It is also recognized by client, industry, and risk categories
to facilitate the global delivery of highly specialized products and services covering a wide spectrum
of risks.

Marsh operates by collecting commissions from insurers and advisory fees from its clientsmainly
large corporations but also small and mid-size businesses, municipal governments, school districts and
some individualsin exchange for locating property and casualty insurance coverage for them. At all
relevant times, the Company stated that its "guiding principle is to consider (its) clients' best interests
in all placements", and that it "(does not.) represent the (companies)" and held itself out as a "trusted
adviser and advocate, in effect representing their best interests in the market place".

Other competitors in the financial sector include: Arthur J. Gallagher (AJG), Brown & Brown (BRO),
and Willis Group Holdings (WSH).

In India, Marsh received its broking license from the Insurance and Regulatory Development
Authority (IRDA) and was established in 2003. Today, it has nine offices across the country providing
clients with local market understanding backed by international expertise and an unmatched global
network. India is a country of contrasts where growth and opportunities go hand in hand with risk and
challenges. Characterized by a growing youth segment, India plays an essential and dynamic role in
the global economy. It is the hub for many global industries, such as pharmaceuticals, manufacturing,
infrastructure development and information technology. Companies operating in India, large or small,
face a constantly changing risk landscape. Marsh understands cost containment is as important as risk
management. It works with the clients to understand their business first, then provide customized and
innovative risk management and insurance solutions at cost effective terms available in the market to
help their business succeed.
Benefits with India

A deep understanding of the Indian insurance market and


regulatory requirements.

A comprehensive suite of integrated services, including insurance


program design and placement.

Optimize the insurance placement, making it cost effective.

Dedicated Professionals - Specialist industry and product capabilities.

Seamless Global Network - A central point of contact for companies


with international operations.

Deliver claim solutions, adding value to our clients when


they need it most.

Marsh India has specialist practices within a multi-disciplinary team environment to meet clients
specific needs which include: Affinity practice, energy, Marsh risk consultancy(MRC), Aviation,
Financial and professional liability(FINPRO), Micro and Rural insurance, Casualty and crisis, India
client service(ICS), Multinational client service (MCS), Claims advisory, Industry practices, private
equity and merger & acquisitions(PEMA), construction, power and utilities(CPU), marine,
Reinsurance, Employee and health benefits, trade credit and political risks(TCPR).

Marsh undertakes a highly structured approach to the insurance and risk program design for its
clients projects. Marsh 3D(DEFINE opportunity, DESIGN solutions, DELIVER results), links to
your existing strategic risk management process, creating a bridge from new and emerging risks to
traditionally insurable ones.
Infrastructure At a Glance

Revitalizing the infrastructure sector remains crucial to improve the overall investment climate
and bring the Indian economy back in the high growth trajectory. India was ranked 81st out of 140
countries for its infrastructure in the World Economic Forums Global Competitiveness Report
201516. The country needs close to INR31 trillion (~US$455 billion) to be spent on infrastructure
development over the next five years, with 70% of the investment needed across the power, roads
and urban infrastructure segments.During the last decade, the Indian infrastructure landscape was
characterized by high levels of stressed assets and stalled projects. The number of stalled
infrastructure projects increased to 893 as of March 2016 compared to 766 in March 2014.
A sharp slowdown in the domestic economy, lack of long-term alternative financing options,
regulatory delays in clearances, persistent policy paralysis, build-up of excess capacity, delays due to
environmental concerns, and deficiencies in the credit appraisal of the banks are some of the key
factors that hampered the smooth implementation of large infrastructure projects. Despite significant
headwinds, notable systematic efforts have been made, especially under the new Government and
with the support from regulators and bankers, to both revitalize stalled projects and boost fresh
investments. Some of the notable measure taken by the RBI to revive stressed projects include
changes in CDR guidelines (taking away provisioning concession offered to CRDs), introduction of
Special Mention Accounts (SMAs) (to identify early signs of stress in an account based on tangible
events or indicators), strengthening of credit risk management at banks and providing more
accountability to promoters. The new Bankruptcy Code and the SDR/S4A guidelines from the RBI are
also expected to play a pivotal role in the resolution of stressed infrastructure projects.
As for propelling fresh investments, we believe that one of the most critical aspects that need to be
looked at is the development of structured institutional financing framework. While globally, pension
and insurance funds are the prime source of long-term financing, regulatory/credit hurdles have
prevented such development in India, where historically, banks are the primary source for
infrastructure financing. The share of infrastructure finance in gross bank credit increased from
1.6% in FY01 to 15.3% in FY15. Credit has flown into infrastructure sector via NBFCs, mutual
funds and capital markets the source of the bulk of which is bank finance. However, infrastructure
financing by banks in India is exposed to challenges, such as a) ALM mismatch, b) long gestation
periods of infrastructure projects, c) elevated stress in infrastructure lending
books and d) the RBIs proposal to cut exposure limits. To address these challenges, the
Government and the RBI have taken effective measures, including the following:
Setting up of National Infrastructure and Investment Fund (NIIF) with initial investment of
INR200 billion to increase investment flow to infrastructure projects
Promising to infuse capital to improve banks CAR for example, under Indradhanush, the
Government has promised to infuse INR700 billion during FY1619 Implementing policy
measures such as improving coal and gas availability to power projects and ensuring faster
clearances of stalled projects
The RBI allowing banks to raise long-term infrastructure bonds with no regulatory costs
Banks being allowed to refinance infrastructure projects under the 5/25 scheme and
extend long-term loans of 2025 years to match the cash flow of projects.
These efforts are noteworthy; however, given the Governments fiscal constraints and sheer magnitude
of financing, there is a greater need to further develop alternative sources of long-term financing, such as
bonds and institutional equity support from the private sector. The corporate bond market in India is still
underdeveloped and is yet to make a mark. Currently, structured issuances in the bond market are
primarily dominated by investment in entities such as the NHAI, PFC, REC
and, most recently, the Railways. Finally, it is to be noted that Indias infrastructure challenges
cannot be mitigated through improved financial intimidation alone. Systematic and well synced
efforts by all the industry participants are the need of hour keeping in mind Indias social, political
and economic scenario.
Research Methodology

We started the project with Studying about the progress of existing metro projects in India along with
the detailed report of most of the metros. This work was followed by the study on upcoming and
planned metro projects with the expected completion date.

Every type of contracts for each metro was analyzed and the list of possible contractors was
extracted, taking care of their other works where these contractors were involved with.

The entire study was based on data extracted through secondary research, along with few detailed
feasibility study of few metro projects and Industry report from neilson and e&y.
Few journals and articles were also referred which were assumed to befrom an authenticate
source .

Scope Approach Methodology

Detailed study of Step 1: Exhaustive list of Secondary Research :


all the metro all the metro projects and Detailed study report
projects in India associated contractors in along with industry
along with India. report from Ibef,
expected Step 2 : Identifying the top Neilson, e&y and
completion date 10 potential contractors KPMG.

Identifying the Step 3 : Studying their Secondary Research:
business risks for business risks and Internet search and
all the contractors recommending solutions published information
and recommending for the same. like journals, research
the solution. papers
Detailed Study

Rapid transit in India:

Rapid transit in India consists of bus, metro, monorail and light rail systems. The first rapid transit
system in India was the Kolkata Metro, which started operations in 1984. The Delhi Metro was
the first modern metro in India. The Mumbai Monorail, which opened on 7 February 2014 is the
first monorail in India, since the closing of the Patiala State Monorail Trainways in 1927.

In 2006, the National Urban Transport Policy proposed the construction of a metro rail system in every
city with a population of 20 lakh (2 million). On 11 August 2014, Union Urban Development Minister
M. Venkaiah Naidu announced that the Union Government would provide financial assistance, for the
implementation of a metro rail system, to all Indian cities having population of more than 1 million. In
May 2015, Prime Minister Narendra Modi approved the Union Urban Development Ministry's proposal
to implement metro rail systems in 50 cities. The majority of the planned projects will be implement
through special purpose vehicles, which will be established as 50:50 joint ventures between the Union
and respective State Government. The Union Government will invest an estimated 5 lakh crore
(US$78 billion). In new draft policy unveiled in March 2017, the Central Government stated that it
wanted State Governments to consider metro rail as the "last option" and implement it only after
considering all other possible mass rapid transit systems. The decision was taken due to the high cost of
constructing metro rail systems.

Metro rail:

Metro rails are rail-based, mass rapid transit systems that operate on an exclusive right-of-way, which
is separated from all modes of transport in an urban area. Most often, the right-of-way is either
underground or elevated above street level. These systems generally operate at an average speed of
2035 km/h, and are characterized by their high capacity (50,00075,000 passengers per hour, per
direction) and high frequency of operation. The capital cost of construction is between 2030 times
that of the Bus Rapid Transit system, depending on whether the metro systems are underground or
elevated (Mohan, 2008).
There has been a growing interest among policymakers about the relevance of rail-based systems in
India, to address the mobility needs of the expanding population in the cities. While evaluating
different mass transit options for Indian cities, metro systems are often given preference due to the
belief that road-based bus systems cannot cater to capacity requirements as much as metro systems. In
addition to this, metr rails are perceived to have higher levels of comfort, speed and efficiency, than
bus systems, making them more attractive to both policymakers and potential users of the system.
Promoters of metro systems often claim that one of the benefits of the metro is reduced congestion,
due to the users shift from road-based motorized modes to metro systems. This mode shift is then
claimed to result in reduced air pollution and road accidents. However, the experience of metro rails
in low and middle income counties around the world shows otherwise (Mohan, 2008). Due to the
induced demand, the available road space fills up with motorized vehicles, and the modal shift to
metro does not result in the reduction of congestion or air pollution.
A study done by the Centre for Science and Environment (CSE) on pollution levels in Delhi illustrates
that in 2001 (Delhi Metro started in 2002) the annual average level of respiratory suspended
particulate matter (RSPM, or PM10) in residential areas stood at 149 microgram per cubic metre.
After registering a drop in 2005, the level rose to 209 microgram per cubic metre in 2008. The
concentration is approximately three times higher than safe levels. Similarly, the eight-hourly
maximum current level of carbon monoxide (CO) is touching 6,000 microgram per cubic metre way
above the safe level of 2,000 microgram per cubic metre though the annual levels have registered a
drop. Overall, these figures illustrate that the operation of the Delhi Metro has not led to a reduction in
pollution levels in the city (Randhawa, 2012).
Findings and Calculation:

Fig: All the data for all the stages of metro construction in India
The detailed study began with finding the number of existing metro projects in India and finding out
their project scope along with their dimensions. The study covered the following headings:
1. Client name
The client name denotes the official name of the metro project in the particular city. Every
metro project has their own governing body which is used to identify different projects.
2. Projects
The project head describes the Planning phase of all the metros as per their detailed study report.
Every metro project is planned in a way that the most needed route is planned first followed by
the less needed route. This is to make sure the smooth functioning of traffic in the city.
3. Net Worth
It denotes the complete project cost which is an approximate calculation is done by government
of the particular state along with the prescribed company who is taking care of the detailed study
report.
4. Corridors
Every Phase of each metro is sub-divided into various corridors where construction work takes
place simultaneously on each corridor. This is done to make sure that a part of work is carried by
the best construction company and by allocating different corridor work to different companies,
work gets completed in much less time and in much efficient way.
5. Metro Lines
Sometimes, It so happens that to make the identification of different routes, the authority allocate
different colors to different metro lines.
6. Location
It specifies the city/state through which the prescribed metro line is planned to pass through. It so
happens that few metro pass through two cities/states, hence it is important to know the partner
state name.
7. Total distance
The report also contains the detailed study of total distance which the particular metro projects
runs through. The distance could be both elevated and underground. The on ground distance
has a small proportion but has also been considered.
8. Total Number of stations
The number of stations also plays a major role in deciding the worth of the metro projects. More
the number of metro stations, more is the project cost. Hence an detailed study to include the
number of metro stations have been done which includes the number of stations which are
underground, elevated and on ground level.

9. Project status
The assigned metro projects may be in different stages of construction. The section
specifically tells us the availability and functioning of metro projects. The project may be
Completed, In-Progress or in ideation stage.
10. Expected Completion date
Apart from few metro projects, most of it have majority of their construction still to be done.
Hence it is very important to know the expected completion date so that the percentage of
work being completed is easily estimated.

After doing the task for about 36 metros we came to a conclusion that a total of about 10-15
metros have officially started their operation, about 12-15 of them are still in their initial stages
whereas around 10-12 are still in their ideation stage.
The exhaustive list also contains the type of work being given under the metro project and their
associated contractors i.e: e for every metro project the related type of work and their
associated contractors list can be taken out and analyzed.
The list also helps us to identify as to which all contractors have worked in which all metro
projects and what kind of works, they have been associated with in the near future. By gathering
such data it becomes very easy for an Insurance/Insurance brokerage firm to identify its business
risks and thereby pitch them against safeguarding their each risk. Targeting their each business
risk, Marsh as an Insurance brokerage firm can look for the best feasible cover for the associated
risks by approaching every Insurance company with the customers details. The broker deals
with the Insurance Company on behalf of the business clients thus trying to get the best deal for
the client. The saves the client from all the hassles as well as documentation delay.
Not only it helps to get the best deal for the clients but also helps in case of a claim settlement.
The entire process of getting the claims is simplified in the presence of a broker which saves a lot
of time for the company.
Shortlisting the Companies

Once the entire process of data gathering was completed, the next step was to shortlist the top 50
construction companies for the further study. A screening down of 50 companies from the complete
list of 568 involved a lot of research and assumption. The decisions taken were influence by the
latest trend and their overall worth in their sector. However the factors considered for shortlisting top
50 companies were:

1. Number of Projects Involved with.

A company which has been associated with more than 2 metro projects itself comes under the
scanner of potential companies. It shows their overall potential as well as the reputation of the
company of being the favorite among the Insurance and the broking companies.

2. Worth of the Project

It so can happen that a particular company is involved with only one project and that too has a very
large potential as compared to the company being involved with multiple small projects. So It is
very important to identify these big fish as they can be as good as various other small fishes.

3. Potential of the bidder

Sometimes a small company may not look very attractive due to various reasons but we cannot ignore the
fact that if the company is a part of some larger conglomerate then it will have a strong financial backup
as well and despite the company looking weak on balance sheet it could be considered as a potential client
because it can anytime leverage the name of its conglomerate and ask for loan.

Once the shortlisting of the top 50 companies is done, further shortlisting of top 24 companies was
carried out based on their financial study for the past 7 years. The following ratios and values were
calculated and analyzed to come to the conclusion.

1. Current Ratio
2. Debt to Equity Ratio
3. Profit after Tax
4. Market Cap per unit sales

Current ratio is equal to the current assets divided by current liability. The current ratio is
mainly used to give an idea of the company's ability to pay back its liabilities (debt and accounts
payable) with its assets (cash, marketable securities, inventory, and accounts receivable). As such,
current ratio can be used to take a rough measurement of a company's financial health.

Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated by
dividing a company's total liabilities by its stockholders' equity. The D/E ratio indicates how much
debt a company is using to finance its assets relative to the amount of value represented in
shareholders' equity.

After-tax profit margin is a financial performance ratio, calculated by dividing net profit after taxes
by revenue. A company's after-tax profit margin is important because it tells investors the percentage
of money a company actually earns per dollar of revenue

Market cap to sales ratio also known as price to sales ratio indicates how the market is valuing
every rupee of the company's sales. ... It is used to compare the companies in the same sector. It
is also useful for valuation of a company that is incurring losses.
The following values for every 49 companies were taken out from the year 2010 to 2016 and the
overall values were normalized by assigning weights to every year (2010 0.05, 2011 0.05, 2012
0.10, 2013 0.10, 2014 0.20, 2015 0.20, 2016 0.30). This was done to give more importance
to the most recent year followed by the early years. For companies whose data for few years were
missing, the average of all the available data was calculated to come to the final figure.

This was followed by the portfolio study of all the 49 companies which included the study about the
sectors in which these companies are currently operating. Not only the sectors in which they are
currently operating are listed but the sectors in which they are less active as well as not at all
present are studies to understand the business potential of these companies.
Once the favorite company is screened out, the list of top 24 companies based on their financial
and portfolio study was finalized and further study was done to drop down the list to top 10
companies. The funneling down of the companies was important to make sure that Marsh as an
Insurance brokerage company targets only the big companies having bigger business potential.

After screening out of top 24 companies, the top 10 companies was decided on the value of their net
worth.Though it is important for any company to be financially stable, its net worth is equally
important to estimate the amount of business the company can offer to both the insurance as well as
the insurance brokerage firm.
Fig: Top 10 Construction Companies

The following companies are most favorable as a potential business partners and can be targeted,
based on what portfolio the company is into. The business risks are identified as per the sector the
company is functioning and feasible solution is provided after consulting both the client and Insurance
companies. Some of the areas of operation of the companies were:

1. Roads, Highways & Flyover


2. Residential Buildings
3. Industrial Civil Works
4. Cement Industry
5. Power
6. Marine and Aero space
7. Renewables & Telecom
8. Oil & gas
9. Electrical Work
10. Operation & Maintenance
11. Tunneling and Boring
12. Mining & Material Handling
13. Metallurgy
14. water supply
15. Metal and Electronics
16. Land system &Lifestyle
17. Machinery & Infrastructure
18. Lifestyle
19. Innovation & Corporate Development
20. Mechanical and Electrical Works

It is very important to identify each sector for the shortlisted companies as they would tell us the type
of business risks and this could help in pitching for the associated product. So for every industry there
is a different kind of business risks which is catered by relevant covers being provided by the
insurance companies. More the number of sectors a company is associated to, more are the chances
of it being business potential.
Identifying the Stakeholders

Stakeholders are those who may be affected by or have an effect on an effort. They may also include
people who have a strong interest in the effort for academic, philosophical, or political reasons, even
though they and their families, friends, and associates are not directly affected by it.

One way to characterize stakeholders is by their relationship to the effort in question.

Primary stakeholders are the people or groups that stand to be directly affected, either
positively or negatively, by an effort or the actions of an agency, institution, or
organization. In some cases, there are primary stakeholders on both sides of the equation: a
regulation that benefits one group may have a negative effect on another. A rent control
policy, for example, benefits tenants, but may hurt landlords.
Secondary stakeholders are people or groups that are indirectly affected, either positively
or negatively, by an effort or the actions of an agency, institution, or organization. A program
to reduce domestic violence, for instance, could have a positive effect on emergency room
personnel by reducing the number of cases they see. It might require more training for police
to help them handle domestic violence calls in a different way. Both of these groups would be
secondary stakeholders.
Key stakeholders, who might belong to either or neither of the first two groups, are those
who can have a positive or negative effect on an effort, or who are important within or to an
organization, agency, or institution engaged in an effort. The director of an organization
might be an obvious key stakeholder, but so might the line staff those who work directly
with participants who carry out the work of the effort. If they dont believe in what theyre
doing or dont do it well, it might as well not have begun. Other examples of key stakeholders
might be funders, elected or appointed government officials, heads of businesses, or clergy
and other community figures who wield a significant amount of influence.

For the metro rail project, we could identify multiple levels of stakeholders. Primary stakeholders
are the ones who are directly affected by the actions of the concerned person followed by secondary
stakeholders who are indirectly affected by what the primary stakeholders do and so the tertiary and
other stakeholders. The magnitude of the effect varies from level to level and so do the risks.
Following are the stakeholders for the construction company as a whole:

1. Principal Constructors
2. Engineers
3. Manufacturer
4. Community
5. Investors
6. Off taker customer
7. Suppliers
8. Operators
9. Contractor/ Sub contractor
10. Consultant
11. Developer
12. Owner/ JV Partner

Types of Risks Identified:

Doing business itself is a risky operation which expects a lot of complex algorithms and assumptions
to work together. Knowing this fact there are various risks which are identified and could potentially
affect the status of the company. The risk could be both quantifiable and non-quantifiable where a
quantifiable risk gives a financial loss to the company and a non-quantifiable loss negatively
affects the brand equity and reputation of the company.
Following are the types of risks identified in for Construction companies:

1. Financial Risks
a) Contractor/ Suppliers Risks
b) Interest rate fluctuation
c) Poor Estimation
d) Acceptance delay
e) Cost of Risk transfer
f) Cost Overrun
g) Commission delay
h) Wrong revenue forecast
i) Cost to changes in specification
j) Liquidity Risks

2. Strategic Risks
a) Change in specification
b) Interfaces
c) Withdrawal of Partners support
d) Change of project scope
e) Regulation framework compliance
f) Change in political direction
g) Operability best practice

3. Operational Risks
a) Delivery of contractual obligations
b) Commissionable regime
c) Delays due to standards changes
d) Environmental compliance
e) Endemic faults to works
f) Contractual Management

4. Hazard Risks
a) Weather
b) Delay in Commissioning
c) Terrorism
d) Protester action
e) Contract liquidation
f) Non-compliance to standards
g) Supplier defaults
h) Disagreement between stakeholders
Categories of Risks:

Businesses face all kinds of risks, some of which can cause serious loss of profits or even bankruptcy.
But while all large companies have extensive "risk management" departments, smaller businesses
tend not to look at the issue in such a systematic way.

We will look at the main types of risk the business may face. Youll get a rundown of strategic risk,
compliance risk, operational risk, financial risk, and reputational risk, so that you understand what they
mean, and how they could affect your business. Few categories of business risks are as follows:

1. Act of God

a) Flood
b) Earthquake
c) Wind damage
d) Lightning
e) Fire
f) Landslide

2. Construction related

a) Damage to Structure
b) Damage to Equipment
c) Incomplete
d) Design scope
e) Defective Design
f) Different Site conditions
g) Equipment Fire and Theft

3. Financial & Economic

a) Inflation
b) Availability of funds from client
c) Exchange Rate Fluctuation
d) Non Convertibility
e) Financial default of subcontractor

4. Design

a) Incomplete Design scope


b) Defective Design
c) Errors and Omissions
d) Inadequate Specifications
e) Different site conditions

5. Political & Environmental

a) Changes in laws and regulations


b) Requirement for permits and their approval
c) Pollution & safety rules
d) War & Civil disorder
Risk Mapping:

A risk map is a data visualization tool for communicating specific risks an organization faces. The
goal of a risk map is to improve an organization's understanding of its risk profile and appetite, clarify
thinking on the nature and impact of risks, and improve the organization's risk assessment model. In
the enterprise, a risk map is often presented as a matrix. For example, the impact of a risk will occur
may be plotted on the X-axis while the likelihood of the same risk is plotted on the Y-axis

3
7 2 1

6
8 5
9

The risk mapping of the following business risks is done for few construction companies where the
graph was plotted on two axis x axis being the likelihood of impact whereas Y axis being the
likelihood of the unforeseeable event. The graph is divided into four quadrants where each quadrant
signifies different impact and different likelihood frequency.
The first quadrant signifies the high impact and high likelihood zone whereas the third quadrant
signifies the vice-versa . The occurrence of ant incident categorized in the first quadrant would be of
high risk for the business and would cause the maximum damage to the company.

Any company would want the amount of risks to be minimized and to add to that it would want
maximum cover for the risks which falls in the first quadrant so that it could safeguard itself from
potential harm and losses which it would bear if it does not take insurance against those risks.
Following are the types of business risks that could be categorized in the above quadrant

1 Project Management / Sub Contractor Failure

2 Project Delay

3 Constructional Risk

4 Regulatory

5 Design Risk

6 Owner Failure / Getting Paid

7 Force Majeure

8 Marine Cargo

9 Workers Compensation

10 Environmental Risk

11 Political Risk

12 Directors & Officers/ Shareholder value

Apart from the types and magnitude of risk, there are the magnitudes of effects which are seen on the
company if the particular mishap occurs. Suppose something happens to a company it can have effect
on multiple areas/ departments which would have their own magnitude. Against every affected area,
there is a separate solution which are available which the company can make use of to make it safe
from the unforeseeable circumstances.
Following are the areas where it can hamper the companys health and associated value propositions.
Value Proposition
Area Associated Risk
The 3 step Marshs solution at every stage:

Step 1 Pre-Construction phase



Assist in Risk Management Process

Assist with Conditions of Contract for OCIP

Design Insurance Program Structure

Compile Underwriting Information

Discuss and agree on panel of insurers

Produce Underwriting Submission for insurance marketing

Market Insurance Program

Negotiate Policy Terms, Conditions and Pricing

Prepare Terms Evaluation to enable informed decision

Place Insurance Program as per instructions

Step 2 Construction

Provide Insurance and Claims briefing to Project Owners and contractors

Advise on additional coverages where necessary

Monitor changes in Construction Schedule

Service Insurance Program

Claims Management Services, hands on approach

Step 3 Post-Construction

Insurance contract adjustment

Claims Management Services

Implement Operational Insurance Program

Marshs solution consists of identification of the business risks as well as their assessment so that a
compatible solution in terms of cover can be asked for, from the insurance companies. Following are
the steps taken by Marsh to provide value to its client through consulting and broking.

Addressing Claims
Risk assessment Transaction Services
risks management

Identification Risk transfer strategies Organization of competition Claims management & Recommendations
advisement / compensation
Recommendations and
Quantification solutions Insurers selection Clients claims manuals Assistance
writing to subsidiaries
Prevention Markets identification Placement of programs
Potential run-off Documentation
Benchmarking
A claims handling client Reporting & monitoring of
Recommendations oriented on-line application services, reviews
Learnings and Recommendations:

Coming to the insurance sector, it was really difficult to believe that the sector itself has so much to
look forward to. Unlike the insurance sector in U.S.A and other European nations the sector in India is
into its nascent stage with most of the business unregulated. It would take approximately 15- 20 years
for Indian Insurance market to contribute substantially to the overall global insurance business. While
most of the insurance bought in India are directly purchased through the insurance companies, it is not
the same case in other nation where the market is much developed and almost all the insurance are
bought down through the brokers.
Marsh & McLennan Companies being the market leader in Insurance brokerage has definitely an edge
over other broking companies in India. The company has its own loyal source of clients and insurers.
The company has a market share of more than 65% and serves more than 90% of the fortune 500
companies. It has more than 12 offices across India which serves to majority of the clients across all
sectors of business. Working at Marsh was a completely new experience as the sector was completely
new and I had no prior experience of working at Insurance brokerage firm. Right from the first day
everything was put in place and the H.R people were proactive in making sure that interns does not
face any problem.
The project was in Infrastructure sector and I was given the task to study about all the metro projects
in India. The learning was new as I did not know the fact that there are 36 metro projects in India and
all involved a lot of investment and time. Every metro project was first proposed by the state
government following which the feasibility study of the project was done by the concerned company.
The feasibility study proposes the total km of metro project possible in the region and in how many
number of phases the total construction needs to be carried out. The feasibility study also calculates
the approximate value of the project in each phase. Once the feasibility study is done the concerned
company opens the tender for all the companies and related to all kinds of work. The company
bidding the lowest wins the tender for the metro project.
I also came to know about the different kinds of works being offered by the construction companies
and also the different kinds of works required for the project to get completed.
Apart from the project I did, I greatly learned about the insurance sector as well as the business model
of insurance brokerage firms. I learned about the value offerings of the company and also its
differentiating factors.
Some of the differentiating factors of Marsh as an Insurance brokerage company were:
1) Excellence in Risk Management Survey
Executive leadership respondents clearly indicated a desire to see the risk function evolves. Not
surprisingly, the goal of integrating decision making across all risk classes and data sets is that
firms are able to avoid duplication of risk management expenditures and exploit natural hedges.
2) Market Support Marsh Market Information (MMI)
Available exclusively to Marsh clients, MMI is the only service that combines ratings and outlooks
from all three major ratings agenciesAM Best, S&P, and Moodys with insurer and group
financial data, stock charts, credit default swap (CDS) spreads, news feeds and Marshs exclusive
financial analyses.
3) Technology Support Marsh Connect
Marshs global online service platform Facilitate interaction between clients and their Marsh service
team throughout the insurance placement and servicing process and is a Single global database to
increase efficiency, reduce errors and in sync with Marsh systems.
4) Analytics
Marsh uses key statistical and actuarial tools based on credible and applicable data to assist clients in
making informed risk management decisions. The practice employs award-winning tools and experts
to help our clients use risk analysis in all facets of their risk management and insurance purchase
decision-making.
References:

http://www.spml.co.in/downloads/reports/Analysis-of-Infrastructure-Investment-in-India-
Assocham-May-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/IMO/in-imo-
infrastructure_&_construction_sectors_building_the_nation-noexp.pdf
http://india.vdma.org/documents/1876199/4165841/Overview%20of%20Infrastructure%20&
%20Construction%20Machinery%20Industry%20in%20India/d0d99d6b-f12c-4f35-927d-
c63416c19277
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Assocham-May-2016.pdf
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http://www.ey.com/Publication/vwLUAssets/ey-infrastructure-investment-and-stressed-
assets-outlook/$FILE/ey-infrastructure-investment-and-stressed-assets-outlook.pdf
http://www.assocham.org/newsdetail.php?id=5973
http://www.assocham.org/newsdetail.php?id=5634
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/IMO/in-imo-
funding_the_infrastructure-investment-gap-noexp.pdf
http://www.nipfp.org.in/media/medialibrary/2013/04/wp_2012_104.pdf
http://www.lse.ac.uk/IDEAS/publications/reports/pdf/SU004/shepherd.pdf
https://www.oecd.org/eco/surveys/INDIA-2017-OECD-economic-survey-overview.pdf
https://www.pwc.com/gx/en/capital-projects-infrastructure/assets/gridlines-india-
article-2013.pdf
Enclosures: