CHAPTER ONE

C h a p t e r One

A FRAMEWORK OF THE STUDY

T h i s c h a p t e r i s an i n t r o d u c t i o n t o t h e s t u d y . It

d e v e l o p s a t h e o r e t i c a l b a c k g r o u n d and b u i l d s a g e n e r a l

framework w i t h i n which t h e s t u d y i s u n d e r t a k e n . It falls

i n n i n e s e c t i o n s w h i c h a r e taken b e l o w .

1.1 Preliminary Considerations

In t h i s s e c t i o n , an a t t e m p t i s made t o d e f i n e project,

management/ p r o j e c t management, formulation, evaluation,

implementation, i m p l e m e n t a t i o n d e l a y s and c o s t over-runs.

These are the key-words used throughout the study.

1.1.1 P r o j e c t , Management and P r o l e c t Management

Hirschman v i e w e d a p r o j e c t i n a d e v e l o p m e n t c o n t e x t . He

d e f i n e s a development p r o j e c t a s " a s p e c i a l k i n d o f invest-

ment. The term c o n n o t e s t o p u r p o s e f u l n e s s , some minimum s i z e ,

a specific location, the i n t r o d u c t i o n o f something quantita-

t i v e l y new, and t h e e x p e c t a t i o n t h a t a s e q u e n c e o f further

d e v e l o p m e n t moves w i l l b e s e t i n m o t i o n . " ^ To him,development

1 Hirschman, A l b e r t 0 . , Development P r o j e c t s O b s e r v e d , The

B r o o k i n g s I n s t i t u t i o n , W a s h i n g t o n , 1967, p . l .
p r o j e c t s are p r i v i l e g e d p a r t i c l e s of the development process.

W h i l e Hirschman s t r e s s e s development and l i n k a g e s , Taylor

and W a i t i n g d e f i n e d a p r o j e c t as a group o f interrelated

a c t i v i t i e s w i t h d e f i n e d s t a r t and f i n i s h p o i n t s and need for

an a g e n c y t o d i r e c t i t . Little and M i r r l e e s (henceforth

c a l l e d L & M) p u t a more p r a c t i c a l d e f i n i t i o n s t a t i n g that

" a p r o j e c t i s any scheme, o r p a r t o f scheme, for investing

r e s o u r c e s which c a n r e a s o n a b l y be a n a l y s e d and e v a l u a t e d as
3
an i n d e p e n d e n t u n i t . " They f u r t h e r r e c o g n i s e d t h a t if

the p a r t s are so c l o s e l y r e l a t e d t h a t the o b j e c t i v e could

n o t b e f u l f i l l e d b y o n l y o n e , then a l l t h e s e p a r t s should

b e taken as a w h o l e o r one p r o j e c t . They e m p h a s i s e d t h e

need f o r e v a l u a t i o n . A recent d e f i n i t i o n emphasising

objectives of time, c o s t and p e r f o r m a n c e i s one o f f e r e d b y

S t i c k n e y and J o h n s t o n who d e f i n e d a p r o j e c t as " a complex, *

identifiable task which i s i n t e r d i s c i p l i n a r y (interfuhctional)

i n n a t u r e and has s p e c i f i c o b j e c t i v e s e s t a b4 l i s h e d f o r the

parameters of time, c o s t and p e r f o r m a n c e . " More recently,

A r b a n i used the s y s t e m s c o n c e p t i n d e f i n i n g a p r o j e c t . To

him, a p r o j e c t i s "a t o t a l system c o n s i s t i n g o f i n p u t , process,

o u t p u t and f e e d b a c k . " ^
2 T a y l o r , W . j . and W a i t i n g , T . F . , P r a c t i c a l P r o j e c t Manage-
ment, B u s i n e s s B o o k s , London, 1973, p . 3 .
3 L i t t l e , I . M . D . and M i r r l e e s , J . A . , P r o j e c t A p p r a i s a l and
P l a n n i n g f o r D e v e l o p i n g C o u n t r i e s , O x f o r d & IBH P u b l i s h i n g
C o . , New D e l h i , 1974, p . 3 ,
4 S t i c k n e y , Prank A. and J o h n s t o n , W i l l i a m R . , " D e l e g a t i o n and
a Sharing o f A u t h o r i t y b y a P r o j e c t Manager", p r o j e c t
Management Q u a r t e r l y , V o l . 1 4 , N o . l , March, 1 9 8 3 , p p . 4 2 - 5 3 .
5 A r b a n i , Prank T . , "A Systems Approach t o P r o j e c t E v a l u a t i o n " ,
P r o j e c t Management Q u a r t e r l y , V o l . 1 6 , N o . 3 , A u g u s t , 1985,
pp. 21-26.
 From t h e above f i v e d e f i n i t i o n s , i t may be seen that

a p r o j e c t i s a system c o n s i s t i n g o f i n p u t f a c t o r s o f labour^

capital/ l a n d and management which a r e i n t e r r e l a t e d i n a

p r o c e s s t o achieve outputs s t a t e d in s p e c i f i c o b j e c t i v e s of

t i m e , c o s t and p e r f o r m a n c e . Such p r o j e c t which can reasonably

be evaluated, has linkages ( f o r w a r d a n d / o r backward) with

other a c t i v i t i e s o r p r o j e c t s i n t h e economy which will

a c c e l e r a t e the development p a c e .

Management, a c c o r d i n g t o Mary P a r k e r F o l l e t , is "the art

o f g e t t i n g t h i n g s done through p e o p l e , " ^ But r e c e n t b o o k s

on management d e f i n e i t as a p r o c e s s i n v o l v i n g management

functions. Trewatha and Newport, f o r e x a m p l e , define

management as t h e " p r o c e s s o f p l a n n i n g , organising, actuating

and c o n t r o l l i n g an o r g a n i s a t i o n ' s o p e r a t i o n s in o r d e r to

achieve a coordination of human and m a t e r i a l resources

essential i n the e f f e c t i v e and e f f i c i e n t a t t a i n m e n t of

7
objectives." Donnelly, Gibson and I v a n c e v i c h (1984) also

d e s c r i b e d management as " t h e p r o c e s s undertaken by one or

more i n d i v i d u a l s t o c o o r d i n a t e t h e a c t i v i t i e s o f o t h e r s t o
a c h i e v e r e s u l t s n o t a c h i e v a b l e b y one i n d i v i d u a l a c t i n g
g
alone." Such a d e f i n i t i o n o f management as a p r o c e s s of

6 Mary P a r k e r F o l l e t , Quoted i n : S t o n e r , James A . F . and

Wankel, C h a r l e s , Management, P r i n t i c e H a l l o f I n d i a ,
New D e l h i , 1986, p . 3 .
7 Trewatha, R o b e r t L. and Newport, M. Gene, Management
F u n c t i o n s and B e h a v i o u r s , B u s i n e s s P u b l i c a t i o n s I n c . ,
D a l a s , 1979, p . 4 .
8 D o n n e l l y , James H . , G i b s o n , James L. and I v a n c e v i c h , John M . ,
Fundamentals o f Management, B u s i n e s s P u b l i c a t i o n s I n c . ,
P i a n o , 1984, p . 3 .
m a n a g e r i a l f u n c t i o n s i s a l s o o f f e r e d by S t o n e r and Vvankel
9 10
(1986) and T e r r y and F r a n k l i n (1987). By the same t o k e n ,

we may d e f i n e management as a p r o c e s s o f p l a n n i n g , organising,

a c t u a t i n g and c o n t r o l l i n g i n o r d e r t o c o o r d i n a t e human and

non-human r e s o u r c e s o f an o r g a n i s a t i o n t o a c h i e v e stated

objectives.

Two a p p r o a c h e s t o t h e s t u d y o f p r o j e c t management in

t h e l i t e r a t u r e o f management can be d i s t i n g u i s h e d . One

c o n f i n e s p r o j e c t management t o t h e management o f project

activities a f t e r pre-implementation s t u d i e s are prepared.

The o t h e r a p p r o a c h i n c l u d e s i n a d d i t i o n t o t h e f i r s t one

s t u d i e s which p r e c e d e i m p l e m e n t a t i o n . For the purpose of

t h i s study, t h e s e c o n d approach i s f o l l o w e d . This approach

i s c l e a r l y s t a t e d by Copur.^^ A c c o r d i n g t o Copur, project

management f a l l s i n two b r o a d c a t e g o r i e s : First is the

allocation o f i n v e s t m e n t funds t o t h e most p r o f i t a b l e and

p r o d u c t i v e p r o j e c t s which r e s u l t s i n what i s c a l l e d feasibility

studies. The s e c o n d c a t e g o r y i s o r g a n i s i n g t h e p r o j e c t and

establishing a d m i n i s t r a t i v e apparatus f o r s u c c e s s f u l performance

of project tasks,

9 S t o n e r , James A . F . and Wankel, C h a r l e s , M a n a g e m e n t , Printice

H a l l o f I n d i a , New D e l h i , 1986, p . 4 .

10 T e r r y , George R. and F r a n k l i n , Stephen G . , P r i n c i p l e s o f

Management, A l l I n d i a T r a v e l l e r Book S e l l e r , D e l h i , 1987,
p . 4.
11 Copur, H a l i l , "The P r o c e s s o f P r o j e c t Management", i n :
S t a t i s t i c a l , Economic and S o c i a l R e s e a r c h and T r a i n i n g
C e n t r e f o r I s l a m i c C o u n t r i e s , P r o j e c t E v a l u a t i o n and
Management, Ankara, 1983, p p . i 3 - 3 3 .
 From the f o r e g o i n g d i s c u s s i o n o f the d e f i n i t i o n s of the

terms p r o j e c t and management, p r o j e c t management may b e

d e f i n e d as t h e management o f t h e v e n t u r e from t h e inception

of p r o j e c t idea t o i t s completion. I t i n v o l v e s the applica-

tion of scientific t o o l s and t e c h n i q u e s i n p l a n n i n g , financing,

implementing, monitoring, c o n t r o l l i n g and c o o r d i n a t i n g unique

activities to achieve desired results according to stated

objectives. A l l these achievements are t o be reached w i t h i n

c o n s t r a i n t s of time, c o s t , q u a n t i t y and q u a l i t y .

To p u t i t more c l e a r l y , one may say t h a t p r o j e c t manage-

ment i s c o n c e r n e d w i t h t h e f o l l o w i n g stages:

(a) Conception o f i d e a
(b) p r e - f e a s i b i l i t y study
(c) F e a s i b i l i t y study
(d) Detailed p r o j e c t report
(e) I m p l e m e n t a t i o n , m o n i t o r i n g and c o n t r o l
(f) T r i a l t e s t s and s t a r t - u p o f p r o d u c t i o n

1,1.2 P r o j e c t Planning ( F o r m u l a t i o n and E v a l u a t i o n )

P r o j e c t planning c o n s i s t s of p r o j e c t formulation and

evaluation.

(a) Project Formulation

P r o j e c t f o r m u l a t i o n i s the s t a g e from the c o n c e p t i o n of

the p r o j e c t idea t i l l the f i n a l a n a l y s i s of the necessary

elements in order t o d e c i d e the v i a b i l i t y of the p r o j e c t . It

i s done in t h r e e s t a g e s : Preliminary study, prefeasibility

 12
s t u d y and f e a s i b i l i t y s t u d y . This e x e r c i s e i s , in essence,

a s o r t of o r g a n i s i n g the i n v e s t m e n t p r o p o s a l i n t o a manner

which w i l l h e l p a n a l y s i n g and e v a l u a t i n g t h e p r o j e c t i n the

next s t a g e . That i s t o s a y , u s u a l l y a p r o j e c t i s formulated

i n t h e way i t w i l l b e a p p r a i s e d . ^ ^ The f u n c t i o n o f the

f o r m u l a t i o n s t a g e i s t o s t u d y a l t e r n a t i v e ways o f accomplish-

ing the o b j e c t i v e s o f p r o j e c t i d e a and t o p r e s e n t t h e support-

14
ing data in a f e a s i b i l i t y study f o r e v a l u a t i o n o r appraisal.

Such a f e a s i b i l i t y study u s u a l l y c o v e r s t e c h n i c a l , commercial,

f i n a n c i a l and s o c i a l aspects.

(b) project Evaluation

p r o j e c t e v a l u a t i o n i n the l i t e r a t u r e o f p r o j e c t manage-

ment, as s t a t e d b y Puttaswamaiah^^and C l e l a n d , ^ ^ among o t h e r s ,

i s of three types: Pre-project evaluation, ongoing evaluation

and p o s t - p r o j e c t e v a l u a t i o n . P r o j e c t evaluation in t h i s study

r e f e r s t o the f i r s t t y p e and i s u s e d i n t e r c h a n g e a b l y w i t h

project appraisal.

P r o j e c t e v a l u a t i o n i s c o n c e r n e d w i t h two i s s u e s : F . i r s t is

making s u r e t h a t i n f o r m a t i o n p r e s e n t e d i n t h e feasibility

12 P i t a l e , R . L . , P r o j e c t A p p r a i s a l T e c h n i q u e , O x f o r d & IBH
P u b l i s h i n g C o . , New D e l h i , 1 9 8 2 , p p . 3 8 - 3 9 .
13 Copur, H a l i l , Op. c i t . , p.19.
14 UNIDO, Manual f o r E v a l u a t i o n o f I n d u s t r i a l P r o j e c t s , Oxford
& IBH Ptablishing C o . , New D e l h i , 1980, p . 1 0 .
15 Puttaswamaiah, K . ( e d . ) , P r o j e c t E v a l u a t i o n C r i t e r i a and
c o s t B e n e f i t A n a l y s i s , O x f o r d & IBH P u b l i s h i n g C o . ,
New D e l h i , 1 9 8 0 , p . v i .
16 C l e l a n d , D a v i d I . , "A S t r a t e g y f o r Ongoing P r o j e c t Evalua-
t i o n " , P r o j e c t Management Q u a r t e r l y , V o l . 1 6 , N o . 3 , August
1985, pp. 1 1 - 1 7 .
s t u d y are a c c u r a t e and s e c o n d i s analysing d i f f e r e n t aspects

p r e s e n t e d in the study t o help in taking a d e c i s i o n whether

t h e p r o j e c t i s recommended f o r s e l e c t i o n , modification or
17
rejection. The a n a l y s i s i n p r o j e c t a p p r a i s a l covers:

(1) T e c h n i c a l a n a l y s i s - t o answer t h e q u e s t i o n w h e t h e r
t e c h n i c a l s p e c i f i c a t i o n s a r e r e a l i s t i c and o p t i m a l .

(2) Commercial a n a l y s i s - t o answer t h e q u e s t i o n w h e t h e r

p r o d u c t s p e c i f i c a t i o n and m a r k e t i n g p l a n and o r g a -
n i s a t i o n s t r c t u r e are soundly c o n c e i v e d .

(3) F i n a n c i a l a n a l y s i s - t o appraise the estimation of

f i n a n c i a l c o s t s and b e n e f i t s and t h e f i n a n c i a l
v i a b i l i t y of the p r o j e c t .

(4) S o c i a l p r o f i t a b i l i t y ^ a l y s i s - t o examine t h e w o r t h i -
n e s s o f the p r o j e c t from the p o i n t o f v i e w o f s o c i e t y
as a w h o l e .

Financial appraisal of a project, as o p p o s e d t o social

appraisal, analyses the p r o j e c t from p r i v a t e profitability

p o i n t of view. I t measures p r o f i t a b i l i t y o f the resources

p u t i n t o t h e p r o j e c t u s i n g market p r i c e s . All factors are

quantified to obtain a definite criterion as t o accept,

r e j e c t o r modify the project.

Social appraisal, on t h e o t h e r hand, i s concerned with

examining t h e s o c i a l d i m e n s i o n o f the p r o j e c t . The focus

h e r e i s on s o c i a l c o s t s and b e n e f i t s . Market o r a c t u a l prices,

as L & M, among many d e v e l o p m e n t e c o n o m i s t s i n t h e 1960s and

1970s have argued do n o t , in most c a s e s , reflect social costs

17 P r o j e c t Appraisal D i v i s i o n , Guidelines f o r the Preparation

of F e a s i b i l i t y Reports f o r I n d u s t r i a l P r o j e c t s , Planning
Commission o f I n d i a , January 1975, p . i v .
 8

18
and b e n e f i t s in d e v e l o p i n g c o u n t r i e s . There are many f a c t o r s

which d i s t o r t a c t u a l p r i c e s ^ e.g., inflation, currency

overvaluation, i m p e r f e c t c a p i t a l markets, protection,

external effects etc.

Therefore, in s o c i a l a p p r a i s a l , market p r i c e s are

corrected. Furthermore, linkages, a i r and w a t e r pollution,

employment g e n e r a t i o n , s e t t i n g i n d u s t r i a l u n i t s i n backward

areas e t c . and n o n - q u a n t i f i a b l e s o c i a l f a c t o r s which the

p r o j e c t may enhance o r r e d u c e a r e examined. A p o p u l a r

technique of s o c i a l appraisal of p r o j e c t s is s o c i a l cost-

b e n e f i t analysis (SCBA) which " p u r p o r t s t o b e a way o f

19
d e c i d i n g what s o c i e t y prefers."

1.1,3 Project Implementation

P r o j e c t implementation i s the a l l o c a t i o n o f tasks to

i n d i v i d u a l s and g r o u p s w i t h i n t h e p r o j e c t o r g a n i s a t i o n and

the e x e c u t i o n of these tasks a c c o r d i n g t o s t a t e d objectives

of time, c o s t and q u a l i t y . P r o j e c t implementation relies

on p r o j e c t f o r m u l a t i o n and e v a l u a t i o n . Implementation of

an i n d u s t r i a l p r o j e c t i n v o l v e s s e t t i n g up o f manufacturing
20
facilities and c o n s i s t s of;

18 Little, I.M.D. and M i r r l e e s , J.A., Op. c i t . , pp.29-37.

19 Dasgupta, A j i t K. and P e a r c e , D.V-J., C o s t - B e n e f i t
A n a l y s i s - T h e o r y and P r a c t i c e , Macmillan P u b l i s h i n g
L t d . , London, 1978, p , 1 9 .
20 Chandra, P r a s a n a , P r o j e c t s ; P r e p a r a t i o n , A p p r a i s a l ,
B u d g e t i n g , I m p l e m e n t a t i o n , T a t a McGraw-Hill I n c . ,
New D e l h i , 1986, p . 7 .
(1) P r o j e c t and e n g i n e e r i n g designs
(2) Negotiations and c o n t r a c t i n g
(3) Construction
(4) Training
(5) Plant commissioning

Those a c t i v i t i e s are c a r r i e d out within managerial aspects

of authority, r e s p o n s i b i l i t y and r e l a t i o n s h i p s , installing and

o p e r a t i n g c o n t r o l systems and c o o r d i n a t i n g a l l e f f o r t s towards

a c h i e v i n g s c h e d u l e s and specifications.

1,1.4 I m p l e m e n t a t i o n D e l a y s and C o s t Overruns

Implementation d e l a y i s a d e l a y which o c c u r s i n implement-

ing a p r o j e c t . I t i s u s e d t o mean c o m p l e t i o n d e l a y and starts

f r o m t h e c o m p l e t i o n d a t e a g r e e d upon between c l i e n t and

contractor. I t i s a l s o c a l l e d t i m e o v e r r u n and has been studied

i n t h i s t h e s i s i n terms o f t h e d e l a y in nvimber o f months from

p r o j e c t e d date of completion.

By the same t o k e n , a d d i t i o n a l c o s t t o the c o n t r a c t cost

o f t h e p r o j e c t due t o time o v e r r u n i s r e f e r r e d t o as cost

•

overrun. I t i s sometimes r e f e r r e d t o as c o s t o f d e l a y . Some-

t i m e s , however, i t may n o t b e a f u n c t i o n o f time overrun.

1,2 The R o l e o f P r o j e c t Management i n

Economic Development

Economic d e v e l o p m e n t i s " a move towards even more efficient

and d i f f e r e n t i a t e d methods o f supplying people with the

* Measurements o f i m p l e m e n t a t i o n d e l a y s and c o s t o v e r r u n s t o
r e f l e c t t h e p r o b l e m under s t u d y come l a t e r in this chapter.
 10

52
r e q u i r e m e n t s f o r s u r v i v a l and i m p r o v e m e n t . " In t h e p a c e

of economic development, governments o f d e v e l o p i n g countries

have embarked on m a s s i v e programmes and p l a n s . The challenge

these countries faced, and are f a c i n g , i s t h e p r o b l e m of

e f f i c i e n t allocation of their scarce resources. Planning at

national l e v e l i s a c c e p t e d i n most d e v e l o p i n g c o u n t r i e s , and

the public s e c t o r p r o j e c t s have become t h e main c o n c e r n of

the p l a n n e r s . Individual projects in these countries "must

be, and i n e v i t a b l y i s " , as argued b y F i t z g e r a l d , "seen in

t h e c o n t e x t o f the p u b l i c i n v e s t m e n t programme as a w h o l e

and, p e r h a p s more i m p o r t a n t l y , o f the r o l e of t h i s latter in

22
economic development."

A public i n v e s t m e n t programme o r n a t i o n a l planning

becomes c r u c i a l when management o f t h e c o u n t r y activities

becomes more c o m p l e x and t a s k - o r i e n t e d . The aim o f such

planning i s t o a c c e l e r a t e development at a l l l e v e l s and i n

diverse f i e l d s . The o b j e c t i v e o f p l a n n i n g i s t o guide

p r o j e c t formulation. That i s t o s a y , formulation, the

cornerstone of the p r o j e c t , emphasises the o v e r a l l objectives

o f the national plan. This i s a p r e r e q u i s i t e , as s t a t e d b y

23 24
t h e World Bank and UNIDO, among many o t h e r b o o k s , for a

21 Baerwald, F r i e d r i c h , H i s t o r y and S t r u c t u r e o f Economic

Development, O x f o r d & IBH P u b l i s h i n g C o . , New D e l h i ,
1969, p . 4 .
22 F i t z g e r a l d , E . V . K . , Pioblic S e c t o r I n v e s t m e n t P l a n n i n g f o r
D e v e l o p i n g C o u n t r i e s , M a c m i l l a n P u b l i s h i n g L t d . , London,
1978, p . 9 9 .
23 K i n g , J . A . , Economic Development P r o j e c t s and t h e i r A p p r a i -
s a l ' - C a s e s and P r i n c i p l e s f r o m t h e E x p e r i e n c e o f t h e World
Bank, The John Hopkins P r e s s , B a l t i m o r e , 1967, p p . 3 - 1 5 .
24 UNIDO, Manaual f o r the P r e p a r a t i o n o f I n d u s t r i a l Feasibility
S t u d i e s , O x f o r d & IBH P u b l i s h i n g C o . , New D e l h i , 1978.
 11

p r o j e c t t o pass the t e s t of f e a s i b i l i t y . Equally important is

that, p r o j e c t evaluation should be c a r r i e d out w i t h i n the

framework o f p l a n o b j e c t i v e s , and o n l y the a l t e r n a t i v e that

25
b e s t f u l f i l s t h e o b j e c t i v e s s h o u l d be selected.

That i s t o s a y / i t i s a c c e p t e d among d e v e l o p m e n t economists

t h a t the f r u i t s of p r o j e c t s c o u l d not be a s c e r t a i n e d without

t h e framework o f a good p l a n . B e n e f i t s o f a p r o j e c t a r e more

if i t i s a n a l y s e d w i t h i n a framework o f an o v e r a l l develop-

ment p l a n b e c a u s e n a t i o n a l o b j e c t i v e s can d i r e c t l y be

r e f l e c t e d at p r o j e c t l e v e l . These plans are f i r s t prepared

on the b a s i s o f a g g r e g a t e e s t i m a t e s and l a t e r on adjusted

according t o the p r o j e c t p r o p o s a l . Therefore, as L & M r e c o g -

26
nised, plans require projects and p r o j e c t s r e q u i r e plans.

T h i s c i r c u l a r r e a s o n i n g means t h a t p r o j e c t management i s a

c y c l i c process; i t s t a r t s w i t h an i d e a and g o e s through

preparation of s t u d i e s , evaluation and i m p l e m e n t a t i o n . Completed

projects are i n p u t s f o r the p r e p a r a t i o n o f new p l a n s .

Projects, once formulated, are s c r u t i n i s e d t o determine

w h e t h e r and t o what e x t e n t t h e y can c o n t r i b u t e to the

objectives. Monetary v a l u e s a r e u s e d , and t h e p r o j e c t cash

f l o w s a r e u s u a l l y summarised i n t o a s i n g l e measure o f profita-

bility f o r acceptance, rejection or modification. In this

regard, the use o f market p r i c e s and t h e a p p l i c a t i o n of

25 S e n , Amortya K . , " O b j e c t i v e s o f P l a n n i n g " , i n : M e i e r ,

G e r l a d M . , Leading I s s u e s i n Economic Development, O x f o r d
U n i v . p r e s s . New Y o r k , 1984, p p . 6 9 2 - 6 9 4 .
26 Little, I.H.D. and M i r r l e e s , J.A., Op.cit., p. 89.
 12

discounting techniques are w i d e l y adopted by economists

and f i n a n c i a l e x p e r t s . But as i t i S / a l l i n p u t s and o u t p u t s

may n o t be q u a n t i f i a b l e . In such c a s e s , as recommended b y

27

UNIDO, t h e r e l a t i o n s h i p between d e v e l o p m e n t o b j e c t i v e s and

v a r i o u s components o f the p r o j e c t s h o u l d b e worked o u t on

their best possible estimates. These f a c t s p r e s u p p o s e s that

the p e r s o n n e l o f o r g a n i s a t i o n s which e v a l u a t e the p r o j e c t s be

w e l l t r a i n e d i n p r o j e c t a p p r a i s a l t e c h n i q u e s and m e t h o d s .

A word o f c a u t i o n d e s e r v e s m e n t i o n i n g i s t h a t governments

use o t h e r measures and f i s c a l p o l i c i e s to reallocate resources

in t h e i r economies. Mere use o f p r o j e c t p l a n n i n g d o e s n o t

28
mean t h a t a l l d e v e l o p m e n t o b j e c t i v e s a r e taken c a r e o f .

Furthermore, a p r o j e c t well-formulated in a f e a s i b i l i t y study,

29
as a r g u e d by B r i c h t a and Sharp* does not in i t s e l f guarantee

s u c c e s s b e c a u s e t h e e n v i r o n m e n t i n which t h e p r o j e c t i s t o be

implemented may b r i n g a b o u t many p r o b l e m s .

1.2.1 I m p l e m e n t a t i o n D e l a y s and Economic Development

One o f t h e p r o b l e m s d u r i n g p r o j e c t i m p l e m e n t a t i o n i s delays

which have been a common f a c t o r and i n v o l v e extra costs. Most

i m p o r t a n t , d e l a y s i n p r o j e c t implementaticin i n v o l v e extra costs

27 UNIDO Manual ( 1 9 8 0 ) , Op.cit., p.13.

28 Fitzgerald, E.V.K., Op.cit., p.99.
29 B r i c h t a , M.H. and Sharp, p e t e r E . M . , From P r o j e c t t o P r o -
d u c t i o n , pregamamon p r e s s L t d . , O x f o r d , 1970, p . 4 7 .
 13

i n terms o f b e n e f i t s p o s t p o n e d . ^ ® B e n e f i t s that a completed

p r o j e c t c o u l d g e n e r a t e have t o b e l o s t b e c a u s e o f delay^ and

o p p o r t u n i t i e s have t o b e f o r e g o n e b e c a u s e r e s o u r c e s are
31
b l o c k e d in the uncompleted projects.

In a d d i t i o n , if t h e d e l a y e d p r o j e c t s were t o generate

f o r w a r d a n d / o r backward l i n k a g e s , then the l i n k e d projects/

a c t i v i t i e s w i l l also s u f f e r a chain r e a c t i o n . In ultimate

analysis, development o b j e c t i v e s of the country w i l l take

more time and money t o achieve.

One o f t h e c a u s e s o f p r o j e c t i m p l e m e n t a t i o n delays

quoted in the l i t e r a t u r e o f p r o j e c t management i s inadequate

32
formulation of p r o j e c t s . B u t d e l a y s may e q u a l l y result

f r o m mismanagement o f implementation. Good p r o j e c t planning,

however, l e a d s t o implementing p r o j e c t s w i t h minimum d e l a y s

and c o s t o v e r r u n s ; thus h e l p i n g i n a c c e l e r a t i n g the achieve-

ment o f p l a n o b j e c t i v e s . The s t a g e s o f p r o j e c t management —

formulation, appraisal and i m p l e m e n t a t i o n — are therefore,

as s t a t e d by UNIDO Manual,^^ c l o s e l y i n t e r r e l a t e d , and t h e

u l t i m a t e s u c c e s s o f an i n v e s t m e n t d e c i s i o n depends equally

on e a c h o f them. T h i s p r e s u p p o s e s b u i l d i n g sound organisations

and s y s t e m s f o r e v a l u a t i n g and i m p l e m e n t i n g the projects,

30 Handa, K . L . , " P r o j e c t Management", Management in Government,
V o l . 1 2 , NO.4, Januairy-March, 1 9 8 1 , p p . 3 6 6 - 3 7 5 .
31 T a y l o r , W.J. and W a i t i n g , T . F . , ' ' P r a c t i c a l P r o j e c t Manage—
ment", O p . c i t . , p . 1 9 .
32 Chandra, P r a s a n a , Op. c i t . , p,6.
33 UNIDO Manual (1980), op.cit., p.10.
 14

1.3 Literature Review

There i s v a s t l i t e r a t u t e on p r o j e c t management i n

general/ and on i n d u s t r i a l p r o j e c t management i n particular,

i n I n d i a and Sudan. Emphasis i n t h i s s e c t i o n w i l l b e made

on t h e most r e l e v a n t m a t e r i a l . Other r e f e r e n c e s , however,

may b e r e f e r r e d t o i n s u b s e q u e n t c h a p t e r s whenever felt

necessary,

34

Porwal (1976) s t u d i e d the p r a c t i c e s and p r o c e d u r e s

of c a p i t a l expenditure decision-making in large manufacturing

companies in t h e p r i v a t e s e c t o r i n I n d i a . I t i s an e m p i r i c a l

s t u d y o f the o r g a n i s a t i o n a l , quantitative, behavioural and

c o n t r o l aspects of c a p i t a l budgeting in l a r g e manufacturing

public limited companies, Porwal's study d i d not tacKle

f o r m u l a t i o n s and i m p l e m e n t a t i o n s t a g e s o f t h e s t u d i e d projects

t o have a w h o l i s t i c v i s i o n o f t h e problems.

Raj (1972)^^ w r o t e a b o o k on p u b l i c e n t e r p r i s e invest-

ment d e c i s i o n s in I n d i a , This i s an outcome o f h i s Ph.D.

thesis entitled: The Dynamics o f C a p i t a l B u d g e t i n g Decisions

of Public Enterprises in I n d i a . The s t u d y aimed t o examine t h e

dynamics o f t h e c a p i t a l b u d g e t i n g d e c i s i o n p r o c e s s i n public

e n t e r p r i s e s and t o o f f e r c o n s t r u c t i v e s u g g e s t i o n s i n terms of

organisation, criteria of selection, required rate of return

and d e c i s i o n s w i t h r e g a r d t o s o l v i n g c o n f l i c t i n g requirements —
34 Porwal, L . S . , C a p i t a l Budgeting in India/ S u l t a n Chand
& Sons, New D e l h i , 1976,
35 R a j / A, B e s a n t C,, P u b l i c E n t e r p r i s e Investment Decisions
in India, The Macmillan Company o f I n d i a L t d , , Delhi,
1977,
 15

economic, p o l i t i c a l and s o c i a l . Raj c r i t i c a l l y examined the

g u i d e l i n e s s e t by the P l a n n i n g Commission o f I n d i a in May

1966 f o r i n v e s t m e n t d e c i s i o n - m a k i n g . His a n a l y s i s concentrated

on c r i t e r i a f o r s e l e c t i o n of p r o j e c t s , location decision,

organisation of c a p i t a l budgetary d e c i s i o n s , training needs,

control over p u b l i c i n d u s t r i a l i n v e s t m e n t s and r e p o r t i n g of

performance of p u b l i c e n t e r p r i s e s . Decision-making process

and management w i t h r e g a r d t o i n ^ l e m e n t a t i o n and follow-up

p r o c e d u r e s were n o t i n c l u d e d w i t h i n t h e s c o p e o f Raj's study.

The Bureau o f P u b l i c E n t e r p r i s e s (BPE) o f I n d i a (1980)^^

p r e p a r e d an i n - d e p t h s t u d y o f c o s t and time o v e r nans o f

Barauni F e r t i l i s e r P r o j e c t . The s t u d y d e s c r i b e d t h e project

from i t s i n c e p t i o n t o i t s completion and a n a l y s e d t h e p r o b l e m s

encountered. A c c o r d i n g t o t h e s t u d y , Barauni p r o j e c t was

p l a n n e d t o b e implemented f r o m March 1968 t o J u l y 1971 b u t was

delayed t i l l October 1976. T o t a l c o s t overrun o f t h e project

was R s . 571.8 m i l l i o n . P r o j e c t management was n o t sound

throughout the whole s t a g e s of the p r o j e c t . A case study

was e x t r a c t e d f r o m t h i s i n - d e p t h s t u d y and p r e s e n t e d in

c h a p t e r f i v e to h i g h l i g h t problems of fertiliser projects.

The F e d e r a t i o n o f I n d i a n Chamber o f Conmerce and I n d u s t r y

37
(1981) p r e p a r e d a p a p e r on t h e l o s s b e i n g c a u s e d t o industry

36 Bureau o f P u b l i c E n t e r p r i s e s , "Barauni F e r t i l i s e r P r o j e c t
I n - d e p t h Study o f T i m e / C o s t O v e r r u n s " , M i n i s t r y of
F i n a n c e , Government o f I n d i a , 1 9 8 0 .
37 C o v e r S t o r y , " C o s t o f D e l a y " , Commerce, V o l . 1 4 3 , No.3655,
J u l y 1981, p p . 7 - 1 4 .
 16

in p a r t i c u l a r , and t h e economy i n g e n e r a l , by implementation

delays mostly because of e x c e s s i v e c o n t r o l s and b u r e a u c r a t i c

bottlenecks. Whether a p r i v a t e o r a p u b l i c s e c t o r project,

s a i d the paper, f o r m a l i t i e s of licensing, finance e t c . might

t a k e s i x t o s e v e n months. Therefore, i n 12 p r o j e c t s , delays

i n months ranged f r o m 11 months t o 100 months, and c o s t of

d e l a y ranged from R s , 2 6 . 4 m i l l i o n t o Rs. 3 , 1 0 3 . 2 million.

T h i s p a p e r , h o w e v e r , was not an i n - d e p t h academic exercise

t o a n a l y s e the s y s t e m and p r o b l e m s of p r o j e c t management.

I n the F i r s t N a t i o n a l Economic C o n f e r e n c e o f Sudan (1982) ,

p a p e r s p r e s e n t e d threw l i g h t on t h e w o r k i n g o f t h e economy

and p r o b l e m s e n c o u n t e r e d . The s e c t i o n on m a j o r industries

38

i n Sudan described, among o t h e r t h i n g s , t h e d e v e l o p m e n t of

s u g a r and t e x t i l e industries. D i f f e r e n t problems of these

i n d u s t r i e s i n b o t h t h e p u b l i c and p r i v a t e s e c t o r s were

b r o u g h t t o the s u r f a c e . These were raw m a t e r i a l shortage,

infrastructure, m a r k e t i n g and f i n a n c e . But p r o b l e m s discussed

were m o s t l y c o n f i n e d t o t h e o p e r a t i o n s t a g e — n o t t o t h e

i m p l e m e n t a t i o n and p r e - i m p l e m e n t a t i o n stages.

39

In my M . S c . t h e s i s (1983) , I s t u d i e d t h e e x t e n t and

causes o f delays in p u b l i c i n d u s t r i a l p r o j e c t s implementation

i n Sudan. The s t u d y a t t e m p t e d t o measure t h e e x t e n t o f delays

i38
n p uAbu
b l i c Z iani dd ,u sMohamed
t r i a l p r Osman
o j e c t s ,and
t o o tahs se er ss s, c" B
o sats i co f I n
d ed luasytsr i eand
s int o
Sudan", i n : P r o c e e d i n g s o f t h e F i r s t N a t i o n a l Economic
C o n f e r e n c e , December 1982, Kharto\im.
39 E l t a y e b , Mohd. E . A . , " E x t e n t and Causes of D e l a y s i n P u b l i c
I n d u s t r i a l P r o j e c t s I m p l e m e n t a t i o n i n the S u d a n " , U n p u b l i s h e d
M.Sc. Thesis in Business Administration, U n i v e r s i t y of
Khartoiam, 1 9 8 3 .
 17

examine the i m p l e m e n t a t i o n s y s t e m . The s t u d y p o i n t e d out

d i f f e r e n t causes of d e l a y s , e.g., unsound organisation,

i n e f f i c i e n t coordination, p o o r communication and l o n g

payment p r o c e d u r e . The s t u d y , h o w e v e r , c o n c e n t r a t e d on

the i m p l e m e n t a t i o n s t a g e and d i d n o t l i n k i t w i t h project

p l a n n i n g t o t r a c e the p r o b l e m s b a c k t o the f o r m u l a t i o n and

evaluation stages.

40
Kharbanda and S t a l l w o r t h y (1983) described project

implementation o f some I n d i a n p i i b l i c s e c t o r fertiliser

projects. They p r o v i d e d d a t a on t i m e and c o s t overruns

i n t h e c a s e o f 15 f e r t i l i s e r p r o j e c t s . They showed how

c o s t o v e r r u n s were t h e r u l e not the exception - - in

p r o j e c t implementation. The w r i t e r s a t t r i b u t e d t h e causes

t o d e p a r t m e n t a l e x e c u t i o n and r e s e r v e d c h a p t e r e i g h t of

t h e i r b o o k f o r d e s c r i b i n g p r o b l e m s e n c o u n t e r e d i n Trombay

F e r t i l i s e r P l a n t Complex. P r o b l e m s which l e d t o d e l a y s were

m a i n l y r e l a t e d t o d e l a y s i n d e c i s i o n - m a k i n g t o make use

o f t h e gas a s s o c i a t e d w i t h o i l d i s c o v e r e d a t Bombay High

in 1974 w h i c h c a u s e d an o p p o r t u n i t y l o s s of Rs. 120 m i l l i o n ^ .

This i s a problem of coordination from e a r l y s t a g e s to

make u s e o f such r e s o u r c e . T h i s s t u d y c o n c e n t r a t e d on fertiliser

project i m p l e m e n t a t i o n as f a r as c o s t o f d e l a y and

decision-making are concerned. Other a s p e c t s o f implementation,

40 Kharbanda, O.P. and S t a l l w o r t h y , E . A . , How t o Learn
From P r o j e c t D i s a s t e r s , Gower P u b l i s h i n g Company
L t d . , A l d e r s h o t , 1983.
 18

e.g.* organisation, planning, c o n t r o l and payment were n o t

touched. In a d d i t i o n , the pre-implementation s t a g e was n o t

dealt with.

The BPE and the S t a n d i n g C o n f e r e n c e o f P u b l i c Enter-

41
prises (SCOPE) (1983) o r g a n i s e d a n a t i o n a l workshop on

p r o j e c t management i n I n d i a , T h i s workshop i n t e g r a t e d the

d i f f e r e n t stages of p r o j e c t l i f e c y c l e in the p u b l i c sector

in India, I t c o v e r e d t o t a l systems approach t o project

management, p r e - i m p l e m e n t a t i o n s t a g e and p r o j e c t implementation,

I n d u s t r i e s t a c k l e d were s t e e l , power, p r o c e s s p l a n t s (ferti-

lisers, c h e m i c a l s and p e t r o l e u m ) , engineering, paper, cement,

c o a l and m i n i n g . F e r t i l i s e r p r o j e c t s p r o b l e m s were m a i n l y

inadequacies in f e a s i b i l i t y s t u d i e s , procedural delays of

Government c l e a r a n c e s , non-availability of scarce materials,

incapability o f i n d i g e n o u s suppliers o f equipment and power

failures. More emphasis was p u t on i m p l e m e n t a t i o n , and the

d i f f e r e n t s t a g e s were n o t i n t e g r a t e d i n t o a w h o l i s t i c vision.
My p a p e r on the e x t e n t and c o s t s o f d e l a y s i n public
42
i n d u s t r i a l p r o j e c t s i n Sudan (1984) , was an e x e r c i s e in

p r o j e c t management. T h i s was more o r l e s s an e x t r a c t o f my

M.Sc. t h e s i s , m e n t i o n e d above i n t h i s s e c t i o n , i n which I

a t t e m p t e d t o d e s c r i b e a m e t h o d o l o g y o f measuring p r o j e c t time

o v e r r u n s and c o s t s o f d e l a y s o f Sudan p u b l i c s e c t o r p r o j e c t s .
41 SCOPE, P r o c e e d i n g s o f N a t i o n a l Workshop on P r o j e c t Manage-
ment in P u b l i c E n t e r p r i s e s , New D e l h i , 1983.
42 E l t a y e b , Mohamed E l t a y e b A b d a l l a , "On t h e E x t e n t and C o s t s
o f Delays i n P u b l i c I n d u s t r i a l P r o j e c t s I m p l e m e n t a t i o n , "
Economic and S o c i a l R e s e a r c h C o u n c i l B u l l e t i n , N o . 1 1 0 ,
Khartoxim, March 1984.
 19

Rao and Mehta (1984)'^^ s t u d i e d time and c o s t o v e r r u n s in

289 I n d u s t r i a l Development Bank o f I n d i a (IDBI) assisted

p r i v a t e s e c t o r p r o j e c t s i n the p e r i o d 1964-65 t o 1979-80.

About 76 p e r c e n t o f t h e sample had c o s t o v e r r u n s . Delay

i n p r o j e c t c o m p l e t i o n has been s t u d i e d i n terms o f d e l a y in

number o f months f r o m p r o j e c t e d d a t e o f c o m p l e t i o n . 85

p e r c e n t o f t h e s t u d i e d companies had time overmans. Caiises

o f the overruns, ranked a c c o r d i n g t o t h e i r i m p o r t a n c e , were

high c o n s t r u c t i o n c o s t , p r i c e r i s e of indigenous machinery,

o m i s s i o n o f some e s s e n t i a l machinery from t h e project

scheme, u n d e r e s t i m a t i o n o f p r o j e c t c o s t and w o r k i n g capital,

change in the v a l u e of rupee, i n c r e a s e in import/custom

d u t y and change i n p r o j e c t s c o p e . But t h e IDBI s t u d y d i d not

draw c o n c l u s i o n s and recommendations on the implementation

s t a g e and l i c e n s i n g procedures,

44

Hafiz (1984) , an e x - c o n s u l t a n t o f t h e S i x Weaving

P r o j e c t s o f Sudan w r o t e a p a p e r on t h e o b s t a c l e s to

i n d u s t r i a l development p r o j e c t s i m p l e m e n t a t i o n i n Sudan i n

the 1970s. Those were p r o b l e m s o f pxablic s e c t o r industrial

p r o j e c t s which r e l a t e d t o c o n t r a c t s , coordination, organisa-

tion, shortage of f i n a n c e , b u r e a u c r a t i c d e l a y s and i n f r a -

structure. Although i t b r o u g h t many i m p l e m e n t a t i o n problems

and o f f e r e d g o o d s u g g e s t i o n s , H a f i z ' s p a p e r d i d n o t a t t e m p t
43 R a o , K.Kameswara and Mehta, R i n d i , "A Study on Time and
C o s t Overruns i n P r o j e c t s A s s i s t e d b y IDBI During 1964-65
t o 1 9 7 9 - 8 0 , " RPD S t u d i e s , N o , 5 , IDBI, Bombay, 1 9 8 4 .
44 H a f i z , Mohamed Hasan, " O b s t a c l e s t o I n d u s t r i a l Development
P r o j e c t s I m p l e m e n t a t i o n i n Sudan, 1 9 7 0 - 8 0 " , Kharoum, 1984.
 20

t o l i n k i m p l e m e n t a t i o n w i t h p r o j e c t p l a n n i n g and, hence,

left a gap t o be filled.

In h i s Ph.D. t h e s i s on d e v e l o p m e n t administration,
45

Mahmoud (1984) r e s e r v e d some p a r t s i n which he discussed

some p r o b l e m s o f administration in public sector industrial

projects i m p l e m e n t a t i o n i n Sudan. A c c o r d i n g t o Mahmoud,

p o l i t i c a l d e c i s i o n s p r e v a i l e d in p r o j e c t s location and

contract administration and b a r g a i n i n g l e d t o loopholes,

t e c h n i c a l p r o b l e m s and p e n a l t i e s p a i d by Sudan Government

to foreign contractors. Mahmoud's s t u d y was n o t an i n - d e p t h

one o f p r o j e c t management. R a t h e r , i t was an e x e r c i s e in

development a d m i n i s t r a t i o n . However, it r a i s e d some i s s u e s

o f p r o j e c t i m p l e m e n t a t i o n when he d i s c u s s e d t h e e f f e c t of

politics i n p r o j e c t management.

Abu A f f a n (1984)^^ e v a l u a t e d the impact of industrial

p o l i c y measures on a c h i e v i n g s t a t e d g o a l s o f t h e industrial

d e v e l o p m e n t s t r a t e g y and t h e i r i m p a c t on t h e p e r f o r m a n c e of

the e x i s t i n g i n d u s t r i a l s e c t o r o f Sudan. She i n t e r v i e w e d a

sample o f 42 p r i v a t e s e c t o r companies through a c o m p r e h e n s i v e

questionnaire. The I n d u s t r i a l A c t s o f t h e Sudan Government

s i n c e 1956 were c r i t i c a l l y examined. C o n c l u s i o n s were drawn

on p o l i c y i s s u e s which i n c l u d e d measures t o r e f o r m t h e
45 Mahmoud, A b d e l r a h i m E l r a y a h , "Development A d m i n i s t r a t i o n
and P u b l i c P o l i c i e s i n t h e Sudan, 1 9 7 0 - 1 9 8 2 " , Unpub-
l i s h e d P h . D . T h e s i s , U n i v e r s i t y o f R e a d i n g , March, 1984.
46 Abu A f f a n , Bodour 0 . , " I n d u s t r i a l P o l i c i e s and I n d u s -
t r i a l i s a t i o n in Sudan, 1 9 5 6 - 8 0 " , Unpublished Ph.D.
T h e s i s i n B u s i n e s s A d m i n i s t r a t i o n , U n i v . o f Khartoum, 1984,
 21

p u b l i c manufacturing s e c t o r , reformulation of the old

incentive policies, reformation o f the l i c e n s i n g apparatus

and r e v i s i o n o f p r o j e c t s e l e c t i o n criteria. A f f a n ' s study-

c o n c e n t r a t e d on p r i v a t e s e c t o r i n d u s t r y b u t d i d n o t give

enough c o n s i d e r a t i o n t o px:iblic s e c t o r i n d u s t r y w h i c h gained

more i m p o r t a n c e i n t h e 1970s.

47

R a t h i and T r i p a t h y (1986) wrote a paper which presented

the views of c r o s s - s e c t i o n o f managers i n v o l v e d i n projects.

Those were 23 p a r t i c i p a n t s o f a r e s i d e n t i a l programme on

p r o j e c t management o r g a n i s e d by t h e I n d i a n I n s t i t u t e of

Management ( I I M ) , Ahmedabad, All projects implemented,

a c c o r d i n g t o the s t u d y , had c o s t a n d / o r t i m e o v e r r u n s , ranging

f r o m 2 . 8 p e r c e n t t o 6 8 . 8 p e r c e n t and 1 1 . 5 p e r c e n t t o 80

per cent respectively. T h i s was t r u e f o r b o t h p v i b l i c and

private sectors. Among t h e s t a t e d c a u s e s o f c o s t and t i m e

o v e r r u n s were l a c k o f infrastructural facilities, inadequate

investigation at p r e - f e a s i b i l i t y stage, change i n s c o p e of

work, inflation, l a b o u r / f i n a n c i a l problems of contractors

and l o n g c l e a r a n c e p r o c e d u r e s . The p a p e r was o n l y a s u r v e y —

n o t an i n - d e p t h s t u d y — which p o i n t e d some p r o b l e m s for

further investigation.
4ft
The M i n i s t r y o f Programme I m p l e m e n t a t i o n and t h e IIM,

47 R a t h i , A.K.A. and T r i p a t h y , A . , " P r o j e c t Management:

P r a c t i c e s and V i e w s " , I n d i a n Management, V o l . 2 5 , N o . l ,
January 1986, p p . 1 7 - 2 4 .
48 M i n i s t r y o f Programme I m p l e m e n t a t i o n , p r o c e e d i n g s o f
N a t i o n a l Workshop on P r o j e c t I m p l e m e n t a t i o n i n I n d i a .
September 2 5 - 2 6 , 1986, New D e l h i . ~~
 22

Calcutta (1986), o r g a n i s e d a n a t i o n a l workshop on p r o j e c t

i m p l e m e n t a t i o n i n I n d i a which t a c k l e d problems o f project

implementation i n c o a l , power, petroleum, petro-chemicals,

fertiliser, steel, aluminium and e n g i n e e r i n g industries.

Both p u b l i c and p r i v a t e s e c t o r s were c o v e r e d and main issues

d i s c u s s e d were c o n t r a c t management, p r o j e c t scheduling,

m o n i t o r i n g and o r g a n i s a t i o n . C o n c l u s i o n s were drawn on

p r o j e c t f o r m u l a t i o n and e v a l u a t i o n . However, t h i s was n o t an

academic e x e r c i s e ; rather, it represented point of views of

p r a c t i c a l experience in p r o j e c t implementation.

49

In i t s c o v e r s t o r y , t h e B u s i n e s s World (1987) surveyed

t h e w o r s t managed p r o j e c t s i n m a j o r s e c t o r s o f t h e Government

of I n d i a . The s u r v e y c o v e r e d p o w e r , p e t r o l e u m , coal, steel,

mining, fertiliser, paper, atomic energy, railways and

shipping industries. According t o the survey, a total

n\jmberof264 Union Government p r o j e c t s which interalia

i n c l u d e d the r a i l w a y s , power, p e t r o l e u m , steel, coal, fertiliser

and power had c o s t o v e r r u n o f R s . 2,15,130 m i l l i o n . Grov/th

r a t e in production decreased from 6 . 8 p e r c e n t (1984-85) to

6.3 per cent (1985-86) mainly because of delays in project

implementation. The s u r v e y p r e s e n t e d d i f f e r e n t p o i n t of views

o f managers and Government o f f i c i a l s . I t attempted t o reflect

t h e unsound p r a c t i c e s o f p r o j e c t management i n p u b l i c sector

i n d u s t r y . The p r i v a t e s e c t o r was n o t i n c l u d e d i n t h e s u r v e y ,
49 Gupta, S u j o y , " I n d i a ' s Shocking P r o j e c t D i s a s t e r s " ,
B u s i n e s s V^orld, V o l . 1 6 , N o . 2 5 , March 2 - 1 5 , 1987,
pp. 42-55.
 23

A r e c e n t s t u d y on p r o j e c t management i n I n d i a i s that

o f Korgaonker ( 1 9 8 7 ) ^ ^ who r e v i e w e d and a n a l y s e d t h e Indian

e x p e r i e n c e as t o why t h e r e a r e heavy c o s t o v e r r u n s in

p r o j e c t implementation. His s t u d y was b a s e d on a s u r v e y

of current p r a c t i c e s i n p r o j e c t management, particularly

in the p u b l i c s e c t o r . P r o f e s s o r Korgaonker c i t e d instances

where e f f e c t i v e management p r a c t i c e s have l e d t o completion

o f Kudremukh I r o n Ore P r o j e c t and A d i l a b a d Cement P r o j e c t

according to plans. He drew i m p l i c a t i o n s o f h i s analysis

f o r the pre-investment i n v e s t i g a t i o n , project appraisal,

o r g a n i s a t i o n and i m p l e m e n t a t i o n stages. Private sector

was n o t tackled.

From t h e l i t e r a t u r e above, i t i s c l e a r t h a t t h e works

r e v i e w e d e i t h e r c o n c e n t r a t e d on one o r a few s t a g e s o f the

p r o j e c t l i f e cycle ignoring other stages, or concentrated

on one s e c t o r l e a v i n g t h e o t h e r . A s t u d y i s needed t o

c o n c e n t r a t e on few i n d u s t r i e s of t h e p u b l i c s e c t o r and t o

throw l i g h t on t h e p r a c t i c e s o f p r i v a t e s e c t o r i n d u s t r y in

p r o j e c t planning. More i m p o r t a n t , no c o m p a r a t i v e s t u d y has

e v e r been made between the e x p e r i e n c e s o f Sudan and I n d i a

i n p r o j e c t management. Therefore, such a c o m p a r i s o n , if

made, w i l l go f u r t h e r m i l e s t o n e s i n t r a c i n g the c a u s e s of

unsound p r o j e c t management i n b o t h the c o u n t r i e s and i n

o f f e r i n g constructive suggestions in policy issues.

50 K o r g a o n k e r , M . G . , " P r o j e c t Management : A S u r v e y o f
C u r r e n t P r a c t i c e s and I m p l i c a t i o n s " , V i k a l p a , V o l . 1 2 ,
N o . 4 , O c t o b e r - D e c e m b e r , 1987, p p . 1 1 - 2 5 .
 24

1.4 S c o p e o f t h e Study

In t h e b e g i n n i n g o f this section, i t i s worth emphasis-

ing that this study i s , b y and l a r g e , c a r r i e d o u t t o examine

and a n a l y s e the p r o c e s s o f p r o j e c t management i n m a n u f a c t u r -

*
ing i n d u s t r y i n Sudan. The main f o c u s o f t h e s t u d y i s on

Government t e x t i l e , s u g a r and l e a t h e r i n d u s t r i e s w h i c h a r e

r e p r e s e n t e d b y t h e 18 p r o j e c t s o f Appendix. 1 . However,

a c c e s s t o t h e I n d i a n e x p e r i e n c e adds a new d i m e n s i o n t o the

study, as i t e n a b l e s a c o m p a r i s o n o f t h e I n d i a n experience

with the experimentation l a u n c h e d i n Sudan.

The s t u d y i s c a r r i e d o v e r f o u r d i m e n s i o n s :

(a) Type o f i n d u s t r y : The r e s e a r c h work i s c o n f i n e d to

m a n u f a c t u r i n g i n d u s t r y o f Sudan and I n d i a n manufactur-
ing industry in g e n e r a l , and f e r t i l i s : e r i n d u s t r y in
particular. In t h i s r e s p e c t , two c a s e s , M e l u t Sugar
p r o j e c t and Barauni F e r t i l i s e r P r o j e c t f r o m Sudan
and I n d i a r e s p e c t i v e l y are studied.

(b) Type of ownership : The s t u d y c o n c e n t r a t e s on t h e

government s e c t o r . However, l i g h t i s thrown on t h e
process of p r i v a t e s e c t o r i n d u s t r i a l projects
evaluation.

(c) Time h o r i z o n : The s t u d y c o v e r s t h e p e r i o d 1970-85.

But as some p r o j e c t s o f Sudan a r e s t i l l under-
implementation, t h e study s t r e t c h e s b e y o n d 1985 to

* M a n u f a c t u r i n g p r o j e c t s and i n d u s t r i a l p r o j e c t s are used

i n t e r c h a n g e a b l y t h r o u g h o u t the t h e s i s .
 25

p i n p o i n t and a n a l y s e p r o b l e m s e n c o u n t e r e d i n their
implementation.

(d) Country-v;ise experience : The s t u d y i s a c o m p a r a t i v e

one between t h e e x p e r i e n c e s o f Sudan and I n d i a i n
p r o j e c t management.

The j u s t i f i c a t i o n f o r the f o u r p o i n t s i s t a c k l e d in

the f o l l o w i n g section.

1.5 Justification o f t h e Study and i t s Relevance

t o Sudan

1.5.1 J u s t i f i c a t i o n o f t h e Study

As s t a t e d i n the previous s e c t i o n , t h e study i s carried

over f o u r dimensions; type of industry, type of ownership,

t i m e h o r i z o n and c o u n t r y - w i s e experience.

As f a r as t h e t y p e o f i n d u s t r y i s c o n c e r n e d , the work

i s c o n f i n e d t o manufacturing i n d u s t r y . This i s because

more e f f o r t o f t h e Sudan Government was p u t on m a n u f a c t u r i n g

i n d u s t r y i n the 1 9 7 0 s . The F i v e Y e a r Plan o f Economic and

S o c i a l Development 1 9 7 0 - 7 1 - 1 9 7 4 - 7 5 e n v i s a g e d an annual

growth r a t e f o r m a n u f a c t u r e d o u t p u t a t an a v e r a g e r a t e of

9.4 per cent.^^ Besides, the r e l a t i v e c o n t r i b u t i o n of the

manufacturing s e c t o r t o the c o u n t r y ' s gross domestic product

was e n v i s a g e d t o i n c r e a s e from 8 p e r c e n t i n 1970 t o 9.6

51 M i n i s t r y o f N a t i o n a l P l a n n i n g , "The F i v e Year Plan o f

Economic and S o c i a l Development 1 9 7 0 - 7 1 - 1 9 7 4 - 7 5 " ,
V o l . 1 , Khartoum, 1970, p . 1 6 ( A r a b i c I s s u e ) .
 26

52
p e r c e n t by 1974-75.

But p r o j e c t management i n Sudan i s not up t o the

expectations. Various d i f f i c u l t i e s are encountered. Most

o b v i o u s are i m p l e m e n t a t i o n d e l a y s , c o s t o v e r r u n s and low

capacity utilisation. A p p e n d i c e s 1 and 2 show i m p l e m e n t a -

t i o n s c h e d u l e s and c o s t s o f Sudan p u b l i c s e c t o r manufactur-

ing p r o j e c t s . C o m p l e t i o n d e l a y as p e r c e n t a g e o f planned

c o m p l e t i o n p e r i o d , w h i c h we c a l c u l a t e d i n Appendix 3, exceeded

50 p e r c e n t i n most o f t h e p r o j e c t s , and f i v e p r o j e c t s —

as shown i n Appendix 1 — p l a n n e d t o b e c a n p l e t e d ten years

b a c k are s t i l l under i m p l e m e n t a t i o n . Total cost overrun

i n seven p r o j e c t s (Appendix 2) amounted t o Ls 6,120*thousand.

production performance, on t h e o t h e r hand, is bad as

e v i d e n t from Appendix 4 . T o t a l p r o d u c t i o n o f the Six

Weaving Sheds r e a c h e d i t s peak i n 1 9 8 5 - 8 6 when i t registered

7 , 4 4 0 thousand y a r d s . But t h i s was o n l y 11 p e r c e n t o f the

i n s t a l l e d c a p a c i t y of the p r o j e c t s ( 6 6 , 0 0 0 thousand yards).

I n d i a has a l s o w i t n e s s e d s i m i l a r p r o b l e m s . The p a p e r

o f t h e F e d e r a t i o n o f I n d i a n Chamber o f Commercie and I n d u s t r y

reviewed in s e c t i o n 1 , 3 showed t h i s . Average d e l a y o f the

twelve p r o j e c t s s t u d i e d was 38 months and t o t a l c o s t overrun

amounted t o Rs. 4 , 9 8 3 . 9 m i l l i o n . ^^ In a d d i t i o n , 76 p e r cent

52 Ibid., p.24.
53 These f i g u r e s a r e c a l c u l a t e d by t h e p r e s e n t w r i t e r from:
Cover S t o r y , Op. c i t . , p p . 8 - 1 4 .
* Ls s t a n d s f o r Sudanese pound: Ls 1 = Rs. 3.111
 27

of 289 p r i v a t e s e c t o r p r o j e c t s a s s i s t e d by the Industrial

Development Bank o f I n d i a d u r i n g the p e r i o d 1964-65 - 1979-80

o v e r r a n t h e i r c o s t and 85 p e r c e n t e n c o u n t e r e d time overruns

54
a v e r a g i n g 10 months.

A r e c e n t a r t i c l e on I n d i a n most d e l a y e d p r o j e c t s revealed

t h a t c o m p l e t i o n d e l a y i n t h e w o r s t managed p r o j e c t s in coal,

r a i l w a y s and f e r t i l i s e r i n d u s t r i e s were of the o r d e r o f 204,

144 and 119 months r e s p e c t i v e l y . T h e i r c o s t o v e r r u n was

Rs, 12,452.5 million. ^^ Such p r o b l e m s were a l s o reflected

i n K o r g a o n k e r s u r v e y which showed a t o t a l c o s t o v e r r u n of

Rs. 5,442 m i l l i o n i n seven p x i b l i c s e c t o r f e r t i l i s e r projects.^^

The f e r t i l i s e r i n d u s t r y i n I n d i a e n c o u n t e r e d serious

i m p l e m e n t a t i o n d e l a y s and c o s t o v e r r u n s . These are shown i n

A p p e n d i c e s 5 , 6 and 7 . As e v i d e n t f r o m my c a l c u l a t i o n s ,

d e l a y as p e r c e n t a g e o f p l a n n e d c o m p l e t i o n p e r i o d i n most o f the

projects (Appendix 7) e x c e e d e d 50 p e r c e n t , and t o t a l cost

overruns o f the p r o j e c t s amounted t o Rs. 9 , 2 8 8 million

(Appendix 6) .

These f a c t s about i m p l e m e n t a t i o n d e l a y s and c o s t overruns

i n Sudan and I n d i a p o i n t t o w e a k n e s s e s somewhere i n the

p r o c e s s o f p r o j e c t management which c a l l for in-depth

investigation.

The s t u d y , however, c o n c e n t r a t e s on the government sector

54 Rao, K.Kameshwara and Mehta, R i n d i , Op.clt., pp. 5-10.

55 Gupta, S u j o y , Op. c i t . , pp. 42-55.
56 Korgaonker, M.G., Op.cit., pp. 11-25.
 28

b e c a u s e in the F i v e Y e a r Plan 1 9 7 0 - 7 1 - 1974-75 o f Sudan,

the c o n t r i b u t i o n o f t h e p u b l i c s e c t o r i n i n d u s t r y was 60

per cent. By t h e end o f t h e p l a n p e r i o d t h e s h a r e o f public

s e c t o r i n v e s t m e n t i n m a n u f a c t u r i n g s e c t o r a v e r a g e d 21 p e r

c e n t p e r annvun o f t o t a l e x p e n d i t u r e . This i s a svibstantial

increase i f compared t o 8 , 8 p e r c e n t p e r ann\am o f the

57
p e r i o d 1965-66 - 1 9 6 9 - 7 0 f o r Sudan. Therefore, the study

c o n c e n t r a t e s on t h e public sector. This i s not t o say

that the p r i v a t e s e c t o r i s ignored. As i t i s s t i l l the

l e a d i n g s e c t o r in manufacturing i n d u s t r y , and i s witnessing

a h i g h c o n c e n t r a t i o n i n the c a p i t a l c i t y of Kharto\am, some

s e c t i o n s in t h e t h e s i s a r e r e s e r v e d t o s t u d y t h e process

o f i n d u s t r i a l p r o j e c t e v a l u a t i o n by t h e l i c e n s i n g organisa-

t i o n and t e r m - l e n d i n g institutions.

The s t u d y c o v e r s t h e p e r i o d 1970-85 b e c a u s e t h i s is

the p e r i o d when more money f l e w i n t o Government investment

p r o j e c t s i n Sudan and p r o l o n g e d g e s t a t i o n p e r i o d s and c o s t

overruns occurred. Five p r o j e c t s ( a s shown i n Appendix 1)

a r e s t i l l under i m p l e m e n t a t i o n . Therefore, the time

d i m e n s i o n o f t h e s t u d y s t r e t c h e s i n t h e 1980s t o pinpoint

and a n a l y s e the p r o b l e m s e n c o u n t e r e d i n t h e i r implementation.

The s t u d y i s a c o m p a r a t i v e one between the experiences

o f Sudan and I n d i a . Both t h e c o u n t r i e s were under B r i t i s h

57 M i n i s t r y o f N a t i o n a l P l a n n i n g , "The S i x Y e a r P l a n o f
Economic and S o c i a l Development 1977-78 - 1 9 8 2 - 8 3 " ,
Khartoum, A p r i l 1977, p . 4 .
 29

rule and o b t a i n e d t h e i r i n d e p e n d e n c e more than t h r e e decades

ago. A l s o both c o u n t r i e s s t a r t e d n a t i o n a l planning since

t h e i r independence, and p r o j e c t s have been taken up i n a b i g

way t o s p e e d up t h e p r o c e s s o f d e v e l o p m e n t . While I n d i a i s an

industrialising country, Sudan i s s t i l l laging. I n d i a i s more

d e v e l o p e d w i t h sound p l a n s and q u a l i f i e d p e r s o n n e l . Therefore,

i t is f o r t h e i n t e r e s t o f Sudan t o s e e how I n d i a has faced

and s o l v e d p r o b l e m s o f p r o j e c t management.

But t h e s t r u c t u r e s o f t h e e c o n o m i e s o f Sudan and I n d i a

a r e n o t t h e same. The Sudan Government owns t h e b u l k of

s u g a r and t e x t i l e p r o j e c t s , the f o c u s of our study. These

a r e m a i n l y owned b y t h e p r i v a t e and c o o p e r a t i v e s e c t o r s in

India. This study concentrates on f e r t i l i s e r i n d u s t r y of

the p u b l i c s e c t o r o f I n d i a , which witnessed s e r i o u s problems

o f d e l a y s and c o s t o v e r r u n s as m e n t i o n e d i n t h e previous

pages, f o r the f o l l o w i n g reasons.

(1) Sugar, textile and f e r t i l i s e r p r o j e c t s b e l o n g t o the

same f a m i l y o f i n d u s t r i e s , n a m e l y , agro-industry sector,

w h i c h g i v e s them s i m i l a r f e a t u r e s . A l l o f them a r e linked

with agriculture.

(2) Sudan, a p r e d o m i n a n t l y a g r i c u l t u r a l c o u n t r y importing

fertilisers at present, i s more l i k e l y t o o p t f o r fertiliser

i n v e s t m e n t s s o o n . The i r r i g a t e d and r a i n - f e d agricultural

schemes o f Sudan which were e x h a u s t e d o v e r t h e y e a r s , need

fertilisers t o e n r i c h the s o i l . Therefore, the lessons t o be

 30

g a i n e d from p r o j e c t management i n f e r t i l i s e r i n d u s t r y in

I n d i a would h e l p f o r e s e e p r o b l e m s i n f u t u r e p r o j e c t s when

Sudan s t a r t s fertiliser investment.

(3) Last, b u t by no means t h e l e a s t r e a s o n , the matter of

comparison concerns p u b l i c s e c t o r i n d u s t r y in developing

countries. And as t h e p r i n c i p l e s u n d e r l y i n g project

management i n p u b l i c s e c t o r i n d u s t r y a r e more o r l e s s the

same, comparing f e r t i l i s e r (in p u b l i c s e c t o r industry) with

s u g a r and t e x t i l e s , a l s o i n government s e c t o r , is valid.

While t h e p r e s e n t work i s a study o f the process of

p r o j e c t management i n m a n u f a c t u r i n g i n d u s t r y , two p r o j e c t s

are s e l e c t e d and a n a l y s e d t o g i v e more i n s i g h t i n t o the

working o f the system, M e l u t Sugar P r o j e c t frOTi Sudan is

s e l e c t e d because i t i s t h e p r o j e c t with the l o n g e s t gestation

period. I t i s l o c a t e d i n t h e Southern R e g i o n , t h e most

u n d e r - d e v e l o p e d r e g i o n i n Sudan. On t h e o t h e r hand, a c a s e

s t u d y o f Barauni F e r t i l i s e r P r o j e c t i n I n d i a i s used to

h i g h l i g h t p r o b l e m s o f p r o j e c t management. Barauni project,

one o f the most d e l a y e d p r o j e c t s in f e r t i l i s e r industry in

India, i s located in Begusarai, an u n d e r - d e v e l o p e d region

of North Bihar. I t encountered problems s i m i l a r t o those

o f Sudan projects.
 31

1.5.2 R e l e v a n c e o f t h e Study t o Sudanese

Economic P r o b l e m s

Sudan i s t h e l a r g e s t c o u n t r y i n A f r i c a c o v e r i n g an a r e a

of about 2,5 m i l l i o n square k i l o m e t e r s . Its population,

a c c o r d i n g t o 1983 c e n s u s , i s a b o u t 21 m i l l i o n s w i t h an

annual growth r a t e o f 2.8 per cent. On t h e eve o f its

independence (1956), t h e p e r c a p i t a income i n Sudan was

e s t i m a t e d t o b e e q u i v a l e n t t o $ 100 p e r anniom w h i c h made t h e

58
c o u n t r y one o f t h e l e a s t d e v e l o p e d c o u n t r i e s i n t h e w o r l d .

The f a c t t h a t Sudan was, and s t i l l is, predominantly

a g r i c u l t u r a l w i t h one main c a s h c r o p (cotton), the country's

economy was s u b j e c t e d t o f l u c t u a t i o n s i n b o t h volume and

value of i t s export c r o p s . Because of these economic

p r o b l e m s , the f i r s t n a t i o n a l government s t a r t e d a m a s s i v e

programme t o c u r e t h e economy, industrialisation was t o take

the form of i m p o r t - s u b s t i t u t i o n s t a r t i n g by p r o d u c i n g

consumer g o o d s . T h a t was t o e n c o u r a g e t h e e s t a b l i s h m e n t of

i n d u s t r i a l p r o j e c t s , w h i c h v;ould h e l p a l l e v i a t e p r o b l e m s of

unemployment, stagnant p e r c a p i t a income, low s t a n d a r d s of

living and p o v e r t y . I t would a l s o e n s u r e e c o n o m i c indepen-

dence, These were taken c a r e o f by embodying t h e policy

i n t h e Approved E n t e r p r i s e s (Concessions) Act, 1956. The

p o l i c y was n o t a s u c c e s s .

In t h e Ten Y e a r Plan (1960-61 - 1970-71), import-

58 Abu A f f a n , Bodour 0 , , Op. C i t . , p. 55.

 32

s\ibstitution i n d u s t r i a l i s a t i o n was one o f the main policies

to achieve development o b j e c t i v e s . For the f i r s t time,the

pviblic s e c t o r invested in industry by e s t a b l i s h i n g nine

factories — primarily agro-industrial projects located in

rural areas. But t h e p r o b l e m o f t h o s e i n v e s t m e n t s was t h a t

t h e y were n o t b a s e d on p r o p e r f e a s i b i l i t y studies. Therefore,

problems o f location, shortages of raw m a t e r i a l and o t h e r

i n p u t s u p p l y worXed a g a i n s t t h e s u c c e s s o f t h e s e ventures.

In 1966-67, t h e c o n t r i b u t i o n o f the m a n u f a c t u r i n g

s e c t o r t o t h e c o u n t r y ' s g r o s s d o m e s t i c p r o d u c t was 2 , 8 p e r

c e n t compared t o t h e 6 . 8 p e r c e n t e n v i s a g e d b y t h e Ten Y e a r
59
P l a n t o be a c h i e v e d by 1 9 7 0 - 7 1 . The problems o f poverty,

unemployment and low s t a n d a r d s o f l i v i n g were n o t s o l v e d . The

c o u n t r y was m a i n l y d e p e n d i n g on c o t t o n as a s o u r c e o f foreign

e x c h a n g e and no i n d u s t r i a l i s a t i o n was a c h i e v e d t o substitute

for imports.

The May Government (1969-85) d r a f t e d the F i v e Y e a r P l a n

( 1 9 7 0 - 7 1 - 1974-75) and The S i x Y e a r Plan (1976-77 - 1982-83),

A high p r i o r i t y t o the m a n u f a c t u r i n g s e c t o r was a c c o r d e d to

a c h i e v e economic d e v e l o p m e n t . M a n u f a c t u r i n g o u t p u t was t o

grow by 5 7 . 4 p e r c e n t b y the end o f t h e P l a n p e r i o d , i.e.,

i t was t o grow a t an annual a v e r a g e growth r a t e o f 9,4 per

cent.^^ And as s t a t e d i n the p r e v i o u s s e c t i o n , the relative

59 Abu A f f a n , Bodour 0 . , Op.cit., p,66

60 M i n i s t r y o f N a t i o n a l P l a n n i n g , "The F i v e Y e a r Plan
1970-71 - 1974-75", O p . c i t . , p . 1 6 .
 33

contribution of t h e m a n u f a c t u r i n g s e c t o r t o the country's

g r o s s d o m e s t i c p r o d u c t was e n v i s a g e d t o i n c r e a s e from 8 p e r

c e n t in 1970 t o 9 . 6 p e r c e n t b y 1974-75.^^

About 60 p e r c e n t o f t h e t o t a l m a n u f a c t u r i n g investment

i n t h e F i v e Y e a r Plan was the s h a r e o f t h e p x i b l i c sector.

Many a g r o - b a s e d p r o j e c t s were p l a n n e d . Those were m a i n l y

textile, s u g a r and l e a t h e r p r o j e c t s . But t h e y added new

p r o b l e m s t o Sudan economy as a l l o f them were characterised

by l o n g g e s t a t i o n p e r i o d s . Therefore, instead of svibstituting

f o r imports, e m p l o y i n g more p e o p l e , p r o m o t i n g a g r i c u l t u r e and

r a i s i n g the s t a n d a r d o f living, they blocked f o r e i g n capital

b o r r o w e d a t h i g h i n t e r e s t r a t e s and d e l a y e d the economic

development p r o c e s s of the country.

Therefore, a b u l k o f Sudanese e x p o r t s i n the 1980s was

s t i l l mainly o f a g r i c u l t u r a l p r i m a r y goods, e.g., cotton,

seasame and gxim a r a b i c (Appendix 8 ) . I t i s rather risky to

depend on a g r i c u l t u r e which i n t u r n depends m a i n l y on rain.

The e a r l y 1980s d r a u g h t which h i t Sudan had i t s far reaching

e f f e c t on a g r i c u l t u r e , and h e n c e , on f o r e i g n exchange reserve

of the country. The f o r e i g n market o f a g r i c u l t u r a l production,

on t h e o t h e r h a n d , i s n o t s t a b l e . Therefore, there is a

p r e s s i n g need t o m a n u f a c t u r e some o f the agricultural

p r o d u c t s in Sudan s o as t o add more v a l u e , g e n e r a t e more

employment, encourage a g r i c u l t u r e , provide against risk of

61 M i n i s t r y o f N a t i o n a l P l a n n i n g , "The F i v e Y e a r Plan
1 9 7 0 - 7 1 - 1 9 7 4 - 7 5 " , O p . c i t . , p . 24.
 34

d e p e n d i n g on one o r a few p r o d u c t s and d i l u t e economic

dependency.

A l a s t p r o b l e m which makes t h i s s t u d y r e l e v a n t t o Sudan

e c o n o m i c p r o b l e m s i s t h e sharp f a l l o f t h e Sudanese pound

a g a i n s t t h e U n i t e d S t a t e s d o l l a r i n t h e l a s t ten y e a r s . While

the o f f i c i a l rate of a Sudanese pound was $ 2 . 5 i n June 1978,

now (1988) it fell sharply to $ 0,222, This overburdens

t h e f o r e i g n exchange r e s e r v e s o f t h e c o u n t r y which is

witnessing long g e s t a t i o n periods of its projects.

Therefore, it is rather d i f f i c u l t f o r industrialisation

in Sudan t o a c h i e v e i t s d e s i r e d o b j e c t i v e s b e c a u s e a l l 1970s

p r o j e c t s under t h i s s t u d y a r e c h a r a c t e r i s e d by l o n g gestation

p e r i o d s i n an e r a o f w o r l d w i d e i n f l a t i o n and a c o n t i n u o u s

d e v a l u a t i o n o f t h e Sudanese p o u n d . The Sudan government

has b u i l t i n s t i t u t i o n a l framework f o r p r o j e c t e v a l u a t i o n and

implementation c o n t r o l . But s t i l l t h e p r o b l e m s have n o t

been s o l v e d and t h e p r o j e c t s o f t h e 1970s o v e r r a n i n t o the

1980s, Therefore, a s t u d y o f p r o j e c t management o f Sudan

manufacturing industry in g e n e r a l , and p u b l i c s e c t o r manu-

facturing projects in p a r t i c u l a r , I b e l i e v e , w i l l go a l o n g

way i n p i n p o i n t i n g p i t f a l l s and d i s c o v e r i n g remedies,

1.6 The Problem Stated

As s t a t e d i n s e c t i o n 1.5, i n the Five Year Plan 1970-71 •

1974-75, t h e Sudan Government a c c o r d e d more i m p o r t a n c e to

 35

m a n u f a c t u r i n g i n d u s t r y as compared t o p r e v i o u s p e r i o d s , and

p u t more e f f o r t on t h e p u b l i c s e c t o r as compared t o the

private sector industry. To i n c l e m e n t p l a n t a r g e t s , the

o r i g i n a l p l a n e n v i s a g e d an i n v e s t m e n t o f Ls 60 m i l l i o n in

the manufacturing s e c t o r , i.e., a b o u t 18 p e r c e n t o f the

total i n v e s t m e n t o f Ls 385 m i l l i o n d u r i n g the p l a n period.

Of t h i s sum, Ls 3 6 . 4 m i l l i o n were t o b e i n v e s t e d b y t h e

pxablic s e c t o r and the r e m a i n i n g Ls 24 m i l l i o n were t o come

from p r i v a t e investment.

In o r d e r t h a t such b i g i n v e s t m e n t o u t l a y o f the public

s e c t o r was implemented e f f i c i e n t l y ^ t h e Sudan Government has

s e t up o r g a n i s a t i o n s f o r p r o j e c t a p p r a i s a l and i m p l e m e n t a t i o n .

However, from Appendix 1 , Iir^jlementation S c h e d u l e o f Sudan

P u b l i c S e c t o r Manufacturing P r o j e c t s , i t is clear that all

p r o j e c t s have w i t n e s s e d l o n g , g e s t a t i o n p e r i o d s . Five

p r o j e c t s planned t o be completed ten years back (i.e., 1977-78)

are s t i l l under i m p l e m e n t a t i o n . T h i s , w h i l e Appendix 2 shows

costs and c o s t o v e r r u n s i n seven o f t h e p r o j e c t s which only

burden t h e c o u n t r y and r e t a r d i t s e c o n o m i c development.

I n d i a n p u b l i c s e c t o r f e r t i l i s e r i n d u s t r y which occupies

the upper-most p l a c e in the development p r i o r i t y of the

c o u n t r y ^ ^ and underwent t h r e e d e c a d e s o f p l a n n e d d e v e l o p m e n t is

62 Ministry of National Planning, "The F i v e Y e a r P l a n 1970-71

1974-75," O p . c i t . , pp. 29-31.
63 Department o f F e r t i l i s e r s , "Annual R e p o r t , 1 9 8 6 - 1 9 8 7 " ,
M i n i s t r y o f A g r i c u l t u r e , Government o f I n d i a , p . 2 .
 36

no e x c e p t i o n i n t h i s regard. Appendix 5 shows i m p l e m e n t a -

t i o n s c h e d u l e w h i l e Appendix 6 shows c o s t o v e r r u n s in

thirteen f e r t i l i s e r projects of the p u b l i c s e c t o r . None o f

t h e p r o j e c t s was c o m p l e t e d on s c h e d u l e , and t h e i r cost

o v e r r u n s ranged between R s . 55 m i l l i o n t o Rs. 216 m i l l i o n .

The c o u n t r y had t o r e l y on i m p o r t s t o f i l l t h e demand-supply

gap d u r i n g t h e d e l a y e d p e r i o d s and i t had t o i n c u r additional

c o s t s t o cover the overruns.

C o m p l e t i o n d e l a y s are measured b y s l i p p a g e s f r o m p l a n n e d

completion p e r i o d s . Also, s t a t i s t i c a l tools (range, mean,

standard d e v i a t i o n and c o e f f i c i e n t o f v a r i a t i o n ) are used

as measurements o f t h e d e l a y p r o b l e m . In A p p e n d i c e s 3 and 1 ,

d e l a y s are measured b y t h e s l i p p a g e s f r o m p l a n n e d c c x n p l e t i o n

p e r i o d f o r Sudan and I n d i a r e s p e c t i v e l y . Deducting planned

completion date from actual completion date gives

completion delay. C o m p l e t i o n d e l a y i n Sudan m a n u f a c t u r i n g

projects ranged between 9 months f o r Ed Duiem Weaving

Project/ and 33 months f o r Hager A s s a l a y a Sugar P r o j e c t . On

t h e o t h e r hand, c o m p l e t i o n d e l a y i n I n d i a n f e r t i l i s e r projects

ranged between 13 months, f o r Trombay IV P r o j e c t , and 96

months f o r S i n d r i R e h a b i l i t a t i o n P r o j e c t . That i s t o say,

t h e ranges o f c o m p l e t i o n d e l a y were 24 ( 3 3 - 9 ) and 83 (96-13)

months f o r Sudan and I n d i a r e s p e c t i v e l y . These r a n g e s , no

doubt, show b i g g a p s . More p o w e r f u l s t a t i s t i c a l tools are

u s e d t o measure t h e d e l a y s . From Appendix 9 the mean

completion delay, standard deviation and c o e f f i c i e n t of

 37

variation f o r Sudan p r o j e c t s are found t o b e 17 months, 7

months, and 41 p e r c e n t r e s p e c t i v e l y . These are 47 months,

25 months and 53 p e r c e n t r e s p e c t i v e l y f o r Indian fertiliser

projects. The l a r g e c o e f f i c i e n t s o f v a r i a t i o n f o r both

Sudan and I n d i a r e f e r t o t h e s e r i o u s p r o b l e m o f d e l a y s among

the p r o j e c t s of these countries.

A f u r t h e r a p p r o a c h t o t h e measurement o f d e l a y i s by

t a k i n g a v e r a g e c o m p l e t i o n d e l a y as p e r c e n t a g e o f planned

completion period. T h i s g i v e s more i n s i g h t i n t o t h e p r o b l e m

o f d e l a y as compared t o p l a n n e d c o m p l e t i o n p e r i o d s . Average

c o m p l e t i o n d e l a y f o r Sudan and I n d i a are found t o b e 69 p e r cent

and 109 p e r c e n t r e s p e c t i v e l y , Again^ t h e s e p e r c e n t a g e s are

alarming.

Such d e l a y p r o b l e m s , a c c o r d i n g t o Avots,^"^ T a y l o r and

W a l t i n g ^ ^ and Krishnaswami,^^ among o t h e r s , are i n d i c a t i o n s

o f p r o j e c t management failure.

1.7 O b j e c t i v e of the Study

The s t u d y aims a t t h e following:

(1) Examining t h e p r o c e s s o f p r o j e c t management i n public

64 A v o t s , I v a r s , "Vlhy Does P r o j e c t Management F a i l " , C a l i -

f o r n i a Management Review, V o l . 12, No. 1 , F a l l 1 9 6 9 ,
pp. 77-82.
65 T a y l o r , W . J . and W a i t i n g , Tom, " S u c c e s s f u l P r o j e c t
C o n t r o l " , A c c o u n t a n c y , V o l . 83, No. 952, December 1972,
pp. 14-21.
66 Krishnaswami, S . , "The C h a l l e n g e o f p r o j e c t Management,"
p r o l e c t Management Q u a r t e r l y , V o l . 1 5 , N o . 3 , September
1984, p p . 56-591
 38

s e c t o r m a n u f a c t u r i n g i n d u s t r y i n Sudan and I n d i a .
Emphasis w i l l b e p u t on p u b l i c s e c t o r a g r o - i n d u s t r y in
Sudan and f e r t i l i s e r industry of the Government o f
India,

(2) Throwing l i g h t on p r i v a t e sector industrial project

e v a l u a t i o n i n Sudan and I n d i a .

(3) Comparing t h e e x p e r i e n c e s o f Sudan and I n d i a in project

management (1 and 2 above) t o h i g h l i g h t the pitfalls
which have r e s u l t e d i n d e l a y s , c o s t o v e r r u n s and wrong
locations of i n d u s t r i a l units.

(4) Offering policy recommendations which may h e l p m i n i m i s e

p r o j e c t management p r o b l e m s i n Sudan and I n d i a

1,8 Research Methodology

1.8.1 Hypotheses

In d e v e l o p i n g c o u n t r i e s , I believe, t h e r e i s no scientific

planning of p r o j e c t s . Scarce r e s o u r c e s are not assembled

according to priorities and, h e n c e , projects s u f f e r in their

implementation s t a g e . These f a c t s l e a d t o implementation

d e l a y s which may a l s o b e c a u s e d b y unsound and l o n g procedures,

act of foreign contractors, d e l a y s i n i m p o r t s and l a c k of

wholistic vision of the projects.

Cost overrun of the p r o j e c t s , on the o t h e r hand, may b e

c a u s e d by i n f l a t i o n o r wrong a s s e s s m e n t o f t h e p r o j e c t s . A

r i s e in the general p r i c e l e v e l of i n p u t s and b u i l d i n g

materials t o be u s e d i n i m p l e m e n t a t i o n may push up p r o j e c t cost

 39

and t h i s i s , to a far extent, out of c o n t r o l of management.

However, e x t e n s i o n o f implementation date of a p r o j e c t may

r e s u l t i n t h e p o s t p o n e m e n t o f some a c t i v i t i e s t o an inflationary

p e r i o d and, h e n c e , u n n e c e s s a r i l y push up p r o j e c t cost.

Wrong a s s e s s m e n t o f a project with r e s p e c t t o its

capacity^ location etc. may n e c e s s i t a t e r e v i s i o n s l a t e r on

/

which l e a d t o p r o b l e m s d u r i n g i m p l e m e n t a t i o n and push up

project cost. This f a c t o r is also controllable.

Good p r o j e c t c o n t r o l i n d e v e l o p i n g c o u n t r i e s has n o t been

exercised. N e i t h e r sound systems are b u i l t n o r g o o d function-

i n g o f t h e systems has been e x e r c i s e d . I think that India

has gone f u r t h e r m i l e s t o n e s i n p r o j e c t p l a n n i n g than has

Sudan. F u r t h e r m o r e , p r o j e c t i m p l e m e n t a t i o n s y s t e m s and

p r a c t i c e s a r e more sound in I n d i a than in Sudan.

The f o l l o w i n g p r o p o s i t i o n s are put forward f o r investi-

gation:

1. P r o j e c t p l a n n i n g i n Sudan and I n d i a d o e s n o t f o l l o w any

scientific, s t a b l e and valid objectives. Clear-cut guide-

lines are not g i v e n . T h i s l e d t o the l o n g g e s t a t i o n periods

and b i g c o s t o v e r r u n s which have been e n c o u n t e r e d i n the

implementation of p u b l i c s e c t o r manufacturing p r o j e c t s of

Sudan and I n d i a n Government f e r t i l i s e r p r o j e c t s during the

period 1970-85.

2. The e v a l u a t i o n p r o c e d u r e o f p r i v a t e s e c t o r industrial

p r o j e c t s i n Sudan and I n d i a i s n o t sound and has r e s u l t e d in

 40

c o n c e n t r a t i o n o£ i n d u s t r y in Sudan and u n b a l a n c e d regional

development in India.

3. There i s l a c k o f sound p r o j e c t c o n t r o l in Sudan and I n d i a

which l e d t o unnecessairy d e l a y s and c o s t overruns.

4. I m p l e m e n t a t i o n d e l a y s and c o s t o v e r r u n s o f t h e projects

i n Sudan and I n d i a a r e c a u s e d by f a c t o r s such as v/rong

a s s e s s m e n t and unsound i m p l e m e n t a t i o n o f the p r o j e c t s vis-

a-vis capacity, location, supply/demand, finance, organisation,

supervision, monitoring, coordination and c o n t r o l . These

f a c t o r s are controllable.

5. I n d i a i s b e t t e r than Sudan a s f a r as i n d u s t r i a l project

management i s c o n c e r n e d . Therefore, the experience of

I n d i a — an i n d u s t r i a l i s i n g c o u n t r y — i n p r o j e c t management

b e n e f i t s Sudan w h i c h i s s t i l l non-industrialising.

1.8.2 Research Design

T h i s r e s e a r c h work i s o f b o t h d e s c r i p t i v e and p r e s c r i p t i v e

nature. I t i s d i v i d e d i n t o seven c h a p t e r s . C h a p t e r two

examines t h e e x p e r i e n c e o f Sudan in p r o j e c t management i n

m a n u f a c t u r i n g i n d u s t r y . While t h e c h a p t e r i s m a i n l y a b o u t t h e

piiblic sector, two s e c t i o n s on i n d u s t r i a l p r o j e c t evaluation

b y t h e S e c r e t a r i a t G e n e r a l f o r I n v e s t m e n t and term-lending

institutions shed l i g h t on p r i v a t e s e c t o r i n d u s t r i a l project

evaluation. A c a s e study o f M e l u t Sugar P r o j e c t (Sudan) is

presented in chapter t h r e e . Chapter f o u r d e s c r i b e s the

 41

p r o c e s s o f p r o j e c t management i n pxoblic s e c t o r manufacturing

i n d u s t r y i n I n d i a and examines i n d u s t r i a l p r o j e c t evaluation

i n t h e p r i v a t e s e c t o r as p r a c t i s e d b y l i c e n s i n g and t e r m -

lending organisations. P r o c e s s and p r o b l e m s o f project

management i n Barauni F e r t i l i s e r P r o j e c t are d e s c r i b e d in

chapter f i v e . Chapter s i x analyses the p r o c e s s o f project

management d e s c r i b e d i n t h e p r e v i o u s c h a p t e r s . A comparison

o f t h e e x p e r i e n c e s o f Sudan and I n d i a i s o f f e r e d t o highlight

the p i t f a l l s . The main f i n d i n g s o f t h e study and recommenda-

t i o n s o f t h e p r e s e n t w r i t e r on p o l i c y i s s u e s a r e o f f e r e d in

c h a p t e r seven f o l l o w e d by a p p e n d i c e s and b i b l i o g r a p h y .

1.8.3 Sources of Data

I n examining t h e p r o c e s s e s o f p r o j e c t management i n Sudan

and I n d i a , the s t u d y r e l i e s on e m p i r i c a l a n a l y s i s . Two c a s e

studies from b o t h t h e c o u n t r i e s were used t o highlight

problems encountered through the d i f f e r e n t s t a g e s of project

management. For t h i s p u r p o s e , b o t h primary and s e c o n d a r y

d a t a were c o l l e c t e d and a n a l y s e d . Discussions on t h e early

days o f the study w i t h f a c u l t y members o f t h e Department of

Business Administration, A l i g a r h Muslim U n i v e r s i t y , and the

I n d i a n I n s t i t u t e o f Management (IIM), Ahmedabad, h e l p e d the

p r e s e n t w r i t e r t o d e v e l o p h i s own i d e a s and t o d e s c r i b e the

p r o c e s s of p r o j e c t management in I n d i a . Primary'" d a t a was

c o l l e c t e d i n two s t a g e s : F i r s t i t was c o l l e c t e d through

 42

u n s t r u c t u r e d i n t e r v i e w s c o n d u c t e d w i t h Government officials

i n Sudan (1985) and I n d i a (1986). In these p i l o t surveys,

f r e e d i s c u s s i o n s were h e l d w i t h o f f i c i a l s i n P r o j e c t s Bureau

(PB) , the S e c r e t a r i a t General f o r Investment (SGI) and the

P l a n n i n g Department (PD) i n Sudan as w e l l as w i t h officials

in the P r o j e c t Appraisal D i v i s i o n (PAD), t h e M i n i s t r y of

I n d u s t r i a l Development and t h e Plan F i n a n c e D i v i s i o n in

India.

In the l i g h t o f data c o l l e c t e d from the p i l o t s u r v e y s and

secondary sources, i n f o r m a l i n t e r v i e w s were c o n d u c t e d w i t h

officials o f the PAD, t h e M i n i s t r y o f Programme I m p l e m e n t a t i o n ,

t h e Bureau o f Pxablic E n t e r p r i s e s (BPE) , t h e Department of

Fertilisers and the F e r t i l i s e r C o r p o r a t i o n o f I n d i a n i n early

1987, Thereafter, in mid-1987, similar interviews were

conducted with o f f i c i a l s of the P r o j e c t s Preparation Unit

(PPU), The Committee o f M e l u t Sugar p r o j e c t Equipments, the

PB, t h e SGI and t e r m - l e n d i n g i n s t i t u t i o n s i n Sudan.

Secondary m a t e r i a l , however, formed an i m p o r t a n t comple-

mentary p a r t o f t h e d a t a . The m e t h o d o l o g y used i n t h i s was

scanning a v a i l a b l e l i t e r a t u r e on the e x p e r i e n c e o f I n d i a in

p r o j e c t management. Such m a t e r i a l was c o l l e c t e d f r o m dociamen-

t a t i o n c e n t r e s o f M i n i s t r y o f Programme I m p l e m e n t a t i o n , t h e Plann-

i n g Commission o f I n d i a , t h e IIM, Ahmedabad, the Fertiliser

Association of India, the BPE and the Ministiry o f Industrial

Development. T h i s i s in a d d i t i o n t o m a t e r i a l f r o m r e s e a r c h
 43

d i v i s i o n s o f t h e I n d u s t r i a l Development Bank o f I n d i a and the

I n d u s t r i a l Finance C o r p o r a t i o n of India. Unpublished m a t e r i a l

and Government r e p o r t s from t h e PD, t h e PB, the SGI, t h e p p u ,

t h e I n d u s t r i a l Bank o f Sudan and t h e Sudan Development Corpora-

tion, formed g r e a t d e a l o f t h e secondairy d a t a .

My o b s e r v a t i o n s from v i s i t s made i n t h e e a r l y 1980s to

some p u b l i c s e c t o r m a n u f a c t u r i n g p r o j e c t s i n Sudan were utilised

in the analysis. T h i s was supplemented by f u r t h e r observations

made d u r i n g the i n t e r v i e w s and c o u r s e o f study.

1.9 Limitations o f t h e Study

I have been g i v e n a s t u d y l e a v e f o r t h r e e y e a r s b y the

Government o f Sudan t o c a r r y o u t t h e r e s e a r c h w o r k . T h i s posed

a s t r i c t time l i m i t t o plan f o r the work, c o l l e c t relevant

material, a n a l y s e t h e d a t a and u n d e r g o o t h e r f o r m a l i t i e s o f a

Ph.D. study. T h i s l i m i t a t i o n was e x a c e r b a t e d b y t h e small

amount o f funds made a v a i l a b l e f o r t r a v e l s and d a t a collection

i n Sudan and I n d i a .

p e r h a p s , b i g g e s t h a n d i c a p i s t h a t i n Sudan no statistics

i s k e p t i n an o r g a n i s e d form f o r t h e use of r e s e a r c h . Therefore,

the a c t u a l c o s t s of a l l the p r o j e c t s c o u l d not be traced.

W h i l e t i m e s c h e d u l e f o r the e i g h t e e n p r o j e c t s (Appendix 1) was

prepared, actual p r o j e c t c o s t c o u l d be t r a c e d f o r o n l y seven

of them.
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The t i m e , money and a v a i l a b i l i t y of d a t a limitations

made t h e p r e s e n t w r i t e r t o e x t r a c t Barauni F e r t i l i s e r Project

case study ( C h a p t e r 5) from an i n - d e p t h study p r e p a r e d b y

t h e BPE. However, e n g i n e e r s i n t h e Department o f Fertilisers

and the Hindustan F e r t i l i s e r C o r p o r a t i o n c l a r i f i e d many

i s s u e s about the p r o j e c t . These l i m i t a t i o n s , no d o u b t , have

had t h e i r e f f e c t on t h e study b u t t h e r e s u l t s o b t a i n e d are

i n d i c a t i v e o f t h e magnitude o f t h e problem^ and t h e analysis

and c o n c l u s i o n s are s t i l l valid.