Global Journal of Flexible Systems Management
DOI 10.1007/s40171-017-0164-6
ORIGINAL RESEARCH
Critical Success Factors in Implementation of Urban Metro
System on PPP: A Case Study of Hyderabad Metro
Rakesh Kulshreshtha1 • Anil Kumar2 • Ashish Tripathi3 • Dinesh Kumar Likhi4
Received: 28 February 2017 / Accepted: 12 August 2017
 Global Institute of Flexible Systems Management 2017
Abstract Rail-based metro system is crucial for supporting
a city’s expansion and growth. However, urban metro
projects being capital intensive with long gestation and pay
back periods may not be financially viable but socially
desirable. More and more cities in India are announcing
metro projects committing huge budgetary resources to
these projects at the cost of sectors such as health and
education. Given the huge requirement of capital and
possibility of attracting willing as well as capable private
investors to undertake urban transport projects, promoting
public–private partnerships (PPPs) could be a key priority.
However, none of the metro projects launched during past
7 years in India have been planned on PPP framework.
International experience in PPP metro and our own Delhi
airport metro experience have demonstrated that many
issues can influence the successful implementation of PPPs
in such projects. In this context, outcome of Hyderabad
& Rakesh Kulshreshtha
rakeshkul@yahoo.com
Anil Kumar
anilkumar@ddn.upes.ac.in
Ashish Tripathi
atripathi@ddn.upes.ac.in
Dinesh Kumar Likhi
dinesh.likhi@midhani.gov.in
1
University of Petroleum and Energy Studies (UPES), Bidholi
Via Prem Nagar, Dehradun 248007, India
2
Department of Power and Infrastructure Management, UPES,
Bidholi Via Prem Nagar, Dehradun 248007, India
3
College of Management and Economic Studies, UPES,
Bidholi Via Prem Nagar, Dehradun 248007, India
4
Mishra Dhatu Nigam Ltd, Kanchanbagh, Hyderabad 500058,
India
metro is keenly watched as it is one of the largest metro rail
projects built under a PPP framework anywhere in the
world. The paper reviews the research conducted on crit-
ical success factors (CSFs) that are necessary for adopting
PPP models in urban metros in Indian context. Eighteen
CSFs identified through literature survey have been vali-
dated in a pilot study through structured questionnaire and
grouped in seven macro-factors through hierarchical
cluster analysis. A case study has been attempted using
SAP–LAP framework to analyse the identified CSFs in
real-life settings of the first two stages of Hyderabad metro
project. Key players working on the project were inter-
viewed during a field study to gather feedback on actions
they took on factors critical to success. Observations and
findings have been synthesised as learnings for future such
projects.
Keywords Critical success factors
Metro system

Public–private partnership
SAP–LAP
Urban transport
Introduction
Urban transport is crucial for supporting a city’s expansion
and growth through spatial distribution of population.
Promoting sustainable transport contributes to environ-
mental protection, economic growth, and energy security.
Rail transportation scores over road transportation in terms
of cost, durability and lower energy consumption. How-
ever, a metro project is capital intensive with long gestation
and payback periods and high operation and maintenance
cost. Therefore, investment requirements for a metro sys-
tem cannot be individually met by state or central gov-
ernment funding. Financial support from private sector
123

entities, financial institutions, multilateral development
agencies and others is imperative.
Public–private partnerships offer several benefits which
are acknowledged by governments from across the world.
However, international experiences with PPP have been
mixed, and many issues can impact the successful imple-
mentation of such PPP projects. The 12th five-year plan
states, ‘Given the huge requirement of capital and will-
ingness as well as capability of the private capital to
undertake urban transport project, promoting PPP could be
a key priority. All metro projects that are in high-density
corridors and are viable on their own {with admissible
viability gap funding (VGF) and real estate development
on land ordinarily required for the project} may be
encouraged under PPP mode’ (12th FYP 2012).
However, a glance at the ongoing metro projects in
various Indian cities reveals that other than Hyderabad and
Mumbai, no other city has considered PPP for imple-
menting metro project. Delhi airport metro express line, the
first PPP metro project to become operational in India, has
not been a success. The metro track planned/constructed
under PPP/private comes to only 110 km out of total
approx 900 km, i.e. just 12.3% by track length and 9.3% by
project cost.1 This is an odd situation where state and
central government budgets are competing with priority
sectors such as health and education. A number of cities are
planning metro projects and private capital has the capa-
bility and willingness to undertake such projects but
somehow the public–private partnerships are not
materialising.
It has been argued that a public–private partnership that
has been well structured can deliver better results effi-
ciently than government sector and for this a clarity and
focus on what contributes to a successful PPP metro project
in Indian context is a prerequisite. The present study aims
to contribute to the existing knowledge bank by analysing
the critical success factors and their relative importance in
influencing the success of PPP metro projects in Indian
context.
Construction and operation of a metro on PPP frame-
work is a huge project that is technically and managerially
complex and involves number of actors in several activities
right from planning to selection of concessionaire and
execution. How well the actors play their role and what
process or set of processes are followed have an impact on
the performance and success of the project.
Progress of Hyderabad metro is keenly watched as it is
one of the largest metro rail projects attempted on PPP
1
Based on approved metro projects in Jaipur, Lucknow, Nagpur,
Kochi, Ahmedabad, Bangalore, Mumbai, Hyderabad, Delhi, Kolkata,
Chennai, Gurgaon, Pune and Noida up to 31 December 2016 (Source:
MoUD).
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Global Journal of Flexible Systems Management
framework in the world. This is also likely to be the third
Indian metro to become operational in the year 2017 after
Bangalore and Kochi. This paper studies Hyderabad metro
project from the perspective of factors that contribute to the
success of the first two stages of a metro project2 using
SAP–LAP analysis.
Methodology
A pilot study was conducted through a set of structured
questionnaire given to selected 31 experts in the field of
PPP and rail-based mass transit system to validate (through
content validity and reliability tests) the CSFs identified
through literature survey covering over fifty research
papers. Eighteen CSFs identified and validated through
pilot study were sent to 124 respondents having some
knowledge of PPP and railway projects. Responses
received were subjected to factor analysis and hierarchical
cluster analysis to synthesise CSFs into seven macro-fac-
tors as shown in Appendix (Exhibit-1). The case has been
examined using SAP–LAP framework to analyse the
macro-CSFs in real-life settings of Hyderabad metro.
Feedback was gathered through semi-structured interviews
of key players working in the field on how actions taken by
them on various critical success factors contributed to the
progress/success of Hyderabad metro in the first two stages
of the project (performance indicators in the three stages of
a metro project at Appendix-Exhibit-2) and what lessons
have been learnt.
SAP–LAP Analysis
SAP–LAP framework is a technique, which can be used for
case-study-based research for better insight (Sushil
2000a, b). Three basic entities in any context, viz. a ‘sit-
uation’ to be managed, an ‘actor’ or group of actors who
manage or deal with the situation and a ‘process’ or pro-
cesses, are deployed for desirable outcomes. Actor has the
freedom of choice to exercise in a given situation. SAP
analysis leads to LAP, i.e. learning, action and performance
(Fig. 1). SAP–LAP framework can be applied successfully
to both generic and specific models for managerial inquiry.
Both qualitative and quantitative methods can be used to
develop these models.
SAP–LAP framework has been widely applied by var-
ious researchers in analysing various management prob-
lems related to strategy, supply chain, performance
2
Out of three stages of a metro project (pl refer ‘‘What Defines
Success of a PPP Metro Project?’’ section), only contract success and
implementation success up to the progress made till December, 2016
have been analysed as the ‘post-implementation success’ can be
analysed only after commissioning of the project.
Global Journal of Flexible Systems Management
Fig. 1 SAP–LAP model of
enquiry Source: Sushil
(2000a, b)
management, e-governance and other organisational issues
(Sushil 2001; Goel et al. 2012; Nasim and Sushil 2014;
Yadav and Sushil 2014; Kabra and Ramesh 2015).
Recently, SAP–LAP framework has also been attempted
for theory building, e.g. as a supporting framework for
building a theory of flexible systems management (Sushil
2016) and more recently in the context of disaster man-
agement (Sushil 2017). In this study, SAP–LAP framework
has been developed by defining the SAP elements and
exploring how these elements have unfolded in the case of
Hyderabad metro.
The situation during bidding and contract stage and
during implementation has been analysed in the context of
identified critical success factors. A questionnaire (‘‘Ap-
pendix, Exhibit-3’’) was structured to discover the role of
various factors both before the contract stage and during
implementation of the project and how various actors have
played their role in deployment of processes for the pro-
gress and success of the project. For this study, different
actors in public and private sectors involved in the imple-
mentation of Hyderabad metro were personally inter-
viewed. The exercise makes an attempt to understand the
viewpoint of an officer as he proceeds in a project and
understands its nature, components and their interrela-
tionships (Leedy 1977). Managers when asked questions
relevant to their ongoing project work are more willing and
forthright in offering their views (Saunders 2007). A ver-
batim transcript was prepared immediately after the inter-
view was based on detailed notes taken during each
interview lasting from half to one hour.
A 5-point Likert scale was used to construct the
assessment matrix with values based on average of
responses. Qualitative evaluation of experts was used for
the development of assessment and cross-interaction
matrices. Self-interaction and cross-interaction matrices
were constructed to establish interrelationship among SAP
elements.
Literature Survey
For a better understanding of PPP concept in the context of
urban metro, available literature and case studies were
reviewed. Salient points emerging from this exercise are
summarised in the ensuing paragraphs.
Critical Success Factors in PPP Metro System
Various researchers have identified critical factors in PPP
projects although such studies are rarely found in a situa-
tion of a metro project. The insights gained during litera-
ture review helped in identification of eighteen critical
success factors that influence a PPP metro project.
There are basically two drivers for PPPs. Firstly, PPPs
make it possible for the public sector to tap the technical
and managerial expertise of the private sector to deliver
public facilities and services more efficiently and produc-
tively than the public sector alone. Secondly, a PPP is
structured so that capital investment made in the creation
of that facility does not result in debt burden on the part of
the public sector (Virginia et al. 2012).
According to the World Bank PPP reference guide, the
following points are the essential components of a PPP
framework:
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a. Policy: A manifest of government’s intent to promote
PPPs for creation of infrastructure for public services,
defined scope and objectives along with broad guide-
lines for the implementation of a PPP programme.
b. Legal framework: PPP programme of governments
should be backed up by appropriate laws and regula-
tions which include specific legislation for PPPs, laws
and regulations governing public finance management
and sector-specific laws.
c. Processes and institutional responsibilities: Defined
principles for identifying projects to be taken up on
PPP, procedural steps for development, appraisal and
implementation, and the roles different public entities
will play in the process.
d. Public financial management approach: Measures to
monitor and control public risk in a PPP project
including public share of committed financial
resources while ensuring that PPP projects are not
held up for want of government’s share of funds.
e. Broader governance arrangements: Elected represen-
tatives and other public entities that participate in the
PPP programme must be held accountable for the
decisions and actions that affect the implementation of
PPPs (World Bank 2014a).
Infrastructure projects in transport sector, especially in
rail-based MRTS, are larger and more complex in terms of
diverse activities in the contractual arrangements and
multiparty transactions. These projects require sound
technical, managerial and project expertise and huge
investments by private parties. For these reasons, standard
PPP contracts/models are not applicable directly to rail
sector. In fact, the models in urban metros are still evolving
(Gangwar and Raghuram 2013).
John F. Rockart and the MIT Sloan school of Manage-
ment first introduced critical success factors in 1979.
Rockart related his critical success factor study to ‘success
factors’ introduced by D. Ronald Daniel in 1961 and
defined as ‘three to six factors that determine success….key
jobs [that] must be done exceedingly well’ (Gates 2010).
Since late nineties, CSF methodology has been applied to
PPP projects. In 2005, Zhang conducted a research study
which categorised 47 identified CSFs into five macro-fac-
tors; ‘viability of the project’, ‘proper risk allocation’, ‘good
financial package’, ‘technically strong reliable consortium’,
and ‘conducive investment climate’ (Zhang 2005). Ismail
while working on PPP project in Malaysia has identified
factors such as ‘identification of right project’, ‘strong
consortium’, ‘attractive financial package’, and ‘commu-
nity support’ (Ismail and Ajija 2013).
Hardcastel et al. and Li distilled nineteen CSFs based on
literature survey out of which eighteen were applied to
study PPP/PFI construction projects in the UK to examine
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Global Journal of Flexible Systems Management
their relative significance. The authors grouped these CSFs
into five groups applying factor analysis; ‘government
guarantee’, ‘effective procurement’, ‘technical feasibility
of the project’, ‘economic environment’ and ‘financial
market availability’. Their findings revealed that ‘a strong
consortium’, ‘allocation of risk to the party that is in best
position to manage the risk’ and ‘financial market avail-
ability’ are the three most important factors (Hardcastle
et al. 2005; Li 2005). The other notable studies on CSFs in
PPP projects available are by Chan (2010) and Famakin
(2014).
Not much literature is available on the application of
CSF methodology for rail projects. However, a research
paper by Smith and Gannon published by University of
Leeds is relevant to the present study. Authors used CSF
methodology based on seven light rail transit (LRT) cases
including two tram links built in the UK since 1980,
identified 23 CSFs and distilled them into seven broad
headings applying analytic hierarchy process (AHP) based
on expert opinion survey. In the opinion of authors, ‘po-
litical support’ is the most significant success factor for
LRT projects (Smith and Gannon 2008).
Recently, a paper (Kulshreshtha et al. 2016) has
reviewed the international and Indian experience with PPP
metros and has explored the research conducted on critical
success factors (CSFs) that are necessary if a PPP frame-
work is to be applied to urban metro projects in India.
Authors while identifying 18 CSFs by previous researchers,
grouped under internal and external factors, argue that the
nature and characteristics of PPP vary across countries and
sectors. In the context of new found interest for metro
system among Indian cities as a solution to ease road
congestion and improve urban mobility, the authors rec-
ommend additional research on CSFs contributing to the
success of a PPP metro project to establish better insights
into PPP models that could be adopted by Indian mega
cities for the implementation of urban metro projects with
minimum constraint on budgetary resources.
What Defines Success of a PPP Metro Project?
A study conducted by London School of Economics
worked on successful transport projects comprising 19
cases spread over 13 locations; many of them rail projects.
The objective of the study was to analyse how identified
key factors impacted the success of the project during its
three stages; financial success (outcomes v/s forecasts
made at the beginning of the project), policy success (ex-
pected or projected outcomes in terms of economic, social
development and environmental impacts versus the actual
outcomes) and durability success (service delivery in the
long run) (Allport 2008; KPMG 2010).
Global Journal of Flexible Systems Management

According to World Bank (2007), a successful PPP unit for successful public–private partnerships in urban
is one that contributes to the implementation of a suc- metro systems in India could be located.
cessful programme. The following criteria can be used to • Available literature, therefore, does not provide insight for
define a successful PPP programme: developing understanding on factors responsible for the
success of public–private partnerships in urban metros.
• Delivery of services as per the contract.
• Project stands the Value for Money (VfM) test on net
present value basis where lifetime costs are taken into
account including those related to risks undertaken. Hyderabad Metro: A Brief Description
• Implementation of the PPP programme has followed
legal and regulatory provisions as applicable to the Hyderabad city has been growing rapidly during the last
country and the industry and demonstrated good gover- 2–3 decades. With increase in population, city’s traffic,
nance principles, be it in procurement or fiscal prudence. which is predominantly road-based with reliance on auto
rickshaws and privately owned passenger vehicles such as
Usually, a PPP project has many qualitative objectives
two wheelers and cars, is becoming congested and
in addition to quantitative ones. The qualitative assessment
unmanageable. Traffic jams and long commute times are
is, therefore, equally or more important than the quantita-
more of a rule than exception. In 2003, Government of
tive factors. A list of criteria is set to evaluate options under
Andhra Pradesh (GoAP), in partnership with Indian Rail-
a project through multiple criteria analysis (US Department
ways (IR), set up multi-modal transport system (MMTS),
of Transport 2012). Factors that may influence the viability
which is basically a suburban rail system and had its lim-
of the project are identified through qualitative assessment
itations in the form of low frequency during off-peak hours
under value for money analysis.
and holidays, limited area coverage and low speed (Owens
The criteria suggested by KPMG were used in a study of
and Reddy 2010). A fast-growing city that is a hub for IT
PPP projects in metro rail in Latin America. Arguing that
and BPO services needed a faster, reliable, safe and
the terms ‘financial success’, ‘procurement success’ and
affordable mass rapid transit system, and rail-based metro
‘durability success’ used in KPMG study basically assess
system was the obvious choice of GoAP.
the economic viability of the project at three stages of the
DMRC prepared the detailed project report, and GoAP
project; preparation stage, implementation stage and post-
decided to implement metro project on a PPP framework.
implementation stage, the author coined the terms ‘contract
A model concession agreement (MCA) was prepared along
success’, ‘implementation success’ and ‘post-implementa-
with manual of specifications and standards, and the con-
tion success’ to evaluate the project through the three
tract was awarded to Larsen & Toubro (L&T) on Design-
stages of the project (Millones 2010).
Build-Finance-Operate-Transfer (DBFOT) basis.
Evaluation of a PPP programme is performed keeping the
Construction and operation of a metro on PPP frame-
promoter’s or project awarding authority’s viewpoint. The
work is a big challenge right from planning and visualising
criterion is whether the objectives set before the start of the
innumerable activities with multiparty involvement and
programme have been achieved. Both quantitative assessment
bundling them into a robust concession agreement while
based on actual outcomes against original forecasts and
effectively keeping control for execution of a huge project,
qualitative assessment including stakeholder perceptions are
technically and managerially complex in nature, to ensure
integral part of such an evaluation (Allport 2008). Appendix
deliverables as per specification. Like any other project,
(Exhibit-2) gives the criteria of success or performance indi-
this project also has a situation to manage, actors to deal
cators for a PPP metro identified based on literature survey.
with the situation and the process followed for its man-
agement. This study examines how well the public and
Research Gap
private partners have handled these challenges in the
implementation of Hyderabad metro on a PPP framework.
The following gaps were observed as a result of survey of
literature on the subject:
• Barring few studies, not much research has been SAP–LAP Linkages Framework for Hyderabad
conducted, in India and abroad, to identify critical Metro
success factors in public–private partnership projects in
urban transport, especially rail-based urban mass transit Assessment Matrix
systems.
• Hardly any scholars have studied the same in Indian ‘Assessment matrix considers the multiple situation and
context. No evidence-based study for enabling factors contexts with qualitative and quantitative measurement’

123

(Sushil 2009). The assessment matrix developed for situ-
ation categorised factor-wise before and after the contract
stage is given in Table 1 with ratings on a five-point scale.
Self-Interaction Matrix
The relationships among the various elements of SAP–LAP
framework are presented in self-interaction matrices, i.e. a
binary and interpretive matrix. The relationship shown is in
binary fashion where a value of 1 means two elements in a
component are interrelated; otherwise 0 is allocated. An
interpretive self-interaction matrix has also been developed
to depict the nature of relationship.
Situation
The situation of Hyderabad metro project is characterised
into contract stage and implementation stage (Table 1).
While the implementation of the project is going on, post-
implementation situation can be analysed only after the
project is commissioned and operated for sufficient duration.
In any project, ‘situation’ is both external and internal.
In case of Hyderabad metro, examples of external situation
variables are political/social environment and financial
market availability. Similarly, transparent and competitive
bidding process, good governance, etc., are representatives
of internal situation variables.
During Pre-bid and Contract Stage
To cope up with growing traffic and to reduce road con-
gestion, GoAP decided to examine the feasibility of a
metro system as multi-modal transport system (MMTS)
set-up in 2003 in partnership with Indian Railways was
proving to be inadequate because of limited area coverage
and low speed.
GoAP entrusted the job of preparing a feasibility study
for a rail-based MRTS to DMRC, which has proved its
credentials in successful construction and operation of a
metro system in Delhi at par with international standards.
DMRC submitted DPR for three corridors and later for
extension of third corridor by 4.77 km taking the total
length of metro line to 71.16 km. The proposed metro was
to be entirely elevated. The estimate for the project cost
was Rs. 6387 crore.
The third-line extension was on account of representa-
tions from students and authorities of Osmania University
for proposal to construct a depot on the university land.
Realignment led to a 5-km extension of the line to Nagole
to plan depot on the nearby vacant land (DMRC 2007).
DMRC proposed an SPV structure for the implementa-
tion of Hyderabad metro on the lines of Delhi metro to be
headed by a Managing Director with full authority for
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Global Journal of Flexible Systems Management
decision-making in routine matters. DMRC further rec-
ommended that Board of SPV should be delegated all the
powers for the implementation of the project.
For the legal cover, the project report advised state
government to enact a Metro Act which should cover all
aspects of metro rail system including construction, oper-
ation, maintenance and land acquisition. The Metro Act
should also provide for safety certification by the Com-
mission of Railway Safety, etc.
GoAP formed an SPV, Hyderabad Metro Rail Limited
(HMRL) with Mr. N. V. S. Reddy who had worked along
with Mr. E. Sridharan in Konkan railway project as
Managing Director and Chief Secretary of the state as the
Chairman.
Because of higher cost, the state government decided to
award metro project on DBFOT basis. Since a model
concession agreement was not available for metro rail,
planning commission prepared a model concession agree-
ment where Mr. N. V. S. Reddy coordinated with Dr.
Haldea, an expert in PPP projects who had prepared model
concession agreement for roads and airports. Along with
MCA, a manual of specifications and standards was pre-
pared to define deliverables in output terms.
The bids were issued, and Maytas-led consortium was
selected as the preferred bidder who, however, failed to
arrange the performance security and to achieve the
financial closure for the project. In the second attempt,
contract for Hyderabad metro was awarded to L&T on
DBFOT basis. The concessionaire formed SPV, namely
L&T Hyderabad Metro Limited, and achieved financial
closure within the stipulated time.
During Implementation Stage
As with any project, Hyderabad metro also received
opposition from displaced persons, traders and other
interest groups. There were demands for change in align-
ment so that fewer commercial and residential buildings
would be affected. General criticism was why the metro
rail authorities cannot build an underground corridor so
that the project does not affect city life. Apprehensions
were expressed on the likely damage to heritage buildings
and assembly. Interest groups and local politicians tried to
politicise the issues.
The start of the work was delayed on account of giving
right of way, which was the responsibility of the govern-
ment or the public agency. Hyderabad city has narrow
congested roads. Creating right of way by diversifying
busy traffic was a herculean task. The plans for traffic
diversion submitted by concessionaire were not accepted
by the police authorities. There were differences of opinion
on what constitutes right of way under the contract. Right
of way for metro corridor and right of way for construction
Global Journal of Flexible Systems Management

Table 1 Assessment matrix of situation-factor-wise analysis on five-point scale

Macro-CSFs Situation during pre-bid and contact stage Situation during implementation

Socio-political GoI’s infrastructure thrust and encouragement to PPP through During implementation, the division of state took place and the
environment policy support has created awareness among planners and city came under Telangana state. After initial apprehensions,
public about the benefits of solving infrastructure issues the new state supported the project but remained
with private participation. apprehensive about a small stretch of 5 km running through
GoAP has supported metro project on PPP basis even after assembly and heritage buildings (yet to be resolved).
failure of first attempt. The project continued to get state New Government took over at the centre in 2014 which has
support despite change of government/leadership. While the initiated several economic reforms. Economy has been
public at large supported the project as a solution to city’s stable and growing. GoI also put in a strong word to the new
traffic congestion, there were some opposition from affected/ state government not to jeopardise the project with new
displaced persons and vested groups on the matter of conditions
alignment, etc. The metro system is being constructed with built-in features
Several rounds of discussions and consultations with various for multi-benefit objectives for all the stakeholders; green
stakeholder groups and public representatives were held. The plantation, sky ways for pedestrians, bus-bays and auto-bays
relevant information was shared with the public through beneath the metro rail stations, exclusive women metro rail
media statements and by conducting workshops, etc. The stations and seamless intermodal connectivity apart from
authorities also held in-depth discussions and consultations transit oriented development (TOD) around metro stations
about the proposed project with MPs, MLAs and senior and depots.
officers of city corporation as also with the general public.
The elected representatives were shown DMRC operations at
Delhi and were explained the salient features of Hyderabad
Metro Rail Project. Extension of third line by 4.77 km was to
take care of the serious objections of Osmania university for
77 acres of land acquisition for depot.
Hyderabad metro system has been designed to provide access
to faster, reliable, safe and affordable means of
transportation, thereby enhancing city’s productivity. It will
also improve city’s environment by reducing fossil fuel
usage and congestion making the city liveable for all
stakeholders
5 4
Stable macroeconomics Detailed project report (DPR) prepared by DMRC proposed an GoI introduced metro railways general rules, 2013 for
and institutional legal SPV structure for the implementation of Hyderabad metro regulating the operations and maintenance of metro railways
framework on the lines of Delhi metro. DMRC further recommended in India under metro railways (operation and maintenance)
that Board of SPV should be delegated all the powers for Act, 2002 (no. 60 of 2002).
implementation the project. SPV should be headed by a As the new Metro Act is silent on a PPP model, there is some
managing director with full authority for decision-making in ambiguity over the ownership of Hyderabad metro project.
routine matters Both state government and L&T have requested GoI for an
The A. P. Municipal Tramways (construction, operation and amendment to rectify this situation
maintenance) Act 2008 was introduced to incorporate the {During budget speech presented in parliament on 1 February
rights, functions and powers of the tramway operator. The 2017 Finance Minister announced that a new Metro Rail Act
Act empowered government to take up guided mass rapid will be enacted by rationalising the existing laws which will
transport systems with a legal cover. facilitate greater private participation and investment in
A consortium of ten banks led by state bank of India provided construction and operation (Budget 2017–2018).}
the debt component of the project including real estate
development facilitating financial closure within the
stipulated time.
5 4
Government support GoI, planning commission and state government have There have been resistance and court cases from NGOs and
supported the project through VGF and help in finalising interested groups on various issues related to the award of
MCA, VGF and other approvals and clearances. contract, real estate, alignment, etc., but HMRL with the
support of government has been able to successfully
overcome these hurdles and moved ahead with the project.
5 4
Good governance The processes followed for conducting a techno-economic While implementation hurdles resulted in some discord
feasibility report, stakeholder consultation, pre-bid between concessionaire and public authority, by and large
conference and award of the project demonstrate principles faster decision-making and good governance led to
of good governance. streamlining of policies and practices, protocol for joint
meetings, quality assurance, role clarity and good
interrelationships.
5 4

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Table 1 continued
Macro-CSFs Situation during pre-bid and contact stage Situation during implementation

Effective procurement While the first attempt to award the contract fell through, the HMRL, a government agency, has a member on the board of
second attempt achieved its objective of selection of a L&T Hyderabad metro, the concessionaire to participate in
competent and strong consortium as preferred bidder. The decision-making processes. The government nominee on
authorities adopted a transparent and competitive two-stage board also has a golden share with veto powers. All
bidding process with single bidding parameter in the form of drawings for implementation in conformity with manual of
amount of VGF quoted by the bidder. The contract was specifications are submitted in advance to HMRL which are
awarded to L&T, which is a reputed leader in project checked by a panel of experts before approval.
management in India. The party achieved financial closure The concessionaire has introduced several design and
within the stipulated time engineering innovations and novel methods of project
execution, e.g. pre-stresses-concrete (PSC) segmental
method of construction. It has not only been able to optimise
on space and scale but also secured competitive rates for
many packages through successful negotiations with
vendors.
4 5
Well-structured contract Contract was awarded on DBFOT basis. A robust model When the new state government wanted a change in alignment,
concession agreement (MCA) was drafted in collaboration it soon realised that risk of change of scope is with
with planning commission and shortlisted bidders as also government and can be done only at its cost. The contract
manual of specification for the metro. Together, they keeps government and bureaucratic interference at arm’s
constitute a complete PPP agreement with defined roles and length. Difference, however, exists between public and
responsibilities and penalty for defaults. private parties on interpretation of certain terms, e.g. right of
Revenue risk has been mitigated by (a) freezing fare escalation way (ROW).
formula insulating it from public and bureaucratic While the project may incur losses in the initial years, real
interference, (b) including property development rights in estate development rights with mixed land use will help the
concession. Land acquisition risk has been mitigated by concessionaire earn revenues once the commercial activities
earmarking government land for the major requirements of start gathering momentum on account of TOD and
the project. Financing risk and risks associated with project, connectivity.
O&M, etc., are transferred to the private operator, and traffic During the implementation of the project, the state was
risk is shared with the government. bifurcated. L&T claims that the division of the state has put a
question mark on the financial viability of the project which
hinges on real estate revenue. Only when the project is
completed, the impact in terms of the revenue flows will be
known.
5 4
PPP implementation A detailed DPR was prepared by DMRC for all the three There have been some conflicts between the public and private
processes corridors where return on equity (ROE) and internal rate of agencies on certain issues during implementation. However,
return (IRR) including 40% VGF and without property by and large good governance, role clarity, shared authority
development were indicated as 14.36 and 11.36% and commitment resulted in establishment of procedures
respectively. The economic benefits, namely reduction in and protocols that resulted in good decision-making process
commuters’ time, pollution, fuel consumption, accidents, and good working relationships.
vehicle operating costs and increase in vehicle speed, Louis Berger has been appointed as independent engineer and
reliability and safety of journey along with economic monitors project performance which is reviewed jointly by
attractiveness of city and improvement in quality of life, private and public authority. A long duration of concession
were evaluated. The IRR for the estimated benefits from the period enables concessionaire to procure quality systems and
project was calculated using discounted cash flow (DCF) at equipments with life cycle costs in mind.
25.6%.
Lack of coordination with some civic agencies, e.g. traffic
Manual of specification and monitoring by independent police, resulted in delay in start of the work due to failure to
engineer is integral part of the contract. agree on traffic diversion route and the responsibility for
MCA defines obligations and responsibilities of both providing the same.
concessionaire and government and provides for damages in
case of default. The roles and responsibilities of both the
partners are defined in MCA.
5 4
Total score 34 29

of metro corridor are two different things. It was a good
decision to start from the outer skirts where the problem
was not so acute because of lesser traffic and wider roads.
The start of the project was also delayed on account of
delay in obtaining permits.
In the meantime, division of state took place and
Hyderabad came under the jurisdiction of the Government
of Telangana (GoT). The new regime was having reser-
vations about the project, especially on elevated corridors
in the city’s old area. L&T which was already voicing
concerns on the viability on account of cost and time
overruns and claiming that division of state has affected its
potential revenues from real estate, threatened to back off
from the project. State government changed its stand when

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Table 2 Self-interaction matrix of actors

0 0 1 0 1 A1 A1 Government of India
0 0 1 1 A2 A2 State Government
0 0 1 A3 A3 City & Ulies Authories
1 1 A4 A4 HMRL-Public agency
0 A5 A5 L&T Metro -the concessionaire
A6 A6 Public, NGOs and Other stakeholders
Interpretive Matrix
Knowledge
Sharing, Policy &
information Clearances A1
support

Administrative
Reporting Support
A2
Coordinator
Champion
A3
Owner
Coordinator Team
Gatekeeper Work
A4
A5
A6

GOI intervened and also on realisation that any change in
scope will be at the cost of the government. The state was
also apprehensive about the negative publicity that would
be generated for the state’s economic climate in case the
project is stalled for the lack of government support.
L&T, the concessionaire, has filed for damages on
account of delay in project due to government’s fault which
has resulted in loss of productivity and idle manpower
resulting in claims from their vendors. HMRL and state
government have, however, disputed the claim.
The project is progressing, and L&T is planning to
commission in phases. However, because of certain reser-
vations in government quarters on the safety of heritage
structures, the work has been stalled at assembly and
nearby areas and final decision on this is pending.
The project is scheduled for commissioning by middle
of 2017. While in public the authorities maintain that the
project is on schedule, there are apprehensions that project
might be delayed by more than a year.
importance of the roles and responsibilities entrusted on
these actors varied across various stages of planning and
execution of the project. Self-interaction matrix of six
actors identified for Hyderabad metro is given in Table 2
along with its interpretive matrix.
Process
The ‘process’ is the expected/desired outcome of a series of
actions. The processes could be of various types such as
construction process, stakeholder management process,
innovation process, investment process, performance
management process, operational relationship within
organisations and/or with partnering organisation. A set of
processes deployed by the actors from conceptualisation to
implementation stage of Hyderabad metro have been
identified for the present study and are shown along with a
self-interaction matrix and its interpretive matrix in
Table 3.

Actors Prioritised Actor 3 Process Matrix

An ‘actor’ can be individual manager, or group, or Binary actor 9 process matrix (Table 4) maps the roles
department. In case of Hyderabad metro, there were many played by various actors in a specific process. However,
actors involved in planning, structuring and implementa- significance of roles played by different actors varies from
tion of the project on a PPP framework. However, process to process. The prioritised actor process matrix for

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Table 3 Self-interaction matrix of process

DPR & Techno-economic feasibility and
1 1 0 1 1 P1 P1 thorough cost benefit analysis
Competitive and transparent procurement
1 1 1 1 P2 P2 process
A Robust concession agreement with proper
1 1 1 P3 P3 risk allocation and sharing
Good Governance, effective coordination and
1 1 P4 P4 shared responsibility by public agency
Develop MSS, appoint independent engineer
1 P5 P5 and monitor contract compliance
P6 Technically and financially competent
concessionaire achieves financial closure and
P6 executes the project
Interpretive Matrix

Information Information Information Information

Flow Flow Flow Flow
P1
Facilitates Facilitates
Supports Supports
P2
Informaon
Facilitates Flow Facilitates
P3
Facilitates Facilitates
P4
Facilitates

P5
P6

Hyderabad metro reveals that in initial process of carrying
out DPR and techno-economic feasibility of the project
state government has played major role (stars in prioritised
matrix show the significance of roles played by different
actors in an identified process). State government was the
main driver for conceptualising and implementing the
metro project on a PPP framework that included real estate
development as a means to augment the revenues, the first
in a PPP metro project in India. Central government gets
the credit for extending their support in successful imple-
mentation of the idea. It not only provided its share of
viability gap funding (VGF) and necessary approvals but
planning commission also helped in drafting model con-
cession agreement and manual of specifications.
HMRL, the public agency, has been involved right from
the beginning of the project in finalising model concession
agreement and manual of output-based specifications in
coordination with planning commission and IR. With
regard to the process of risk analysis and proper risk
allocation under the contract, different agencies con-
tributed to the process though the major role has been
played by the public agency, HMRL, in identifying the risk
and allocating it to the agency which is best placed to
handle the risk.
The private concessionaire, L&T, a reputed infrastruc-
ture player and known for its management skills has played
its role well in negotiating debt from consortium of banks,
achieving financial closure and starting the execution of the
project. During implementation, while HMRL and other
civic bodies (A3) have played significant role in providing
ROW, shifting of utilities, widening of roads, etc., the role
of self-help groups (A6) is rather negative by creating
hurdles in execution which the public agency HMRL (A4)
has dealt with a firm hand.
LAP Synthesis
The interrelationship of various elements of situation, actor
and process and its synthesis leads to learning–action–
performance (LAP). A study of how the situation unfolds,
roles the actors play and the processes that are deployed in
a given context and analysis of outcome highlights key
learnings and action points which are relevant to the case.
Based on the outcome facilitated by SAP, knowledge may
be gained for desired actions to influence or alter situation,
actor or process. This knowledge should also make it
possible to anticipate improvement in performance in terms
of better processes, improved roles of actors or situational
factors through appropriate actions.
The outcome of LAP synthesis of SAP elements of
Hyderabad metro gives key learning issues. They highlight

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A6

A6 (public and NGOs)

problem areas and the desired actions to overcome them to

Watchdog/nuisance
achieve the stated objectives. The specific learnings may
help in scenario building as a result of alternative actions
and evaluation.

Learnings

• A metro system is required to solve city’s mobility

Project executor
*****
problem but huge requirements for funds for Hyderabad
A5 (L&T)
A5

Reporting
metro could not be met from government resources
**

alone. However, private sector has the ability and

willingness to undertake complex metro projects in a
favourable socio-political and economical environment.
A4 (HMRL-public agency)

• A capable and well-organised public agency is essential

Coordinator champion
Coordinator champion
Owner coordinator to structure the project and to act as an interface
between government, public and the concessionaire.
Team work • There was no model concession agreement available
*****

*****
*****

for PPP metro before the start of Hyderabad metro.

****

****
A4

Monitor

• Metro systems all over the world are not known to be

financially viable purely from fare box revenue.
Property development at metro stations contributes
A3 (civic authorities)

Support/collaboration

substantial part of the revenue to Singapore, Hong

Kong and Tokyo metros which are few profit earning
metros in the world.
• Implementation of a large and complex metro system
like Hyderabad metro requires close coordination
A3

**

between concessionaire and public authority and a

decision-making process reflecting principles of mutual
Developing techno-feasible solution

trust and good governance.

• The contract agreement has to be complete with respect
to roles and responsibilities of partners, risk allocation
and sharing, methods of risk mitigation, provisions for
Administrative support
Guidance and support

Guidance and support

contingency situations, etc.

Policy and support
A2 (GoAP/GoT)

• Transparent and competitive procurement process

******

attracts qualified bidders. While the concessionaire is

****
***

***
A2

responsible for DBFOT functions, the primary respon-

**

**

Owner

sibility of ensuring a world-class metro which conforms

to the performance criteria, technical specifications and
safety standards squarely lies with the government, the
Guidance and support
Policy and clearances

owner of the project.

Table 4 Actor 9 process matrix—prioritised

• For successful implementation of a highly technical and

complex project of this magnitude, political will and
A1 (GoI)

commitment are necessary.

Policy

•
*****

Effective coordination and fast decision-making are

A1

**

important among several government departments.

*

• Project of this magnitude will have objection, resent-

P6 (contract and execution

ment, opposition from some stakeholders and may be

politicised by vested interest groups.
Interpretive matrix

P2 (procurement)

• Getting right of the way for the project is a complex

P5 (compliance)
P4 (governance)

process and has a potential to delay the project.

P3 (MCA)
P1 (DPR)

• Obtaining required permits before the appointed date is

difficult in practice and has a potential to delay the start
P1
P2
P3
P4
P5
P6

of the project.

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Actions Suggested Actions

• GoAP appointed DMRC for preparing DPR with cost– • 50% of the right of way should be taken in advance
benefit analysis. before the start of the project.
• MCA was developed with close coordination with • Permits should be obtained beforehand specifically by
planning commission. the public agency.
• State government created a SPV named ‘Hyderabad
Metro Rail Limited (HMRL)’ and delegated adequate
Performance
powers for implementation.
• MD, HMRL developed a robust concession agreement
• Project approved by state and central governments with
in collaboration with planning commission with defined
provision for 40% VGF.
roles and responsibilities of the partners, risk allocation
• Hyderabad metro is one of the largest metro projects
and sharing, methods of risk mitigation, provisions for
being attempted on PPP framework anywhere in the
contingency situations, etc. A revenue model was
world and has a potential of being a light house to other
developed which included lease rentals and property
aspiring cities/states.
development rights to keep passenger fares affordable.
• A model concession agreement is now available which
• A reliable, implementable and pragmatic manual of
could be used by other metros in the country.
specification was developed as an integral part of
• The contract was signed within stipulated time.
concession award agreement with emphasis on ‘perfor-
• Business model based on fare box and real estate
mance-based outputs’ rather than the conventional
earnings is found bankable, and a consortium of ten
‘input’-oriented specifications, allowing design innova-
banks led by State Bank of India provided the debt
tions. The manual of specification formulated is tech-
component of the project including real estate devel-
nology neutral, giving the choice of technology
opment facilitating financial closure within the stipu-
selection to the concessionaire.
lated time.
• An extensive mechanism has been developed for scrutiny
• In 2013, Global Infrastructure Leadership Forum, USA,
and vetting of drawings and designs submitted by conces-
awarded the Global Engineering Project of the Year
sionaire. An independent engineer has been appointed for
award to Hyderabad metro (Ahluwalia 2014).
monitoring the contract compliance as per specification
• Project progressing as per specification.
and standards set in the contract (Reddy 2011).
• A competent and strong concessionaire with proven
• A transparent and competitive two-stage bidding pro-
technical, managerial and project engineering skills
cess was followed with single bidding parameter in
was awarded the contract. A technologically
terms of VGF demanded by the bidder.
advanced communication-based train control (CBTC)
• Property development rights were included in the
system has been selected, which provides higher
concession to overcome the constraint of raising fare
degree of safety and reliability and a scalable metro
box revenue, traffic risk shared partly (by adjusting
system.
concession period) and design, finance and project risks
• Public agency, HRML, has been an effective interface
were transferred to the private party.
between the government and concessionaire on the one
• An institutional framework was provided in the form of
hand and concessionaire and public on the other hand
HRML with chief secretary of Government of Telan-
contributing to implementation success. While L&T
gana (GoT) as the Chairman and Secretaries of
metro did start a public awareness campaign called ‘My
Ministry of Administration and Urban Development
City, My Metro, My Pride’, it was HMRL, the public
(MaUD), Finance and Transport, Roads and Buildings
agency which managed the external environment for
(TR&B) departments and other top functionaries of
the project with a firm hand and protected the interests
civic bodies as directors on board of HRML for
of the project.
effective coordination, quick resolution of problems.
• There have been delays in the start of the project on
• Public awareness campaign was started to allay fears
account of getting ROW. Delay was also caused on
about the project and to create a positive image. Issues
account of delay in obtaining permits.
were dealt with a firm hand and disposed of quickly.
• Depots, stations, etc., were planned on government land Summary of lap synthesis factor-wise is depicted in
which was used for majority of land requirements to Table 5.
minimise the risk of project being stalled for this reason.

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Table 5 LAP synthesis of Hyderabad metro: CSFs versus LAP summary

Macro-CSF Learnings Action Performance

Sociopolitical– A metro system is required to solve State leadership supported the project Hyderabad metro is one of the largest
environment city’s mobility problem. While on PPP framework and with decision metro project being attempted on
budgetary resources of government support system and institutional and PPP framework anywhere in the
are limited, private sector’s finance legal cover and created conducive world and has a potential of being
and expertise can be tapped if a environment for buy-in of all a light house to other aspiring
right socio-political and economic stakeholders. cities/states.
environment is available/created.
Stable macroeconomics A large PPP project has to be State government created a special HMRL played a major role in project
and institutional legal supported by institutional and legal purpose vehicle named ‘Hyderabad achieving contract stage success
framework framework. Metro Rail Limited (HMRL)’ and and implementation progress.
delegated necessary powers for
implementation and operation of the
system.
Government support Both central and state governments MCA and manual of specification were A model concession agreement and
need to support a PPP programme developed with close coordination manual of specification are now
not just through VGF but at with planning commission. available, which could be used by
various stages in resolving issues other metros in the country.
specific to the projects.
Metro systems anywhere in the world The revenue model developed A consortium of ten banks led by
are not known to be financially includes lease rentals and property state bank of India found the
viable purely from fare box development rights to keep business model based on fare box
revenue. Property development at passenger fares within reach of the and real estate earnings bankable
metro stations contributes masses. and provided the debt component
substantial part of the revenue to of the project including real estate
Singapore, Hong Kong and Tokyo development, facilitating financial
metros which are few exceptions closure within the stipulated time.
and earn profit.
Good governance Implementation of a large and Set up a decision-making processes to While implementation hurdles
complex metro system like deal with every aspect of project resulted in some discord between
Hyderabad metro requires close including streamlining of policies concessionaire and public
coordination between and practices, protocol for joint authority, by and large decision-
concessionaire and public meetings, quality assurance, role making has been good and the
authority and a decision-making clarity and good interrelationships. private and public agencies have
process reflecting principles of been working in tandem for the
mutual trust and good governance. success of the project.
Effective procurement Transparent and competitive Followed a transparent and competitive A technically and strong
procurement process attracts two-stage bidding process with concessionaire with project skills
qualified bidders. single bidding parameter. was selected.
Well-structured PPP The contract agreement has to be Developed a robust concession The contract signed and project
project complete with respect to roles and agreement with respect to roles and achieved financial closure within
responsibilities of partners, risk responsibilities of partners, risk stipulated time.
allocation and sharing, methods of allocation and sharing, methods of
risk mitigation, provisions for risk mitigation, provisions for
contingency situations, etc. contingency situations, etc.
Risk analysis and proper risk Included property development rights A robust model concession
allocation in a PPP project are to overcome the constraints of agreement is now available for
important to make the project raising fare box revenue, shared PPP metro with provisions for
viable and bankable. traffic risk partly (by adjusting proper risk allocation to the party
concession period) and transferred most suitable to bear that risk.
design, finance and project risks to
the private party.

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Table 5 continued
Macro-CSF Learnings Action Performance

PPP implementation Processes deployed for structuring a Appointed DMRC for preparing DPR Project approved by state and central
processes PPP project and for its with cost–benefit analysis. governments with provision for
implementation contribute most 40% VGF.
significantly to the success of the
project.
While the concessionaire is Specified a reliable, implementable and In 2013, Global Infrastructure
responsible for DBFOT functions, pragmatic manual of specification Leadership Forum, USA, awarded
the primary responsibility of with emphasis on ‘performance- the Global Engineering Project of
ensuring a world-class metro based outputs’ rather than the the year award to Hyderabad metro
which conforms to the conventional ‘input’-oriented (Ahluwalia 2014).
performance criteria, technical specifications, allowing for design
specifications and safety standards innovation and appointed an
squarely lies with the government, independent engineer for monitoring
the owner of the project. the specification as per contract.
For successful implementation of a Chief Secretary of GoT is the chairman HRML has been able to fulfil most of
highly technical and complex of HRML and Secretaries of MaUD, the government obligations under
project of this magnitude political Finance and TR&B departments and the contract contributing to
will and commitment is necessary. top functionaries of civic bodies are implementation success of the
Effective coordination and fast directors on board of HRML for project.
decisions making are important effective coordination, quick
among several government resolution of problems.
departments.
Project of this magnitude will have Public awareness campaign and firm While L&T metro did start public
objection, resentment, opposition and quick handling of the issues. awareness campaign, it was
from some stakeholders and may HMRL, the public agency which
be politicised by vested interest managed the external environment
groups. for the project with a firm hand and
protected the interests of the
project.
Getting right of the way for the Land acquisition risk was minimised by There have been delays in start of the
project is a complex process and earmarking government for land for project on account of getting
has a potential to delay the project. majority of land requirements. ROW.
Suggested action 50% of the right of
way should be taken in advance
before start of the project
Obtaining required permits before the Suggested action Permits should be There was a delay in start of the
appointed date is difficult in obtained beforehand preferably by project on account of delay in
practice and has a potential to the public agency. obtaining permits.
delay the start of the project.

Generalised Findings and Conclusions • While central government’s role is limited to providing
policy framework, creation of a conducive legal and
The general findings of the study can be summarised as regulatory structure and financial support in the form of
follows: VGF, it is the state government which is responsible for
enabling a ‘socio-political-ecosystem’ in the state and
• The utility of SAP–LAP framework in analysis of a large
eliminating constraints and hindrances at each stage of
PPP project implemented on a PPP framework is estab-
a metro project.
lished through the case study. The study helps us to gain
• A ‘strong, capable and well-organised public agency’
insights into the significance of key factors and their
emerges as the most significant variable in contributing
interplay in the project structuring and implementation.
to the success of the first two stages of Hyderabad
• The seven critical success factors have played more
metro project. This is in line with the findings of pilot
significant role in Hyderabad metro during its concep-
study and opinion survey done earlier.
tualisation, project structuring, selection of concession-
• ‘Well-structured contract’ is another variable, the
aire and contract finalisation stage than during its
significance of which was observed across all stages
implementation.3
of the study such as exploratory research, quantitative
3
Up to the progress made till December, 2016. research and field study of Hyderabad metro. The

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Global Journal of Flexible Systems Management

findings are in agreement with World Bank and United date. A further clarity in the concession agreement on
Nations (ESCAP) guidelines on PPP implementation what constitutes right of the way for constructing a
referred earlier in literature survey which highlight the metro corridor will help avoid such situations in future
importance of public agency in taking ‘the steps by projects.
which PPP projects are identified, developed, • Exploratory research and field study reveal that apart
appraised, implemented and managed’ (World Bank from a viability gap funding of Rs. 1458 crores the
2014b) and in ‘finalising terms of contract, bid government is only committed to compensating the
document, bid evaluation criteria, draft contract/con- concessionaire for expenses incurred towards shifting
cession agreement, service and output specification, of public utilities on the right of way. The state has
mechanism for monitoring and control as well as for achieved, through private sector participation, the
dispute resolution’ (ESCAP 2011). construction and operation of critical infrastructure of
• ‘Mutual trust and Good governance’, i.e. how the an urban metro system for a period of 30 years with a
public agency conducts its affairs and manages the reduced requirement of upfront money.
partnership and public resources for execution of the
metro project is a significant factor highlighted during
the study. The proactive participative approach fol-
Limitations and Suggestions for Further Study
lowed by public agency in managing external environ-
ment in case of Hyderabad metro is an example of good
Hyderabad metro is under implementation and scheduled
governance.
to start operations in mid-2017. While the study has
• A ‘strong and competent consortium’ only can deliver a
effectively brought out the significant role played by fac-
good metro system with sustainable performance. The
tors in project structuring and its implementation so far on
concessionaire for Hyderabad metro has earned recog-
a PPP framework, the success of Hyderabad metro can be
nition for its competence in engineering, design and
assessed only after commissioning of the project and its
project management. As has been seen in case of
operation for significant length of time. Project time and
Hyderabad metro, a technically strong party with
cost overrun, stabilised operations, quality of O&M, cus-
project management skills plays the most significant
tomer service and overall user satisfaction are some of the
role in technology selection, and innovations in design
important criteria to term a metro project as successful in
and engineering of the project bringing in benefits to
achieving its aims. It’s performance on these success cri-
the public utility infrastructure that might not have been
teria will also be compared with Kochi and Bangalore
available had the project been executed as a govern-
metros which became operational recently.
ment project.
Finance minister in his budget speech on 1 February
• Earlier studies have brought out that ‘social barriers can
2017 has announced about the proposal to introduce new
be a big hindrance to PPP projects both before and after
Metro rail bill and Metro Policy which will make state
the award of contract’ (Babatunde et al. 2014). Social
governments a prime mover of a metro project with
impediments can mar the success of a project. Hyder-
options to consider private funding or various forms of
abad case study has corroborated this finding where
public private partnerships (Budget 2017–2018). Hyder-
evidence points to the role of state government in
abad metro is the first PPP metro in India where con-
highlighting multi-benefit objectives of Hyderabad
cession includes real estate development to augment
metro and creating awareness and buy-in from politi-
revenue as the fare box revenue alone would not have
cians and public at large. The findings are similar to the
made the project viable. Further, it is also the first PPP
concluding opinion expressed by Smith and Gannon in
metro project where traffic risk has been partly shared by
the context of UK that ‘political support’ is the most
the government with a provision for increasing/reducing
significant success factor for light railway projects
the concession period in case of actual traffic being
(Smith and Gannon 2008).
less/more than the projected traffic. While the facts evi-
• The delay in obtaining right of way and necessary
denced so far point towards success of this approach in
permits for the project resulting in the delay in the start
selection of a good consortium and making a PPP metro
of the project has been a major source of discord and
project bankable achieving financial closure, it could be a
blame game between private and public agency in
subject of further study to explore whether there could be
Hyderabad metro. As a suggested approach, future
better alternatives of funding and structuring a PPP metro
projects may consider obtaining 50% or more right of
project.
the way and all necessary permits before the appointed

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Appendix

Exhibit-1 cluster analysis of 18 CSFs into 7 macro-factors

S. nos. Micro-variablesa Macro-variables Type of factors

1 Political/social environment/support Socio-political environment External

Consultation with stake holders
Multi-benefit objectives
2 Stable macroeconomic environment Stable macro-economics and institutional, legal, framework
Financial market availability
Institutional legal framework
3 Thorough cost–benefit assessment Government support
Government support and guarantee
3 Capable and well-organised public agency Good governance Internal
Good governance
5 Competitive and transparent procurement Effective procurement
Strong consortium
6 Appropriate risk allocation and sharing Well-structured PPP project
Contract agreement
7 Techno-economic feasibility of project PPP implementation processes
Commitment, responsibility and defined role of partners
Contract compliance for results
Shared authority between public and private
a
Micro-variables identified through literature survey and validated through quantitative research techniques. Micro-variables are grouped as per
final partition done by cluster analysis

Exhibit-2 Success Criteria and Performance Indicators in a PPP Project

Success criteria Performance indicators

1. Contract success a. Quality and completeness of the contract

b. Appropriate risk sharing and risk allocation
c. Selection of concessionaire and contract agreement
d. Financial closure within stipulated time
2. Implementation success a. Timely project delivery
b. Project completion within budget
c. Scope of the project as per contract
d. Quality of construction
3. Post-implementation success a. Ridership recovery in short and long terms
b. Last mile connectivity
c. Service quality in O&M
d. User satisfaction

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Global Journal of Flexible Systems Management
Exhibit-3 Key Questions
1. Who are the main actors involved in planning and
implementation of Hyderabad Metro?
2. Which critical factors have contributed to the success
of Hyderabad metro in achieving contract success and
financial closure? Have these factors contributed in the
same way during implementation?
3. What is your opinion on the concessionaire agreement
for Hyderabad Metro with regard to complete clarity
on the contract with respect to scope, time,
deliverables, etc.? Do you think the risks in the project
have been allotted to the party which is best placed to
bear that risk?
4. Please describe the role played by your counterpart in
public/private agency. How it has affected the project
positively? What in your opinion could have been done
more or done differently?
5. What obstacles/problems were faced in the start of the
project and during implementation? What are the
learning points with respect to concession agreement
for PPP metro projects?
6. What are the key learnings from implementation of
Hyderabad metro?
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Key Question
1. What are the critical success factors for public–private
partnerships in urban metro systems in Indian context?
Rakesh Kulshreshtha is a doctoral scholar in
Infrastructure Management at University of Pet-
roleum and Energy Studies (UPES), Dehradun.
His professional interests are in the domain of
steel, business strategy, infrastructure and TQM. A
gold medallist in engineering, he worked in Steel
Authority of India Limited in plant operations,
supply chain logistics, marketing, international
trade and TQM and headed Corporate Planning and Strategy as
123
Global Journal of Flexible Systems Management
Executive Director. Post-retirement he worked as Advisor in IIDC
Limited (an IL&FS group company) and Ernst and Young.
Dr. Anil Kumar is Professor and Head of
Department of Power and Infrastructure Manage-
ment at UPES, Dehradun. He is M.A. in Eco-
nomics, M.Com. (Finance), MBA in Operation
Management, MBA in Financial Management and
Ph.D. in the field of Power Economics. His
research interests include power and energy,
infrastructure, environment, training and aca-
demics. Acknowledged as an expert in power sector reforms, he has
authored two books in the field of ‘Power Sector Structure, Tech-
nology, Functioning and Regulation’.
Dr. Ashish Tripathi is associate professor in
Urban Infrastructure Development at UPES,
Dehradun. A postgraduate in engineering and
management, he earned his Ph.D. in Finance from
University of Houston, USA. His research interests
include FDI, prospect theory as an alternative to
utility theory, use of signalling to overcome
information asymmetry, relationship banking, risk
management in big firms and portfolio theory. Recently, he has
started investigating into the spiritual dimension of management and
has researched and published papers on the principles of management
as enunciated in the Vedas.
Dr. Dinesh Kumar Likhi is Chairman and
Managing Director of Mishra Dhatu Nigam Lim-
ited (MIDHANI). A gold medallist in engineering,
he did his MBA from Maastricht School of Man-
agement, Netherlands, and Ph.D. from IIT Delhi.
His areas of interest are strategic and HR inter-
ventions in metals and mining industry. He has
developed a number of steel products for high-end
applications and published several articles in technology and man-
agement. A recipient of Udyog Ratan Award and National Metal-
lurgist Award 2016, he is a Member of National Material Policy and
is on the Governing Council of International Advanced Research
Centre for Powder Metallurgy and New Materials.