E1-E2 Core Rev.

Date: 31-03-2021

Chapter-13

PLANNING AND CAPITAL WORKS MANAGEMENT

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Telecom Strategic Business Planning

Strategic Planning

Strategic Planning can be thought of as having three 's' constituent parts:

i) Strategic Analysis
ii) Strategic Direction and
iii) Strategic Implementation

While planning such, the changes / developments in seven key areas (as at present and in
future) will be kept in view. 'TEMPLES' is the numeric for these areas as follows:

T - (Technology)
E - (Economy)
M - (Market forces competitions)
P - (Political Decisions)
L - (Law & Regulatory Systems) viz. TRAI etc.)
E - (Environment & Human Resources); and
S - (Social obligation (viz.) USO)

The Corporate Office of BSNL, will consider all the above before framing its "long term" and
"short term" planning proposals along with varied techno-economic choices keeping in view
technological developments that are taking place and that would take place in long term.

Business Plans: Main Areas

The main areas that influence any Business planning generally are mainly:
Market, Technology and Finance: Business plans of Telecom are being formulated with
judicious admixture of these three elements. The factors that influence in business plans of
Telecom are

a) Short and long term forecasting of market demand in respect of basic as well as
Value Added Services
b) Assessment of needed "Technology' and identification of suitable vendors for
supplies / products.

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Basics for Formulation of Business Plan

Telecom Corporate Office communicates targets thus fixed against each territorial circle with
suggested technological options, giving certain flexibilities to Heads of Circle.

Accordingly Business plan documents in Telecom wings will depend mainly, on Targets,
Objectives, Social obligations as well as Capital Funds as follows:

(i) Targets as fixed by BSNL for the planning period for (a) Basic Services (b)
Rural & VPTs under Universal Service Obligation.
(ii) Meeting bandwidth requirements as targeted.
(iii) Choice/Availability of appropriate technology keeping view future market
demands and availability of suitable vendors/ production units.
(iv) To meet 'On demand' Accessibility and to maintain Reliability of services
(v) And, availability of Resources / Capital funds

Planning Guidelines for New Telephone Exchange:

During 98-99, two major policy changes in respect of rural telecom has taken place. These
are, Declaration of SDCA as multi exchange area w.e.f. 15.8.1998 and announcement of New
Telecom Policy 1999 in March 1999. Objective of Universal service has been included in the
New Telecom Policy. This objective is to be achieved by providing village public telephones
in the remaining villages and telephones on demand.

In view of the above changes, planning guidelines for new telephone exchanges in rural areas
have been reviewed. New guidelines as stated hereunder are given for planning new
telephone exchanges in the rural areas.

Pre Corporatisation period

To accommodate the changes inspired by declaration of the SDCAs as multi exchange local
areas and to meet universal service obligation as stated in NTP1999, the planning guidelines
for new telephone exchanges in rural areas have been revised as under:

(i) The switching network should be planned for the whole area covered by the
SDCA in such a way that the telephone can be provided on demand anywhere
within the SDCA and the balance uncovered villages within the SDCA are
provided with VPTs.

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(ii) The local area of each of the multi exchanges should be defined and
demarcated in such a way that entire area of the SDCA is covered by the
existing exchange(s) within the SDCA.
(iii) A telephone from an exchange within its local area shall be treated as local
telephone irrespective of its distance from the exchange. However, if a
telephone is provided from an exchange at a place outside its local area (in the
local area of another exchange) on the request of an applicant, the same shall
be treated as a long distance telephone.
(iv) The fresh demand for telephones at a place or in an area should be met either
from an existing telephone exchange by underground cables / overhead lines
or by opening of a new telephone exchange or by using TDMA/PMP
equipment depending on techno-economic considerations. A new telephone
exchange should be planned and opened only if its is techno-economically not
feasible to meet the demand for telephone from an existing telephone
exchange within the SDCA.
(v) When a new telephone exchange is opened in a SDCA, its local area and that
of the already existing adjoining exchanges should be re-demarcated and
notified.
(vi) Provision of reliable transmission media to all telephone exchanges by the
year 2002 is another objectives stated in the NTP 1999. Accordingly all new
exchanges should be planned along with reliable transmission media.

Post Corporatisation Scenario:

After the Corporatisation of DTS / DTO on 1.10.2000 careful strategy is being adopted for
opening of new exchanges in the rural areas. This is to ensure the economic viability of
BSNL. SDCA has been declared as multi exchange area w.e.f. 15.8.1998 and New Telecom
Policy 1999 announced in March 1999. Objective of Universal Service is to be achieved by
providing village public telephones in the remaining villages and telephone on demand by
year 2003.

In view of the above changes, planning guidelines for new telephone exchanges in rural areas
have been reviewed. The norms for planning of Small Exchanges in the rural areas have been
revised. New guidelines stated hereunder (Para 4) be followed while planning new telephone
exchanges in the rural areas.

4. Planning of Small Exchanges in Rural Areas

With effect from 27.9.2002, norms for planning of small exchanges are as follows:

i) The planning of rural area should first be with WLL solution.

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ii) If WLL solution is not workable due to technical reasons, a new exchange
would be planned with minimum registration of 75 within the local area of
exchange.
iii) New exchange would be commissioned on optical fiber media. However,
radio / satellite media could be used wherever optical fiber media is not
techno-economically feasible.

Providing Telecom Services in Rural Areas: General Instructions

i) The opening / shifting of telephone exchanges in rural areas should only be in

exceptional circumstances. No new site (departmental or rented building) be
acquired for opening new telephone exchange or shifting an existing telephone
exchange of up to 500 lines capacity in rural areas.
Any unusual proposal of opening new telephone exchange in rural area should
be personally approved by the Head of the Circle with the concurrence of the
IFA.
ii) Guidelines have already been issued for providing telephone connection on
copper cable up to a radial distance of 3 Kms. from the exchange and any
demand beyond is to be met by providing connections on WLL. The area to be
covered for providing new telephone connections on copper cable is reduced
from 3 Kms to 2.5 Kms radial to further cut down the cost of cable required
for providing a landline connection.
iii) As telephone exchange capacity up to 496 lines (2 AN racks) can be achieved
in the existing C2 exchanges, we may not open any RSU of 500 line capacity.
The next stage of increasing the capacity by installing 1K RSU should be
resorted to in cases where the revenue per line is reasonably high (about
Rs.400/- per line per month and above) and the area is important because of
the location of industries, agriculture products and agro based industries and
customers like NRIs etc. All proposals of installing 1K RSU should be
profitable proposals and for this cost saving may have to be resorted to by
having buildings of the reasonable size and cutting down the cost of
infrastructure wherever possible.
iv) Where the revenue per line is relatively low (less than Rs.300 per month), it is
not expected that a capacity of more than 2 numbers of AN racks will be
required. Additional demand in such cases may be met by providing
connections on WLL. Only in cases where the demand rises to about 600 to
700, the proposal of increasing the exchange capacity to 1K may be initiated
ensuring that it is not a loss making proposal.

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v) The choice of new telephone connection on wire-line or WLL should be based

on techno-economic considerations and not on the option of the customer.
vi) External Plant of the existing telephone exchanges in rural area should be
developed to provide more connections as per demand and existing
infrastructure be utilized to the maximum extent.
vii) While providing new telephone connections to meet the targets, priority
should be given to exchanges of 1000 line capacity or more as this will ensure
a minimum rental of rs.110/- per month per connection.

Opening of New Rural Exchanges: Revised Policy

Management Committee of BSNL while considering the item related to revision of policy for
opening of new rural exchanges in circles having large waiting list has decided as follows:

The earlier decision on the subject for opening of new rural exchanges for A&N, Assam,
Bihar, Chhattisgarh, J&K, Jharkhand, NE-I, NE-II, Orissa, UP (East) and Rajasthan Circles
conveyed vide this office letter no.2-1/98-RDTF, dated 14-06-04 will remain in force with the
modification that new rural exchange may be opened in above circles having net waiting list
of more than 50000, with 5 Kms radius instead of 3.5 Kms if a minimum demand of 150
subscribers exist. CGM has to ensure the manning of such exchanges prior to approval of
proposal for opening such exchange.

As regards other remaining circles all such proposal shall continue to be sent to Corporate
Office for prior approval.

The exchange should be opened on reliable media.

The proposal for new exchange be studied and approval case by CGMs in concurrence with
IFA.

Budget Process –Re-engineering

As approved by BSNL Management Committee in its 105th meeting held on 11-11-2008, the
budget processing and related works have been modified in order to streamline the Budget
processes and to yield more realistic budgetary estimates in the circles and corporate office as
detailed below:-

1.Capital Budget:-
(a)Allotment of funds under Capital works:-
BBF Division shall arrange allotment of funds to the circles under Capital outlay service-
wise/component-wise in lump-sum for all Projects irrespective of area
(General/Rural/Tribal/VAS), but on the basis of assessment/recommendation of Planning

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branches of Corporate Office viz. LTP, Switching, core Network, Cellular Mobile, Building
works, Broad Band etc within the approved Plan of the year. Circles will, in turn, allot funds
to their SSAs accordingly in order to achieve the physical targets already fixed under various
parameters. Circles shall forward a consolidated statement of allotment showing account
code-wise distribution of funds as allotted by corporate office. Submission of RE/BE
proposals under Capital outlay from Circles/Units to corporate Office is dispensed with.

(b)Compilation of Capital works Programme:-

Capital works programme shall be compiled only for works costing Rs.20 crores and above
instead of Rs.5 crores and above. The details are to be submitted to BBF Division of
Corporate office by the respective circles very year in the prescribed format (enclosed) to
enable corporate office to monitor the progress of ongoing and New projects costing more
than Rs.20 crores.

(c ) Budgetary control:-
BBF Division will furnish details of expenditure (as obtained from Corporate Accounts
Branch) to the concerned Circles and respective Planning branches of Corporate office, on
quarterly basis for monitoring physical targets viz-a-viz capital expenditure recommended by
planning branches. This pro-active measure will ensure quarterly review of reasons for
budgetary variance and a periodical and centralized budgetary control. The circles need not
send variation statements at the close of the financial year to corporate office. The variation
statements will have to be reviewed by the respective circle.

Procedure for obtaining statements of physical achievements/progress/review will continue to

be dealt in Planning Branches as hitherto followed.

2.Revenue Budget:-
(a)”New Items of Expenditure” proposals from circles for fixing ceiling on New posts and
expenditure therefore is dispensed with immediate effect.

(b)Expenditure statement of Loans & Advances:-Obtaining of expenditure statements of

Loans & Advances, including HBA, is dispensed with immediate effect.

The existing procedure and related works on budget processing under capital outlay/working
expenses stand modified to the extent noted above with immediate effect

Copy to:-
1.PGMs(F)/GMs(F)/DGMs(F&A)/IFA of circles for information & follow up action. They
are requested to forward a consolidated statement showing account code-wise distribution of
funds made at circle level to BBF Division of Corporate Office after receipt of RE –BE.

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2.PGMs/GMs of Planning Branches of BSNL corporate office for information. They are
requested to furnish circle-wise details financial assessment/recommendation under various
parameters along with physical target assigned for achievement to BBF division for allotment
of funds to circles in lump sum for all works under various services and components under
RE-BE

Proforma for capital works programme for the projects costing Rs.20 crore and above
(in thousand of rupee)
Sl. No. BSNL Full Ac- Sanctioned Estimated Expenditure remarks
No. particulars code particulars cost incurred up
of the of project to 31st
project March

1
2
3
And so
on

Signature of IFA Signature of Head of circle

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Questions in Planning and Capital Works Management

1. What are the revised policy guidelines from Corporate office on opening of new rural
Exchanges?
2. What are the instructions of Corporate Office in respect of Fixed Assets at the time of
closure of Accounts?
3. What are the guidelines issued by Corporate office in respect of charging of Overheads?
4. Write down the procedure for physical verification of Inventory
5. Write briefly on capitalization policy of BSNL in respect of Buildings, partitions and
Software?
6. Write a brief on stores scrapping
7. Write a brief on charging of overheads
8. Briefly explain the physical verification of Capital work in progress
9. Write a brief on scrapping of computers
10. How the adjustment of accounting of sale proceeds of unserviceable or obsolete stores is
made in accounts?
11. Write short notes on capital works programme.