Prepare for Risks in Mega Projects;

Illustrated with success stories

19th Dec 23, Mumbai

Rajesh Kanade
President –Civil International
 The Facts...

 Big infrastructure projects are economically transformative.

 Infrastructure megaprojects are crucial to the future of cities, states, and
individual livelihoods.
 Construction becomes the basic input for socio-economic development.
 The world needs to spend about $57 trillion on infrastructure by 2030 to
enable the anticipated levels of GDP growth globally.
But unfortunately...

 If you haven’t been on a project that’s gone over time or budget, you’re in
the minority.

 No less than 98 percent of all megaprojects slip by over 30 percent.

 More than 75 percent of the big projects suffer cost overruns by even 40
percent and more.
Well, the solution lies in…

Understanding what differentiate Mega Projects from others

Identifying the Risks & Assessing its impact

Mitigating the Risks by taking appropriate action

Keep monitoring and improving

Mega Projects…
Are of High value
Having long duration
Involve multiple stakeholders
Attract large amount of public attention
And can be differentiated largely on 3 areas:
• Execution perspective
• Management techniques
• Commercial approach

Execution Perspective Management Techniques Commercial Approach

Mega Projects…
• Are usually of High value
• Having long duration
• Involve multiple stakeholders
• And can be differentiated largely on 3 areas:
• Execution Perspective
• Management techniques
• Commercial approach

Execution Perspective Management Techniques Commercial Approach

 Differentiation
• Huge Volume- Quantum of every
work is massive
• There will be various structures,
facilities, systems etc.
Execution Perspective 1 Management Techniques
Risk
• If it is not understood properly,
the last minute arrangement will
lead to huge delays and
additional cost
• Lack of right assessment and
experience of handling such
volume could be disastrous
Mitigation
• Meticulous planning.
• Right assessment of resources
• Right assessment of land, water ,
power and disposal
• Detailed plan for safety and
security
• Expertise to establish and
operate such huge establishment
Commercial Approach
 Differentiation Risk
• More complex • Failure to understand the
interdependency and sequencing
of works will lead to rework,
idling, additional time, claims
Execution Perspective 2 Management Techniques
Mitigation
• Breakdown each set of work into
smaller subsets and establish the
right dependencies
• Properly link various structures
and systems with integrating
utility network
• Have rounds of discussions with
each subject matter expert and
establish the interdependency
Commercial Approach
 Differentiation Risk
• Early stage Design, Planning & • Lack of visibility can not be
owner's approval afforded in Mega projects.
• Delay in approvals & selection by
owner can jeopardize the whole
schedule
Execution Perspective 3 Management Techniques
Mitigation
• Specific focus on earliest
completion of design and
planning
• Understand stakeholder’s
requirement and consents
required.
• Have a charter for all approvals
to be provided by Engineer and
customer
Commercial Approach
 Differentiation
• Obstruction removal
Risk
• No Mega Project is free from
hindrances and physical
obstructions falling on the
footprint or in the ROW of the
project.
• Failure to timely removal of
these obstructions will cause
huge time and cost impact and
sometime suspension of the
project
Mitigation
• Responsibility and ownership for
removal of such obstruction is to
be clearly documented
• Clear idea of the interested,
authorized and affected
stakeholders with these removal
or rerouting
• Always have a plan B to work
around to gain some time

Execution Perspective 4 Management Techniques Commercial Approach

 Differentiation
• Simultaneous works- Linear
working usually doesn’t work in
Mega Project
Risk
• Not working on multiple fronts
will lead excessive time and huge
cost
Mitigation
• Planning to optimize overall
duration is to be achieved by
working in parallel at various
fronts.
• Modularization, pre-fab and pre-
cast construction are to be
maximized.

Execution Perspective 5 Management Techniques Commercial Approach

 Differentiation Risk Mitigation
• Logistics • One of the important aspects for It is must to have:
success of Mega project is • Detailed procurement tracker
efficient logistic planning and
implementation • Supply chain with internal
milestones of delivery duration
including approval required
• Warehousing and storage plan
for off site and on site
• Safe and efficient Vehicle and
personnel movement plan within
site

Execution Perspective 6 Management Techniques Commercial Approach

 Differentiation Risk
• Subject Matter Expert • Mega Projects can not be
successfully executed without
SMEs
Execution Perspective 7 Management Techniques
Mitigation
• Think Big, Go Global and have
experts in every field;
Engineering, Planning,
Procurement, Advance
technology for execution, Testing
& Commissioning, etc.
Commercial Approach
 Differentiation
• Appropriate Plant & Machinery
and right technology
Execution Perspective 8 Management Techniques
Risk Mitigation
• This can make or break the • Specific P&M to be selected
Project which is fit for the use satisfying
the safety requirement, available
timeline and fitting logistic
constraints
• Appropriate technology for
construction to be chosen
• There will be fleet of equipment
and hence, proper facility for
maintenance, repair, fueling, etc.
to be planned.
• Digitalized monitoring for proper
utilization of P&M to be
implemented.
Commercial Approach
 Differentiation Risk
• System Integrity • Mega projects consists of various
electromechanical and IT
systems and if it is not properly
integrated it will lead to dis-
functional product
Execution Perspective 9 Management Techniques
Mitigation
• It is must to have system
integrator at the time of design
itself
• Inter system dependency and
communication to be checked at
lab before site installation
• Integrated testing and
commissioning to be performed
at various stages among two
systems, multiple systems and
scenario test
Commercial Approach
Mega Projects…
• Are usually of High value
• Having long duration
• Involve multiple stakeholders
• And can be differentiated largely on 3 areas:
• Execution strategies
• Management techniques
• Commercial approach

Execution Perspective Management Techniques Commercial Approach

 Differentiation Risk Mitigation
• Multiple stakeholders • One of the biggest risk in Mega • Dependency chart to be drawn
projects is improper stakeholder out and timely follow up is to be
management made

Execution Perspective Management Techniques 1 Commercial Approach

 Differentiation Risk
• Socio-political-economical • Mega projects have wider impact
factors on social, political and
economical aspects of the
locality and if these correlations
are not well thought and
solutions are not drawn in time,
projects will not see the light at
the end of the tunnel.
• This is more pertinent with
respect to the International
projects and bear huge risk.
Execution Perspective Management Techniques 2 Commercial Approach
Mitigation
• Assess the impact on the life of
habitants, ecology in the vicinity.
• Understand interest of politically
influential persons.
• Specially for international projects,
it is very important to carry out
country analysis from these
aspects including security, stability,
profit repatriation, CPI, etc.
• Factor in CSR works, employment,
awareness campaign,
environmental equilibrium, etc.
• Insurance, ECGC coverage are
advisable for Intl projects.
 Differentiation Risk
• Communication matters • Mega Projects involve so many
people at different levels, of
different understanding,
working at different locations
but connected for the common
goal and hence Efficient and
Effective communication is the
key for the performance.
Execution Perspective Management Techniques 3 Commercial Approach
Mitigation
• Complete clarity has to be
established by devising detailed
communication protocol
highlighting who has to take
action, who has to be informed,
who has to be reported, etc.
• Clear, correct and complete
instructions reaching to the right
person in time is the key for
success.
• Electronic Data Management
system is must to efficiently
handle mammoth
correspondences.
 Differentiation Risk
• Workmen Management • This is a special task for Mega
Projects and failure to this will
lead to frequent exodus of
workmen, more turn around,
under utilization, productivity
loss, etc.
Execution Perspective Management Techniques
Mitigation
• Systematic planning of good
accommodation and welfare
facilities.
• Measures to maintain the
harmony among workmen
coming from different regions,
religions and geography
• Safe and secure environment
with good complaint redresses
system
• Proper intelligence to curb anti-
social activities
4 Commercial Approach
 Differentiation Risk
• Team Work & alignment • Mega Projects usually have
Supervisors, engineers,
managers and executives of
different nationality and culture.
A dysfunctional team work is big
threat for Mega Projects.
Execution Perspective Management Techniques 5 Commercial Approach
Mitigation
• Create Conducive Environment
• Align them for common goal
• Create harmony among multi-
cultural, multi-national team
members
• Make subcontractors, suppliers,
vendors as execution partner
 Differentiation
• Monitoring & Control
Risk
• Things measured are considered
done. That shows it’s a huge risk
if there is ineffective monitoring
and control system in Mega
Projects.
Mitigation
• Organization to be aligned as per
the Work Break Down Structure.
• Control to be exercised through
quantified targets, internal
milestones, focus areas reviews,
fall back plans and
demonstration of management
commitment.

Execution Perspective Management Techniques 6 Commercial Approach

 Differentiation Risk
• Government clearances & • Unawareness of rules and
approvals regulations, delays in approvals
have impacted various Mega
Projects
Execution Perspective Management Techniques
Mitigation
• Get the knowledgeable people
and develop a comprehensive
list of all statutory clearances,
approvals and NOCs required for
the project at various stages like
design, procurement, execution
and occupancy
• Closely monitor and obtain these
approvals
7 Commercial Approach
Mega Projects…
• Are usually of High value
• Having long duration
• Involve multiple stakeholders
• And can be differentiated largely on 3 areas:
• Execution perspective
• Management techniques
• Commercial approach

Execution Perspective Management Techniques Commercial Approach

 Differentiation
• Escalation & Price Adjustment
Risk
• Mega Projects are of long
duration and subject to price
escalation. Absence of proper
model on PA may lead to delays
and suspension by contractors
Mitigation
• It is a must to have escalation
clause for mega Projects.
• Weightages and indices for
various cost elements to be
chosen very carefully to rightly
reflect your spending and
sourcing strategy
• Currency proportion to be
decided based on plan
spending's for Intl Contracts

Execution Perspective Management Techniques Commercial Approach 1

 Differentiation
• Working Capital Management
Risk
• Due to high value and long
duration, cost of funding plays an
important role in the execution
of Mega Projects. If working
capital is not managed well,
contract may suffer huge losses
Mitigation
• Project cash flow is to be drawn
meticulously
• Payment terms and conditions
should be agreed upon to avoid
unnecessary funding by any
party
• JIT approach to be adopted for
inventory management

Execution Perspective Management Techniques Commercial Approach 2

 Differentiation
• Secured funding
Risk
• Money is the prime mover. Many
projects fail due to fund crises.
Mitigation
• A detailed check on funding
arrangement is to be made to
ensure continuous funding
through out the projects.
• Projects with buyer's credit,
lateral funding, concessional
funding, etc. requires specific
compliances to be adhered
throughout the project and to be
carefully monitored.

Execution Perspective Management Techniques Commercial Approach 3

 Differentiation
• Contract modality
Risk
• Fairly drafted contract paves the
foundation for the success of the
Mega Project
Mitigation
• Parties to agree upon fair and
balance terms and conditions
• There has to be provisions for
amendment on mutual
agreement
• Negotiations to be aimed for
win-win situation
• As long as possible disputes to
be resolved amicably

Execution Perspective Management Techniques Commercial Approach 4

 The world needs megaprojects to
deliver the economic and social goods
that billions of people lack and to create
the economic growth that will pay for
them.
But a bad project has consequences
that go well beyond a specific bridge,
tunnel, or sewage system.
So, avoiding risks, getting it right, or at
least better, is good for everyone.
Thank You

Rajesh Kanade
President –Civil International
M: +91 9987642805 | T +91 22 6885 1742

KALPATARU PROJECTS INTERNATIONAL LIMITED

(Formerly Kalpataru Power Transmission Limited)
3rd Floor, Kalpataru Synergy, Opp. Grand Hyatt Hotel,
Vakola, Santacruz (E) Mumbai-400055, India

Website: www.kalpataruprojects.com