Page 58 - Built Expressions - Online Construction Magazine - November 2014 Issue

Cover Feature However, certain challenges will taken place since the tender award including transportation, housing, need to be overcome if the industry in 2010 because of land acquisition and effective land use, to name is to realize that potential. Because delays. Country-wide regulations on just a few. For example, there the following barriers stretch across land acquisition have been enforced is lack of coordination between multiple sectors, addressing them in a non-uniform fashion, causing central, state, and local agencies could lead to a signifcant pickup delays. Even lenders are unwilling for road construction projects, and in infrastructure activity across the to support projects unless clearances planning for urban transportation country: are available and 100% right of way and housing development are often • Limited long-term funds: has been secured. not done concurrently. Because Funding for infrastructure is a • Clearance delays: Delays related to of changes in the ecosystem, the constraint because of limited public forest and environment clearance are master plans developed for urban funds, which leads to work-in- also impacting many infrastructure development are often outdated progress projects being stalled. projects. Clearance policies are by the time they are implemented. Moreover, infrastructure outlay by often not used objectively, providing There is an urgent need to develop the central government is spread thin different rationale for clearances on an all-encompassing perspective on across a large category and number of different occasions. Not only does infrastructure development planning projects. At the local execution level, this impact the speed of clearances, by incorporating multiple aspects of local bodies have a low revenue base it also sends uncertain signals to development, going beyond just the to work with for urban infrastructure investors—and often leads to pullback immediate project. projects. With a lack of innovative of investments. For example, the • Low fnancial viability: Many funding models and an uncertain contractor for the Kishangarh- infrastructure projects have a low business environment,private funding Udaipur-Ahmedabad six-lane highway internal rate of return because they is also constrained. has terminated the project because are heavy on investment and the • Land acquisition delays: Across environmental clearance failed revenue stream often does not refect infrastructure projects, delays as a to materialize. Similarly, a lack fair costing. For example, India’s result of land not being acquired by of clearance from the state water MRTS projects have historically the time projects are awarded have department has held up the Chennai provided fnancial returns of less affected many projects both before Port-Maduravoyal road project. than 5%, although if the positive and after they start. For example, • Inadequate planning:. Current externalities are taken into account, land clearance issues have held up the infrastructure plans do not necessarily the returns to the economy are much Trivandrum-Tamil Nadu border road incorporate an integrated view that higher at more than 20%. Benefts of project, where no construction has encompasses all facets of development, any infrastructure project often go way beyond the domain of the project Many infrastructure projects have a low internal rate of return itself. Similarly, projects related to water supply and sanitation often because they are heavy on investment and the revenue stream doesn’t provide enough user revenues often does not refect fair costing. to even cover operating costs. Because infrastructure projects tend to be multiyear programs, working capital cycles are long, and operators are stretched for margins. Consequently, interest in infrastructure development projects is often low, especially from operators looking to invest in short- term projects with good fnancial returns. • Weak governance:. Multiple bodies acting at all levels across central, state, and local governments is a common phenomenon across an array of infrastructure development areas. The fragmented nature of governance not only delays projects, but also conveys conficting signals PG 58 Built ExpressionsBuilt Expressions PG 58 Vol: 3 Issue: 11 November 2014