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Delhi metro project evaluation


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Delhi metro project evaluation

  2. 2. INTRODUCTION  The need for a reliable public transportation was felt in Delhi for a long time.  A comprehensive traffic and transportation study completed in 1990 highlighted the urgent need for a rail- based transit system comprising a network of underground elevated and surface corridors to meet the traffic demand projected for 2021. To make this dream a reality , the Delhi Metro Rail Corporation Limited (DMRC) was rd
  3. 3. Reasons  Population of over 1 million.  More registered vehicles than Mumbai, Kolkata & Chennai put together.  Automobiles contributing to more than two – thirds of the total atmospheric pollution.  High rate of road accidents  More than 35 studies recommended Mass Rapid Transit System.
  4. 4. Challenges  Delhi Metro is the biggest successful urban project in India since independence in 1947  Project has to be executed in very difficult urban environment  Being the capital city, all actions under close scrutiny of VIPs  Project implementation period compressed from 10 years to 7 years  Metro being constructed to world class standards with frontline technologies  Expertise and technology not available in the country.
  5. 5. The Delhi Metro Project  Second project in country after Kolkata Metro:1984.  A 50:50 joint venture of GoI and GNCTD  DMRC incorporated under Companies Act 1995  Duration of completion of Phase – 10 years by the end of 2005  Get approved by GoI in Sept 1996 (after civic organizations recommendations)  Phase-I to connect Delhi’s business, education and shopping districts.  Total land needed 340 hectares (58% govt., 39% private agriculture and 3% private urban land)  Phase-I consists 3 Lines, total length 56 km, 50 stations (10 underground) and 3 maintenance depots.
  6. 6. Line Length of Line Route Line 1 Red Line 22km Shahdara to Rithala Line 2 Yellow Line 11km Vishwa Vidyalaya to Central Secretariat Line 3 Blue Line 23km Barakhamba to Dwarka
  7. 7. Project  GoI and GNCTD arranged the all capital required.  Initial estimation of cost in 1996 Rs 60 billion  Revised estimation cost in 2002 was Rs 89.27 billion  Final cost of project approx Rs 99 billion.  2.2 million passenger/day to become the project viable later revised to 1.5 million passenger/day  Economic IRR 21.4%  Financial IRR 3% (low IRR some minister suggested to drop the project)  Social sector project can benefit the regional economy in more than one ways.
  8. 8. Cost Structure  Repayment period 30 years including 10 years grace period.  Debt to equity ratio 2:1  Exchange rate risk bore equally by GoI and GNCTD.  Sources of Revenues: fares, property development, taxes on local public.  Property Development: Shopping Mall, IT Part, Multiplex, Restaurant and Stores etc.  This project was exempted from custom and excise S. No. Source of Fund % of total cost Remark 1 Equity 28% Equally subscribed by GoI & GNCTD 2 Interest Free Loan 5% Land Acquisition 3 JBIC 64% Time Sliced Soft Loan 4 Property Development 3% Commercial activities
  9. 9. The Project Team  Mr. E. Sreedharan was appointed as project manager and managing director in Nov 1997.  A technocrat retired from IR in 1990.  Earned reputation for completing the project on time and within budget.  70% of senior staff hired on deputation from IR  DMRC opted lean structure.  Effective contract awarding and procurement process (to tackle with time, cost and corruption)  Contract awarding process transparent and simple & fair and just  Removed subjectivity from tender
  10. 10. Contd…  Had two departments: project organization and operation & maintenance  Experts required from: Civil, electrical and communications area etc.  Young 18-30 years motivated team of professionals personally interviewed by MD.  Faced skill shortage problem everyone was new to metro project  No technical institute of such kind in the country.  Suitable candidates sent HongKong MTRC for training.  Metro Training School at Shastri Park  Unique work culture: hard working, dedicated and professionally competent
  11. 11. The Project Plan  Individual accountability.  Daily monitoring of progress.  Weekly reviews and targets.  Delhi Metro Act, 2002  Superseded Delhi Municipal Laws.  Lower courts barred from issuing stay orders.  Dedicated team of lawyers to prevent property disputes.  Cost centers  Manpower.  Energy.  Material & maintenance.
  12. 12. Road Blocks  Low Financial IRR prompted second thoughts on the project  Criticism due to inability to recruit, 70% were deputed from Indian Railways  Lack of experience & specialized experts in Civil, Electrical & Communication Engineering  Loss of Rs 5 million if one day lost  Difference of opinion on gauge to be adopted
  13. 13. Critical Success Factors  ‘We mean business’ attitudes.  Efficiency, courtesy & integrity in corporate culture.  Corruption free Contract Awarding System & Procurement Process.  Autonomy in decision making.  Advance planning in utility diversion, minimizing public inconvenience.
  14. 14. THANK YOU