Knight Frank is a global real estate consultancy with an integrated prime commercial and residential offering, operating in key hubs across the world. Deben Moza, in an email interaction with Sandeep Menezes, discusses a wide range of issues related to project planning and management in India.
Many projects face delays and cost escalations during execution. Do you think this can be attributed to incorrect project management or planning?
Yes, in most of the cases the delay or cost escalation is on account of lack of proper planning. Proper planning in the pre-construction phase minimises the risk of change/recourse which thereby eludes the chances of any possible time and cost escalations.
How closely is project risk linked to financial closure of a project?
Smooth running of the project and fluidic financial closure is highly determined by the variations which give rise. The variations and subsequent changes is a factor of how much has been anticipated as a likelihood of change. Project risk register is a very important tool in determining the likelihood of change and forms the basis of the planning and development. A well-planned project where possible risks pertaining to change are identified and controlled results in very minimal change in a project. This result in eliminating the long and arduous task of managing change and followed by financial closure.
How should unseen risks like variation in regulatory policies be managed?
We have seen that the local building approval before construction varies largely from state to state. With mandatory compliance under the current administration system has always been an applicant’s nightmare. Union approval policies like MoEF and Civil Aviation have also been posing jitters to the developers more often than not. In Mumbai alone we have seen a lot of development being stalled owing to the shift from the existing byelaws and their compliances. These unseen risks have more often outsmarted the planning criterion of any project.
Around 50 to 70 per cent of any project costs relate to procurement, be it labour, equipment or material. What are the various challenges during procurement and how can these be eliminated?
Procurement has always been the most important part of the pre-construction period. Procurement strategy and its effective implementation define the subsequent activities falling in line with the schedule estimate. A good manager would preempt the challenges/risks associated with the current procurement strategy thereby arriving at a right balance between the direct purchase and onsite works. The principal components that decide the procurement strategy are time of the year, duration of the project, geographical location, price etc. Shortage of manpower in a current geographical location or factory-made finish would prompt the use of factory fabricated components than made on site. A good manager would identify the risks and plan the mitigations before formulating a strategy.
How do you see the recent trend of awarding the total contract instead of in small packages? Will this lead to a reduction in project costs?
The recent trend of adopting a total contracts method for awarding over multi-package contract has primarily been a call taken by corporates to make the process simpler, faster and hassle free. However, each comes with its own share of challenges. The total contract method makes the construction time faster than its former but it makes the pre-construction part slightly elaborate to make everything clear before start of works. In the Indian context, this would be slightly higher priced than its former for the very fact that there are very few entities providing all scope in house, which means they outsource the components that they don’t do in house thereby charging a premium for handing and profit over and above the cost of the product.
At times during execution stage, project scope changes often require adjustments to cost, time, quality, risk or other project deliverables.
Change is impending in any project and attributable to a lot of things. Primarily, a client’s decision which is derived from business forms 60 per cent of changes while the site related changes forms 10 per cent of changes and the changes related to inefficient quantification/due diligence amount to around 30 per cent of the bill of quantities. While changes due to client decisions get client nod on the escalations in project cost, what becomes a challenge is the rest of 40 per cent which is largely in the hands of the project managers and the consultants who drive the project. Over the years we have been able to collate a checklist of items that, if unchecked, would result in major variations at a later date and so the project manager has to identify the risks and play around those to nullify their effect.
Project Management is a new term in the development sector. What are your suggestions for today’s young civil engineers?
Project Management has always been there in the development sector but thanks to the corporate institutions for bringing this into the curriculum and enabling a career prospect for individuals. Project management in today’s scenario is a widely accepted career option with rising awareness that a good manager is most important for any project to be a success.
What is the future strategy of Knight Frank India in project management consultancy?
Knight Frank India had traditionally its project management business focused in Western India, however, the new strategy is to expand footprint pan-India and create regional teams to provide Project Management Services across all regions. We are also focusing on new business initiatives which include EPC and audit services, especially for funds and banks.