How To Meet India’s Infrastructure Ambitions With Constrained Resources

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How to meet India's infrastructure ambitions with constrained resources

India is transforming. It stands on the cusp of significant change: a change that will lead to unprecedented financial development with radical improvements. India is among the fastest developing economies of the world. India’s hyper-growth has led to an optimistic population with needs that have extended the resources of the nation to its limit.

The largest of these needs to be fixed is infrastructure. Most agree that bridging India’s infrastructure gap can be the catalyst for a massive economic and development leap.

 The construction industry not only drives substantial economic potential but is also a huge part of that economy. It is also among the most significant employment providers.

However, over the years, some difficulties have limited the growth and development prospects of the construction industry in India. I’ve already made the point that physical infrastructure directly affects the growth and overall development of an economy. It’s clear therefore that the prevailing issues impacting the infrastructure sector must be addressed.

Some of the biggest challenges faced by India in the field of construction include:

1)   Lack of skilled workforce: The surge in construction projects has added to the woes of ever-increasing demand for employment in the industry. The drawback of the shortage of skilled labour is that it not only affects your output and ability to meet deadlines, but it also puts the folks on the construction site at risk as compromises are made and corners cut. 

2)   Project Complexity: Modern construction and development projects are getting more demanding, both in terms of design and functionality. Today’s smart building demand more modern materials, sustainable building practices, and room for technological extensions in the future.

3)   Cost of materials: The supply of construction materials is always constrained, and this pushes up the price. Poor estimates of material requirements, inefficient ordering, pilferage, and material wastage all add up to further drive up the costs. This is a significant problem in a sector where the margins have historically always been slim.

4)   Technology Adoption: Technology has the potential to be a significant differentiator in the construction industry today. This is especially true with global investors investing in India. Technologically efficient builders are attracting collaborations in the higher end and organizations that follow traditional methods are falling behind. Elements like Virtual Reality, AI, and, even, BIM are helping drive that change today, both in the commercial and housing sector. But a resistance to change and a fear of the unknown still holds back many from adopting the power of technology. 

5)   Other issues: For a sector this complex, the interface with a variety of local and federal government agencies adds a certain complexity that is challenging to address. There is a crucial need to improve transparency. The reduction of regulatory uncertainty and approval delays is essential. Creating a system for single-window clearance for approvals of infrastructure projects is a valid request of the construction sector. The sector cannot modernize if the government bodies that commission the work fail to adopt change. 

However, this scenario is changing slowly but steadily. And much more needs to be done.

To foster the emergence of world-class practices in the sector, India needs to invest more in research and development (R&D). Government sector support is crucial in this area. Especially in creating a pool of employable talent to drive tomorrow’s construction sectors.

On the cash flow side, in recent years, some steps have been taken by the Indian government to address some concerns. Credit enhancement helps, to a degree. The formation of infrastructure investment funds like REITs which take contributions from many investors and utilize the funding for a large number of framework ventures are also providing some funding avenues. But finance is always a bit of a chicken and egg story. As the sector does well, money comes in. As things stall, the money tends to dry up too. The only sustainable strategy would be to use money wisely! 

Of course, to really develop our infrastructure, the government needs to review issues of budget allocation, tax strategy, monetary incentives, and the synergistic participation of the private sector and public-private partnerships (PPPs). But structural fixes aside there’s a lot that’s in our own hands too.

On the part of the construction companies, we need to be open to adopting more technology. We must become more data-driven and nimble. Employing technology solutions like BIM to encourage better planning, drive better resource estimates and utilization tracking, and effective collaboration should be an obvious first step. In fact, I have appealed to the powers that be that they must make the use of BIM mandatory for public infrastructure projects to save money and time.

To my mind, a variety of behavioural factors can also help us meet the infrastructure ambitions of India. To name a few: 

1) Concentrating on accountability, integrity, and sustainability.

2) Flexible and adaptable operating models

3) An empowered and informed customer

4) Modern thinking by adopting new and different approaches and technologies that may have been developed and worked elsewhere but that would also work in India.

India still has a long journey ahead, but the right steps in the right direction are starting to be taken. The vision is that India’s infrastructure will help us bridge the gap between our ambitions and our present-day realities. And if these difficulties are solved urgently, the success story will be unique and worthy.