Indian National Highways

Case Study

Development and Maintenance – The practices of Ministry of Surface Transport, A Government of India initiative

Based on research done by Amit Kumar at Ministry of Surface Transport, New Delhi, India. Dates spent: 15th December 2003 till 31st March 2004

Project Organization Background

The Government of India under the Ministry of Surface Transport (MOT) carries out the development and maintenance of national highways in India. The ministry is the nodal organization for the development of roads and bridges in the country. The total length of National Highways in the country is about 54,000 KM, for which the ministry is responsible for planning and development. The executing agencies are various state governments for the respective length of national highways falling under their State.  The projects are funded in the annual budget by the central government and allocated to the various state governments. The state governments undertake the execution of the works on National Highways through Public Works Department (PWD). PWD carries out the routine maintenance through their permanent work force and development works like widening by inviting bids from civil contractors.


The ministry undertakes the multiple projects of 18 months to 30 months duration.

Main Theme of this Paper

  • Ministry has faced time and cost overruns during implementation of highways projects. We would examine the organization structure of MOT and how creation of project manager organization resolved those issues.
  • Communication challenges dealing with stakeholders and project Organization.
  • The practices of the organization to handle highways development and implementation of projects.


Identifying Client

The client is the Government of India - Ministry of Transport. The director general – road development has a permanent role as client who reports to secretary of govt. of India and the minister. The director general is responsible for the development of national highways in the country

Key tasks involved in Highway Development Projects - WBS

  • Preparation of Feasibility Report.
  • Preparation of Detailed Project Report and Bid documents.
  • Cutting and removal of trees clearing work sites.
  • Removal and relocation of utilities from the site.
  • Acquisition of additional land for realignment or widening of road
  • Invitation of bids and their evaluation.
  • Award of work and fixing executing agency (contractor).
  • Handing over the site to the executing agency free of all obstructions.
  • Supervision and monitoring of execution work.
  • Quality checks to ensure that work is executed as per specifications.
  • Taking over of completed work from the executing agency.


Organization Structure – Ministry of Surface Transport

The organization chart of ministry of surface transport is shown in Exhibit I.  The MOT is responsible for development, planning and monitoring phases of the projects. The implementation phase is carried out by contracting agency under public works department (PWD).

The minister is responsible for approval of any project with consultation of the cabinet. The Legal Advice is sought from the ministry of law.

The executive sponsor and client contact for projects is the director general of road development. The director general is a functional role with responsibility for overseeing project development – highways including country planning and R&D.

Projects comprise 10 chief engineers and each chief engineer is allocated 2 superintending engineers, 2 executive engineers and 2 assistant engineers. A single project chief engineer is in-charge of national highway development in two states. Each state chief engineer has its own supportingstaff comprising superintending engineers, executive engineers and assistant engineers.








Executive Sponsor

Director General –Road Development

Reporting to Secretary- Govt. of India. Powers to sponsor the project.

Client Contact

Director General –Road Development


Program Manager

10 Chief Engineers – Projects


Reporting to Director General – Road Development. Project Conception, Feasibility studies, Costing, Planning, Contract Administration, Execution and Controlling.


One Chief Engineer – Project responsible for National Highwaydevelopment in 2 states.


Responsible for direct management of Chief Engineer – State PWD organization.


State PWD Chief Engineer has its own similar organization.



Project Manager

Chief Engineer - PWD

Project Team

Superintending Engineers – Onsite


Responsible for an Area in the State

Executive Engineers - Onsite


1 for each area, responsible for 1 or 2 projects.

Assistant Executive Engineers - Onsite


1 for each project.


Current MOT's Functional Project Organisation

The organization chart for MOT (Exhibit I) resembles a functional organization. However, the purpose of the whole organization is development of highways projects. Therefore, each component can be taken as sub-components of projects. The organization can be called as Project Oriented Organization. This structure is known for its rigidity and resistance to adjustment during the lifetime of the projects. Hence, the structure has its inherent problems of bureaucracy and is very hierarchical.


We will now examine effectiveness of MOT’s management structure in the next part of this paper.



Challenges of Current Project Management Structure of MOT – Project Development Stage

  • There are layers of management between the client and project. There are three organizations – MOT, PWD and Contractor Agency. MOT and PWD organisations are bureaucratic and no single official is fully responsible for the projects. This makes decision making difficult and may delay the project schedule.
  • The ministry of transport conducted the development of the project and gave execution to public works department which included supervision and quality control over works done. There was no direct control exercised by the project chief engineer (MOT) over state chief engineer (PWD). The project chief engineer (MOT) could only persuade the matter. The quality control procedures were independently structured by PWD and may not be fully in conformance with MOT requirements.
  • Cross-functional teaming was not possible and hence no team spirit when a project was undertaken.
  • Because the MOT is responsible to provide support to executing organization such as land acquisition, environmental clearance, relocation of facilities on construction site, before contractor can begin the works, any delay by the MOT in signing off this work risks the project falling behind the schedule.
  • The project chief engineer (MOT) also has functional responsibility to provide reports to the Parliament. This in itself is very much time-bound and becomes a priority because the delay is almost inevitable. Hence, the project lacks focus, and drifts.
  • The projects have a strong social benefit focus. Every project is selected by considering Marginal Social Benefit/Marginal Social Cost ratio. SIRR (Social Internal Rate of Return) > interest rate or cost of capital needs to be satisfied in project selection.
  • The delays in decision making at various levels of MOT structure causes cost overruns as material and labour prices change very frequently due to instable market economy of India. Suppliers can change prices and disagree to supply at the original agreed prices as per contract. This is identified as a major risk in the projects undertaken by MOT.
  • The projects also experience contractual disputes between state PWD and contractor agency. The chief engineer, MOT provides supporting staff to initiate a meeting with all parties concerned and resolve the dispute.
  • MOT is a functional organisation with project focus. The workforce is highly educated in technical areas, however lacks Management expertise.

Challenges of Current Project Management Structure at State PWD – Project Execution Stage

  • Immediate project management at PWD needs support from MOT regarding availability of the works site free from obstructions. The removal and cutting of trees is done by ministry of environment and forests. PWD has no influence on the ministry of environment and so delays here halt the whole project.
  • The removal and relocation of utility services like electric transmission lines, poles, water pipes and sewerage involves local bodies and often delays occur in finalizing the design, re-location plan and cost estimation. Approval from local bodies can be time consuming.
  • PWD may find scope and specifications needs to be changed in the light of local conditions. These changes need to be authorised by the client organization. This initiates a design re-consideration, investigations and field surveys. But as the PWD has no authority to change the scope of the projects, there is more delay in decision making and the works stop at the site.
  • Lack of feedback regarding issues of quality to MOT. Contracts include clauses for feedback from PWD and Contractor Agency.


Transition to Pure Project Organization (Through the Act of Parliament)

To overcome the difficulties that accounted for project failures, the ministry of transport has set up a separate project organisation – National Highway Authority of India in 1986. The NHAI is purely responsible for development and implementation of highways projects. This new organization is autonomous and empowered to undertake the execution of any project in any state.

The organisational structure of NHAI is given in Exhibit II. NHAI constitutes board of directors that includes members from Engineering, Finance, Administration, Technical, and Business Development areas.


Organisation structure of NHAI – Roles and Responsibilities

Chief General Manager (CGM)


He is the nodal Project Manager handling multiple projects. He has limited functional responsibilities and is more project focus.

Project Director

He is an Onsite Project Director reporting to CGM and controlling Contracting Agency issues.

Supervision Consultants

Supervision Consultant is an Engineer who is employed by NHAI, but has an independent organization for a single project. After the completion of the single project, his project team disbands.



As exhibited in Exhibit II, NHAI organisational structure eliminates public works department and introduces Supervision Consultant/Engineer Project Based Organisation. This model more resembles a pure project organisation approach in dealing the highway projects. MOT realised that if supervision consultant organisation was not appointed as an independent entity, the organisation of the chief general manager would expand, become difficult to manage and expensive to run. However, supervision consultant organisation is temporary and disbands after the project is accomplished. The organisation structure of supervision consultant is shown in Exhibit III.


The supervision consultant has been delegated the following tasks by the NHAI, reporting directly to NHAI chief general manager and also to NHAI onsite project director.

  • Review of detailed project reports during execution.
  • Supervision of execution of works undertaken by contracting agency.
  • Monitoring and controlling of work.
  • Certification of payments made to contracting agency.
  • Decision making regarding routine changes during the execution of works such as increase or decrease in the quantity of any item of works. However, he needs to refer back to NHAI for the approval in case decisions have to be made in regards to scope change, or variations having major changes not included in schedule of quantities of work.

We shall now see how NHAI structure has improved the problem faced by MOT of time and cost overruns in the projects.


  • Project Manager – Chief General Manager has full line management authority over the projects. He is like CEO of a firm dedicated to carrying out projects. While in MOT, decision making was escalated through the hirerachary causing delays.
  • The lines of communications are shortened. Decision making in terms of scope, specifications and cost changes are done by Project Manager – Chief General Manager, NHAI. In case of MOT, no such powers existed with Public Works Department who actually carried the execution responsibility.
  • Since projects are ongoing, NHAI is able to maintain permanent project focused experts and are able to develop skills in specific technologies.
  • NHAI is able to have a faster decision making life cycle, because:
  1. The need for change in scope is seen by Contracting Agency who communicates to Supervision Consultant.
  2. Supervision Consultant communicates to Onsite Project Director.
  3. Project Director communicates to Chief General Manager, who now delegates his own team – General Manager, Deputy General Manager and Supporting Staff for further investigation in the matter.
  4. The results will then be passed to Project Director Onsite, who can then take action.

Decision still has to move through various levels which can cause delays.

  • Motivation is high in NHAI as the each individual is appointed on the basis of project focus. Mainly the techniques of empowerment and intrinsic rewards are followed. Any extrinsic rewards like bonus or pay package is not allowed. Promotions are attached with the performance and hence become the major motivational aspect.
  • The structure is flexible and adapts to the changes and easy to implement.
  • Supervision consultant organisation is a temporary organisation and can disband. Because projects are ongoing, hence they can be re-allocated on new projects. NHAI can use multiple supervision consultant organisations since there are multiple projects and this leads to duplication of effort.


Recommended further improvements within NHAI Project Organisation

  • Use of steering groups– As mentioned previously the NHAI experiences delays in communication and slow decision making due to a hirerachary. A steering committee involving members from Contracting Agency, Supervision Consultant Organisation, Chief General Manager and Project Director – Onsite could be formed and regular fortnightly meetings arranged to discuss progress in project/projects. Consideration can be given for virtual meetings using video conferencing. This would reduce time overruns that in turn would avoid cost over runs.
  • Management Training – NHAI has highly qualified staff technical discipline. They hold Bachelors/Masters/Phds in Civil Engineering, however they often lack in management skills. The programs of project management education should be imparted to the staff of NHAI as well as MOT.
  • Reward system – a step towards team motivation –One of the hardest processes to instate at NHAI is a suitable reward system for project team members. I investigated that winning the bid involves illegal practice of bribery paid to approval committee offered by contractor organisation. It is one of the very common practices in Indian government organisations. The Ministry of Transport is looking at ways of overcoming this problem by introducing a reward system which would pay bonus/commission linked to fair practice and achievement. A separate steering committee would be formed to control illegal practices.
  • Organisational Project Alliance - Delays in the execution phase of  highways development projects were due to failure to liaise between local authorities who have responsibility for removal of trees, relocation of utilities like electric transmission lines, poles, water pipes and sewerage,NHAI is considering forming a relationship between these organisations. NHAI wants to involve officials from these organisations as project stakeholders. This would enable all parties to commit to working closely together with overall benefit to the project.
  • Introduction of Information System for reporting, monitoring and controlling the project – As I examined that there has always been the danger of scope creep, cost overrun and schedule overrun. NHAI does not have any proper control system. The only documentation they maintain is bid and contract documentation, design and specification documentations relating to design phase of the project, bill of quantities documentation and project cost bills. Payments to various contractor agencies are based on lump sums and/or progress payments. The NHAI also practices BOOT projects.

NHAI requires the establishment of proper project procedures for handling day to day tasks. Configuration Management procedures also need to be adapted. Hence, a properly structured administrative and control system need to be introduced in NHAI.

I introduced a brief overview of PMBOK and PRINCE2 methods practiced here in United Kingdom for large government projects. NHAI and MOT officials were delighted to see PRINCE2 methods, and are considering modifying and adopting similar standard as per Indian circumstances. There is a possibility of bringing over NHAI project managers to United Kingdom for training in PRINCE 2 methodology.






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