Saturday, July 18, 2009

CAG Audit of Delhi Metro

Delhi Metro's iconic CEO, E Sreedharan, tendered and withdrew his resignation in quick time following the recent collapse of a Delhi metro bridge. The CAG Audit of the Metro, tabled a year after it was submitted, is damning in its contents. Although the Audit was of Phase I and not the ongoing Phase II, the report suggests that some of the problems that have arisen at the Metro are the result of flaws in procedures.

A comptroller and Auditor General (CAG) audit report has found that the Delhi Metro Rail Corporation scaled down testing requirements in four contracts as these were falling behind schedule. ...

The report also says DMRC has not been put under direct control of any administrative ministry. “This model,” the report points out, “presents ambiguity relating to coordination and control by the executive government and the proper forum for legislative accountability.”

The bidding process was also found to have flaws: out of 13 “design and construct” contracts reviewed in seven cases, the estimates were revised or approved after the opening of financial bids, the CAG report says.

So, what does the Delhi government propose to do now? I am in no position to comment on the way the Metro is proceeding. But, as a B-school prof, I will say one thing: there is something terribly wrong with a situation where a 77-year old engineer is considered indispensable.


Anonymous said...

The CAG report casts doubts on the safety and design engineering management plans and it would be a wise move to plug holes in these before proceeding further with the execution.

PD said...

I have serious doubts on the skills available with agencies like CAG and CVC to appraise various projects.

Secondly, these agencies are wiser in hidsight. An organization which has to DELIVER cannot wait and has to take risks inevitably.

Thirdly, I do not understand the idea of sensationalising issues based on CAG or CVC reports. I believe that there is an urgent need to debate the very process of appraisal undertaken by CAG and CVC. Since you are professor at a pre-eminent Management Institute, can you tell us whether any study has been undertaken by anyone on this issue. All inspection and investigation agents only try to second-guess the objective realities as they existed at the time of decision making and they are not equipped attitudinally to address this issue.

Another issue: Do CAG and CVC even know about TCO (Total Cost of Ownership)? And mind you, TCO include cost of foregone opportunity!

Why should CVC have jurisdiction on commercial organizations even though govt may have a majority stake. Can't the organizations decide what is in their best interest. Would Reliance or Tata or Birlas wait to issue elaborate RFPs where business opportunity is knocking on their doors and such business opportunity may evaporate soon and a competitor may beat you to the market?

gaddeswarup said...

I attended about two years ago a function honouring Sri E. sridharan in Vijayawada:
As the report said:
"It was ensured that there were no clerks or peons in the system to the extent that officials of the rank of joint secretary to the Government had to fend for themselves, which worked wonders in avoiding corruption and enabling fast-paced decision making, he added."
I also remember him saying that the contractors were paid 75 percent as soon as they submitted the bills and the rest with in 10 days. He thought that paying the contractors late and the clerical work involved led to lot of delays and corruption and that led to chhosing the procedures.
perhaps comparing it with the kolkata Metro may indicate the significance of what Sridharan achieved.
I get the impression that in India despite corruption, individuals with good track record and reputation for honesty get a lot of leeway and sometimes this does lead to mistakes, honest or otherwise.

K.R.Srivarahan said...

This is a bold expression of a contrarion view, objectively academic and therefore welcome. But, why the politically incorrect reference to Mr.Sreedharan's age? Would the indispensability be acceptable if he were say 40 years of age? Somehow anti-geriatric bias is ingrained in us.

Anonymous said...

It is unfortunate that Mr.Sreedharan has assailed CAG's report, saying that the government auditor's job is to find fault, but it has no responsibility to deliver. Of course, yes. An auditor has necessarily to be a watchdog and a critic. Otherwise, he is abdicating his responsibility. Mr.Sreedharan is always welcome to prove why the CAG's observations are misplaced.