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Fundamentals of Project Management

Notes 2. Regional utility board accessing capital markets through a state infrastructure fund in
Bangalore, Karnataka.
3. Concession contract for private sector delivery of bulk water supply in Tirupur, Tamil
Nadu.
4. Performance-based management contracting with private firms for water and sewer
services in Navi Mumbai, Maharashtra.
5. Corporatization of public sector agencies in the states of Maharashtra and Orissa.
6. Unbundling solid waste management services for assigning individual components to
private companies and public agencies in Asansol and Durgapur, West Bengal.
The most important lessons of this pilot experience were highlighted in the “Key Things
to Remember” section at the beginning of this chapter. No matter what institutional
arrangement is chosen, local government needs to be more involved in infrastructure to
make urban service delivery accountable to city residents and local politicians. Politics
can play both negative and positive roles in the process, and systems need to be in place so
that political pressure helps improve service delivery.

For this reason, (1) stakeholder participation, with a focus on social inclusion; (2) market-
oriented design; and (3) local government accountability are all important governance
features of developing commercially viable projects. But without technical capacity, local
and state agencies cannot be expected to replicate the pilot activities on a larger scale. To
facilitate this replication, as an essential first step, the FIRE (D) Program created several
project development tools.
7. Financial Prefeasibility Study: To help identify a project concept, and to rapidly assess
whether it can be developed in a commercially viable format, the FIRE (D) Program
created a concise toolkit that provides a standardized approach to conducting prefeasibility
studies, along with specific considerations for water and sanitation projects.
8. Market Demand and Willingness to Pay Study: To determine the preferences of residents,
how they value improved services, and what they are willing to pay for them, a market
demand study needs to be conducted. This study surveys various customer classes and
helps establish detailed tariff categories and rates.

9. Appraising Commercial Viability: In partnership with financial institutions, the FIRE (D)
Program established an appraisal format that incorporates the project concept and market
demand study to assess risk. Here, the focus is an institutional credit assessment and a risk
mitigation plan.

10. Environmental Impact Assessment (EIA): It is often assumed that environmental
infrastructure projects have only positive impacts on the environment. However, large-
scale projects can be very disruptive to the environment in both the short and long terms.
An EIA develops strategies to mitigate negative externalities and encourage positive
design elements.
11. Procuring Urban Services: It is important that local governments can access the technical
support they need to augment their internal capacity. Procurements utilizing the best-
value-for-money approach help ensure access to the best services at the right price.
12. Contract Management: Even if local governments decide to procure external support for
developing infrastructure and managing services, in-house staffs still need to be heavily
involved in the work to ensure that all parties are adequately fulfilling their obligations.
Good contract management helps resolve problems as they arise and keeps the work
progressing in the most efficient and effective manner

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