From projects to assets, and towards sustainability

From projects to assets, and towards sustainability

Why do we plan and execute projects? Why does anyone think of any project at all? What makes public and private bodies invest money into projects? All this is done, to create assets for ourselves, assets which give us value through their useful lives, and thus, give us returns on our investments. So, quite clearly, a project is not an end in itself, the end really is the asset that the project is striving to set-up. And, the most important thing to note, is that this asset has to serve its intended purpose, and must be "sustainable" till the end of its normal life term. These two are not “or” conditions, but are “and” conditions – both have to happen. A project manager like me, may pat himself on his back, and give a few twirls to his or her(?) moustache, having successfully planned and executed a project, but the reality is that the great battle (of sustainability) starts henceforth.

I have very intense views on sustainability of assets. About 20 years back, on my way to my workplace, I used to be treated everyday to the forlorn sight of an abandoned, dilapidated three-storied building with a largish compound, and boundary wall, complete with a gate, etc. The building, which evidently was originally nicely planned, and was once beautiful, was now devoid of plastering, brickwork almost crumbling, all doors and windows stolen, and shrubs growing all over. There was a huge signboard near the gate, pompously announcing that this big charitable hospital(?) was so kindly built by the Lions Club of so and so, and proudly dedicated to the citizens of the city. In fact, the only thing well maintained in the whole precinct was this proud and comical billboard. I am giving you such a graphic description of this image, because this image left an indelible mark in my mind, making me promise to myself, that I shall never in my life do a project, or even help to do a project, that creates unsustainable assets – simply because, there is no point in doing it. I have very very strong feelings about this abject futility.

Perhaps the concept of sustainability, in this context, needs to be explained a little more in detail. Let us take the example of this failed hospital. It could well be, that the project team felt happy when they presumably completed this hospital in time, and in all likelihood, the hospital started well, and initially even served the people as expected. I imagine that no one gave a thought to generation of resources needed for upkeep and maintenance and running expenses of the charitable hospital. At some point in time, the hospital must have become unsustainable to run, and folded up! All the capex money spent on creating the asset was down the proverbial drain, only because nobody thought of the opex, where it will come from. There is no logic whatsoever in creating assets of these kind.

The concept of sustainability originally argued to bring about a balance among the three symbolic pillars of people, profit and planet. A project (asset) will be sustainable when it makes economic sense (viable), when it adds value to the society (useful) and last, but not the least, it is not harmful to the environment. So, clearly, it is a concept which transcends the yardstick of viability alone.

According to my experience, it is mostly the public projects which become unsustainable, because of lack of vision of our public leaders and their inability to think beyond the populist actions of foundation stones and inauguration plaques. Examples are strewn all around us. Look at the numerous vandalised bus shelters, unkempt office buildings, ill-maintained roads, cracked bridges and culverts, saplings destroyed by cattle, pilfered waste bins, and many more such painful items. These are strikingly hard-hitting examples of lack of protection, lack of upkeep, and lack of maintenance – utter lack of any thought whatsoever, beyond spending the capex to just create the assets. Recently, I learnt from a newspaper article, that 30 to 60 per cent of all medical devices (like machines for x-ray, ultrasonography, CT scan, MRI, ECG, EEG, etc.) installed in State and Central government hospitals in our country, valued at approximately Rs 10,000 crore, are lying out of order and defunct*. Why am I not surprised? From another newspaper report, we gather that a spanking new Railway Nursing College building constructed in Taratola, and already abandoned because of unviability, has now become a playground of street urchins by the day, and a den of criminals by the night. Are you shocked? Don’t be, because this is more the rule, than an exception.

Franck Boston

Going beyond the process of constructing an asset, we have to spare a thought regarding how the asset will be :

  • Protected

  • Maintained

Let us focus on maintenance, to begin with. As an empirical thumb rule, a civil construction like a building needs 2.5 to 5 per cent of its capital expenditure every year on an average, for adequately carrying out maintenance activities like repairs, water-proofing, grouting, and painting as per recommended frequency. For an industrial asset like a factory, which also includes electrical and mechanical machinery, this maintenance outlay may be even higher, say 5 to 7 per cent of the capital cost per year, because this will include the cost of spares as well. Over the long life-span of such assets (may be 20/30 years), these maintenance budgets are also expected to escalate due to inflationary impact. Many project owners do not really care about all these calculations and provisions, because, we have this inner affinity to short term results rather than long term outcomes. We love foundation stones and inauguration tablets, remember! The end-result is inevitably similar to that of the charity hospital.

We have not learnt. We are repeating these mistakes. I am told that six lakh toilets have been built already, and 10 crore of them will be built eventually, as part of the Swachh Bharat Abhiyan. At the rate of even a measly Rs 10,000 per year (Rs 800 per month only) that may be needed to properly maintain these toilets, these 10 crore toilets will need Rs 1,00,000 crore (Rs 1 lakh crore) per annum, every year. Such a noble and timely thought is likely to fail, if the government does not have the wherewithal to allocate these funds on ongoing basis. We hope that this great initiative, which has the potential to transform India, goes beyond mere symbolism, and attains sustainability. The early signs are not so good.

Simplistically speaking, a project lifecycle has three distinct phases, planning, execution, and deployment or commercialisation. Sustainability as an attribute as discussed here, clearly applies to this third phase, when the asset starts getting used by stakeholders. My argument is that, project managers must learn about these challenges , which, in the normal course, would seem to be outside the scope of execution. This is because, knowledge about sustainability aspects of a project/an asset will empower the project manager to also informally validate the meaningfulness of the project in her mind, and be convinced about its longevity.

- SUMIT BANERJEE

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