India wins if Bharat wins

BharatNet Project

By Dr. Jaijit Bhattacharya

Learning from the experiences of National Highway Authority of India (NHAI), the BharatNet project for laying broadband across 2.5 lakh gram panchayats needs to incorporate the strategies that made NHAI successful.

Mahatma Gandhi once said that “Real India Lives in Villages”. In an era when broadband has become a necessity, connecting the villages with broadband is like providing food, clothing and shelter to villagers. The Government of India is working to bring the villages at par with cities by providing them with broadband.

The BharatNet is the Government’s flagship initiative for digitally connecting India. It is a grand project that is needed by the nation, as was well demonstrated during the Covid pandemic. It is indeed a no-brainer that not having connectivity to the last mile in India, would be a major hurdle for India’s development and progress in the digital age.

The timely implementation of BharatNet, in an intended way is important to achieve the desired vision of Digital India. The success story of any project is based on the robust framework developed for its timely and cost-effective implementation to achieve the desired outcomes.

A lesson learnt from the implementation of the BharatNet I and II was that execution needs to be strengthened. BharatNet in its third avatar needs joint ownership, or sharing of infrastructure amongst Government and Private sector. In the past there were mechanisms that were sparsely leveraged , and project execution faced numerous challenges and hurdles. More importantly, BharatNet ended up having networks whose quality and reliability were not aligned to market requirements. One of the key reasons for such quality and reliability misalignment was due to the quality of upstream fibre and their maintenance levels.

Keeping in view such learnings, it may be relevant for the appropriate government agencies to consider an enabling contractual agreement that has sufficient risk mitigation provisions to motivate bidders to participate in the bidding process of such a prestigious project.

It turns out that one of the key reasons for the delay in execution of BharatNet Phase-I and II was the non-availability of a pre-approved contingency budget to take care of additional requirements established during the survey, re-routing and other changes. To manage these unanticipated changes, a robust change management process with pre-defined process timelines and approving authorities needs to be clearly laid out in the contractual agreement.

Based on past learnings and taking a leaf out of the successful NHAI road infrastructure implementation, it would be helpful to have a 15%~ 20% additional contingency pre-approved budget for the unforeseen changes in such a project of national importance. This will speed up the implementation of the project in a time-bound manner.

Penalty provision for delayed completion of the construction activities plays a crucial role in risk contingency loading in bidding price and the bidders’ offering an attractive price. While it is important to keep stringent penalty provisions to ensure the vendor takes implementation timelines seriously, it is equally important that the penalty provisions are balanced to protect the interest of the vendor, such practices are already prevailing in NHAI and other PSU Tenders.

To strengthen the implementation process, the implementing agencies should also adopt the principles related to efficient execution of the projects. It is critical to count project timelines starting date only when the physical survey is approved, the implication of the same on BoQ (Bill of Quotation) is agreed, PO (purchase order) for the extra work is issued and all RoW (Right of Way) approvals are in place. Also, it is necessary to have a clearly defined start date definition in the agreement, with fulfilment of mandatory requirements / preceding conditions prior to declaring the project start date. This helps to maintain a similar understanding of both the parties of the contract about their obligations.

Time is always an essence for every national project. Early completion of the project activities and the start of the commercial operation date will fetch significant benefits for the stakeholders. To add motivation for early completion of a project, NHAI adopts the strategy of incentivizing the contractor for early completion of the project. It would certainly help if the provisions for incentivizing the contractors for early completion is incorporated into the contractual agreement for the BharatNet project, which was not there in the earlier tenders of BharatNet.

Assured cash flow for project activities is a vital aspect for successful implementation. Therefore, the contractual agreement needs to have supporting clauses for secured payment terms with fixed timelines for the payment to be made by the procuring agency. These provisions of secured payment terms are already in practice in NHAI contracts and it would certainly help BharatNet if these provisions are adopted in the BharatNet procurement agreements also.

Project success is driven by timely performance of the reciprocal promises by both the parties. Failure of one party may affect the cost of another party’s obligation. To mitigate this risk a mechanism needs to be in place to safeguard the contractor’s cost of implementation of the project for the delay of handing over of the site. Thus, SLA’s (Service Level Agreements) need to be there from the procuring agency also.

Clearly, NHAI has been a success story, which took two decades to fine tune and made efficient and effective. It would certainly be worthwhile for the procuring agency of BharatNet to borrow the relevant best practices from the NHAI contract agreement and tender itself, and also adopt the project implementation best practices of NHAI.

With the Government playing an increasingly important role in the deployment and maintenance of this critical network, significant reforms are necessary for faster deployment and maintenance of the infrastructure that is capable of high SLAs (Service Level Agreements). The Government needs to come up with an enabling procurement process, an on time payment mechanism and a strong governance model to ensure the private sector and the Government are jointly accountable for the network and its quality and ensure maximization of the utilization of the network.

This article first appeared in ET Government,