The Delhi Metro Project: Effective Project Management in the Indian Public Sector

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Case Details:

Case Code : PROM005
Case Length : 21 Pages
Period : 1998-2006
Pub Date : 2006
Teaching Note :Not Available
Organization : DMRC
Industry : Construction
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Everyone who has traveled by the Delhi Metro wants one in his or her city. Today, there is a national resurgence in public interest in urban public transport."¹

- Dr. Manmohan Singh, Prime Minister of India, in 2006.

"The successful implementation of the Delhi Metro project would not have been possible without timely availability of funds and the necessary political support. An equally important role has been played by the DMRC's corporate culture, which emphasizes that targets are most sacrosanct and our dignity is in performing our duty well."²

- E. Sreedharan, Managing Director, Delhi Metro Rail Corporation Ltd., in 2005.

Introduction

With a 6.5 km section of Line 3 becoming operational in April 2006, Phase I of the Delhi Metro³ project was nearing completion. Of the total length of 65.16 km of the first phase, 62 km had been completed and opened for service. This phase was set to cost Rs. 98 billion. As of early 2006, around 450,000 passengers were traveling by the Delhi Metro every day.

The Delhi Metro was meant to solve Delhi's traffic problems, which had become almost unmanageable. The first steps to build a metro system in the city were taken in the early 1990s. In 1995, the Government of India (GoI) and the Government of the National Capital Territory of Delhi (GNCTD) formed the Delhi Metro Rail Corporation Ltd (DMRC) under the Companies Act to construct the Delhi Metro.

Conceived as a social sector project, a significant portion of the project cost was funded through a soft loan provided by the Japanese government through Japan Bank International Corporation (JBIC)⁴. The rest was contributed by GoI and GNCTD through equity.

E. Sreedharan (Sreedharan) was appointed managing director (MD) of the DMRC and project manager for Phase I of the project in November 1997. Work on Line 1 of Phase I started in October 1998. DMRC formed consortiums to advise it on the project and to provide it with the latest technology. It also saw to it that the foreign companies worked with the Indian companies to ensure that the latter assimilated their expertise and technological know-how.

The DMRC faced any number of technical and systemic challenges during the construction of the metro.

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1] "PM lays foundation stone for Bangalore Metro," www.pib.nic.in, June 24, 2006.

2] "Interview with Mr. E. Sreedharan, Managing Director, Delhi Metro Rail Corporation Ltd," www.indiainfoline.com, December 19, 2005.

3] A metro system is usually an urban electric mass transit railway system independent of other traffic and with high frequency. A metro system includes elevated, at-grade, and underground sections.

4] JBIC was founded in 1961 by the Japanese government as the Overseas Economic Cooperation Fund (OECF). It served as the implementing agency for loan aid given to entities in developing countries. OECF generally gave low-interest (around 2.1%), long-term funds (about 20 years with five year grace period). In 1999, OECF was merged with Export-Import Bank of Japan (JEXIM) to form the JBIC.