Introduction

Urban transport is crucial for supporting a city’s expansion and growth through spatial distribution of population. Promoting sustainable transport contributes to environmental protection, economic growth, and energy security. Rail transportation scores over road transportation in terms of cost, durability and lower energy consumption. However, a metro project is capital intensive with long gestation and payback periods and high operation and maintenance cost. Therefore, investment requirements for a metro system cannot be individually met by state or central government funding. Financial support from private sector entities, financial institutions, multilateral development agencies and others is imperative.

Public–private partnerships offer several benefits which are acknowledged by governments from across the world. However, international experiences with PPP have been mixed, and many issues can impact the successful implementation of such PPP projects. The 12th five-year plan states, ‘Given the huge requirement of capital and willingness as well as capability of the private capital to undertake urban transport project, promoting PPP could be a key priority. All metro projects that are in high-density corridors and are viable on their own {with admissible viability gap funding (VGF) and real estate development on land ordinarily required for the project} may be encouraged under PPP mode’ (12th FYP 2012).

However, a glance at the ongoing metro projects in various Indian cities reveals that other than Hyderabad and Mumbai, no other city has considered PPP for implementing metro project. Delhi airport metro express line, the first PPP metro project to become operational in India, has not been a success. The metro track planned/constructed under PPP/private comes to only 110 km out of total approx 900 km, i.e. just 12.3% by track length and 9.3% by project cost.Footnote 1 This is an odd situation where state and central government budgets are competing with priority sectors such as health and education. A number of cities are planning metro projects and private capital has the capability and willingness to undertake such projects but somehow the public–private partnerships are not materialising.

It has been argued that a public–private partnership that has been well structured can deliver better results efficiently than government sector and for this a clarity and focus on what contributes to a successful PPP metro project in Indian context is a prerequisite. The present study aims to contribute to the existing knowledge bank by analysing the critical success factors and their relative importance in influencing the success of PPP metro projects in Indian context.

Construction and operation of a metro on PPP framework is a huge project that is technically and managerially complex and involves number of actors in several activities right from planning to selection of concessionaire and execution. How well the actors play their role and what process or set of processes are followed have an impact on the performance and success of the project.

Progress of Hyderabad metro is keenly watched as it is one of the largest metro rail projects attempted on PPP framework in the world. This is also likely to be the third Indian metro to become operational in the year 2017 after Bangalore and Kochi. This paper studies Hyderabad metro project from the perspective of factors that contribute to the success of the first two stages of a metro projectFootnote 2 using SAP–LAP analysis.

Methodology

A pilot study was conducted through a set of structured questionnaire given to selected 31 experts in the field of PPP and rail-based mass transit system to validate (through content validity and reliability tests) the CSFs identified through literature survey covering over fifty research papers. Eighteen CSFs identified and validated through pilot study were sent to 124 respondents having some knowledge of PPP and railway projects. Responses received were subjected to factor analysis and hierarchical cluster analysis to synthesise CSFs into seven macro-factors as shown in Appendix (Exhibit-1). The case has been examined using SAP–LAP framework to analyse the macro-CSFs in real-life settings of Hyderabad metro. Feedback was gathered through semi-structured interviews of key players working in the field on how actions taken by them on various critical success factors contributed to the progress/success of Hyderabad metro in the first two stages of the project (performance indicators in the three stages of a metro project at Appendix-Exhibit-2) and what lessons have been learnt.

SAP–LAP Analysis

SAP–LAP framework is a technique, which can be used for case-study-based research for better insight (Sushil 2000a, b). Three basic entities in any context, viz. a ‘situation’ to be managed, an ‘actor’ or group of actors who manage or deal with the situation and a ‘process’ or processes, are deployed for desirable outcomes. Actor has the freedom of choice to exercise in a given situation. SAP analysis leads to LAP, i.e. learning, action and performance (Fig. 1). SAP–LAP framework can be applied successfully to both generic and specific models for managerial inquiry. Both qualitative and quantitative methods can be used to develop these models.

Fig. 1
figure 1

Source: Sushil (2000a, b)

SAP–LAP model of enquiry

Full size image

SAP–LAP framework has been widely applied by various researchers in analysing various management problems related to strategy, supply chain, performance management, e-governance and other organisational issues (Sushil 2001; Goel et al. 2012; Nasim and Sushil 2014; Yadav and Sushil 2014; Kabra and Ramesh 2015). Recently, SAP–LAP framework has also been attempted for theory building, e.g. as a supporting framework for building a theory of flexible systems management (Sushil 2016) and more recently in the context of disaster management (Sushil 2017). In this study, SAP–LAP framework has been developed by defining the SAP elements and exploring how these elements have unfolded in the case of Hyderabad metro.

The situation during bidding and contract stage and during implementation has been analysed in the context of identified critical success factors. A questionnaire (“Appendix, Exhibit-3”) was structured to discover the role of various factors both before the contract stage and during implementation of the project and how various actors have played their role in deployment of processes for the progress and success of the project. For this study, different actors in public and private sectors involved in the implementation of Hyderabad metro were personally interviewed. The exercise makes an attempt to understand the viewpoint of an officer as he proceeds in a project and understands its nature, components and their interrelationships (Leedy 1977). Managers when asked questions relevant to their ongoing project work are more willing and forthright in offering their views (Saunders 2007). A verbatim transcript was prepared immediately after the interview was based on detailed notes taken during each interview lasting from half to one hour.

A 5-point Likert scale was used to construct the assessment matrix with values based on average of responses. Qualitative evaluation of experts was used for the development of assessment and cross-interaction matrices. Self-interaction and cross-interaction matrices were constructed to establish interrelationship among SAP elements.

Literature Survey

For a better understanding of PPP concept in the context of urban metro, available literature and case studies were reviewed. Salient points emerging from this exercise are summarised in the ensuing paragraphs.

Critical Success Factors in PPP Metro System

Various researchers have identified critical factors in PPP projects although such studies are rarely found in a situation of a metro project. The insights gained during literature review helped in identification of eighteen critical success factors that influence a PPP metro project.

There are basically two drivers for PPPs. Firstly, PPPs make it possible for the public sector to tap the technical and managerial expertise of the private sector to deliver public facilities and services more efficiently and productively than the public sector alone. Secondly, a PPP is structured so that capital investment made in the creation of that facility does not result in debt burden on the part of the public sector (Virginia et al. 2012).

According to the World Bank PPP reference guide, the following points are the essential components of a PPP framework:

  1. a.

    Policy: A manifest of government’s intent to promote PPPs for creation of infrastructure for public services, defined scope and objectives along with broad guidelines for the implementation of a PPP programme.

  2. b.

    Legal framework: PPP programme of governments should be backed up by appropriate laws and regulations which include specific legislation for PPPs, laws and regulations governing public finance management and sector-specific laws.

  3. c.

    Processes and institutional responsibilities: Defined principles for identifying projects to be taken up on PPP, procedural steps for development, appraisal and implementation, and the roles different public entities will play in the process.

  4. d.

    Public financial management approach: Measures to monitor and control public risk in a PPP project including public share of committed financial resources while ensuring that PPP projects are not held up for want of government’s share of funds.

  5. e.

    Broader governance arrangements: Elected representatives and other public entities that participate in the PPP programme must be held accountable for the decisions and actions that affect the implementation of PPPs (World Bank 2014a).

Infrastructure projects in transport sector, especially in rail-based MRTS, are larger and more complex in terms of diverse activities in the contractual arrangements and multiparty transactions. These projects require sound technical, managerial and project expertise and huge investments by private parties. For these reasons, standard PPP contracts/models are not applicable directly to rail sector. In fact, the models in urban metros are still evolving (Gangwar and Raghuram 2013).

John F. Rockart and the MIT Sloan school of Management first introduced critical success factors in 1979. Rockart related his critical success factor study to ‘success factors’ introduced by D. Ronald Daniel in 1961 and defined as ‘three to six factors that determine success….key jobs [that] must be done exceedingly well’ (Gates 2010). Since late nineties, CSF methodology has been applied to PPP projects. In 2005, Zhang conducted a research study which categorised 47 identified CSFs into five macro-factors; ‘viability of the project’, ‘proper risk allocation’, ‘good financial package’, ‘technically strong reliable consortium’, and ‘conducive investment climate’ (Zhang 2005). Ismail while working on PPP project in Malaysia has identified factors such as ‘identification of right project’, ‘strong consortium’, ‘attractive financial package’, and ‘community support’ (Ismail and Ajija 2013).

Hardcastel et al. and Li distilled nineteen CSFs based on literature survey out of which eighteen were applied to study PPP/PFI construction projects in the UK to examine their relative significance. The authors grouped these CSFs into five groups applying factor analysis; ‘government guarantee’, ‘effective procurement’, ‘technical feasibility of the project’, ‘economic environment’ and ‘financial market availability’. Their findings revealed that ‘a strong consortium’, ‘allocation of risk to the party that is in best position to manage the risk’ and ‘financial market availability’ are the three most important factors (Hardcastle et al. 2005; Li 2005). The other notable studies on CSFs in PPP projects available are by Chan (2010) and Famakin (2014).

Not much literature is available on the application of CSF methodology for rail projects. However, a research paper by Smith and Gannon published by University of Leeds is relevant to the present study. Authors used CSF methodology based on seven light rail transit (LRT) cases including two tram links built in the UK since 1980, identified 23 CSFs and distilled them into seven broad headings applying analytic hierarchy process (AHP) based on expert opinion survey. In the opinion of authors, ‘political support’ is the most significant success factor for LRT projects (Smith and Gannon 2008).

Recently, a paper (Kulshreshtha et al. 2016) has reviewed the international and Indian experience with PPP metros and has explored the research conducted on critical success factors (CSFs) that are necessary if a PPP framework is to be applied to urban metro projects in India. Authors while identifying 18 CSFs by previous researchers, grouped under internal and external factors, argue that the nature and characteristics of PPP vary across countries and sectors. In the context of new found interest for metro system among Indian cities as a solution to ease road congestion and improve urban mobility, the authors recommend additional research on CSFs contributing to the success of a PPP metro project to establish better insights into PPP models that could be adopted by Indian mega cities for the implementation of urban metro projects with minimum constraint on budgetary resources.

What Defines Success of a PPP Metro Project?

A study conducted by London School of Economics worked on successful transport projects comprising 19 cases spread over 13 locations; many of them rail projects. The objective of the study was to analyse how identified key factors impacted the success of the project during its three stages; financial success (outcomes v/s forecasts made at the beginning of the project), policy success (expected or projected outcomes in terms of economic, social development and environmental impacts versus the actual outcomes) and durability success (service delivery in the long run) (Allport 2008; KPMG 2010).

According to World Bank (2007), a successful PPP unit is one that contributes to the implementation of a successful programme. The following criteria can be used to define a successful PPP programme:

  • Delivery of services as per the contract.

  • Project stands the Value for Money (VfM) test on net present value basis where lifetime costs are taken into account including those related to risks undertaken.

  • Implementation of the PPP programme has followed legal and regulatory provisions as applicable to the country and the industry and demonstrated good governance principles, be it in procurement or fiscal prudence.

Usually, a PPP project has many qualitative objectives in addition to quantitative ones. The qualitative assessment is, therefore, equally or more important than the quantitative factors. A list of criteria is set to evaluate options under a project through multiple criteria analysis (US Department of Transport 2012). Factors that may influence the viability of the project are identified through qualitative assessment under value for money analysis.

The criteria suggested by KPMG were used in a study of PPP projects in metro rail in Latin America. Arguing that the terms ‘financial success’, ‘procurement success’ and ‘durability success’ used in KPMG study basically assess the economic viability of the project at three stages of the project; preparation stage, implementation stage and post-implementation stage, the author coined the terms ‘contract success’, ‘implementation success’ and ‘post-implementation success’ to evaluate the project through the three stages of the project (Millones 2010).

Evaluation of a PPP programme is performed keeping the promoter’s or project awarding authority’s viewpoint. The criterion is whether the objectives set before the start of the programme have been achieved. Both quantitative assessment based on actual outcomes against original forecasts and qualitative assessment including stakeholder perceptions are integral part of such an evaluation (Allport 2008). Appendix (Exhibit-2) gives the criteria of success or performance indicators for a PPP metro identified based on literature survey.

Research Gap

The following gaps were observed as a result of survey of literature on the subject:

  • Barring few studies, not much research has been conducted, in India and abroad, to identify critical success factors in public–private partnership projects in urban transport, especially rail-based urban mass transit systems.

  • Hardly any scholars have studied the same in Indian context. No evidence-based study for enabling factors for successful public–private partnerships in urban metro systems in India could be located.

  • Available literature, therefore, does not provide insight for developing understanding on factors responsible for the success of public–private partnerships in urban metros.

Hyderabad Metro: A Brief Description

Hyderabad city has been growing rapidly during the last 2–3 decades. With increase in population, city’s traffic, which is predominantly road-based with reliance on auto rickshaws and privately owned passenger vehicles such as two wheelers and cars, is becoming congested and unmanageable. Traffic jams and long commute times are more of a rule than exception. In 2003, Government of Andhra Pradesh (GoAP), in partnership with Indian Railways (IR), set up multi-modal transport system (MMTS), which is basically a suburban rail system and had its limitations in the form of low frequency during off-peak hours and holidays, limited area coverage and low speed (Owens and Reddy 2010). A fast-growing city that is a hub for IT and BPO services needed a faster, reliable, safe and affordable mass rapid transit system, and rail-based metro system was the obvious choice of GoAP.

DMRC prepared the detailed project report, and GoAP decided to implement metro project on a PPP framework. A model concession agreement (MCA) was prepared along with manual of specifications and standards, and the contract was awarded to Larsen & Toubro (L&T) on Design-Build-Finance-Operate-Transfer (DBFOT) basis.

Construction and operation of a metro on PPP framework is a big challenge right from planning and visualising innumerable activities with multiparty involvement and bundling them into a robust concession agreement while effectively keeping control for execution of a huge project, technically and managerially complex in nature, to ensure deliverables as per specification. Like any other project, this project also has a situation to manage, actors to deal with the situation and the process followed for its management. This study examines how well the public and private partners have handled these challenges in the implementation of Hyderabad metro on a PPP framework.

SAP–LAP Linkages Framework for Hyderabad Metro

Assessment Matrix

‘Assessment matrix considers the multiple situation and contexts with qualitative and quantitative measurement’ (Sushil 2009). The assessment matrix developed for situation categorised factor-wise before and after the contract stage is given in Table 1 with ratings on a five-point scale.

Table 1 Assessment matrix of situation-factor-wise analysis on five-point scale
Full size table

Self-Interaction Matrix

The relationships among the various elements of SAP–LAP framework are presented in self-interaction matrices, i.e. a binary and interpretive matrix. The relationship shown is in binary fashion where a value of 1 means two elements in a component are interrelated; otherwise 0 is allocated. An interpretive self-interaction matrix has also been developed to depict the nature of relationship.

Situation

The situation of Hyderabad metro project is characterised into contract stage and implementation stage (Table 1). While the implementation of the project is going on, post-implementation situation can be analysed only after the project is commissioned and operated for sufficient duration.

In any project, ‘situation’ is both external and internal. In case of Hyderabad metro, examples of external situation variables are political/social environment and financial market availability. Similarly, transparent and competitive bidding process, good governance, etc., are representatives of internal situation variables.

During Pre-bid and Contract Stage

To cope up with growing traffic and to reduce road congestion, GoAP decided to examine the feasibility of a metro system as multi-modal transport system (MMTS) set-up in 2003 in partnership with Indian Railways was proving to be inadequate because of limited area coverage and low speed.

GoAP entrusted the job of preparing a feasibility study for a rail-based MRTS to DMRC, which has proved its credentials in successful construction and operation of a metro system in Delhi at par with international standards.

DMRC submitted DPR for three corridors and later for extension of third corridor by 4.77 km taking the total length of metro line to 71.16 km. The proposed metro was to be entirely elevated. The estimate for the project cost was Rs. 6387 crore.

The third-line extension was on account of representations from students and authorities of Osmania University for proposal to construct a depot on the university land. Realignment led to a 5-km extension of the line to Nagole to plan depot on the nearby vacant land (DMRC 2007).

DMRC proposed an SPV structure for the implementation of Hyderabad metro on the lines of Delhi metro to be headed by a Managing Director with full authority for decision-making in routine matters. DMRC further recommended that Board of SPV should be delegated all the powers for the implementation of the project.

For the legal cover, the project report advised state government to enact a Metro Act which should cover all aspects of metro rail system including construction, operation, maintenance and land acquisition. The Metro Act should also provide for safety certification by the Commission of Railway Safety, etc.

GoAP formed an SPV, Hyderabad Metro Rail Limited (HMRL) with Mr. N. V. S. Reddy who had worked along with Mr. E. Sridharan in Konkan railway project as Managing Director and Chief Secretary of the state as the Chairman.

Because of higher cost, the state government decided to award metro project on DBFOT basis. Since a model concession agreement was not available for metro rail, planning commission prepared a model concession agreement where Mr. N. V. S. Reddy coordinated with Dr. Haldea, an expert in PPP projects who had prepared model concession agreement for roads and airports. Along with MCA, a manual of specifications and standards was prepared to define deliverables in output terms.

The bids were issued, and Maytas-led consortium was selected as the preferred bidder who, however, failed to arrange the performance security and to achieve the financial closure for the project. In the second attempt, contract for Hyderabad metro was awarded to L&T on DBFOT basis. The concessionaire formed SPV, namely L&T Hyderabad Metro Limited, and achieved financial closure within the stipulated time.

During Implementation Stage

As with any project, Hyderabad metro also received opposition from displaced persons, traders and other interest groups. There were demands for change in alignment so that fewer commercial and residential buildings would be affected. General criticism was why the metro rail authorities cannot build an underground corridor so that the project does not affect city life. Apprehensions were expressed on the likely damage to heritage buildings and assembly. Interest groups and local politicians tried to politicise the issues.

The start of the work was delayed on account of giving right of way, which was the responsibility of the government or the public agency. Hyderabad city has narrow congested roads. Creating right of way by diversifying busy traffic was a herculean task. The plans for traffic diversion submitted by concessionaire were not accepted by the police authorities. There were differences of opinion on what constitutes right of way under the contract. Right of way for metro corridor and right of way for construction of metro corridor are two different things. It was a good decision to start from the outer skirts where the problem was not so acute because of lesser traffic and wider roads. The start of the project was also delayed on account of delay in obtaining permits.

In the meantime, division of state took place and Hyderabad came under the jurisdiction of the Government of Telangana (GoT). The new regime was having reservations about the project, especially on elevated corridors in the city’s old area. L&T which was already voicing concerns on the viability on account of cost and time overruns and claiming that division of state has affected its potential revenues from real estate, threatened to back off from the project. State government changed its stand when GOI intervened and also on realisation that any change in scope will be at the cost of the government. The state was also apprehensive about the negative publicity that would be generated for the state’s economic climate in case the project is stalled for the lack of government support.

L&T, the concessionaire, has filed for damages on account of delay in project due to government’s fault which has resulted in loss of productivity and idle manpower resulting in claims from their vendors. HMRL and state government have, however, disputed the claim.

The project is progressing, and L&T is planning to commission in phases. However, because of certain reservations in government quarters on the safety of heritage structures, the work has been stalled at assembly and nearby areas and final decision on this is pending.

The project is scheduled for commissioning by middle of 2017. While in public the authorities maintain that the project is on schedule, there are apprehensions that project might be delayed by more than a year.

Actors

An ‘actor’ can be individual manager, or group, or department. In case of Hyderabad metro, there were many actors involved in planning, structuring and implementation of the project on a PPP framework. However, importance of the roles and responsibilities entrusted on these actors varied across various stages of planning and execution of the project. Self-interaction matrix of six actors identified for Hyderabad metro is given in Table 2 along with its interpretive matrix.

Table 2 Self-interaction matrix of actors
Full size table

Process

The ‘process’ is the expected/desired outcome of a series of actions. The processes could be of various types such as construction process, stakeholder management process, innovation process, investment process, performance management process, operational relationship within organisations and/or with partnering organisation. A set of processes deployed by the actors from conceptualisation to implementation stage of Hyderabad metro have been identified for the present study and are shown along with a self-interaction matrix and its interpretive matrix in Table 3.

Table 3 Self-interaction matrix of process
Full size table

Prioritised Actor × Process Matrix

Binary actor × process matrix (Table 4) maps the roles played by various actors in a specific process. However, significance of roles played by different actors varies from process to process. The prioritised actor process matrix for Hyderabad metro reveals that in initial process of carrying out DPR and techno-economic feasibility of the project state government has played major role (stars in prioritised matrix show the significance of roles played by different actors in an identified process). State government was the main driver for conceptualising and implementing the metro project on a PPP framework that included real estate development as a means to augment the revenues, the first in a PPP metro project in India. Central government gets the credit for extending their support in successful implementation of the idea. It not only provided its share of viability gap funding (VGF) and necessary approvals but planning commission also helped in drafting model concession agreement and manual of specifications.

Table 4 Actor × process matrix—prioritised
Full size table

HMRL, the public agency, has been involved right from the beginning of the project in finalising model concession agreement and manual of output-based specifications in coordination with planning commission and IR. With regard to the process of risk analysis and proper risk allocation under the contract, different agencies contributed to the process though the major role has been played by the public agency, HMRL, in identifying the risk and allocating it to the agency which is best placed to handle the risk.

The private concessionaire, L&T, a reputed infrastructure player and known for its management skills has played its role well in negotiating debt from consortium of banks, achieving financial closure and starting the execution of the project. During implementation, while HMRL and other civic bodies (A3) have played significant role in providing ROW, shifting of utilities, widening of roads, etc., the role of self-help groups (A6) is rather negative by creating hurdles in execution which the public agency HMRL (A4) has dealt with a firm hand.

LAP Synthesis

The interrelationship of various elements of situation, actor and process and its synthesis leads to learning–action–performance (LAP). A study of how the situation unfolds, roles the actors play and the processes that are deployed in a given context and analysis of outcome highlights key learnings and action points which are relevant to the case. Based on the outcome facilitated by SAP, knowledge may be gained for desired actions to influence or alter situation, actor or process. This knowledge should also make it possible to anticipate improvement in performance in terms of better processes, improved roles of actors or situational factors through appropriate actions.

The outcome of LAP synthesis of SAP elements of Hyderabad metro gives key learning issues. They highlight problem areas and the desired actions to overcome them to achieve the stated objectives. The specific learnings may help in scenario building as a result of alternative actions and evaluation.

Learnings

  • A metro system is required to solve city’s mobility problem but huge requirements for funds for Hyderabad metro could not be met from government resources alone. However, private sector has the ability and willingness to undertake complex metro projects in a favourable socio-political and economical environment.

  • A capable and well-organised public agency is essential to structure the project and to act as an interface between government, public and the concessionaire.

  • There was no model concession agreement available for PPP metro before the start of Hyderabad metro.

  • Metro systems all over the world are not known to be financially viable purely from fare box revenue. Property development at metro stations contributes substantial part of the revenue to Singapore, Hong Kong and Tokyo metros which are few profit earning metros in the world.

  • Implementation of a large and complex metro system like Hyderabad metro requires close coordination between concessionaire and public authority and a decision-making process reflecting principles of mutual trust and good governance.

  • The contract agreement has to be complete with respect to roles and responsibilities of partners, risk allocation and sharing, methods of risk mitigation, provisions for contingency situations, etc.

  • Transparent and competitive procurement process attracts qualified bidders. While the concessionaire is responsible for DBFOT functions, the primary responsibility of ensuring a world-class metro which conforms to the performance criteria, technical specifications and safety standards squarely lies with the government, the owner of the project.

  • For successful implementation of a highly technical and complex project of this magnitude, political will and commitment are necessary.

  • Effective coordination and fast decision-making are important among several government departments.

  • Project of this magnitude will have objection, resentment, opposition from some stakeholders and may be politicised by vested interest groups.

  • Getting right of the way for the project is a complex process and has a potential to delay the project.

  • Obtaining required permits before the appointed date is difficult in practice and has a potential to delay the start of the project.

Actions

  • GoAP appointed DMRC for preparing DPR with cost–benefit analysis.

  • MCA was developed with close coordination with planning commission.

  • State government created a SPV named ‘Hyderabad Metro Rail Limited (HMRL)’ and delegated adequate powers for implementation.

  • MD, HMRL developed a robust concession agreement in collaboration with planning commission with defined roles and responsibilities of the partners, risk allocation and sharing, methods of risk mitigation, provisions for contingency situations, etc. A revenue model was developed which included lease rentals and property development rights to keep passenger fares affordable.

  • A reliable, implementable and pragmatic manual of specification was developed as an integral part of concession award agreement with emphasis on ‘performance-based outputs’ rather than the conventional ‘input’-oriented specifications, allowing design innovations. The manual of specification formulated is technology neutral, giving the choice of technology selection to the concessionaire.

  • An extensive mechanism has been developed for scrutiny and vetting of drawings and designs submitted by concessionaire. An independent engineer has been appointed for monitoring the contract compliance as per specification and standards set in the contract (Reddy 2011).

  • A transparent and competitive two-stage bidding process was followed with single bidding parameter in terms of VGF demanded by the bidder.

  • Property development rights were included in the concession to overcome the constraint of raising fare box revenue, traffic risk shared partly (by adjusting concession period) and design, finance and project risks were transferred to the private party.

  • An institutional framework was provided in the form of HRML with chief secretary of Government of Telangana (GoT) as the Chairman and Secretaries of Ministry of Administration and Urban Development (MaUD), Finance and Transport, Roads and Buildings (TR&B) departments and other top functionaries of civic bodies as directors on board of HRML for effective coordination, quick resolution of problems.

  • Public awareness campaign was started to allay fears about the project and to create a positive image. Issues were dealt with a firm hand and disposed of quickly.

  • Depots, stations, etc., were planned on government land which was used for majority of land requirements to minimise the risk of project being stalled for this reason.

Suggested Actions

  • 50% of the right of way should be taken in advance before the start of the project.

  • Permits should be obtained beforehand specifically by the public agency.

Performance

  • Project approved by state and central governments with provision for 40% VGF.

  • Hyderabad metro is one of the largest metro projects being attempted on PPP framework anywhere in the world and has a potential of being a light house to other aspiring cities/states.

  • A model concession agreement is now available which could be used by other metros in the country.

  • The contract was signed within stipulated time.

  • Business model based on fare box and real estate earnings is found bankable, and a consortium of ten banks led by State Bank of India provided the debt component of the project including real estate development facilitating financial closure within the stipulated time.

  • In 2013, Global Infrastructure Leadership Forum, USA, awarded the Global Engineering Project of the Year award to Hyderabad metro (Ahluwalia 2014).

  • Project progressing as per specification.

  • A competent and strong concessionaire with proven technical, managerial and project engineering skills was awarded the contract. A technologically advanced communication-based train control (CBTC) system has been selected, which provides higher degree of safety and reliability and a scalable metro system.

  • Public agency, HRML, has been an effective interface between the government and concessionaire on the one hand and concessionaire and public on the other hand contributing to implementation success. While L&T metro did start a public awareness campaign called ‘My City, My Metro, My Pride’, it was HMRL, the public agency which managed the external environment for the project with a firm hand and protected the interests of the project.

  • There have been delays in the start of the project on account of getting ROW. Delay was also caused on account of delay in obtaining permits.

Summary of lap synthesis factor-wise is depicted in Table 5.

Table 5 LAP synthesis of Hyderabad metro: CSFs versus LAP summary
Full size table

Generalised Findings and Conclusions

The general findings of the study can be summarised as follows:

  • The utility of SAP–LAP framework in analysis of a large PPP project implemented on a PPP framework is established through the case study. The study helps us to gain insights into the significance of key factors and their interplay in the project structuring and implementation.

  • The seven critical success factors have played more significant role in Hyderabad metro during its conceptualisation, project structuring, selection of concessionaire and contract finalisation stage than during its implementation.Footnote 3

  • While central government’s role is limited to providing policy framework, creation of a conducive legal and regulatory structure and financial support in the form of VGF, it is the state government which is responsible for enabling a ‘socio-political-ecosystem’ in the state and eliminating constraints and hindrances at each stage of a metro project.

  • A ‘strong, capable and well-organised public agency’ emerges as the most significant variable in contributing to the success of the first two stages of Hyderabad metro project. This is in line with the findings of pilot study and opinion survey done earlier.

  • ‘Well-structured contract’ is another variable, the significance of which was observed across all stages of the study such as exploratory research, quantitative research and field study of Hyderabad metro. The findings are in agreement with World Bank and United Nations (ESCAP) guidelines on PPP implementation referred earlier in literature survey which highlight the importance of public agency in taking ‘the steps by which PPP projects are identified, developed, appraised, implemented and managed’ (World Bank 2014b) and in ‘finalising terms of contract, bid document, bid evaluation criteria, draft contract/concession agreement, service and output specification, mechanism for monitoring and control as well as for dispute resolution’ (ESCAP 2011).

  • ‘Mutual trust and Good governance’, i.e. how the public agency conducts its affairs and manages the partnership and public resources for execution of the metro project is a significant factor highlighted during the study. The proactive participative approach followed by public agency in managing external environment in case of Hyderabad metro is an example of good governance.

  • A ‘strong and competent consortium’ only can deliver a good metro system with sustainable performance. The concessionaire for Hyderabad metro has earned recognition for its competence in engineering, design and project management. As has been seen in case of Hyderabad metro, a technically strong party with project management skills plays the most significant role in technology selection, and innovations in design and engineering of the project bringing in benefits to the public utility infrastructure that might not have been available had the project been executed as a government project.

  • Earlier studies have brought out that ‘social barriers can be a big hindrance to PPP projects both before and after the award of contract’ (Babatunde et al. 2014). Social impediments can mar the success of a project. Hyderabad case study has corroborated this finding where evidence points to the role of state government in highlighting multi-benefit objectives of Hyderabad metro and creating awareness and buy-in from politicians and public at large. The findings are similar to the concluding opinion expressed by Smith and Gannon in the context of UK that ‘political support’ is the most significant success factor for light railway projects (Smith and Gannon 2008).

  • The delay in obtaining right of way and necessary permits for the project resulting in the delay in the start of the project has been a major source of discord and blame game between private and public agency in Hyderabad metro. As a suggested approach, future projects may consider obtaining 50% or more right of the way and all necessary permits before the appointed date. A further clarity in the concession agreement on what constitutes right of the way for constructing a metro corridor will help avoid such situations in future projects.

  • Exploratory research and field study reveal that apart from a viability gap funding of Rs. 1458 crores the government is only committed to compensating the concessionaire for expenses incurred towards shifting of public utilities on the right of way. The state has achieved, through private sector participation, the construction and operation of critical infrastructure of an urban metro system for a period of 30 years with a reduced requirement of upfront money.

Limitations and Suggestions for Further Study

Hyderabad metro is under implementation and scheduled to start operations in mid-2017. While the study has effectively brought out the significant role played by factors in project structuring and its implementation so far on a PPP framework, the success of Hyderabad metro can be assessed only after commissioning of the project and its operation for significant length of time. Project time and cost overrun, stabilised operations, quality of O&M, customer service and overall user satisfaction are some of the important criteria to term a metro project as successful in achieving its aims. It’s performance on these success criteria will also be compared with Kochi and Bangalore metros which became operational recently.

Finance minister in his budget speech on 1 February 2017 has announced about the proposal to introduce new Metro rail bill and Metro Policy which will make state governments a prime mover of a metro project with options to consider private funding or various forms of public private partnerships (Budget 2017–2018). Hyderabad metro is the first PPP metro in India where concession includes real estate development to augment revenue as the fare box revenue alone would not have made the project viable. Further, it is also the first PPP metro project where traffic risk has been partly shared by the government with a provision for increasing/reducing the concession period in case of actual traffic being less/more than the projected traffic. While the facts evidenced so far point towards success of this approach in selection of a good consortium and making a PPP metro project bankable achieving financial closure, it could be a subject of further study to explore whether there could be better alternatives of funding and structuring a PPP metro project.