Restructuring of Government Departments-Karnataka Experience

Transcription

1 Restructuring of Government Departments-Karnataka Experience T V Ramanayya, V.Nagadevara & Shyamal Roy Indian Institute of Management Bangalore Abstract Public expenditure in India has played a key role in economic and social development of the country. Public finances in the last two decades have undergone lots of strain; so much so, that expenditure incurred on capital expenditure has drastically come down. Thus the role of the public sector needs to be redefined in tune with the changing times. First, its role has to be more focused to pave the way for a larger role for the private sector, in the wake of economic liberalization. Second, it should be driven more by efficiency. PWD has historically played a pivotal role in the development of Roads in the state of Karnataka. However, like many other government departments, it has given scant attention to cost and efficiency considerations. The productivity of employees (specially technical personnel) has come down. The study outlines the manpower restructuring, HR schemes, activities that may be outsourced and strategies for private sector participation for improving its functioning. Introduction Public expenditure has played a pivotal role in the development of roads in Karnataka over the years. Private sector investment today is attracted to the state mainly because of public sector investment undertaken in the past. Public Works Department (PWD) of Government of Karnataka (GoK) is solely financed from general revenues till 80s. Subsequently due to resource constraint the growing needs of the roads sector could not be fully met from the general revenues. Table 1 presents trends in government deficits during the last four decades. It may be noted that 56% of the fiscal deficit is going towards financing revenue deficit and the balance is only left for capital formation, while in a well managed fiscal system, the revenue expenditure should be entirely met from revenue receipts and the borrowings should be utilized exclusively for capital formation. The impact of this on the budgets of PWD is presented in Tables 2 and 3. It can be seen that capital expenditure on roads (after adjusting for inflation) stagnated between and and picked up slightly during Nearly 65% of the total expenditure is utilized towards revenue expenditure. Over the years the non-plan expenditure as a percentage of total expenditure has shot up and in the year it stood at 88%. This needs correction otherwise no new capital road works could be undertaken. Table 1. Trends in Government Expenditure Particulars Unit Revenue deficit (RD) Rs. million Fiscal deficit (FD) Rs. million RD as % of FD Percentage Year Revenue expenditure (RE) Table 2.PWD Budget details (Rs. million) Capital expenditure (CE) Total RE as a % of total

2 Year Revenue expenditure (RE) Capital expenditure (CE) Total RE as a % of total Year Table 3. PWD Budget for State Highways & Major Dist Roads (Rs. million) Plan (P) Non-plan (NP) Total SH & MDR NP as % of total Total as a % of PWD budget Current Structure and Staffing At present, Principle Secretary PWD heads the department and the technical staff consists of different cadres such as Engineer-in-Chief (E-in-C), Chief Engineers (CE), Superendant Engineers (SE), Executive Engineers (EE), Assistant Executive Engineers (AEE) and Assistant Engineers (AE). Figure 1 presents the details of organization structure and technical cadres at different levels. The department is divided geographically into zones, circles, divisions and subdivisions for carrying out its activities across the state. Currently there are 3 zones, 12 circles and 40 divisions. Historically PWD is considered as a depositary of technical manpower and various other departments draw their technical manpower from PWD as and when needed. The existing manpower details are presented in Table 4. Table 4. Current Manpower Details Of PWD Designation Sanctioned Filled-up Working in PWD Number on Deputation Engineer-in-Chief Chief Engineer Supdt Engineer Exe Engineer Asst Exec Engineer Asst Engineer Total The department is involved in all the activities relating to the construction and maintenance of national highways (NH), state highways (SH) and major district roads (MDR). In addition, the department advises the Zilla Parishat (District level local government body) in planning and construction of rural roads. The major activities of the department include Collection of field data on National Highways, State Highways and Major District Roads Up gradation, improvement and maintenance of the network Traffic surveys and database on traffic operations Planning, design and execution of new road projects Planning, design, maintenance and repairs of buildings of different government departments

3 Figure 1. Organizational Structure of PWD Even though the PWD is responsible for building activities in addition to roads, a number of corporations have been created to undertake the building construction activity of different departments. This is mainly to enable these corporations to raise resources from the market for construction of buildings. Thus, the role of PWD with respect to construction of buildings is marginalized. At the same time, the department is vested with the responsibility of maintaining all the buildings. On the same lines, the Government of Karnataka has created Karnataka Road Development Corporation Limited (KRDCL) in 1999 as a limited company to facilitate barrowing funds from external agencies and from financial institutions. The main activities of KRDCL include Building Roads and Bridges Facilitate Private Entrepreneurs to take up Road Projects under BOT Collection of tolls Barrow funds from different agencies Presently KRDCL is involved in rehabilitating 153 bridges, 600 kms of Road Network and maintenance of 7500 kms of Roads. KRDCL utilizes the technical staff of the department to carryout their activities. Thus, they manage to remain as a lean organization. Currently there are 27 divisions of PWD assisting KRDCL. During the year 2000, Karnataka State Highway Implementation Project (KSHIP) was initiated to utilize Rs.23 billion barrowed from World Bank. A separate cell called Project Implementation Unit (PIU) within the department was created to enable efficient utilization of the World Bank loan. The PIU is given enough autonomy to set up special systems and processes with a view to minimize the time and

4 cost overruns and improve the efficiency levels to the global standards. The main activities of KSHIP are upgrading 950 kms of SH and major maintenance of 1300 kms of SH. Thus, the newly created KRDCL and KSHIP practically undertake the bulk of the activities of state PWD. Both are enjoying enough autonomy in their functioning and assisted by respective boards. The creation of these bodies was necessitated by the opening up of the activities of the department and also to mobilize resources from national and international agencies. In light of these developments, there is a need to undertake a comprehensive functional review of the department leading to its restructuring. Consequently, this assignment has been entrusted to Indian Institute of Management Bangalore by the Karnataka Administrative Reforms Commission (KARC). Study Objectives and Methodology The specific objectives of the study are Restructuring /merger of sub-departments to improve efficiency and provide better service. Right sizing the manpower in the department at different levels Identifying the areas for possible privatization and outsourcing Devolution of powers and finances at different levels. The study was carried out in two stages. The first stage included personal interviews at different levels of the department and focus group discussions on the functioning of PWD. The focus group discussions were carried out at cadre level such as CE, SE, EE etc. as well as at unit levels such as circles, divisions etc. The second stage included collection of data from different units of PWD for the past 3 to 5 years. This data was supplemented with the information and reports available at the head office and secretariat of PWD. A random sample consisting of one circle, 5 divisions and 15 sub divisions was selected for the purpose of in-depth study. In order to understand the linkages with the department data was collected from the offices of KSHIP and KRDCL. Review of the functioning of PWD The data collected through questionnaire surveys, annual reports of the department and information generated through individual and focus group discussions is used to analyze the functioning of the department. Most of the respondents are with at least 15 years of experience in the department and as such their responses reflect their experience and the practices followed in the department. Some of the major observations on the functioning of the department, based on the sample are given below: Two- thirds of the respondents feel that the man power in the department is more than adequate The following activities can be outsourced 1. Survey and investigations 2. Quality control 3. Legal matters 4. Maintenance of Guest houses and 5. Vehicles and their maintenance for official transport needs of technical staff The respondents felt that outsourcing of these activities will improve the image as well as the efficiency of the department. A large amount of time is spent on paper work and attending meetings to coordinate with other departments and to handle public grievances Project management techniques (PERT/CPM) are used initially at the planning stage only but never seriously followed in monitoring and updating The present promotional policies are predominantly seniority based. In addition, there are very few opportunities for skill development. Consequently, there is no motivation for

5 improving the skills. This, coupled with lack of promotional opportunities, is resulting in frustration and de-motivation at different levels in the organization. Establishment expenditure as a percentage of civil works undertaken is quite high in some divisions. This can be seen from Table 5 where data for two divisions is presented. Table 5. Details of Establishment and Cost of Civil works (Rs. million) Name of the division (1) Kolar Division Gulbarga Division Year (2) Cost of establishment (3) Cost of civil works (4) Percentage (3/4) *100 (5) % % % All Years % % % % All Years % As explained earlier, most of the construction as well as the maintenance work of NH and SH is being handled by KRDCL, owing to the fact that the resources are generated by KRDCL. KRDCL takes the assistance of various divisions of the department, depending on the geographical location of the work being carried out. Whenever KRDCL takes the assistance of the divisions, these divisions are compensated to the extent of the assistance received. Thus, whenever the divisions provide assistance to KRDCL, they have a higher value of civil works and consequently the establishment expenditure (which is fixed in nature) as a percentage of cost of civil works is lower. The percentage of the establishment expenditure in in Kolar division is only 9.52 percent since KRDCL had taken up a number o civil works in the district during that particular year. On the other hand, the percentage of establishment expenditure in Gulbarga division is as high as 56.9 percent in because KRDCL had not taken up any major activity. The same percentage has dropped to in the year owing to the fact that KRDCL had taken up many activities in the district. Time and cost overruns are predominant. There are instances of enormous delays in the process of obtaining required sanctions, as shown in Table 6. Table 6. Processes followed in Gulbarga Division Court Complex Details of Work at Gulbarga Road Project 1 Road Project 2 Road Project 3 Admin. Approval October 96 January 2000 April.1997 May 2000 Tech. Sanction March 1999 February 2000 January 1997 July 2000 Tenders Called March 1999 February 2000 July1997 May 2000 Tenders Approved January 2001 October 1997 September 2000 Work Order March 2001 January 2000 November 1997 September 2000 Time for completion (Months) Cost of Works (Rs. million) Status Under progress Under progress Completed Completed As can be seen from the above table, the Court Complex at Gulbarga is not completed even after 6 years from receiving the administrative sanction. Similarly, another road project is not completed even after 36 months, even though the cost is only Rs. 5 million. At the same time, the same division was able

6 to complete two road projects costing Rs million and Rs. 5 million within a reasonable period. It is obvious that the department is capable of completing the works as per schedule if the internal processes are managed. Restructuring of PWD Based on the above review and the discussions with various functionaries, it is suggested that the department should be restructured on the following lines: Maintenance of buildings of different government departments may be entrusted to corporations set up within these departments for building construction activities. The resources required for construction of new roads are being generated mostly by KRDCL and KSHIP. Hence, it is suggested that the department should exclusively deal with maintenance and rehabilitation activities of NH, SH, and MDR while KRDCL and KSHIP are to be entrusted with the development and construction of new roads. Based on the data from some of the better managed divisions as well as the work carried out by KRDCL, work norms for different levels in the department are suggested. These norms are developed both in terms of physical activity (length of the road in kms.) and monetary value (Rs. Million) as shown in Table 7. Table 7. Norms for Technical Staff Work Norms for Operations and maintenance Cadre Cadre Below Number of posts in cadre below Length of Road to be maintained (Kms) CE SE's SE EE's 2 to EE AEE's AEE AE's AE 250 Note: These norms are on the basis of the average length of road maintained by some of the better managed divisions in PWD Work Norms for Construction (in monetary terms) Number of posts in Cadre Cadre Below cadre below Rs. million CE SE's SE EE's EE AEE's 3 to AEE AE's AE 30 Note: This is based on the average expenditure incurred by KRDCL Based on the above norms, the manpower requirement for technical staff is estimated and presented in Table 8.

7 Table 8. Manpower for Road Maintenance activities Item Existing As per our study % Change Engg-in-Chief equivalent Chief Engineer Supdt Engineer Exe Engineer Asst Exe Engineer Asst Engineers Total Zones Circles Divisions It can be seen that under the revised norms, the manpower requirement can be drastically reduced from 1128 to 351. Both KRDCL and KSHIP are able to manage large number of civil works with a very lean organizational set up owing to the assistance provided by the department. It will be necessary for the department to continue to provide such assistance. Considering the activities undertaken on behalf of KRDCL and KSHIP the manpower needs of PWD are revised and presented below in the Table 9. Table 9. Total Manpower for PWD Activity Position Total Requirement Filled-up posts Excess % of Excess Eng-in-Chief Chief Engineer Supd Eng Exe Engineer Asst Exec Eng Asst Engineer Total As can be seen in the above table, the filled-up posts for the department are actually 2672, even though some of them are not currently working in the department. Some of the technical staff of the department are utilized by other departments in the state as when required. Thus, at any point in time there are considerable number of technical personnel working on deputation in other departments. As seen from the above table, 726 technical staff as against a filled-up strength of 2672 could accomplish the activities of PWD. It amounts that nearly about 73% are surplus. In the same way the administrative offices could be reduced by 65%, which results in enormous savings in administrative expenses. As mentioned earlier, the department acts as a depository of technical personnel and other departments utilize their services on deputation as and when the need arises. At the same time, these personnel continue to draw their salary and other related perks from the department, even when the department itself is not utilizing their services. It is suggested that these personnel who are on deputation to other departments should be absorbed into the respective departments.

8 Outsourcing of the following activities are recommended to improve the efficiency and reduce costs a. Survey and Investigation b. Quality Control c. Maintenance and up keeping of Guesthouses d. Vehicles and other official travel needs of technical staff There is an office of the Chief Architect within the department, which is providing architectural drawings for the buildings constructed by the department. In light of the fact that the building activity is to be taken out of the purview of the department, closure of Chief Architect s office is recommended. One of the major reasons for undue delays is the requirement of obtaining numerous sanctions at different stages, even though administrative and technical sanction is given for the work. To minimize these delays, it is recommended that the concerned EE is authorized to utilize the funds if the work is budgeted and approved. He needs to take further approvals only in the case cost over runs. Human resources development policy needs strengthening. Promotions should be based on performance appraisal rather than solely on the basis of seniority. Opportunities for skill and competence development needs to be integrated with training and promotions Computerization has already been carried out up to the division level. This may be extended to cover sub divisional offices and information technology is to be used in tracking the file movements, holding conferences and early feedback. If the policy changes suggested above are implemented, then the Public Works Department can become a more vibrant and responsive organization to meet the needs of society. It will be able to deliver the services more efficiently and effectively. References 1. Functional Review Report on Public Works Department, Sponsored by KARC, October Five Year Plan Documents of Government of Karnataka 3. Progress Reports and Budget Documents of KRDCL 4. Annual Reports of PWD 5. Action Plan Documents of KSHIP 6. Internal Circulars of PWD