Environmental and organisational variables affecting project implication: case studies from small scale sector

Abstract

In this report, we are trying to study the effects during project implementation caused due the various environmental and organizational variables in small scale sector, the implications of such variables may lead to time and cost overruns. Apart from such overruns, there may be other implications on the entrepreneur and his family in terms of physical and mental agony, morale, confidence, his relationship and image in the social group, etc., which are very difficult to measure and express in words. In this study, we will be concentrating more on the time and cost overruns arising due to various variables. For the purpose of the study, we had discussions with various officials of financial institutions and conducted unstructured in depth interview with five entrepreneurs of SSE units. On the basis of the reading material and secondary research, we identified a number of variables which affect project implementation. These time and cost overruns become a threat to the project viability itself due to the following reasons: one, project cost goes up affecting return on investment; two, input coats going up and three, missed opportunities and lost revenues affecting cash generating capacity. The conclusions drawn of the basic of the basic of the five case studies are summarized below:  Almost all the five units faced Govt. delays in terms of clearances and approvals, in spite of providing sufficient lead time.  Govt. Policy decisions like devaluation lead to serious cost overruns in two of the units which had import content.  Except for one unit, Professional approach was lacking in others, in terms of application of modern management techniques like PERT/CPM.  Delays in equipment delivery and possession of site/building also results in time and cost overruns.  Unfortunate incidents like waking out of partners and demise of project personnel may lead to serious problems.  Lastly, improper planning, unrealistic estimates and wrong assumptions may lead to further worsening of the problems. Finally, we suggested a few recommendations which, if not eliminate completely, at least reduce the slippages to some extent.  It is advised to make realistic or rather conservative estimates and keep enough liquidity to cope with changing situations,  Given the general awareness of the Govt. decision making process, it would be prudent for any prospective implementer to allow reasonable time period for the necessary clearances.  One has to be more sensitive to the pre-operative and hidden expenses and estimate proper contingency needs.  Alternate sources of finance should be always kept open in case of urgency.