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Money Does Not Make the World Go Round!
“I did not share my memories of the bandage removal with Alice, but I did tell her that when I was in the hospital, I wanted to know the meaning of all the noises and beeps around me. I wanted to know my heart rate and blood pressure. I wanted to know the level of oxygen in my blood, the functioning of my lungs, and so on. I wanted to know which sound meant that my body was functioning and which indicated that things were not going well. I also wanted to know how long the pain would continue, when a treatment causes the pain to increase, and when I would have some relief. At the superficial level, it seemed that I yearned for information about what was happening to me, but what I really wanted—in contrast to my almost motionless experience in the hospital bed—was to have some feeling of control.” That was Dan Ariely lying in hospital with 80% burns. Definitely not one of the most cheery parts of the book, but it is one of the most important ones as it highlights what actually gets us through the worst situations—motivation.
 
Dan Ariely’s Payoff is a low down on the concept of motivation and how this factor actually helps us all do the things we do. With every logical reasoning for motivation, or even de-motivation, Ariely presents an example or experiment to get his point across. Like the paragraph quoted above, where Ariely focuses on how a meaningful path is significant to all of us, especially during tragic times. “I realised how many of our motivations spring from trying to conquer a sense of helplessness and reclaim a tiny modicum of control over our lives.” He states that human motivation is not a simple concept but, with more understanding, we would be able to understand ourselves and every aspect in our life; this is an essential step towards enhancing the inherent joy in our lives.
 
To understand what really motivates us, he and his colleagues, Uri Gneezy (a professor at the University of San Diego, California), George Lowenstein (a professor at Carnegie Mellon University) and Nina Mazar (a professor at the University of Toronto) carried out an experiment to test the effectiveness of different motivations at a semiconductor factory where the standard work cycle lasted eight days. Each work week was composed of four days of 12-hour shifts, followed by four days off. The factory managers set up a bonus structure to help motivate the chip-makers; if they reached the day’s target, they would receive a cash bonus. Ariely and his colleague changed this format and provided a set of incentives: cash, pizza voucher, a compliment and no incentive. The managers hypothesised that cash would bring about the most productivity while the ‘no incentive’ would bring about the least.
 
So, what actually motivated them? The first three approaches boosted motivation, but the most surprising factor was that the pizza voucher boosted productivity by 6.7%, close to the verbal incentive, by 6.6%; the financial incentive performed the worst, with a 4.9%  boost in productivity. These were the results for the first day. On the second day, the cash incentive did 13.2% worse than those who received no incentive. On the third day, those in the financial incentive group did better; the performance dropped only by 6.2% with respect to the no-incentive condition. Overall, for the week, the monetary incentive recorded a 6.5% drop in performance compared to the no-incentive. The ‘compliment’ drifted down slowly towards the ‘no incentive’ and the pizza voucher results were between the financial incentive and the verbal incentive.
 
The result is a clear proof that financial incentive does not drive a person to work harder. For some, it was as good as no incentive. The author points out, “It’s astonishing to me how some ideas endure even when it’s obvious that they are no longer relevant. (Adam) Smith’s industrial-era view of labour has been passed down for generations as an indisputable truth, but as our experiments and many others show, there is a lot more to work than money and things to buy.”
 
Ariely states that the question of motivation encompasses almost every aspect of human endeavour and drive, but he makes one thing clear: “Among all of the motivating forces in the world, it turns out that money isn’t the simple, great motivator most of us assume it to be.

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Mumbai Metro: Windfall for EPC, systems and rolling stock sectors
The scope of the Mumbai Metro programme has broadened significantly and the current master plan envisages a network spanning about 200kms. This work, probably the largest and amongst the fastest metro rail expansion programme in the world currently, provides opportunities to sectors like construction, systems contracts and wagons, says a research report.
 
In a note, Edelweiss Securities Ltd, says, "Rising spending on metro rail dovetails with our thesis of capex recovery led by public sector. With about Rs20,000 crore of civil construction contracts already awarded in 2016, near-term opportunity of around Rs4,500 crore and potential Rs5,500-6,000 crore orders for future lines, metro rail is a boon for engineering, procurement and construction (EPC) players like Larsen & Toubro (L&T), NCC Ltd, J Kumar Infraprojects Ltd (JKIL), Simplex Infrastructures and Texmaco Rail. With about Rs18,000 crore systems and rolling stock opportunity over CY2017 to CY2018 and government's recent directive to prioritise domestic procurement in metro projects, ABB, Voltas and Siemens for systems contracts and Titagarh Wagons and BEML (erstwhile Bharat Earth Movers Ltd) for rolling stock works are likely to benefit."
 
As per Edelweiss, civil construction forms the largest chunk of the metro project. Civil contracts, which involve tunnelling or other structural work, are complex and hence face minimal competition. As a result, margins in these contracts are higher, at about 12-15%, compared to the usual 10% in construction contracts. Stations and depots are more of ‘building’ contracts and hence fetch lower margins.
 
"In our view, more than margins, the benefit of undertaking metro projects lies in the relatively better working capital cycle for these projects. With funding secured (from government and multilateral agencies), agencies which develop metro projects generally pay contractors on time and have better payment terms. As a result, return on capital employed (RoCE) for contractors is higher compared to the construction projects in other segments where the payment cycles are longer," it added.
 
Apart from civil construction, the other major component in the development of a metro network is the systems work. This includes signalling and communication systems, power transmission, track laying, baggage handling system, automation control systems and fare collection systems. These are essentially catered to by engineering and capital goods companies.
 
The systems works are typically awarded 6-12 months after the civil construction contracts. Consequently, for projects which saw award of EPC contracts in 2016, like Line 2, Line 3 and Line 7, the process of awarding systems contracts is currently underway.
 
‘Make in India’ boost in metro space
The government recently mandated that 25% of critical equipment and sub-systems in metro projects will be produced in the country. The government has also stipulated procurement of nine types of signalling equipment from within the country. The government intends to ensure that Indian companies are associated with the production of a wide-range of signalling and train control project equipment. 
 
Similarly, indigenisation of several metro functions has also been suggested. These include communication systems, managing operational disturbances, time-table preparation, fault reporting, control traction power, maintenance, infrastructure supervision, and rolling stock management. "We believe these steps will ensure that opportunities for domestic companies remain rampant going ahead," Edelweiss says.
 
According to the report, while Line 1 of Mumbai Metro is operational (11km), Lines 2A, 3 and 7, (together about 68kms) which were awarded last year, are under construction. In addition, the Mumbai Metropolitan Region Development Authority (MMRDA) expects to award civil construction contracts worth Rs4,500 crore for Lines 2B and 4 (spanning around 56kms) over the next one month. The systems and rolling stock contracts for Line 3 (worth about Rs4,000 crore), Line 2A, 2B and 7 (around Rs10,000 crore) and Line 4 (about Rs4,000 crore) are expected to be awarded over the next year. MMRDA has set 2021 as project completion target, which will take the overall operational length to about 135kms.
 
 
Apart from these corridors, the Maharashtra state government is expected to approve two new routes—Line 5 (24km, worth about Rs8,400 crore) and Line 6 (14km, around Rs6,700 crore)—soon. "In addition, plans to extend some of the existing lines are under consideration. For e.g., Line 7, which currently runs between Dahisar and Andheri, may be extended to Mumbai International Airport at one end and Mira Road-Bhayander at the other. We expect work on these corridors, stretching about 65kms, to start over the next couple of years," Edelweiss says.
 
Plans for the metro network were laid out in the 1990s with the initial master plan for Mumbai Metro drawn up by Delhi Metro Rail Corporation Ltd (DMRC) unveiled in 2004. Over the years, this master plan has seen multiple iterations.   The original master plan, prepared by DMRC, envisaged development of a metro rail network spanning about 145kms, of which 32kms was to be underground.
 
 
Over the years, the master plan has undergone various modifications. In fact, even now, new lines are being added and multiple options for further expansion are being considered. The master plan, as it stands today, is given below:
 
 
Comparison of metro networks across the world
While Mumbai is quite late compared to other global major cities as far as development of a metro rail network is concerned, the scale and speed of the network envisaged is astonishing, Edelweiss says. Over the next four-five years, construction of about 125kms metro lines is being targeted in Mumbai. 
 
"This is amongst the fastest rate of metro network development compared with other major cities across the globe. It is, in fact, at par with the pace witnessed in some major cities in China, reputed for tremendous execution speed," it added.
 
 
Line 2: Dahisar–Andheri–Mankhurd
Line 2 is an under construction metro line in Mumbai which connects Dahisar with Mankhurd. The line is being built in 2 phases – 2A and 2B. While Line 2A stretches from Dahisar to DN Nagar (Andheri), Line 2B spans the stretch from D N Nagar to Mankhurd via Bandra. 
 
Both Line 2A and Line 2B are proposed to be funded through assistance from the Asian Development Bank (ADB) with the balance amount being contributed by MMRDA and the state government. The civil construction work for Line 2A was awarded in mid-2016. Work on the line began in November 2016, and is targeted to be completed in 2019.
 
 
For Line 2B, bids have been invited for civil construction. MMRDA expects to award civil construction contracts worth Rs1,800 crore over the next one month. Edelweiss says it expects work to start post monsoons with MMRDA targeting to complete this stretch by 2021.
 
As per MMRDA, companies interested in package 1 of Line 2B are Larsen & Toubro, Afcons, ITD Cementation and GHEC-RCC-JV-China. For two packages in Line 2B NCC, JMC Projects, JKIL, CHEC-TPL and Simplex Infra have applied, while the Reliance-RdE joint venture (JV) is in fray for three packages.
 
The systems and rolling stock contracts for Lines 2A and 2B will be awarded along with Line 7. The total cost of the systems and rolling stock contracts is estimated to be Rs10,000 crore. MMRDA has already started the bidding process and expects to award these contracts over the next two-three quarters.
 
Line 3: Colaba – Bandra – SEEPZ
Line 3, being implemented by Mumbai Metro Rail Corporation (MMRCL), is a 33.5kms long underground metro project connecting Colaba to SEEPZ. Boasting of 26 underground and one-at-grade stations, this line is estimated to cost about Rs23,100 crore. 
 
The Japanese International Cooperation Agency (JICA) is funding the project by
way of a soft loan of Rs13,240 crore, with the balance funding coming from central and state governments, property development and other stakeholders (like Mumbai Airport developed by GVK). JICA is funding 60% civil and 100% systems contracts. The cost of JICA’s soft loan is 1.4%.
 
MMRC had awarded civil construction contract for 7 packages worth Rs18,100 crore in July 2016.
 
As per Edelweiss' recent visit, utility shifting is in progress at various work sites. The soil testing work is well in progress and the tunnelling work is expected to commence by year-end. 
 
 
The process of awarding the systems and rolling stock contracts is already underway. While the rolling stock contract (comprising 210 coaches) is estimated at Rs1,800-Rs2,000 crore, the system contract amounts to around Rs2,000 crore. As per Edelweiss, MMRC expects to award these contracts by Q1CY18.
 
Line 4: Wadala – Ghatkopar – Mulund – Teen Hath Naka – Kasarvadavali
Line 4 is a proposed fully elevated metro line which will connect Wadala with Thane. The 32kms line will have 32 stations from Wadala to Kasarvadavli and is estimated to cost Rs14,500 crore. 
 
As per news reports, the project will be funded through loans of about Rs3,900 crore, while MMRDA and the Maharashtra state government will contribute around Rs6,900 and Rs3,700 crore, respectively.
 
As far as civil construction work is concerned, the bidding process is already underway. MMRDA expects to award 5 EPC contracts worth Rs2,700 crore over the next one month. Edelweiss says it expects work to start post monsoons with MMRDA targeting to complete this stretch by 2021.
 
As per MMRDA, L&T has shown interest in all the 5 packages of Line 4. Companies which are interested in 1 package are JKIL and ITD Cementation. While players like Afcons, NCC and JMC Projects have applied for two packages, Reliance-RdE JV and CHEC-TPL have applied for three packages in the Metro-4 corridor.
 
The total cost of the systems and rolling stock contracts for Line 4 is estimated to be about Rs4,000 crore and is  expected to be awarded over next couple of years, the research note says.
 
Line 7: Dahisar (E) – Andheri (E)
Line 7 is about 16kms long elevated metro stretch connecting Andheri (E) to Dahisar (E). The estimated project cost is around Rs6,200 crore. 
 
The project is proposed to be partially funded by the Asian Development Bank (ADB), with the balance being contributed by MMRDA and the Maharashtra state government.
 
MMRDA had awarded the civil construction contracts for three packages worth around Rs960 crore in May 2016. Work on the project began in August 2016 and is targeted to be completed by 2019.
 
As per Edelweiss' recent site visit, work on these stretches is in full swing with U-girders already being erected. 
 
 
Edelweiss says the rolling stock and system contracts for Line 2A, Line 2B and Line 7 amounts to about Rs10,000 crore. Bid documents for the rolling stock contracts for Line 7 are ready and MMRDA expects awarding to be completed over next two-three quarters.
 
According to the research report, the government has plans to build a metro network of about 200kms in Mumbai and with this target in mind, has planned many other corridors. Some of the prominent among the corridors are:
 
Line 5 – This is a proposed elevated line spanning the Thane-Bhiwandi-Kalyan corridor. This is expected to be about 24kms long stretch and will cost Rs8,400 crore. The line will have 17 stations. Tenders for carrying out detailed survey and preparation of site plans have already been invited. The project is currently awaiting the state government’s approval, post which the bidding process will begin.
 
Line 6 – This is a proposed elevated line spanning the Lokhandwala-Jogeshwari-Vikhroli Kanjurmarg corridor. This 14.5kms long line will cost Rs6,700 crore. The line will have 13 stations. Like Line 5, this project is also currently awaiting state government approval, post which the bidding process will commence.
 
Extension of existing projects: Apart from the two lines mentioned above, MMRDA is also contemplating extension of existing lines. For instance, Line 7, which would connect Dahisar to Andheri may be extended to Mumbai International Airport (Terminal 2) at one end and Mira Road-Bhayander at the other. Extension of Line 7 on the North end to Mira-Bhayandar is estimated to be around 13.5kms long. 
 
"This line, which may be called Line 10, is expected to cost around Rs6500 crore. Similarly, the extension at the South end to Mumbai Airport is 3.5kms long and may cost Rs2,000 crore. Line 4, which ends at Wadala currently, may also get extended to GPO (to connect Thane to South Mumbai). This might be an 8km long link with an expenditure of Rs300 crore per km for the extended route. We believe MMRDA will take up these extensions once it is through with the lines, which have already been approved. Consequently, we expect work on these projects, spanning about 65kms to start over next couple of years," Edelweiss says.

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COMMENTS

Mukul Modani

2 weeks ago

A very good article which summarises the Mumbai metro project and provides a global perspective too. Mumbai metro ideally should have been functional by 2010 as was suggested in the plan. The congestion on the existing transportation network has crossed it's upper limit already, so the 3-4 year wait, if everything goes well, is going to be a long one. And by the way, conveyance provided by metro rails are unmatchable by any other modes including BRTS.

Sudhir Jatar

3 weeks ago

To me this is mind boggling spread of the Metro.
Just mull over the costs in Mumbai:
Colaba-Bandra (u/g) cost is about Rs.690 crores per km. Underground costs are prohibitive.
Wadala –Kasarvadavali 32 km cost is Rs. 453 crores per km.
Dahisar (E) – Andheri (E) 16km cost is Rs. 390 per km.
Thane-Kalyan 24 km elevated cost is 350 crores per km.
Lokhandwala- Kanjurmarg 14.5 km 6700 crores @ of Rs. 463 crores per km.
South End to Mumbai airport 3.5 km cost is Rs. 2000 crores @ Rs. 571 per km.
If Pune Pilot BRTS had succeeded, we would not have seen this kind of Metro proliferation at such expensive per km costs. Unfortunately, even now the authorities and many of us have not realised the criticality of doing pre-feasibility, feasibility and making a DPR for BRTs. We apply our energies to re-write instructions for which IRC codes exist. We tend to coin words such as "mixed BRTS" to justify our lack of planning. We tend to take BRTS for granted because the costs are low and then mess it up.
When are we going to learn from our mistakes? Actually, we learn from history that we do not learn from history!
SJ

REPLY

Shirish Sadanand Shanbhag

In Reply to Sudhir Jatar 2 weeks ago

I fully agree with Sudhir Jathar.
Twenty years ago, govt of India, decided to have uni-gauge railway line, and stated conversion of all meter gauge and narrow gauge in to broad gauge.

This mono and metro is meant to replace traffic of cars in the city.
Unless some rules are made, to replace cars in the city, any alternate mode of public transport will add only to the conjustion to the city and expenditure to the public exchequer.

Simple Indian

3 weeks ago

It's interesting that Govts in various States in India are suddenly interested in having a Metro Rail Project, which is a charade in the name of infrastructure development. Besides metros like Mumbai and Delhi, many Tier-I cities in India have a population of over 3-5 million, for which an MRTS (Mass Rapid Transport System) is the necessity, and Metro Rail can never be a part of that, due to its very limited commuter carrying capacity. Mono-rail is even worse, and in Mumbai where it exists, it's nothing more than a tourist attraction and caters to barely few thousand commuters. Hence, instead of wasting public money on extravagant Metro Rail projects, Govts should focus on MRTS options like a regular suburban railway system, as exists in Mumbai. Such mass-transport systems need urgent revamp to make commuting safe for lakhs who depend on them daily. But, "local trains" as they are called, aren't quite as 'sexy' or glamorous as Metro Rail or Mono-Rail. Hence, in the name of providing new-age transport systems, Govts in India are cleverly fooling people by working on Metro Rail/Mono-Rail projects, which won't address commuting needs of millions who reside in Indian cities. Strange that no citizens' group has stood up to this farcical devt agenda of the govts.

Suketu Shah

3 weeks ago

Wonderful informative article.

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