Planning process at BESCOM

Abstract

Inefficiency in the public sector, especially in India has been a commonly accepted and experienced phenomenon1 . Numerous academic analyses have been carried out on this topic2 and many public economic theories have even explained the economic rationale for these inefficiencies.3 In addition to the common sources of inefficiencies faced by public companies worldwide, corruption, bureaucracy and red tape issues in India compound the inefficiency. However, despite all these macro level issues, lack of use of appropriate business (/corporate) level processes and practices in public companies also contributes to the overall inefficiency. Examples of this sort could include lack of proper corporate level planning, absence of proper performance incentives, no clear vision and mission for the organization, poor reporting structure etc. In this study we focus on the planning process of BESCOM, an electric utility supply company in Bangalore. The aim of this study is to study the planning process of BESCOM in detail; to understand if the current planning process is suitable to work efficiently for carrying out the current processes of BESCOM and also to evaluate if it is suitable for adapting to process level improvements at BESCOM. (e.g. IT initiatives) We have interacted with key officials involved in planning at BESCOM at the corporate level and at the subdivision level to understand the planning process. Our study of BESCOM’s planning process reveals that 1. The planning process is highly centralised, top down with the final decisions being made at the corporate level and the lower levels having little autonomy and minimal involvement in the overall planning process. 2. The major planning is for non plan investment which is mainly a resolution of the capital expenditure which is carried out once a year. For the long term plans there clear evaluation of financial or strategic goals seem to be absent. 3. Thus, the planning process seems overall seems rather adhoc and lacks the rigor of a clear corporate planning process. Delays in implementation due to lack of proper coordination among the various government entities are also common. To address these issues in planning, we propose 1. Organizational structural changes (cross functional teams, greater divisional autonomy and planning) , 2. Process level improvements and Decentralized planning process 3. Use of financial and strategic planning methods 4. Changes in the planning format 5. Improving coordination between Government bodies involved in public works We evaluate our recommendations in terms the timelines involved in implementation and propose a staggered phased implementation plan. In this report, we have outline the secondary research, the primary research, methodology, key findings, and observations regarding the planning process at BESCOM and also our plan for taking this project forward. The main source of data has been interviews carried out with managers at the corporate office and subdivision level at BESCOM and secondary research. We have studied the planning process adopted in the private sector to adopt (and adapt) best practises to BESCOM. We have also studied in the corporate planning academic literature to obtain the clear understanding of the process and to use methods proposed in academic research. These inefficiencies observed in BESCOM are shared by many governmental organizations. Thus our study could serve a model for planning process improvements in such organizations and thus in a minor but significant way address the important public policy problem of improvement of efficiency of the public sector.