Tamil Nadu's highways department was spending heavily but thinly. A World Bank transport note says that in 2011-12 it spent $310 million across 2,675 upgrade contracts and about $76 million across 2,672 maintenance contracts, creating high transaction costs and poor economies of scale.

The smarter answer was not simply more budget. The second road sector project introduced EPC lump-sum contracts with 5-year performance-based maintenance for 435 km of highways, shifting design and quality risk toward contractors.

The operating change scaled. By 2017-18, the number of procured contracts had fallen to 878 from 5,347, while about 3,000 km of non-project highways were under performance-based maintenance. The department was managing a 29,000 km network with a $1.5 billion budget and fewer staff than 10 years earlier.

Bundle roads into accountable assets

Bundling gave contractors enough scale to use better equipment and planning.

Five-year maintenance made construction quality matter after opening day.

Fewer contracts reduced the agency's supervision burden and made asset management possible.

Fragmented procurement can make an agency busy but weak; larger output contracts let it manage asset condition instead of paperwork.

The World Bank note says the department mainstreamed performance-based maintenance and paired the contract shift with digitized procurement, HR and financial-management improvements. The broader insight is blunt: a road agency can be too fragmented to be competent, even when it is spending real money.

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The sources

  1. Our infrastructure projects can help build many things—including stronger institutions blogs.worldbank.org