pakistan railways

[PAKISTAN RAILWAYS – THE LIFE LINE OF THE COUNTRY]

Prepared By: Maria Jawed (9689) Safia AbdulAziz (9613) Sumaiya Farooqui (9570) Javeria Siddiq (xxxx)

2011Submitted to:Mr. Haroon Waheed

TABLE OF CONTENTS

S. # Topics Page #Executive Summary 2

1. Pakistan Railways – the life line of the country

3

1.1 History1.2 At Present1.3 Organizational Structure1.4 Human Resource

2. Problems faced by Pakistan Railways 52.1 Shortage of Locomotives2.2 Eroding Market Share2.3 Soaring Budget Deficit

3. Entering & Contracting 63.1 Organizational Issues3.2 Key Clients3.3 OD Process3.4 Time & Resources

4. Diagnosis of Pakistan Railways 74.1 Huge Losses and Budget Deficit4.2 Mismanagement4.3 Decreased Market share4.4 Corruption

5. Action Planning 105.1 Structural Design5.2 Downsizing5.3 Reengineering5.4 Alliance Intervention5.5 Network Intervention

6. Conclusion 12Bibliography 13

Organization Development & Change

EXECUTIVE SUMMARY

Pakistan Railways (PR) is the state owned railway company of Pakistan. It is a large organization under the administration of Ministry of Railways. Pakistan Railways provides an important mode of transportation in the farthest corners of the country and brings them closer for business, sightseeing, pilgrimage and education. He current Chairman is Raja Shahid Hussain.

Over the past many years, Pakistan Railways has been facing problems and is now on the verge of bankruptcy. With budget deficit of billions, eroding market share and corruption scandals, the future of Pakistan Railways – once the life line of the country – is grim. At the time of independence, both India and Pakistan, inherited the Railway Network laid down by British. While Indian Railways has emerged as a highly profitable organization, Pakistan Railways is struggling to keep itself running.

This report summarizes how organization development can help Pakistan Railways revamp its image and goodwill. It is based on facts and hypothetical situations created by the group members to evaluate the applicability of OD interventions. He data is collected from various sources including books, newspaper articles and internet.

The report provides introduction of Pakistan Railways, its history, organizational structure which is then followed by how the concepts of entering and contracting can be applied to this case. Diagnosis of the organization has been done with the help of data collected and hypothetical situations. Based on the diagnosis, OD interventions have been suggested for Pakistan railways which include techno-structural interventions and collaborative interventions.


1. PAKISTAN RAILWAYS – THE LIFE LINE OF THE COUNTRY

1.1 History

The possibility of Karachi as a sea port was first noticed in the middle of 19th century. Sir Henry Edward Frere was appointed Commissioner of Sindh after its annexation with Bombay in 1847 and sought permission from Lord Dalhousie to begin a survey for a sea port. He also initiated the survey for a railway line in 1858. It was proposed that a railway line from Karachi City to Kotri, steam navigation up the Indus and Chenab rivers up to Multan and from there another railway to Lahore and beyond be constructed.

It was on 13 May 1861, that the first railway line was opened for public traffic between Karachi City and Kotri, a distance of 105 miles (169 km). The line between Karachi City and Keamari was opened on 16 June 1889. During 1897 the line from Keamari to Kotri was doubled.

The railway line from Peshawar to Karachi closely follows Alexander’s line of march through the Hindukush Mountains to the Arabian Sea. Different sections on the existing main line from Peshawar to Lahore and Multan and branch lines were constructed in the last quarter of 19th century and early years of 20th century.

The four sections, i.e., Scinde (Sindh) Railways, Indian Flotilla Company, Punjab Railway and Delhi Railways, working in a single company, were later on amalgamated into the Scinde, Punjab & Delhi Railways Company and purchased by the Secretary of State for India in 1885, and in January 1886, it was named North Western State Railways, which was later on renamed as North Western Railway.

At the time of independence, 1,947 route miles (3,133 km) of North Western Railways were transferred to India, leaving 5,048 route miles (8,122 km) to Pakistan. In 1954, the railway line was extended to Mardan and Charsada, and in 1956 the Jacobabad-Kashmore 2 ft 6 in (762 mm) gauge line was converted into broad gauge. In 1961, the Pakistani portion of North Western Railways was renamed Pakistan Railways. The Kot Adu-Kashmore line was constructed between 1969 and 1973 providing an alternative route from Karachi up the country.


1.2 At Present

At present Pakistan Railway comprises of 8,163 route km, 1,212 stations and 42 train halts. It has a fleet of 546 diesel electric locomotives, 25,815 wagons and 2,099 passenger coaches. Maintenance is provided by three major locomotive workshops and thirty-five smaller workshops. Signaling facilities at important stations are track circulated within interlocking limits. Most routes have VHF radio coverage for communication between train dispatchers and trains. Telephone Communication is over wire lines and microwave. Pakistan Railways is multi system and operates on three gauges, i.e. broad gauge, meter-gauge and narrow gauge.

1.3 Organizational Structure

Ministry of Railway is responsible for overall control of Pakistan Railways as well as to guide the overall policy. There are four (4) Directorates in this PR namely Administrative Directorate, Technical Directorate, Planning Directorate, and Finance Directorate.

The following officers also report directly to the Secretary Railways:-

a. General Manager (Operations)

b. General Manager/Manufacture and Services

c. Federal Government Inspector of Railways

Railway Board is the highest body for technical matters of the Railways and consists of Chairman and five Members out of which three are from the private sector. Secretary to the Government of Pakistan, Ministry of Railways is the ex-officio Chairman of Railway Board and the General Manager, Railways is the Chief Executive Officer. Organization Structure of Pakistan Railways is of functional type, headed by GM and assisted by four Addl. General Managers.

Pakistan Railways at this time is a vertically integrated organization and has four business units:

1. Infrastructure Business Unit 2. Passenger Business Unit

3. Freight Business Unit

4. Manufacturing and Services Unit


1.4 Human Resource

Pakistan Railways is the largest civil employer in the country and has about 90,000 employees consisting of staff and officers as of 2008). 71% of the total employees are working in Civil, Mechanical and Transportation departments. All the hierarchy positions are held by graduate Engineers.

2. PROBLEMS FACED BY PAKISTAN RAILWAYS

Since 1861 when the first railway line was laid down between Karachi and Kotri, the expansion of the railway network by the British came at a rapid pace up until 1947. The driving factors for this growth were strategic and economic in nature. For instance to thwart the Russians from the West, the British built the Khojak tunnel, the fourth largest at that time, in seemingly inaccessible areas of Balochistan to reach Chaman railway station. But after 1947, little has been done to expand and maintain this network.

2.1 Shortage of Locomotives:

The Pakistan Railways has a total of 546 locomotives but only 290 are on track while the rest are out of order. Similarly, 70 per cent carriages are out of service. In a report submitted to Railway Ministry, it has been disclosed that as many as 70 locomotives are awaiting spares at Pakistan Locomotive Factory, Risalpur since 2004.

2.2 Eroding Market Share:

Railway sector in Pakistan has not maintained its position in the transport sector. The market share of Pakistan Railways kept on declining with the passage of time. For example, annual passenger volume carried by Pakistan Railways in late 1970’s was approx. 145 million, which has come down to 59 million in 1992/93. The freight business was of PR was 15 million tons in late 1960’s but has come down to 7 million tons. Roads have steadily become the more preferred form of transportation. An example of PR’s declining market share is that it is moving only 11% of total petroleum products and 2% of the total containers. A more professionally managed and independent railways have immense growth potential.

2.3 Soaring Budget Deficit:


The biggest problem for Pakistan Railways is the soaring budget deficit. Although railways are traditionally not expected to earn profit. However, it is legitimate to expect from railways to meet at least operational expenses. Today Pakistan Railways with Rs.334 billion liabilities is at the verge of bankruptcy because of corruption, shortage of locomotives and losses incurred due to the running expenses. According to one report Rs 21 billion is spent on wages and pensions every month leaving the department less or nothing for maintenance of power and rolling stocks.

In the light of above problems the Railway Board decided to hire external OD consultants to design interventions that can help in turning around the organization into a successful commercial entity.

3. ENTERING & CONTRACTING

A group of four OD practitioners has been approached by the Railway Board to help Pakistan Railways recover from the verge of bankruptcy. As OD consultants for Pakistan Railways (PR), the first and foremost task for us is to understand the current structure of the organization and the issues. A meeting with the Chairman of Pakistan Railways, Raja Shahid Hussain and other members of Railway Board was conducted to discuss the issues.

3.1 Organizational Issues:

We conducted meetings with the members of Railway Board, General Manager Railways, and Additional General Managers of each business unit of Pakistan Railway and found out the following issues:

- Huge financial losses- Decreased market share

- Inefficient operations

- Corruption

3.2 Key Clients

In case of Pakistan Railways, our main client is the Railway Board. Other important key clients include GM Railways, Addl. GM of each business unit, and representatives from Railway Employees Union, Railway Workshop Worker’s Union, and Association of Station Masters etc.

3.3 OD Process


To fix the problems faced by Pakistan Railways (PR), we recommend the process with following key steps:

- Selecting a design team: A team of 8-10 individuals will be selected which will include key policy makers for Pakistan Railways, representatives from various functional areas of the organization and worker’s unions.

- Diagnosing: Once the team is selected a joint diagnosis of the organization will be conducted which will include understanding organization’s current strength and weaknesses, growth opportunities, organization culture and values etc.

- Action Planning: The first key output of the team is a 5 year action plan that describes where Pakistan Railway should move to, key activities and milestones, assigned responsibilities/accountabilities for those activities, and contingencies/assumptions that need to be monitored.

- Implementation, Monitoring & Evaluation: As the plan is implemented, new information, changes in the environment and other issues always arise that need adjustment. In this phase the OD consultants along with the design team will monitor the implementations and collect feedback to evaluate whether action plan is on track or not and will fix any deviations. Also design team will conduct formal evaluation processes and discuss their learning about organization structure and change.

3.4 Time & Resources

As OD consultants, we will provide consultancy services up to and including development of action plan. Additional time beyond that time can be contracted. Apart from the consultancy fee Pakistan Railways will also be responsible for all the direct expenses including airfares, hotels, etc. for the research. The complete process including diagnosis and development of action plan might take six to eight months subject to:

- Access to key information and people.- Commitment from PR management

- Access to sensitive information like HR records, PR policies, PR contracts etc.

- Prompt response/feedback from key clients.


4. DIAGNOSIS OF PAKISTAN RAILWAYS

In order to carry out a detailed diagnosis of Pakistan Railways, the OD Consultants along with the design team gather the key information through:

- Questionnaires- Interviews

- Observations

- Unobtrusive measures

The data collected help us in identifying the root causes behind the problems faced by Pakistan railways. Since the overall organization is facing problems, the diagnosis is carried out at organizational level. The findings of diagnosis are discussed in detailed as below:

4.1 Huge Losses & Budget Deficit

The reason for this loss is the presence of unnecessary departments which are white elephant for Pakistan Railways. The biggest among those is the Railways Police that takes over Rs 1.5 billion including emoluments and other facilities followed by Stores and Purchase. These departments should be abolished from Railways without further delay. Their utility for railways is marginal at best. The Audit and Accounts, Railways Workshops Division, and General Administration staff need drastic cuts. These organizations are heavily overstaffed. If they will continue to ignore the presence of non-productive over staffed departments with very insignificant contribution in overall performance of Pakistan Railways, the department will continue to decline. It shall never be in a position to meet the expectations of public.

Railways are operating at low rates. A flexible policy for rates and fare requires to be adopted whereby freight rates could be varied according to the type of commodities as well as direction.

4.2 Mismanagement

Currently Pakistan Railways is facing acute shortage of locomotives and spare parts for maintenance of out of service locomotives. Since independence little has been done to expand the railway network in Pakistan. As per the reports compiled by the design team, Pakistan Railways need 40 – 50 locomotives annually to run its operations effectively. However, during the past two decades only 100


locomotives have been added. The management of PR has failed to generate revenues through use of assets like land, locomotive factory, carriage factory etc.

The focus of Railway officials is on getting new locomotives while ignoring the improvement in operations and maintenance of existing locomotives. The plans to change broad gauge into standard gauge at this stage are not just costly but also unnecessary.

4.3 Decreased Market Share

Over the years, Pakistan Railways could not maintain its share in the country’s transport sector. With Railway ministry shutting down operations of various trains, it is no wonder that the market share of Pakistan Railways in cargo transport has fall to mere 5% from 75% in 1960s and 1970s.

Around the world, railways are the cheapest and safest mode of transport and majority of goods transport is carried out via railways. However, in Pakistan the situation is completely different. The indifferent attitude of various governments, direct competition from NLC, container mafia and bus mafia are all behind the drastic condition of Pakistan Railways today. Railways and NLC need to coordinate their operation and also compete in their operations to economize on the inter – modal movement of goods traffic. The Railway should carry goods in bulk in the plains, while NLC and private road transport should take over further distribution from these points in to the hilly regions. This will help the railway to concentrate its resources of locomotives and wagons on the main line in the plains, after withdrawing them from the hilly regions. This is in fact the best and most economical rail road mix for the country.

4.4 Corruption

Corruption is the biggest problem Pakistan Railways is facing today. The Railway Department has been suffering losses since years long. Contractor system is one of the causes of such losses. Moreover, there are enormous irregularities in local purchases. The number of officers’ cadre has increased considerably since 1977, mostly due to political appointments. It has been revealed that the crises are self generated creating a space for more corruption and PRACS-Pakistan Railways Advisory Commute Services is responsible for this mess.

Selective services have been privatized by allotting its contract to different private parties to operate those privatized trains. Ironically the contract has been awarded only for ticketing and like buss conductors those private firms after selling out the ticket deposits payments into the Railways account. As per agreement after


deducting its commission the contractors are legally bound to deposit the funds into the Railway account but due to the nexuses between Railways bosses and private contractors deposit the funds in private accounts. This illegal practice has confronted Railways with financial crunch where as the officials of Railways are least bothered for the interest of Pakistan. Some Railways circles insist that Pakistan Railways is still a viable and progressive organization, provided the rampant corruption could be controlled.

In short Pakistan Railways is a classic example of bad governance, poor policies, corruption and mismanagement.

5. ACTION PLANNING

After a careful diagnosis, the results were feedback to the main clients. Several meetings were conducted with key clients to determine the type of OD interventions that will most appropriately suit the needs of Pakistan Railways. The clients and consultants jointly agree that Pakistan Railways need a mixture of techno-structural and collaborative interventions to recover from the current crisis.

5.1 Structural Design

Pakistan Railways is a vertically integrated highly bureaucratic organization. The current organizational structure is a mixture of functional and divisional structures. The positions are divided into four classes:

- Officer Cadre- Station Masters- Running Staff- Class Four comprises of labors, signal operators etc.

The structure needs to be revamped into a more leaner and flexible one. A combination of divisional and network structure will be most appropriate for Pakistan railways. The PR management can retain the structure based on current divisions and create a network of these divisions for better management of operations and resources.

5.2 Downsizing

The Pakistan Railways is an over staffed organization. Political appointments over the years have added to the problem and are the major reason behind organization’s financial troubles. Departments like Railway Police, Stores &


Purchase need to be abolished. Other over staffed departments like Audit & Accounts, General Administration etc. need drastic cuts in workforce. For successful implementation of downsizing, the PR management must follow the following steps:

- Clarify organization’s strategy to its members and provide ample opportunities for them to voice their concerns ask questions and obtain counseling.

- In case of PR, the structural change will help in eliminating unnecessary layers, merge units and non productive staff can be reduced through layoffs and buyout packages.

- While implementing methods of downsizing, management should use a top down approach. It should target inefficient and high cost areas. Keep people informed throughout the process about restructuring activities.

- Address the needs of survivors and those who leave to help them overcome the stress of structural changes.

5.3 Reengineering

Pakistan Railways have great potential for growth. However, the current process and technology does not provide much room for implementing growth strategies. Pakistan Railways can improve the performance of its various functions and department through proper use of information technology. The areas where information technology can play a vital role include:

- Seat Reservations- Freight Management- Asset Management- Track Management- Rolling stock inventory- Electric Billing- Timetable

During diagnosis many members of Pakistan Railways suggested that the organization should be privatized like PTCL to improve performance efficiency. However, research suggested that key state owned enterprises like Railways, Airlines, and Road Transport etc. should remained publically owned for the overall benefit of the customers. However, Pakistan Railways can privatize some of its units like The Locomotive Factory, The Carriage Factory and other large manufacturing units.


5.4 Alliance Interventions

Apart from techno-structural interventions, Pakistan Railways can make good use of collaborative interventions to improve productivity. Instead of hiring information technology and database experts, Pakistan Railways can create an alliance with National Database & Registration Authority (NADRA) for developing Track Management and Seat Reservation Systems.

Similarly Pakistan Railways can create alliance with China Railway Engineering Corporation (CREC) for expansion of railway tracks in Pakistan.

5.5 Network Interventions

With the help of Public-Private Partnership, Pakistan Railways can create networks to operate some of its route for privatized trains. For creating such a network, PR can call for a private investor’s convention and brief those about the available opportunities select the organizations that can fit in the network best and implement networking strategies and evaluate the performance of networks periodically.

For small routes Automatic Train Operation System can be implemented by creating a network of Pakistan Railways with US General Railway Signal Corporation (GRS), UK Westing House and Siemens Germany.

6. CONCLUSION

With growing interest in the development of Trans-Asian rail links, one might think that Pakistan Railways has a promising future. However, the Railway Ministry, the Railway Board and all the relevant agencies have to play their role to return Pakistan Railways to its glorious days. Before allocating any further funds to bail out the organization, government should force the management to undergo vast structural changes as recommended by OD consultants in this report. These changes can be implemented within a period of 3 – 5 years and once the changes have been made and evaluated then new investment plans can be made.


BIBLIOGRAPHY

- Organization Development & Change – 8th Edition by Cummings & Worley.

- www.pakrail.com - www.railwaygazette.com - www.wikipedia.com - www.pakistaniat.com - Article “Corruption in Pakistan Railways” published in Pukhtoonistan

Gazette on Friday, 26 November, 2010- http://pak1stanfirst.com/201102253236/pakistan/economy/fixing-

pakistan-railways.html- Various articles and editorials published in Daily Dawn and The

Nation from July 2010 – March 2011- http://www.privatisation.gov.pk/Transport/Pakistan%20Railways.htm


http://www.privatisation.gov.pk/Transport/Pakistan%20Railways.htm

http://pak1stanfirst.com/201102253236/pakistan/economy/fixing-pakistan-railways.html

http://pak1stanfirst.com/201102253236/pakistan/economy/fixing-pakistan-railways.html

http://www.pakistaniat.com/

http://www.wikipedia.com/

http://www.railwaygazette.com/

http://www.pakrail.com/

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