Overrun: average 38.74 months for 563 projects
Cost of 1,636 projects has increased by a hefty 20.52% to Rs 2,353,108.80 crore from original implementation cost of Rs 1,952,524.85 crore, reflecting the challenges of managing projects in India.
The Ministry of Statistics and Programme Implementation which monitors projects, each of Rs.150 crore and above, reported cost overruns of 388 projects and project time escalation of 563 projects as of October 2019.
Industry observers said this reflected the urgent need to have a higher level of efficiencies in managing projects in the country, as the completion cost is likely to be Rs.400,583.95 crore, or 20.52%, of original cost.
“Total original cost of implementation of the 1,636 projects was Rs.1,952,524.85 crore and their anticipated completion cost is likely to be Rs.2,353,108.80 crore, which reflects overall cost overruns of Rs.400,583.95 crore (20.52% of original cost),” Press Trust of India reported, citing the ministry’s latest report for October 2019.
As many as 388 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of more than Rs 4 lakh crore owing to delays and other reasons, according to a report in October 2019.
The Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 crore and above. Of such 1,636 projects, 388 projects reported cost overruns and 563 projects time escalation.
Expenditure incurred on these projects till October 2019 is Rs 10.32 lakh crore, which is 43.86% of the anticipated cost of the projects.
Further, it said that for 720 projects, neither the year of commissioning nor the tentative gestation period has been reported.
Out of the 563 delayed projects, 185 projects have overall delay in the range of one to 12 months, 123 projects in the range of 13 to 24 months, 136 projects reflect delay in the range of 25 to 60 months and 119 projects show delay of 61 months and above.
The average time overrun in these 563 delayed projects is 38.74 months.
Delays in land acquisition, forest clearance and supply of equipment were among the main reasons for time overruns.
Other reasons given were fund constraints, geological surprises, geo-mining conditions, slow progress in civil works, shortage of labour, inadequate mobilisation by the contractor, Maoist problems, court cases, contractual issues, ROU/ROW (right of use/right of way) problems, law and order situation, said the Ministry’s report.
Project agencies are not reporting revised cost estimates and commissioning schedules for many projects, indicating that time or cost overrun figures are under-reported, according to the report.
However, the report said the number of delayed projects decreases to 490 if delay is calculated on the basis of the latest schedule of completion. fiinews.com