373 projects show cost overruns of Rs 3.89 trillion

09 Dec 2019 Editorial Team

The report states that the original estimated cost of all the projects is approximately Rs 19.40 trillion. Completion cost is now expected to be around Rs 23.29 trillion. This amounts to cost overruns of around 20.05 per cent from the original cost – of around Rs 3.89 trillion. Till August 2019, the expenses incurred by these projects amounts to Rs 9.75 trillion, which is 41.85 per cent of the expected cost of the projects.

Additionally, the report included the number of projects that had crossed their deadlines; these amounted to 552. The average time overrun for all 552 projects was reported to be 38.89 months.

Reportedly, out of all the 552 projects showing time overruns, 181 projects are showing an overall delay in the range of 1 to 12 months, 128 projects have delay of 13 to 24 months, 127 projects show delay in the range of 25 to 60 months and 116 projects reflect delay of 61 months and above. However, as per the report, the number of delayed projects decreases to 489 if the delay is calculated on the basis of latest schedule of completion. Moreover, for 687 projects neither the year of commissioning nor the tentative gestation period has been reported.

Escalations in time could be caused by issues relating to obtaining forest clearances, acquiring required land and supply of equipment. According to the report, developers also face additional constraints because of funding, geographical conditions, labour issues and court cases, among other reasons. Reportedly, it is possible that the time and cost overrun figures have been under-reported since project agencies have not reported revised cost estimates and commissioning schedules for numerous projects.

The Ministry of Statistics and Programme Implementation (MoSPI), charged with the responsibility of monitoring infrastructure projects worth Rs 1.5 billion or more, has released a report for August 2019, according to which, out of a total 1,634 projects, around 373 have shown cost overruns to the tune of Rs 3.89 trillion. The report states that the original estimated cost of all the projects is approximately Rs 19.40 trillion. Completion cost is now expected to be around Rs 23.29 trillion. This amounts to cost overruns of around 20.05 per cent from the original cost – of around Rs 3.89 trillion. Till August 2019, the expenses incurred by these projects amounts to Rs 9.75 trillion, which is 41.85 per cent of the expected cost of the projects. Additionally, the report included the number of projects that had crossed their deadlines; these amounted to 552. The average time overrun for all 552 projects was reported to be 38.89 months. Reportedly, out of all the 552 projects showing time overruns, 181 projects are showing an overall delay in the range of 1 to 12 months, 128 projects have delay of 13 to 24 months, 127 projects show delay in the range of 25 to 60 months and 116 projects reflect delay of 61 months and above. However, as per the report, the number of delayed projects decreases to 489 if the delay is calculated on the basis of latest schedule of completion. Moreover, for 687 projects neither the year of commissioning nor the tentative gestation period has been reported. Escalations in time could be caused by issues relating to obtaining forest clearances, acquiring required land and supply of equipment. According to the report, developers also face additional constraints because of funding, geographical conditions, labour issues and court cases, among other reasons. Reportedly, it is possible that the time and cost overrun figures have been under-reported since project agencies have not reported revised cost estimates and commissioning schedules for numerous projects.

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