417 infrastructure projects in India face Rs 4.77 tn cost overrun

17 Nov 2023 CW Team

The initial cost of implementing the 1,763 projects was Rs 24,86,4027 million, with the projected completion cost expected to reach Rs 29,64,3451.3 million, indicating an overall cost overrun of Rs 4,77,9424.3 million (19.22% of the original cost), as per the ministry's September 2023 report.

As of September 2023, the expenditure on these projects amounted to Rs 15,44,6006.7 million, representing 52.11% of the anticipated project cost. The report noted a decrease in the number of delayed projects to 617 when considering the latest completion schedule. Additionally, 298 projects lacked reported commissioning years or tentative gestation periods.

Among the 842 delayed projects, 194 experienced delays of 1-12 months, 190 were delayed for 13-24 months, 323 projects faced delays of 25-60 months, and 123 projects were delayed for more than 60 months. The average time overrun for these 842 delayed projects was 36.94 months. Reasons for time overruns cited by project implementing agencies included delays in land acquisition, obtaining forest and environment clearances, and insufficient infrastructure support and linkages. Other factors included delays in project financing tie-ups, finalisation of detailed engineering, changes in scope, tendering, ordering and equipment supply, as well as law and order problems.

The report highlighted state-wise lockdowns due to COVID-19 in 2020 and 2021 as contributing to project implementation delays. Furthermore, it observed that project executing agencies often fail to report revised cost estimates and commissioning schedules for many projects, suggesting potential underreporting of time and cost overrun figures.

An official report reveals that in September of this year, 417 infrastructure projects, each requiring an investment of Rs 1.5 billion or more, experienced cost overruns exceed Rs 4.77 trillion. The Ministry of Statistics and Programme Implementation, overseeing projects valued at Rs 1.5 billion and above, reported that out of 1,763 projects, 417 faced cost overruns, and 842 projects encountered delays. The initial cost of implementing the 1,763 projects was Rs 24,86,4027 million, with the projected completion cost expected to reach Rs 29,64,3451.3 million, indicating an overall cost overrun of Rs 4,77,9424.3 million (19.22% of the original cost), as per the ministry's September 2023 report. As of September 2023, the expenditure on these projects amounted to Rs 15,44,6006.7 million, representing 52.11% of the anticipated project cost. The report noted a decrease in the number of delayed projects to 617 when considering the latest completion schedule. Additionally, 298 projects lacked reported commissioning years or tentative gestation periods. Among the 842 delayed projects, 194 experienced delays of 1-12 months, 190 were delayed for 13-24 months, 323 projects faced delays of 25-60 months, and 123 projects were delayed for more than 60 months. The average time overrun for these 842 delayed projects was 36.94 months. Reasons for time overruns cited by project implementing agencies included delays in land acquisition, obtaining forest and environment clearances, and insufficient infrastructure support and linkages. Other factors included delays in project financing tie-ups, finalisation of detailed engineering, changes in scope, tendering, ordering and equipment supply, as well as law and order problems. The report highlighted state-wise lockdowns due to COVID-19 in 2020 and 2021 as contributing to project implementation delays. Furthermore, it observed that project executing agencies often fail to report revised cost estimates and commissioning schedules for many projects, suggesting potential underreporting of time and cost overrun figures.

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