360 projects report cost overruns of Rs 3.88 tn
PORTS & SHIPPING

360 projects report cost overruns of Rs 3.88 tn

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 June 2019, according to which, out of a total 1,608 projects, more than 360 have shown cost overruns to the tune of Rs 3.88 trillion.

The report states that the original estimated cost of all the projects is approximately Rs 19.18 trillion. Completion cost is now expected to be around Rs 23.05 trillion. This amounts to cost overruns of around 20.23 per cent from the original cost. Additionally, the report included the number of projects that had crossed their deadlines; these amounted to 550. The average time overrun for all 550 projects was reported to be 39.24 months.

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.

“Project implementation in certain infrastructure sectors continues to remain challenging, with many projects witnessing significant time and cost overruns,” says Shubham Jain, Group Head & Senior Vice-President, Corporate Ratings, ICRA. “As per the recent data available, the aggregate cost overrun for all major ongoing infrastructure projects as a percentage of original cost had increased to over 20 per cent—the highest in about eight years. Two key sectors—railways and power—have contributed to the majority of the cost overruns. This is despite the various reform measures undertaken by the Government. Delays in land acquisition, the difficulty faced in project financing, and increasing cost of land acquisition have been some of the key reasons behind the time and cost overruns.”

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 June 2019, according to which, out of a total 1,608 projects, more than 360 have shown cost overruns to the tune of Rs 3.88 trillion. The report states that the original estimated cost of all the projects is approximately Rs 19.18 trillion. Completion cost is now expected to be around Rs 23.05 trillion. This amounts to cost overruns of around 20.23 per cent from the original cost. Additionally, the report included the number of projects that had crossed their deadlines; these amounted to 550. The average time overrun for all 550 projects was reported to be 39.24 months. 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. “Project implementation in certain infrastructure sectors continues to remain challenging, with many projects witnessing significant time and cost overruns,” says Shubham Jain, Group Head & Senior Vice-President, Corporate Ratings, ICRA. “As per the recent data available, the aggregate cost overrun for all major ongoing infrastructure projects as a percentage of original cost had increased to over 20 per cent—the highest in about eight years. Two key sectors—railways and power—have contributed to the majority of the cost overruns. This is despite the various reform measures undertaken by the Government. Delays in land acquisition, the difficulty faced in project financing, and increasing cost of land acquisition have been some of the key reasons behind the time and cost overruns.”

Next Story
Infrastructure Energy

South West Pinnacle Wins Rs 30 Cr Oman Mining Contract

South West Pinnacle Exploration Ltd has secured a Rs 30 crore contract from Minerals Development Oman (MDO) for mining exploration in concession areas 12B and 13.The two-year project will be carried out via Alara Resources LLC, a JV in Oman. MDO, backed by Oman’s investment authorities, focuses on monetising mineral wealth.The contract covers copper, gold, and chromite and highlights South West Pinnacle’s growing footprint in international exploration and mining services. ..

Next Story
Equipment

Godrej GEG Boosts Intralogistics with AI and Green Tech

Godrej Enterprises Group (GEG) is revolutionising warehouse and factory logistics through its Material Handling Equipment and Storage Solutions arms by integrating AI, IoT, and automation.With 20–25% market share and 85% local sourcing, GEG champions Atmanirbhar Bharat and sustainability. The Chennai plant, a green manufacturing leader, uses RoHS-compliant materials and has slashed energy consumption by 60%.GEG serves e-commerce, FMCG, retail, and cold chains with high-performance racking and electric forklifts. Upcoming IoT-enabled forklifts and telematics solutions aim to improve speed, sa..

Next Story
Infrastructure Urban

Amit Shah Inaugurates Key Projects Across Gujarat

Union Home Minister Amit Shah inaugurated and laid the foundation stone for various projects in Gujarat’s Panchmahal district and Ahmedabad.In Godhra, he inaugurated the Center of Excellence building, sports complex, reservoir, and Miyawaki plantation. In Ahmedabad, he unveiled a new cooperative complex in Adaroda village and a primary school in Juwal.These projects, under the Model Co-op Village scheme, aim to boost education, sustainability, and rural development across the state. ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?