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Time and cost overruns haunt India's infra projects

The cumulative cost overrun of 1,568 projects monitored across the country, each with an investment of Rs 150 crore or more, is Rs 4.5 lakh crore.

June 27, 2022 / 05:28 PM IST
Representative image (REUTERS/Amit Dave)

Representative image (REUTERS/Amit Dave)

As many as 721 projects have been delayed and 423 have reported cost overruns as of May 2022, according to a report published by the Ministry of Statistics and Programme Implementation, monitoring projects costing Rs 150 crore and above.

According to the report, 241 projects have reported both cost and time overruns. The report includes data from 1,568 projects across the country monitored by the Infrastructure and Project Monitoring Division of the ministry.

“Total original cost of implementation of the 1568 projects was Rs 21,59,802.67 crore and their anticipated completion cost is likely to be 26,54,818.05 crore, which reflects overall cost overruns of Rs 4,95,015.38 crore (22.92 percent of original cost),” the report said.

The cumulative expenditure incurred on these projects till May 2022 was Rs 13,42,535.22 crore, which is more than 50 percent of the total anticipated cost of the projects.

Railway projects took the top two spots of projects with the biggest cost overrun percentages.

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The Lalitpur-Singrauli railway line project, which was originally approved in 1998 and was expected to be completed by 2008, is yet to be completed and has seen a cost overrun of 3231 percent. The project is now anticipated to cost Rs 8,248 crore, compared to the original cost of Rs 248 crore.

Similarly, the Madurai-Tuticorin broad-gauge line via Aruppukottai, announced in 2011 has seen a cost overrun of 1650 percent since then. The anticipated cost of the project now stands at Rs 2,112 crore, compared to the original cost of Rs 121 crore.

When it comes to the size of the amounts, the Polavaram Irrigation Project is reported to have the maximum cost overrun as the anticipated cost has gone up to Rs 55,549 crore from the original cost of Rs 10,151 crore. This is an increase of Rs 45,397 crore.

Likewise, the Eastern Dedicated Freight Corridor project – which is next on the list of projects with a maximum cost overrun – has seen a cost overrun of Rs 39,630 crore as it is now expected to cost Rs 51,219 crore compared to the original Rs 11,589 crore.

Only 270 of the monitored projects were on schedule as of May, while eight were ahead of schedule.

“Out of 721 delayed projects, 113 (15.67 percent) projects have overall delay in the range of 1 to 12 months, 121 (16.78 percent) projects have a delay in the range of 13 to 24 months, 350 (48.54 percent) projects have a delay in the range of 25 to 60 months and 137 (19 percent) projects have a delay of 61 months and above,” the report stated. The average time overrun among these projects is 43.34 months.

However, the number of delayed projects decreases to 563 if the delay is calculated based on their revised schedule rather than their originally anticipated date of completion.

With a delay of 26 years, the Bangalore-Sathyamangalam rail project tops the list of projects with the largest time overruns. The project, which was approved in 1996, was originally supposed to be commissioned in 2002. But it is now expected to be commissioned only in 2028.

Mahabubnagar – Munirabad rail project comes in second for the largest time overrun, with a delay of 23 years. In fact, the top five positions in the list are taken up by railway projects.

Delay in land acquisitions, environment clearances, tendering and contractual issues among others have been blamed by the report for the time overruns. The COVID-19-induced lockdowns have also been cited as a reason.

The time and cost overruns could be undercounted because of improper reporting done by the project agencies. “It has also been observed that project agencies are not reporting revised cost estimates and commissioning schedules for many projects, which suggests that time/cost overrun figures may be underreported,” the report stated.
Sreedev Krishnakumar
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