403 infra projects show cost overruns of Rs 4.05 lakh crore

Source: The Hindu Business Line, Jul 26, 2020

New Delhi: As many as 403 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns of over Rs 4.05 lakh crore owing to delays and other reasons, according to a report.

The Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 crore and above.

Of the 1,686 such projects, 403 reported cost overruns and 530 time escalation.

“Total original cost of implementation of the 1,686 projects was Rs 20,66,771.94 crore and their anticipated completion cost is likely to be Rs 24,71,947.66 crore, which reflects overall cost overruns of 4,05,175.72 crore (19.60 per cent of original cost),” the ministry’s latest report for March 2020 said.

The expenditure incurred on these projects till March 2020 is 11,20,696.16 crore, which is 45.34 per cent of the anticipated cost of the projects.

However, it said that the number of delayed projects decreases to 452 if the delay is calculated on the basis of latest schedule of completion.

Further, it said that for 857 projects neither the year of commissioning nor the tentative gestation period has been reported.

Out of 530 delayed projects, 155 have overall delay in the range of 1 to 12 months, 114 have delay of 13 to 24 months, 148 reflect delay in the range of 25 to 60 months and 113 projects show delay of 61 months and above.

The average time overrun in these 530 delayed projects is 41.16 months.

The brief reasons for time overruns as reported by various project implementing agencies are delay in land acquisition, delay in obtaining forest/environment clearances and lack of infrastructure support & linkages.

Besides there are other reasons like delay in tie-up of project financing, delay in finalisation of detailed engineering, change in scope, delay in tendering, ordering and equipment supply, law and order problems, geological surprises, pre-commissioning teething troubles and contractual issues, among others, the report said.

It also observed that project agencies are not reporting revised cost estimates and commissioning schedules for many projects, indicating that time or cost overrun figures are under-reported.

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