The 266th Flash Report on Central governent projects (each with an outlay of Rs 100 crore and above) for December 2007, brought out by the ministry of statistics and programme implementation, shows that 513 projects involving a total envisaged outlay of Rs 3.83 trillion are set to suffer Rs 40.000 crore (12 per cent) cost overrun, according to current indications.
Nearly three-fourth of the overrun is concentrated in railway projects, which would mean that 133 railway projects covered in the report would cost 79 per cent more than envisaged when they were formulated. Next two sectors in terms of overrun are petroleum (Rs 6,356 crore, or 12 per cent) and power (Rs 2,241 crore, or 2 per cent). The Flash Report covers 200 roadway projects with Rs 60,875 crore outlay, 133 railway projects with Rs 67,095 crore outlay, and 62 power sector project with anticipated capex of Rs 112,377 crore.
Cost overrun can be caused by cost escalations of materials that go into projects, change in scope of the project and/or slippages; the last is to be abhorred as it additionally involves costs to economy of delayed infrastructure facilities. Here also, picture is not reassuring: out of 513 projects, only 13 projects were progressing ahead of schedule and 164 were on schedule. As against this, as many as 210 projects would miss their scheduled dates of commissioning. In addition, 82 projects were sanctioned sans any fixed dates of commissioning. More ominously, as many as 31 projects have reported fresh slippages in the range of 1-48 months. In most of the delayed projects, the concerned authorities have not offered any reason for new delays.
Out of total cost of Rs 3.83 trillion, the capex till the end of 2007 in the projects totaled Rs 1.35 trillion, which would imply that Rs 2.48 trillion would be spent on these projects in the next few years. With these details mapped by individual projects, the report is a very useful tool for project vendors.
Incidentally, there is little monitoring of state projects and more importantly private sector projects. With billions of dollars pouring in infrastructure projects from all ownership categories including PPP modes, there should be some Central agency tracking developments in the projects world and disseminating information through periodical reports. The agency could also act as the forum for resolving impediments to ensure that projects come up in time without cost-time overruns.