513 projects face Rs 40,000 cr overrun
Dr. M.S. Kapadia
Government Project Monitor
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
[May 12-18, 2008]