Govt to rein in cost, time overruns of infra projects

New Delhi: Worried over the excessive cost and time overruns of the major infrastructure projects, the central government is mulling a mechanism that could ensure focused and special monitoring of such projects by the respective administrative ministries.

There are 46 major delayed infrastructure projects, which have the cost overrun of 50 per cent and more, and the time overrun of 50 months and more, official sources told Bizz Buzz. These projects have a contribution of about 39 per cent of the total cost overruns and 20 per cent of the total time overruns, they added.

Last month, the government found that as many as 647 out of a total of 1,559 projects worth Rs 150 crore or more were delayed. Further, 428 projects had cost overruns. The anticipated completion cost of all the projects is Rs 2,672,201.26 crore.

The original cost was Rs 2,173,907.11 crore. This means that Rs 498,294.15 crore are more anticipated to be spent on the projects.

There are several reasons for time overruns, officials said, adding that delays in acquiring land and getting forest and environmental clearances are major factors. Often infrastructure support and linkages are inadequate. The finalization of detailed engineering is sometimes not in time.

There are also delays in tying up of project financing, in tendering, ordering and equipment supply, and in technical approvals. Projects sometimes also face law and order issues, including encroachments.

Then there are also geological surprises and contractual issues. Surprising though it might appear against the backdrop of a high unemployment rate, sometimes it is difficult to find a workforce.

The Covid-induced lockdowns also played havoc with many infrastructure projects.

Such is the bureaucratic apathy that even Central government projects had to wriggle out of red tape tied around them by the local authorities. Besides, these also suffer because of court cases.

Underestimation of the original cost and changes in rates of foreign exchange and statutory duties are major causes for cost escalation. Environmental safeguards and rehabilitation measures have also made the Central projects costlier. Land prices are going up all across the country, which makes projects more expensive.

Then there is often change in the scope of projects, which leads to both time and cost overruns. Apart from general inflation, officials believe that monopolistic pricing by vendors of equipment services also augments project costs. While the government wants to start special monitoring of projects in the foreseeable future, it has taken several steps to expedite them. The project appraisal has been made more rigorous. There are also online monitoring and regular reviews.