462 infrastructure projects hit by cost overruns totalling over Rs 4.36 lakh cr

As many as 462 infrastructure projects, each worth Rs 159 crore or more have been hit by cost overruns totalling more than Rs 4.36 crore, according to a report. The Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 crore and above. Of the 1,737 such projects, 462 reported cost overruns and 557 were delayed.

“Total original cost of implementation of the 1,737 projects was Rs 22,33,409.53 crore and their anticipated completion cost is likely to be Rs 26,69,649.35 crore, which reflects overall cost overruns of Rs 4,36,239.82 crore (19.53% of original cost), the ministry’s latest report for March 2021 said.

The cost overrun, as per the report, for completion of these 462 projects works out to be Rs 4,36,239.82 crore. The expenditure incurred on these projects till March 2021 is Rs 13,06,617.54 crore, which is 48.94% of the anticipated cost of the projects. However, the report said the number of delayed projects decreases to 412 if the delay is calculated on the basis of the latest schedule of completion.

Furthermore, for 938 projects neither the year of commissioning nor the tentative gestation period has been reported. Out of the 557 delayed projects, 114 projects have overall delay in the range of 1-12 months, 131 projects (13-24 months), 190 projects (25-60 months) and 122 projects (61 months and above). The average time overrun in these 557 delayed projects is 44.69 months.

Reasons for time overruns as reported by various project implementing agencies include delay in land acquisition, delay in obtaining forest and environment clearances, and lack of infrastructure support and linkages. Delay in tie-up for project financing, delay in finalization of detailed engineering, change in scope, delay in tendering, ordering and equipment supply, and law and order problems, among others, are the other reasons, the report said.

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It also cited state-wise lockdown due to COVID-19 as a reason for the delay in implementation of these projects. The report also observed that project agencies are not reporting revised cost estimates and commissioning schedules for many projects, which suggests that time and cost overrun figures are underreported.