PROJECT AND COST OVERRUNS - A WHIRLPOOL SUCKING INDIA IN

By Ruma Dubey

The joke on the street – if a project, maybe a road or a railway track is mooted to be built in two years, be assured it will surely get ready for your to-be-born child to use! This is just like the letter from Indian Post coming with the news of the new-born after the infant has celebrated its first birthday.

Well, the Indian Post has surely improved and letters do get delivered on time yet projects, especially those started by the Govt go on for years and years and years. One road will be dug up during summer for repair work before monsoon but it does not get ready even after monsoon goes and winter goes, another summer comes and once again monsoon comes. That somehow, just has not changed; in fact it has got worse.

A project is announced, it might take a year or two to first get the project outlay and plan approved and then begins the land acquisition and approvals. Ten years has become the norm. And that too if all approvals come in. The Ministry of Statistics and Programme Implementation or Mospi as it is more popularly recognized as, has presented a Flash report on project status till end of December 2014. And it’s a very dismal picture. Take a look….

This report contains information on the status of the 738 Central Sector Infrastructure Projects costing Rs.150 crore and above.

• During December 2014, 12 projects (4 projects are in Petroleum, 3 projects each are in Power and Steel and 1 project each is in Shipping & Ports and Road Transport & Highways) have reported completion.

• Out of 738 projects, 315 projects are delayed with respect to original schedule and 71 projects have reported additional delays vis-à-vis the date of completion reported in the previous month. Of these 71projects, 24 are Mega Projects costing 1000 crore and above.

• Out of 315 delayed projects, 76 projects have overall delay in the range of 1 to 12 months, 70 projects have delay in the range of 13 to 24 months, 95 projects have delay in the range of 25 to 60 months and 74 projects have delay of 61 months and above.

• Out of the 738 projects, 6 projects are ahead of schedule, 117 are on schedule.

• The brief reasons for time overruns as reported by various project implementing agencies are delay in land acquisition, delay in forest clearance, delay in supply of equipments, fund constraints, geological surprises, problems in equipment erection, geo-mining conditions, slow progress in civil works, shortage of labour, in adequate mobilization by the contractor, maoist problems, court cases, contractual issues, ROU/ROW problems, law and order situation.

• In comparison to April 2014, number of projects reporting cost overruns has gone down from 32% to 30% whereas projects reporting time overruns have increased to 39% from 43%.

• The maximum delay, not surprisingly, was in the Road Transport & Highway projects – of the 136 projects on monitor, 98 projects have been delayed of which 41 have got more delayed during Dec’14.

• Next comes the Power sector, where out of 102 projects, 63 projects are delayed. In Railways, which has the maximum number of projects – 291, 35 projects are delayed.

• Atomic energy had four projects and all four are delayed while in telecom, out of 3, two projects are delayed.  In Civil Aviation Sector, out of 7projects, 4 projects are delayed. In the steel sector, out of 24 projects, 17 projects are delayed.

• In terms of cost, of the total original cost of implementation of the 738 projects was Rs.9,77,589.16 crore and their anticipated completion cost is likely to be Rs.11,84,766.43 crore, which reflects overall cost overruns of Rs.2,07,177.27crore (21.20 % of original cost).

• The expenditure incurred on these projects till December 2014 is Rs.5,14,200.53 crore, which is 43.40 % of the anticipated cost of the projects.

The ground to be covered is thus immense and really speaking, we need to write off FY15, with the hope that FY16 will see projects getting completed. But for now, the picture is dismal and realistically speaking, we should not expect much from FY15 results of India Inc.