Infrastructure projects: Cost overruns of Rs 4.83 lakh crore impact 425 infrastructure projects

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Up to 425 infrastructure projects, each requiring an investment of Rs 150 crore or more, have been hit by cost overruns of more than Rs 4.83 billion, according to a report.

According to the Ministry of Statistics and Program Implementation, which oversees infrastructure projects of Rs 150 crore and above, out of 1,579 projects, 425 projects reported cost overruns and up to 664 projects were delayed.

“The initial total cost of implementing the 1,579 projects was Rs. 21.95196.72 crore and their projected completion cost is likely to be Rs. 26.78365.62 crore, making the total cost overruns of Rs (22.01 percent of the original cost),” the ministry’s latest report for March 2022 said.

According to the report, the expenses for these projects as of March 2022 totaled Rs. 13,88,760.73, which is 51.85 percent of the expected cost of the projects.

However, the number of delayed projects fell to 561 when the delay is calculated based on the latest schedule for completion.

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In addition, for 606 projects neither the year of commissioning nor the expected maturity time was reported.

Of the 664 delayed projects, 94 had overall delays ranging from 1-12 months, 124 were delayed by 13-24 months, 331 projects were delayed by 25-60 months, and 115 projects were delayed by 61 months or more.

The average timeout for these 664 delayed projects was 42.41 months.

Reasons for timeouts reported by various project implementation agencies include delays in land acquisition, delays in obtaining forest and environmental clearances, and lack of infrastructure support and connectivity.

Other reasons include delays in tying in project funding, delays in completing detailed engineering, changes in scope, delays in bidding, ordering and delivery of equipment, and law and order issues.

The report also cited state lockdowns due to COVID-19 as a reason for the delay in implementing these projects.

It has also been observed that project agencies are not reporting revised cost estimates and commissioning plans for many projects, suggesting that the time/cost overrun figures are underreported, it said.

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