India curbs project cost overruns by 50 percent

September 23rd, 2008 - 1:28 pm ICT by IANS  

New Delhi, Sep 23 (IANS) India has brought down project cost overruns by nearly 50 percent in under two decades through timely implementation of various schemes, says a government assessment.The Ministry of Statistics and Programme Implementation says the cost overrun has come down to around 12 percent since 1991, when it was over 60 percent, though there is scope for further improvement.

“Our latest assessment says the cost overrun has come down to 11.75 percent as compared to 61.6 percent in March 1991. It is a big leap to save funds,” said a senior ministry official who did not wish to be identified.

The ministry, headed by Minister of State G.K. Vasan, monitors the implementation of major infrastructure projects related to energy, railway, coal, civil aviation and road transport.

Timely implementation of mega projects has always been a matter of concern for the government. Delay is normally attributed to red tape, law and order problems and flaws in conceiving the projects.

“The cost overrun has come down because of regular monitoring of project implementation. We at the ministry constantly keep other ministries concerned posted about the delay, and ask them to expedite the execution process,” the official told IANS.

The infrastructure and project monitoring division of the statistics and policy implementation ministry currently monitors 868 central sector projects, each costing Rs.200 million or above at an anticipated cumulative cost of Rs.403,755.85 crore or over Rs.4.03 trillion.

“The cost overrun was 22.4 percent in March 2004,” the official said, adding that better coordination at the ministry level had further improved the performance.

“The original cost of 868 projects stood at Rs.361,296.59 crore (Rs.3.61 trillion) against the cumulative anticipated cost of Rs.403,755.85 crore (Rs.4.03 trillion),” said the official.

According to him, 329 projects are delayed with respect to original schedule, while 316 projects were found to be sluggish in meeting the revised schedule.

The private public partnership (PPP) projects in infrastructure, however, do not suffer from the malaise of cost overrun, at least not as acutely as the public sector projects.

“The cost overrun is not a problem with PPP infrastructure projects. They are well on time, and will be implemented in all likelihood on time,” said Arvind Mayaram, joint secretary, Department of Economic Affairs (DEA), Ministry of Finance.

“There are several factors leading to cost overrun in the case of public sector projects. It is, however, being significantly checked. We expect continuous improvement,” Mayaram told IANS on the sidelines of the launch of his ministry’s database here Monday.

The finance ministry’s database on PPP projects currently covers 220 infrastructure projects worth Rs.127,987 crore or Rs.1.27 trillion. These are projects in the sectors of airports, ports, roads and railways.

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