Wednesday, July 24, 2024

Government Projects See Positive Shift: Cost Overruns Drop Below 18% in Four Years

The latest government data reveals a positive trend in the execution of infrastructure projects, as the proportion of cost overruns dipped below 18% for the first time in almost four years. According to the government’s released statistics, the percentage of cost overruns, which had reached 19.2% in September, decreased to 17.4% in October. Additionally, the report highlights a decrease in the number of projects lagging behind schedule, dropping from 47.7% to 46.8% over the past month.

As of November 1, the anticipated cost of 1,788 projects, each valued at Rs 150 crore and above, stood at Rs 29.1 lakh crore—Rs 4.31 lakh crore higher than the original cost. The government’s comprehensive analysis revealed that out of these projects, 50 were ahead of schedule, 611 were on schedule, 837 faced delays, 411 reported cost overruns, and 259 experienced both time and cost overruns compared to their initial implementation schedules.

Despite progress in project completion, the average time overrun for projects remains consistent at 36.94 months. Of the 837 delayed projects, 54% faced delays exceeding 25 months. Until October, the government successfully completed 183 projects amounting to Rs 1.84 lakh crore. In the fiscal year 2022-23, a total of 329 projects were completed with a cumulative value of Rs 3.07 lakh crore.

Examining specific sectors, the water resources ministry witnessed the highest cost overruns, with 41 projects surpassing the original cost by 197%. The Railways sector followed with a cost overrun of 51.8%, while the Roads sector, constituting more than half of all projects, experienced minimal cost overruns at 5.3%.

On a regional scale, the northeastern states exhibited the highest cost overruns compared to the rest of the country. However, the government acknowledged that the reported figures might underestimate the actual situation on the ground. It emphasized that project agencies often fail to submit revised cost estimates and commissioning schedules, suggesting that time and cost overrun figures could be underreported.

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