355 infra projects showing cost overrun of Rs 3.88 trillion: Govt tells LS

Govt said the reasons for cost overruns are project- specific, depend on a variety of technical, financial and administrative factors, and differ from project to project

As many as 355 infrastructure projects are showing cost overrun, with the overall cost overrun being Rs 3.88 trillion, Union Minister Rao Inderjit Singh said in Lok Sabha on Wednesday.

Singh said the Ministry of Statistics and Programme Implementation monitors ongoing central sector infrastructure projects costing Rs 150 crore and above on time and cost overruns, on the basis of information provided by project implementing agencies on the online computerised monitoring system (OCMS).

"As per the flash report of July, 2019, a total of 355 projects are showing cost overrun and the overall cost overruns is Rs 3.88 trillion (20.07 per cent)," he said during Question Hour.

Singh said the reasons for cost overruns are project- specific, depend on a variety of technical, financial and administrative factors, and differ from project to project.

However, as reported by the project implementing agencies on the OCMS of this ministry, the main reasons for increase in cost of the projects are under-estimation of original cost, changes in rates of foreign exchange and statutory duties, high cost of environmental safeguards and rehabilitation measures, he said.

The minister said spiralling land acquisition costs, shortage of skilled manpower and labour, changes in project scope, monopolistic pricing by vendors of equipment services, general price rise and inflation and time overruns are a few other reasons.

Delay in land acquisition and forest clearance has been one of the reasons for time overrun leading to cost overrun as reported by implementing agencies, he said.

Singh said the major steps taken or being taken by the government to restrict the cost escalation and timely completion of projects are periodic review of projects under PRAGATI, rigorous project appraisal, online computerised monitoring system for better monitoring, setting up of revised cost committees besides others.