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Rediff News  All News  » Business » Time, cost overruns mar the prospects of infra projects

Time, cost overruns mar the prospects of infra projects

March 11, 2010 17:06 IST

Time and cost overruns have delayed 850 infrastructure projects out of a 1,035 during the period between 1992 and 2009, says a study.

"Of the 1,035 infrastructure sector projects completed during April 1992-March 2009, 41 per cent faced cost overruns and 82 per cent witnessed time overruns," a joint study by professional services firm KPMG and Project Management Institute released here on Thursday said.

Inadequate design and planning coupled with material cost escalations were identified as the biggest reasons for schedule and budget overruns, while regulatory hurdles and land acquisition have been identified as the biggest external hurdle hurting the projects as per the study 'Drivers for Success in Infrastructure Projects 2010'.

Eighty-three per cent of the respondents felt that the primary reason for cost overruns was frequent design changes, while 75 per cent of the respondents felt that delays in regulatory approvals and land acquisition caused overall project delays.

The study claiming to have surveyed 100 top management personnel from leading infrastructure firms said, "Cost effective project designs emerge as one of the most efficient tool to control project costs...progress reports identified as most frequently used tool for project monitoring."

Companies surveyed include those in oil and gas, power, roads and bridges, ports and shipping, civil aviation, steel and telecom sectors. "...While infrastructure has been driving economic growth in India...on-ground delivery and extent of success achieved in terms of timely and within-budget completion sound a cautionary signal to the industry and the stakeholders," Global Head, Major Project Advisory Services, KPMG, Geno Armstrong said while releasing the survey.

The industry is marred by poor project management practices leading to cost overruns, time delays and resource shortages in most of the on-going projects. Earlier, the government too had admitted that almost half of 951 central sector projects are delayed in the country resulting in cost overrun to the tune of over Rs 40,000 crore. "...out of 951 central sector projects costing Rs 20 crore and above on the monitor of the Ministry of Statistics and Programme Implementation...474 projects have been delayed. The cost of the order of Rs 42,014 crore," a recent government document had said.

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