PROJECT MONITORING : AN OVERVIEW

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BACKGROUNDER

Project Monitoring Division (PMD) of Ministry of Statistics & Programme Implementation monitors all Central sectors projects costing Rs. 20 crore and above.

OJBECTIVES

• Enhance effectiveness of project implementation
• Facilitate information flows for decision making
• Resolve outstanding implementation issues

• Bring about system improvements

• Promote Best Management Practices

IMPLEMENTATION OF CENTRAL SECTOR PROJECTS

As on 1.10.2002, 542 projects with anticipated completion cost of Rs. 2,13,134 crore are on the monitor of the Ministry. For the purpose of monitoring, these have been categorised as follows :

Sl.No.	Category	Number	Amount (Rs. Crore)
1.	Mega (Rs. 1000 crore and above)	38	1,28,637
2.	Major (Rs. 100 crore to less than Rs. 1000 crore)	237	70,952
3.	Medium (Rs. 20 crore to less than Rs. 100 crore)	267	13,544
	TOTAL	542	2,13,134

The projects are monitored on sectoral and geo-physical basis. he monitoring system is based on milestones drawn from PERT/Bar Charts of the projects. Mega and major projects are covered by a monthly Flash Report System.

CURRENT SCENARIO OF PROJECTS ON MONITOR

• 75 Projects ahead of schedule
• 173 on schedule
• 170 delayed
• 76 without date of commissioning
• 48 without updated completion schedule

EXTENT OF TIME AND COST OVERRUN (as on 1.10.2002)

• Original cost of 542 project : Rs. 1,72,319 cr.
• Latest approved cost : Rs. 1,92,752 cr.
• Anticipated completion costs : Rs. 2,13,134 cr.
• Overall cost overrun with respect to original cost : 23.7%
• Overall cost overrun with respect to latest approved cost : 10.6%
• Range of delays : 1 to 156 months

 

Reasons for Time Overrun

• Delays in land acquisition
• Delays in obtaining forest/environment clearances
• Lack of infrastructure support and linkages
• Delays in tie-up of project financing
• Delays in finalisation of detailed engineering
• Changes in scope
• Delays in tendering, ordering and equipment supply
• Law & order problems
• Geological surprises.
• Pre-commissioning teething troubles,

Causes of Cost Escalation:

• Under -estimation of original cost
• Changes in rates of foreign exchange and statutory duties,
• High cost of environmental safeguards and rehabilitation measures,
• Spiralling land acquisition costs
• Changes in project scope
• Monopolistic pricing by vendors of equipment and services
• General price rise
• Disturbed conditions

 

Analysis of Time and Cost overrun for ongoing projects

S.No.	Factors	No. of Projects
1.	Fund Constraints	42 (38 Railways, 2 Coal and 2 Surface Transport)
2.	Land Problems	Non-forest land 33 (25 Railways, 6 Coal and 2 Power) Forest land 6 (2 each in Coal, Power & Railways)
3.	Delay in Civil Works	22 (15 Railways, 4 I&B, 2 Urban Development, and 1 in Surface Transport)
4.	Delays in other works	13 (9 Railways, 2 Surface Transport and 1 each in Power and Urban Development)
5.	Delay in Award of Contract	19 (12 Railways, 4 in I & B, 2 in Civil Aviation and 1in Urban Development)
6.	Delay in Supply of Equipment	11 (4 Railways, 3 Coal, 2 in I&B and 1 each in Surface Transport and Atomic Energy (10 indigenous and 1 imported)

ACTION TAKEN TO MINIMISE TIME AND COST OVERRUNS IN PROJECTS

• Intensive monitoring at various levels.

• Setting up of Empowered Committees in the Ministries.
• Inter-Ministerial Coordination and interaction

• Emphasis on adoption of latest management tools and techniques
• Adoption of Standard Contract Management System
• Strengthening of the existing quarterly performance review mechanism

REMEDIAL MEASURES INITIATED

• Rigorous project appraisal and 2-stage approval procedure,

• Weeding out of unviable projects
• Reprioritisation of projects in the light of resources constraints
• Appointment of Nodal Officer for the duration of each project costing Rs. 50 crore and above
• Filling up of Board Level vacancies in the PSUs
• Setting up of an On-line Computerised Monitoring System for better monitoring
• Higher weightage to project management in the MOUs signed between the administrative Ministries and PSUs.
• Amendment to Land Acquisition Act, 1894
• Legislation for rehabilitation
• Setting up of Standing Committee in each Ministry for fixation of responsibility for time and cost overruns.

IMPACT OF MONITORING

The analysis of the Ministry of Statistics and Programme Implementations shows that the cost overrun in projects costing Rs. 20 crore and above has come down from 62% in March, 1991 to 23.7% in September, 2002 even with respect to their original approved cost.

FOCUSSED ATTENTION ON 23 DELAYED PROJECTS

Implementation of projects showing substantial cost overruns shows that 23 delayed projects contribute nearly 90% of the total cost overrun in all projects together. These projects have been taken up for special monitoring.

PROJECTS COMPLETED IN LAST 3 YEARS

2000-2001		2001-2002		2002-2003 (1.10.2003)
Number	Cost (Rs. Crore)	Number	Cost (Rs. Crore)	Number	Cost (Rs. Crore)
65	20603.05	96	19567.78	16	6995

PROJECTS TO BE COMPLETED IN THE 10^TH PLAN

	Number	Cost (Rs. Crore)
No. of Projects completed	16	6995
No. of projects due for completion	407	162300
Total	423	169295