CLOSER MONITORING REDUCED TIME-COST OVERRUNS OF CENTRAL PROJECTS
SUBSTANTIALLY
There has been a
continuous decline in the extent of time and cost overruns of
central sector projects. This is attributed to closer monitoring
and system improvements brought about by the ministries concerned
with the support of the Ministry of Statistics and Programme Implementation.
The overall cost overrun in central sector projects costing Rs.
20 crore and above has come down from 62% in March 1991 to 22%
in March 2003 with respect to their original approved costs resulting
in a substantial reduction in the potential dissvings.
According to the
latest available Project Implementation Status Report on central
sector projects prepared by the Ministry of Statistics and Programme
Implementation, power, steel, information & broadcasting and
urban development sectors have performed better while the performance
of civil aviation, coal, atomic energy, railways, petroleum, telecommunication
and shipping & ports sectors have been poorer. No appreciable
change was seen in the projects related to Mines, fertilizers
and health & family welfare sectors.
The Report covered
540 projects including 40 mega projects (costing Rs. 1000 crore
and above), 240 major projects (costing between Rs. 100-1000 crore)
and 260 medium projects (costing between Rs. 20–100 crore). The
anticipated cost of these projects is Rs. 2,19,699 crore. The
total expenditure till 31st March 2003 was Rs. 77,060
crore which is about 35.1% of the total estimated cost of the
projects included in the Report.
Against an approved
outlay of Rs. 31,503 crore for the year 2002-2003, the expenditure
during the year was Rs. 24,094 crore. Mega and Major projects
account for about 52% of the total number of projects and about
94 % of the total anticipated cost. At the beginning of the year
2002-2003, 105 projects were scheduled to be completed during
the year. Later 82 projects were added with dates of completion
by March 2003. Out of the 187 projects due for completion during
the year, 83 projects have been completed, one project has been
dropped, for 27 projects the commissioning schedule is yet to
be confirmed by the project authorities and 65 projects have slipped
for completion beyond March, 2003. For 11 projects, though scheduled
for completion by March 2003, latest status is not available.
Time and cost overruns
have been a major problem affecting the central sector projects.
The study shows that during the year only 22 out of the 230 delayed
projects have contributed more than 90% of the cumulative cost
overruns. Similarly the number of projects with large time overruns
is very small. While most of these projects had serious problems
in the past, these are now in fairly advanced stages of completion
While the cost overrun
due to general inflation cannot be avoided, the escalation on
account of delays can be minimized. The quarterly review of the
project enables the Government to identify the constraints and
helps to resolve the problems affecting the implementation of
the projects. In-depth critical review of the progress by the
administrative ministries/departments with the Project Authorities
and follow up with the State Governments enables the Government
to minimize delays and cost overruns in completing the projects.
