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Post Reply: Indian Infrastructure Project cost overrun at INR 4,82,529 Crores

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-admin" href="https://pmri.in/forum/profile/pmdistilled/">Abrachan</a> on 08/06/2024, 11:27 PM</div>
<p>The Indian Infrastructure project cost overrun stand at INR 4,82,529 Crores, which translates to around 18.65% of the original cost. According to reports by the Ministry of Statistics and Programme Implementation (MSPI), out of 1820 infrastructure projects (projects with more than 100 Cr budget), 848 were delayed and 431 reported cost overruns.</p>

<h4 class="wp-block-heading">Cost variance </h4>

<ul>
<li>Budgeted cost of the 1820 projects = 25,97,066 Crores</li>

<li>Estimated cost at completion           = 30,69,595 Crores</li>

<li>Cost overrun                                     = 4,82,529 Crores</li>
</ul>

<h4 class="wp-block-heading">Schedule variance </h4>

<ul>
<li>848 projects got delayed, out of the total number of 1820 infrastructure </li>

<li>For 298 projects, neither the year of commissioning nor the tentative gestation period has been reported</li>

<li>Out of 848 delayed projects;
<ul>
<li>202 projects had a delay between 1 to 12 months</li>

<li>200 projects had a delay between 13 to 24 months</li>

<li>323 projects had a delay between 25 to 60 months</li>

<li>123 projects had a delay above 60 months</li>
</ul>
</li>
</ul>

<h4 class="wp-block-heading">Root causes for time over runs </h4>

<ul>
<li>Delays in land acquisition </li>

<li>Delays in clearances from environment and forest departments </li>

<li>Lack of infrastructure support </li>

<li>Project tendering delays </li>

<li>Engineering delays </li>

<li>Delays due to scope change </li>

<li>Procurement delays </li>

<li>Law and order problems </li>

<li>Pandemic </li>
</ul>

<p>For a large number of projects, the project executing agencies are not reporting the revised cost estimates. May be, they do not have any clue about it. </p>

<h4 class="wp-block-heading">How do these numbers compare with the global benchmarks?</h4>

<p>The global benchmark for schedule and cost overruns for infrastructure projects can vary depending on the specific type of project, its complexity, location, and other factors. However, studies and reports often cite figures that suggest significant challenges in this area.</p>

<p>One widely referenced study is the "Global Infrastructure Hub’s Global Infrastructure Outlook" report, which provides comprehensive analysis on infrastructure investment needs and trends worldwide. According to this report and other similar studies, schedule overruns of <strong>20% to 25%</strong> and cost overruns of <strong>50% to 100%</strong> (18%) are not uncommon for large infrastructure projects.</p>

<h4 class="wp-block-heading">Observations </h4>

<p>When compared to global benchmarks, the cost and schedule overruns of Indian infrastrcture projects are within the global benchmarks. However there are many projects which are included in the report by MSPI. Another point to be noted is the calculation of schedule variance. It is calculated based on the latest revised schedule, not based on the initial schedule. Third point is, this is not done sector wise, hence may lack accuracy. </p>
</blockquote><br>

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