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Public projects: High cost of poor planning and monitoring

S.D. Naik

THE Union Minister of Statistics and Programme Implementation, Mr. Arun Shourie, has informed the Lok Sabha that as on March 31, 2000, out of the 425 Central Sector Projects costing Rs. 20 crores and above on the monitor of his Ministry, 205 projects wer e running behind their original schedules. Consequently, the cost of these projects had increased to Rs. 84,167 crores from the original estimate of Rs. 52,987 crores, that is, by 58.8 per cent.

The actual loss would be much more since a large number of projects costing up to Rs. 20 crores are not on the monitor of the Ministry. Besides, similar losses are being incurred by various State Governments on the projects coming under their jurisdictio n.

If one includes the losses incurred on smaller projects under the Central sector and also those coming under the State sector, it is estimated that public funds worth around Rs. 50,000 crores go down the drain every year because of the huge time and cost overruns. Much of this wastage can be avoided if only there is better planning and tighter monitoring of projects.

Replying to another question relating to delayed projects, Mr. Shourie informed the Lok Sabha that there were 18 projects in the Central Sector which were approved 15 years ago. The original cost of these projects was Rs. 2,064.24 crores and their revise d estimated cost was Rs. 10,686.3 crores. The cumulative expenditure on these projects till date is Rs. 5,444.4 crores.

There is also another dimension to the problem of time and cost overruns. According to Construction Industry Development Council, the disputed amount locked up in all projects, is to the tune of Rs. 52,000 crores over a period of 8-10 years.

The problem of huge time and cost overruns in infrastructure projects has been nagging policy makers and experts for many years now with no solution in sight. Even the creation of a separate Department of Programme Implementation (formerly Ministry of Pr ogramme Implementation) in 1985 with the exclusive purpose of independently monitoring Central Sector Projects, has not improved matters.

If at all, the losses suffered by the nation have only tended to escalate over the years. It is ironical that while the debate over the ways and means of raising resources for infrastructure projects continues, little attention seems to have gone into th e question of efficient use of available funds.

The reasons dished out by the Ministry for the long delays in the implementation of projects remain unchanged year after year. These include funds constraints, land problems, delays in civil works, delay in award of contract, slow progress and the delay in supply of equipment. It need not come as a surprise that of the 205 Central Sector projects running behind schedule, as many as 125 are Railway projects.

For the Railway Ministers are notorious for sectioning populist projects without taking into consideration the availability of resources.

It may be recalled that the White Paper on Railway Projects tabled in Parliament in July 1998 by the then Minister of State for Railways, Mr. Ram Naik, had highlighted how the funds crunch had resulted in heavy throw-forward estimated at a whopping Rs. 3 5,000 crores, with pending new lines at the top of the list.

The Government has in place a system of monthly monitoring of major and mega projects, and quarterly monitoring of all projects including medium projects. Also Standing Committees have been set up in concerned administrative Ministries to go into the cau ses of time and cost overruns. The Reports of these Committees form part of the notes for revised cost estimates of the projects with time and cost overruns and the same are submitted to the Cabinet Committee on Economic Affairs.

However, unless the concerned Ministries pay much greater attention to economic viability while sanctioning the projects, instead of being guided by political and populist considerations, no amount of monitoring is going to improve the situation.

A major cause for the current state of affairs is the indiscriminate sanctioning of projects without proper feasibility studies and the assessment relating to the availability of resources within a given time-frame. The thin spread of the limited resourc es over a large number of projects has become a serious problem.

Hence the national priority should shift to early completion of ongoing projects so that they start yielding results, rather than on commissioning too many projects.