BUSINESS

Time, cost overruns mar prospects of infrastructure projects: KPMG

NEW DELHI: Time and cost overruns have delayed 850 infrastructure projects out of 1,035 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 the Project Management Institute 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.

“...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 ongoing projects. — PTI