Centre examining big-ticket projects over cost overrun

The construction of the new Vice-President Enclave in the heart of New Delhi was bid out for ₹189.16 crore and had to be completed by November 2022. But the big-ticket project was completed almost two years later, in June 2024 and with a 51% cost overrun.The works related to shifting of tourism and skill development ministries at Jodhpur Officers Hostel were tendered at ₹7.94 crore with a targeted date of completion of February 2023. This project saw a 142% cost overrun with the final bill at ₹19.26 crore and a time overrun of five months.In the run-up to 2022 Republic Day parade, the work for 3D projection mapping on North block and South block buildings was given out at a cost of ₹2.32 crore but the completion cost saw a 33.48% overrun at ₹3.10 crore.The work of external development of two-side roads outside the Vice-President Enclave was tendered out at a cost of ₹5.71 crore but the final bill came with an almost 19% cost overrun and a five-month delay.Hit by time and cost overruns in urban development projects like these, the Centre has started examining big-ticket projects initiated across India to investigate the reasons for escalations and how these can be curbed.The Central Public Works Department, the primary construction arm of the government, has asked all its divisions to prepare reports with details of projects with a tendered cost of over ₹1 crore and initiated after 2020. The government is now looking at what was the expected cost of the project, if it was tendered out at a lower cost, how low was the tendered cost, the final completion cost, different heads where there was cost escalation, stipulated date of completion and the time overrun.Though the exercise is incomplete yet, the initial reports have thrown staggering statistics. The biggest challenge is that the contractors try to outbid each other by quoting very low costs. Take for instance, the finishing work of the subterranean tunnel in Vice-President's Enclave. The government expected to bid out the project at ₹3.85 crore but the tendered cost was 38% lower at ₹2.78 crore. The government expected the construction work of the same tunnel to cost ₹21.31 crore but the tendered cost was ₹18.31 crore and the final completion cost was almost ₹20 crore - closer to government's initial estimates.A government source told ET, "There is stiff competition among contractors and this is why the tendered cost is very low. There are now complaints of poor quality of work and time and cost overruns. Here cost overruns are important because the projects were taken at very low rates to beat competition."