Why are infrastructure projects facing time and cost overrun?
ROADS & HIGHWAYS

Why are infrastructure projects facing time and cost overrun?

Every project is unique and has its own challenges, which result in delays and cost overruns. Some typical reasons encountered are delays in land acquisition and/or land transfer for project execution; statutory approvals such as environmental compliances, forest clearances and coastal zone clearances; and project funding constraints.
In addition to the typical reasons, as India starts implementing mega projects, Jai Prakash Shivahare, Managing Director, Dholera Industrial City Development Company (DICDL), shares some of the less talked about but still quite common reasons that result in delays: “Unrealistic expectations of project timelines, which get mandated in the contract; delays in invoice payments by owners; contractors not adequately understanding or prepared for the bid; and lack of use of internationally accepted contractual standards such as FIDIC (which is especially important in international tenders).”
For his part, the only reason for delay Sunil Srivastava, Managing Director, BARSYL, quotes is “bad planning, be it timelines, money, manpower, etc.” Bad planning starts with undercutting budgets to get the plan approved.
Meanwhile, Devendra Jain, Executive Director and CEO, Dilip Buildcon, views project delays from two perspectives: That of the company or contractors, and that of the client (government agencies). “There are external scenarios such as compensation to land owners, arbitration over ownership of land and impediments despite 80-90 per cent of the land being in place,” he points out. Jain drives the point that if contractors have the capacity and ability to commission the project on time, the government should support them by putting permissions in place. He adds, “At times, when in-house project engineers or independent agencies identify some discrepancies, government agencies take time in amending suggested changes.” 
Yogesh Jain, Managing Director, PNC Infratech, lays emphasis on, “delay in shifting of utilities and securing forest clearances for either diversion or tree cutting also contribute to considerable delays.”
And, though HAM has proved to be a successful model to date, Devendra Jain adds, “PSU banks are reluctant to fund these projects. While banks have their own NPA issues to sort out, they are unable to provide the required funding for working capital.” 
With regard to funding, Dr Ritesh Chandrashekar Tiwari, Director-Highways & Structures, Egis India, says, “Lack of clarity leads to conflict and lack of funds. And, in some way, both are intertwined. There is a lack of central planning for cities, which can look at long-term plans, say for the next 50 years, and then start allocating funds and resources.” Once this is in place, the implementing bodies could be empowered to take on day-to-day operations to complete the project.
In the view of Sandeep Upadhyay, Managing Director & CEO, Centrum Infrastructure Advisory, financial stress is something that actually has to circle back with the model of the government. “We are definitely better on the policy side but issues of land acquisition, approvals and clearances have been languishing for the past four to five years. This will result in immense financial stress for the contractors.” 
Adding to the list, Dr A Sivathanu Pillai, President, Project Management Associates India, says: “There is lack of review and corrective system. Also, project management methods and techniques are not used. Project managers are identified on the basis of their functional/engineering experience and qualification, which may not have any correlation with their competence levels of successfully managing projects.” Weighing in, Jagdish Salgaonkar, Senior Vice President-Major Programmes, Aecom, says, “We lack accurate technology to execute the projects. Because labour is not expensive, we avoid the machines that could easily expedite the schedule.” 
And, RK Pandey, Member-Projects, National Highways Authority of India (NHAI), affirms, “While there are many issues pertaining to project delays, NHAI has taken a stand whereby we will award the project only if we acquire 90 per cent right of way. That is why we have awarded fewer projects during the year. Recently, we have also modified the documents for land acquisition and contractual terms.” 
SHRIYAL SETHUMADHAVAN and RAHUL KAMAT
 

Every project is unique and has its own challenges, which result in delays and cost overruns. Some typical reasons encountered are delays in land acquisition and/or land transfer for project execution; statutory approvals such as environmental compliances, forest clearances and coastal zone clearances; and project funding constraints. In addition to the typical reasons, as India starts implementing mega projects, Jai Prakash Shivahare, Managing Director, Dholera Industrial City Development Company (DICDL), shares some of the less talked about but still quite common reasons that result in delays: “Unrealistic expectations of project timelines, which get mandated in the contract; delays in invoice payments by owners; contractors not adequately understanding or prepared for the bid; and lack of use of internationally accepted contractual standards such as FIDIC (which is especially important in international tenders).” For his part, the only reason for delay Sunil Srivastava, Managing Director, BARSYL, quotes is “bad planning, be it timelines, money, manpower, etc.” Bad planning starts with undercutting budgets to get the plan approved. Meanwhile, Devendra Jain, Executive Director and CEO, Dilip Buildcon, views project delays from two perspectives: That of the company or contractors, and that of the client (government agencies). “There are external scenarios such as compensation to land owners, arbitration over ownership of land and impediments despite 80-90 per cent of the land being in place,” he points out. Jain drives the point that if contractors have the capacity and ability to commission the project on time, the government should support them by putting permissions in place. He adds, “At times, when in-house project engineers or independent agencies identify some discrepancies, government agencies take time in amending suggested changes.”  Yogesh Jain, Managing Director, PNC Infratech, lays emphasis on, “delay in shifting of utilities and securing forest clearances for either diversion or tree cutting also contribute to considerable delays.” And, though HAM has proved to be a successful model to date, Devendra Jain adds, “PSU banks are reluctant to fund these projects. While banks have their own NPA issues to sort out, they are unable to provide the required funding for working capital.”  With regard to funding, Dr Ritesh Chandrashekar Tiwari, Director-Highways & Structures, Egis India, says, “Lack of clarity leads to conflict and lack of funds. And, in some way, both are intertwined. There is a lack of central planning for cities, which can look at long-term plans, say for the next 50 years, and then start allocating funds and resources.” Once this is in place, the implementing bodies could be empowered to take on day-to-day operations to complete the project. In the view of Sandeep Upadhyay, Managing Director & CEO, Centrum Infrastructure Advisory, financial stress is something that actually has to circle back with the model of the government. “We are definitely better on the policy side but issues of land acquisition, approvals and clearances have been languishing for the past four to five years. This will result in immense financial stress for the contractors.”  Adding to the list, Dr A Sivathanu Pillai, President, Project Management Associates India, says: “There is lack of review and corrective system. Also, project management methods and techniques are not used. Project managers are identified on the basis of their functional/engineering experience and qualification, which may not have any correlation with their competence levels of successfully managing projects.” Weighing in, Jagdish Salgaonkar, Senior Vice President-Major Programmes, Aecom, says, “We lack accurate technology to execute the projects. Because labour is not expensive, we avoid the machines that could easily expedite the schedule.”  And, RK Pandey, Member-Projects, National Highways Authority of India (NHAI), affirms, “While there are many issues pertaining to project delays, NHAI has taken a stand whereby we will award the project only if we acquire 90 per cent right of way. That is why we have awarded fewer projects during the year. Recently, we have also modified the documents for land acquisition and contractual terms.”  SHRIYAL SETHUMADHAVAN and RAHUL KAMAT  

Next Story
Infrastructure Transport

JNPA Becomes First Indian Port to Cross 10 Million TEU Capacity

The Jawaharlal Nehru Port Authority (JNPA), located at Uran in Navi Mumbai, has become the first port in India to achieve over 10 million TEUs (twenty-foot equivalent units) in container handling capacity.With the recent expansion, the port now operates five container terminals with a combined capacity of 10.4 million TEUs, alongside two liquid and two general cargo terminals.Handling more than half of India’s container traffic, JNPA processed 7.05 million TEUs in 2024 and has moved 15.39 million tonnes of containers and 16.64 million tonnes of total cargo in the first two months of FY 2025â..

Next Story
Infrastructure Transport

Nod for Rs. 36.26 billion Expansion of Pune Metro Line 2

The Union Cabinet has approved the Rs.36.26 billion expansion of Pune Metro Line 2, adding 12.75 km of track and 13 new stations to improve east–west connectivity across the city.The project aims to link Pune’s urban core with rapidly growing suburbs, supporting the city’s rising demand for efficient and sustainable transport solutions. This expansion is part of Corridor 2 of the Pune Metro and includes two key routes: Vanaz to Chandani Chowk (Corridor 2A) and Ramwadi to Wagholi/Vitthalwadi (Corridor 2B).It will connect residential, IT, and educational hubs in areas such as Bavdhan, Koth..

Next Story
Infrastructure Transport

Assembly begins for ‘Nayak’ TBM on Thane– Borivali Twin Tunnel Project

The assembly of ‘Nayak’, the first of four Tunnel Boring Machines (TBMs) for the Thane–Borivali Twin Tube Tunnel Project, has commenced at the Thane site. Built by German firm Herrenknecht AG and deployed by Megha Engineering & Infrastructure (MEIL), the TBM marks a key milestone in Mumbai’s ambitious 11.8-km underground road corridor beneath Sanjay Gandhi National Park.The twin tunnels will reduce the Thane–Borivali travel distance by 12 km and decongest Thane Ghodbunder Road. ‘Nayak’, with a 13.2-metre diameter, is designed to bore through challenging geological conditions ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?