INFRASTRUCTURE

Study on
project schedule
and cost
overruns
Expedite infrastructure
projects

Foreword

Foreword from PMI India

Today, India is one of the leading outsourcing hubs in

the world. However, the world judges us not just by
the talent we have to offer, but also on the basis of our
infrastructure capabilities. India has set an ambitious
target of investing USD 1 trillion in infrastructure during
the Twelfth Five Year Plan period. Given this factor,
infrastructure development has been a key focus area
in every Indian state more so in the recent past. At the
center as well, big budgets have been allocated for
infrastructure development in every Five Year plan.
However, the country has consistently fallen short of
meeting such targets over the last few years. These
projects have been invariably riddled with issues of time
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reasons for such schedule and cost overruns, Ministry
of Statistics and Programme implementation (MoSPI)
recommended PMI to conduct a Study, in consultation
with KPMG to highlight the major reasons for the time
and cost overruns across major sectors in infrastructure
projects. The projects surveyed in this report are from
nine sectors in the Infrastructure space viz. Power,
Petroleum, Coal, Steel, Railways, Roads & Highways,
Civil Aviation, Ports & Shipping, and Telecom.
It is a known fact that a large number of infrastructure
projects in India have been delayed due to regulatory
clearances, environmental issues and problems
pertaining to land acquisition. Also, there are challenges
in the tendering phase that affect viability of projects
thus delaying implementation, construction phase is
beset with over-runs and disputes and last but not the
least; provider skills are weak all across the value chain.
Given the critical role of infrastructure in ensuring a
sustained growth trajectory for India, it is imperative
that we identify the core issues affecting completion of
infrastructure projects in India and chalk out initiatives
that need to be acted upon in short term as well as long
term. This report attempts to identify these pertinent
issues and also brings out how professional project
management practices can bring about a positive
change in the completion of projects on time and within
budget.
Almost 79% of our respondents felt that the
infrastructure sector faces an acute shortage of skilled
project managers. This absence of project managers
with the requisite skill sets has emerged as the major
cause for time and cost overruns. Young graduates

today are being lured away be other seemingly lucrative

opportunities and project management education and
training is not yet getting the priority it requires.
Though organizations are realizing the growing need
for structured project management, many are looking
at short term training programs to enhance the skill sets
of their project teams. However, the situation warrants a
more serious approach. The survey reveals that by 2022
Indian infrastructure sector is likely to have a shortage of
around 3 million project professionals including project
managers, civil engineers, planners, surveyors, safety
professionals, etc.
The government too realizes the urgency of meeting
this skill dearth. In the Twelfth Five Year Plan, the
government has plans to focus on improving the project
management skills across country to get better returns
from public investment in infrastructure and also in
the social sectors. Project management, with a view to
deliver on time and within cost, is a learnable capability
that can be institutionalized in India. There is therefore,
a pressing need for industry and academia to realize
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project managers must encourage and support their
professional growth. In addition, organizations must
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will provide academia the impetus required to introduce
project management into their curriculum.
Project management is the imperative for Indias growth
story and we believe, the way forward is for industry
and academia to work in tandem on this course to reach
the countrys goal of being ranked as an economic
superpower and a developed nation.
Raj Kalady
Managing Director
PMI India

Foreword from KPMG in India

Infrastructure plays a paramount role in the economic

growth of a country. Infrastructure investments in India
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year plan, the government sets an ambitious target
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infrastructure sector to bridge the huge infrastructure
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64%


trillion through 2016-17 with 50 percent of the funding
to be met by private sector. Although, the sector is
considered to be a key driver of economic growth, time
and cost overruns threaten to limit the sectors potential
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capital expenditure.
To understand the reasons for time and cost overruns
KPMG initiated the PMI-KPMG study on the request of
MoSPI to analyze the reasons for schedule and cost
overruns across various infrastructural projects running
across the country. The study was undertaken after
surveying key stakeholders in the infrastructure sector
and analyzing several key projects and comparing them
with best practices available globally.

It deliberates on both the external reasons for delays,

which are beyond the control of implementing agencies
and internal reasons, which can curtailed at the project
level with proper planning and project management.
The study also dwells on the proposed actions to be
taken for expediting infrastructure projects in India.
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in its bid to highlight the reasons for overrun in the
infrastructure projects and possible recommendations.
Neeraj Bansal
Partner, Real Estate and Constructions
KPMG in India