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Construction Planning & Management

 

Government Project cost estimation.

Created by : Prasad PN, Zonal Sales Manager  | 10 27 2009 14:18:54 +0000
Industry : Public Sector/GovernmentFunctional Area : Budgeting and right estimation(Others)
Keywords : cost overruns delays in execution project cost inflating
Activity:  855 views;  last activity : 07 06 2010 20:18:09 +0000

The projects initiated by government agencies and departments is inflated grossly to accommodate siphoning of funds. In the recent story in The Hinduhttp://www.hindu.com/2009/10/24/stories/2009102451750300.htm

In the neighbouring district of Villupuram, in Tamil Nadu which is 50 kms away, a medical College-cum- 500 bedded hospital is being built by the Government of Tamil Nadu at a cost of less than 100 Crores( Hundred Crores), and would be inaugrated shortly.


This has been reported in the papers recently. The running cost per annum would also be substantially low.  Pondicherry Government  should come out clear on why it is costing about 10 times more to complete a similar setup here.

 

  
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Proect costs are inflated to hedge for delays and cost overruns Vs Project costs are inflated to siphon off the money
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Well, I don't think there is any corruption in that. While making a project plan, we have to keep in mind, the probable extra costs, miscellaneous expenses and the probable time that may go beyond the estimated time. With all this probabilities, paying of labourers and many more expenses, there is possibility of more expenditures of what has been estimated. Also, what is the guarantee all the money will go in official's pockets ? The estimated costs is merely an "estimation" and the actual spendings may come much lesser also. After that the money left may be returned back to government funds...
By Venkatesh M, Warehouse Manager, Larsen and Toubro  10 28 2009 05:55:18 +0000
 
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The cost comparison of 2 similar setups by 2 different governments at cost differential factor of about 10 is ample proof


By Prasad PN, Zonal Sales Manager  10 28 2009 05:07:49 +0000
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Not true . There can not be a comparision of unequal things same way no copmarision of cost if two buildings are not similar in area ,specification and location and both of them shall be constructed during same time. In absence of such figures it is vague to say that cost is inflated. There can be huge cost diffrence in cost of projects due to location, due to diffrent requirement of services road water supply and sanitation. There may be augmentation of other services alongwith the project. Hence without knowing exact scope of project not coorect to say costs are inflated.
By Er. Harnam Singh, Project Manager, CPWD  | 03 17 2010 13:20:29 +0000
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I do not belive that project costs are inflated to siphon off the money particularly in large projects. This has got some snese if the project cost is less than 10 crore & not a new project. Asfar as the case referred here one can not do a comparision before going in to details. Two projects appearing same from outside visually may have different cost implications depending upon detailings. The costlier one may vary nature oc construction, types of structures, embedded facilities etc. Even same  two cars of two cara differ significantly costwise due to difference of features provided. Two house of same plinth area can also be cost quite differently depending upon detailings involved in those buildings. Thus inflating cost cannot be attributable for siphoning off money.

Delay & cost overrun are mainly responsible for inflation of cost. Delays are mostly due to indecision, political problem & procedurial reasons.
By Biranchi Narayan Acharya, Chief Manager (Projects), Simplex Infrastructures Ltd  | 10 29 2009 05:17:14 +0000
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project cost are inflated to account for the inflation
By Madhusudanan.V , Senior site engineer,Derby design  | 10 28 2009 11:47:34 +0000
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What more can we expect from government agencies? They don't even spare hospitals and medical colleges from their corrupted minds. Merely for 100 bedded hospitals, when the cost per capita is much lower, the project cost estimation of 100 crores itself sets a question mark why so much money has been set. We will see, by the end of this project, all money will get spent. Whereas if we keenly analyse, majority portion of it will go in the pockets of corrupted government officials and politicians...
By Devarajan Venkataraman, Construction-Heavy, DLF  | 10 28 2009 05:56:36 +0000
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Tiruvarur Government College

A sum of Rs. 42.77 crore has been allotted in the first phase for 
construction of buildings.
A 300-bed hospital building is coming up at a cost of Rs. 26.18 crore,
another 200-bed hospital at a cost of Rs. 6.88 crore,
an outpatient ward at a cost of Rs. 6.5 crore,
a central laboratory and a blood bank building at a cost of Rs. 2.30 crore.
http://www.hindu.com/2009/05/23/stories/2009052358120100.htm

And Why should the similar project in Pondy Cost 10 times more?

By Prasad PN, Zonal Sales Manager  | 10 28 2009 05:11:04 +0000
Argue for "Proect costs are inflated to hedge for delays and cost overruns"
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