It is a well-known fact that time and cost over-runs are widely prevalent of public sector projects. Because of these time and cost over-runs, the output goods and services come much later and at a higher cost. In fact, some projects often become uneconomical due to the time and cost overrun. Moreover, the resource requirement for the ongoing projects increases considerably, leaving very little for new projects starts. All this adversely affects the economic development of the country.

REASONS FOR TIME AND COST OVER-RUNS
An Analysis of the past experience is necessary to identify the main reasons for these time and cost over-runs and to suggest steps for minimising these.
The main reasons for time and cost over-runs of projects can be considered in three major groups.

• Inadequate formulation
• Lack of proper implementation planning
• Poor management of implementation

Inadequate formulation
This group will cover aspects such as:

• Poor field investigations
• Incomplete and inadequate information
• Bad or deliberately wrong estimation
• Lack of expertise and experience
• Inadequate project analysis
• Omission of project linkages
• Poor appraisal and investment decisions

In the project formulation phase, pre-feasibility and feasibility analysis play a significant role in investment decision making. The project concept is to be crystallised after considerable efforts, technical studies, consultations, inter-ministerial discussions, etc. In many projects such detailed work is not undertaken and the project concept is not properly formulated. There are many instances where the project concept was crystallised much after the investment decision or the scope of technology changed or the project designing continued side by side the execution. In some cases, consultants were not able to give proper technical details and their Geological data needed for mining or hydel projects was not, sometimes, properly collected, as it involved a lot of time, expenditure and effort. Experience shows that such poorly formulated projects generally face more time and cost over-runs.

The poor formulation may be due to 

• lack of expertise & experience or 
• hurry for going ahead without spending enough time on investigations, data collection and project preparation or 
• a deliberate attempt to get the project approved by under-estimating costs (and/or over-estimating benefits). 

Often, some of the weaknesses are identified during appraisal and the project concept gets improved during this exercise but considering the short time available for actual appraisal, inadequate data base and limited availability of skilled inadequacies in formulation continue. In some projects, which are not subjected to rigorous project appraisal, the weaknesses in formulation do not get identified. Obviously, if the basic parameters of the project are wrong, the time and cost over-runs are in-built from the very start and these are bound to show up later.

Lack of proper implementation planning
After the investment decision is taken (and in many cases, even while appraisal is underway) but before actual implementation starts, it is necessary to undertake detailed implementation planning covering aspects such as:

• Physical work (activities, quantities)
• Time plan
• Input resources - manpower, materials construction equipment utilities, funds
• Inter-linkages
• Organisation and management systems
• Output generation - raw materials, manpower and utilities for operation
• Cost planning.

Experience shows that the majority of projects which failed on their time and cost targets, suffered from inadequate implementation planning. Some of the weaknesses observed are:

• Inadequate time-plan - Some activities either are not conceived or insufficient time is provided. For example, land acquisition, clearances, tender evaluation, recruitment, administrative procedures etc. are not adequately provided for in many project time plans. In some cases incomplete or mere superficial use of PERT/CPM techniques does not give a realistic time plan. Often the master network is not further broken down to detailed networks for operational levels.
• Inadequate resource plan and its linkage with time plan - The time plan is not matched with resources. The implicit resource requirements (manpower, materials, money etc.) for each period (month/quarter/year) may not meet the availability constraint and hence the time plan may not be implementable.
• Inadequate equipment supply and contract planning - Individual equipment supply and other constraints may not be matched with the network time-plan. Apart from sufficient delivery times, in sequence deliveries may not have been determined.
• Inter-linkages not anticipated - Some inter-linkages (e.g. for supply of inputs, transportation, power and other infrastructure) may not have been anticipated at all or inadequately provided, or a dialogue with interlinked agencies not undertaken in the planning stage with a result that the time duration for inter-linked activities is provided unrealistically.
• Poor organisational and systems planning - The organisation and management systems needed for successful implementation are not properly planned in many projects.

The manpower development and training so as to generate necessary skills, attitude and or organisation culture is overlooked, responsibilities for the project, its components and activities are not specifically identified, implementation and monitoring system which would help ensure effective execution and control, are not developed and interface with government agencies is not adequately provided for.

• Inadequate output generation planning - For generation of output goods and services, the planning for manpower, raw materials, utilities (power, water, transport, etc.) is often not fully carried out. Similarly, planning is needed for reaching the output to consumers or beneficiaries. Some of these aspects might be considered under inter-linkages but in many cases, advance market effort (both for procurement of inputs and for supply of outputs) may have to be planned. There are examples of projects lying physically completed but not commissioned (and not generating outputs) for want of inputs or arrangements for supply of outputs.
• Poor cost-planning - Even where project time is properly planned, the cost planning, particularly by detailed activities, is hardly undertaken, with the result that in spite of meeting the time-schedule, there is cost over-run (over and above what is arising purely due to price escalation).

Poor management of implementation
After detailed implementation planning, the effectiveness of project management lies in execution in accordance with the implementation plan, overcoming the problems coming in the way by necessary corrective action. The problem areas generally include:

• Delays - actual activity time more than that estimated (e.g. in land acquisition, approvals, clearances from various agencies, design and engineering, civil works, equipment supply, etc.)
• Changes in scope, location, technology, etc.
• Law and order, labour problems
• Failure of inter-linked agencies
• Unforeseeable problems such as natural calamities, excessive rains, draughts.

Delays: If the actual time taken for a critical activity is more than what was realistically estimated in the implementation plan, it may result in delay in the project completion and cost over-run. If the activity is not critical and delay is within the float or slack available, it may not lead to time over-run but may result into cost over-run. Typical activities where such delays take place, have been listed above. These delays can be divided into two groups:

• Interauthorities (including administrative ministries), and
• External - those which are outside their control and are caused by outside agencies. While the first category directly highlights the poor management performance, the second category indirectly reflects the management weakness, as it is their responsibility to inter-act with the external agencies, identify and anticipate the problems in advance and take up the problems at appropriate levels in order to overcome them. The performance of contractors and suppliers is generally covered by first category as the project authorities supervise their performance. Often the incentive and penalty measures are too meagre or ineffective to ensure on-schedule or before-schedule performance. In many cases longer than estimated time is required due to inexperience or where technology is to be indigenously developed and consequently greater time is needed for learning and experimentation (e.g. in atomic energy, underground railway, difficult underground mining projects).

Changes in scope, location, technology - While, as stated earlier, some of changes in scope and technology are avoidable by better investigation and planning in the formulation stage, in many cases there may be unforeseeable geological and ground conditions (e.g. in mining, hydel projects), sudden changes in technology, demand, market etc., requiring changes in scope. Many a time, when the project execution is prolonged and there is a change of personnel, new thinking and ideas may lead to changes in scope. In most of the cases, change in scope requires further design and engineering, new equipment etc. and there is a consequent delay and cost over-run.

Law and order, labour problems - Law and order problems such as civil disturbances, labour strikes, etc. may sometimes, hamper the progress of the project execution.

Failure of inter-linked agencies - In most projects, unless the activities of inter-linked agencies are completed in time, either the execution of project work gets held up or its commissioning is delayed. These activities, which may involve completion of respective projects by the inter-linked agencies, include supply of power, water, building of transmission line, road, rail line/siding; project to supply raw materials (e.g. coal, ore or minerals), forest and agriculture produce; projects such as command area development, housing, etc. Often there is considerable delay in the approval of these inter-linked projects or in allocation of funds to them in their respective budgets. In many other cases, there may be delay in their implementation for various reasons.

Unforseeable problems such as natural calamities - Earthquakes, cyclones, heavy rains, floods, draughts, wars, accidents, etc. are examples of natural calamities and unforeseeable problems which can result in delays and cost over- runs.

HOW TO MINIMISE TIME AND COST OVER-RUNS
The foregoing analysis of the reasons for time and cost over-runs provides clues for remedial steps. These can be listed as follows:

• Better formulation and appraisal of projects - Investment decision on a project should be undertaken only after full investigation, collection of data, analysis and cristallisation of the concept. Since in many projects, this analysis may be expensive and may require preparation of the detailed project report, the first stage clearance should be used to eliminate those project ideas which are prima-facie not viable and on which expenses for detailed analysis may not be incurred. The appraisal system also needs to be made more effective for checking the data, questioning under-estimates and unrealistic assumptions. For this purpose, suitable databank for project analysis containing data about other similar projects (past and present) should be developed. Evaluation studies of completed projects should also help in developing this data bank. Once final investment decision after sound appraisal is taken, no significant change in project concept, location, technology and scope should normally be permitted.
• Sound implementation planning - Sound implementation planning is a pre-requisite for effective implementation. Realistic, resource - based (resource requirements matched with availability constraints) implementable plans can be formulated by using techniques such as PERT/CPM and estimating activity times, linkages and resource requirements realistically through an inter-disciplinary group-process where experiences of many persons is pooled together. Here also a data bank on similar projects (past and present) would be useful. Where project authorities do not have sufficient experience or data, consultants can be employed for this task. Generally, a slack of about 10-15% should be kept in reserve and an “internal network” for shorter duration may be drawn up which may be used by the implementing staff. Alternatively, the 10-15% slack may be implicitly included in the time duration of the last one or two activities. This ‘reserve’ is means to meet the contingency of unforseeable or uncontrollable delays. Good computer software packages are available for project planning with PERT/CPM, equipment scheduling, manpower planning, cost optimisation and control, monitoring etc., which could be effectively used. With sound implementation planning after proper project formulation more than half of the battle is won.
• Advance action - After the first stage examination and clearance when prima-facie desirability or viability has been established, advance action on following activities by project authorities should be permitted:
• Acquisition of land
• Getting essential clearance e.g. environment, foreign investment etc.
• Identification and type up with main technology consultant 
• Preliminary design and engineering
• Calling of tenders for main long lead plants and equipments
• Identification and positioning of core project management team
• Arrangement for preliminary infrastructure facilities for construction (e.g. power, water, roads, etc.).

Some of these advance action areas may require small investment. In the unlikely event of the project not being finally approved for investment, only a part of this small investment may become infructious - On the other hand, in the likely event of the project being approved, there will be considerable saving in time and cost.

Clearances - Even after the government approval of the project, there may be many clearances required from various government agencies. In order to save time, there may be one or more ‘Empowered Committees’, consisting of the secretaries or senior officials from concerned ministries, which may give some of the necessary clearances. Some major projects, for which such committees were constituted, were successful in minimising time and cost over-runs. To start with, such committees may cover projects costing over Rs.100 crores.

Inter-linked Projects - All inter-linked activities/projects of other agencies, on which the completion or commissioning of this project (say XYZ) under focus depends and which are to be undertaken primarily for the project XYZ, should be considered, appraised and cleared together with this project (XYZ). Where, some time gap is inevitable, it should be kept to minimum, not exceeding 6 months. The fund allocation should also be considered and decided at the same time. Preferably, all these funds should also be allocated to the project XYZ in its budget (as is generally done for railway sidings) and these should be released by the project XYZ to the agencies concerned for the inter-linked activities/projects on the basis of their implementation plans and progress. This will help in ensuring effective control of project XYZ on their execution. Even where exception to this procedure is necessary (e.g. where the inter-linked activity is a part of an integrated project of the other agency), the fund allocation should be considered for the inter-linked activity at the same time as the project XYZ.

Equipment procurement and tendering - For effective coordination, the number of contract packages should be minimum. Turnkey contracts have obvious advantages. But adequate content of indigenous equipment and other services has to be ensured. There has to be a marriage of the objective of the use of indigenous equipment with the objective of minimising time and cost over-runs. If most contracts were awarded on the basis of global tenders to foreign contractors (assuming that they could supply and construct with lesser time, cost and quality defects), then there would be not only under utilisation of indigenous capacity (hence higher economic costs) but also considerable outgo of foreign exchange and acute balance of payments problems for the country. A better approach may be to have global tendering but with a higher weightage (in line with the current premium on foreign exchange considered for economic analysis on indigenous supply). But when there is a slump in the international market even this weightage may not be enough to ensure desired indigenisation and it may need to be reviewed. In any case, the efficiency of indigenous equipment suppliers has to be improved.

Better contract management, penalties and incentives - Since in majority of projects, execution is through contracts, their proper management is a key to minimise time and cost over-runs. The contract planning (both for works and equipment supplies) has to be linked closely to resource-based implementation planning of the projects. Contractors and suppliers should be bound to give their resource and time plans integrated with project plans (based on PERT/CPM) and follow them. Each contract’s dates should be as per the detailed network. There should be close follow-up and interaction. Existing penalties and incentives need to be considerably enhanced so that contractors are also interested in on-time performance. Where delays are anticipated, project authorities should be able to off-load contracts (partially or fully) to other parties (either within the country or abroad) well in time. Target cost contracts with incentives for savings should be encouraged to minimise time over-runs. Where consultants are use for planning, awarding and following up the contracts, the effectiveness of consultants in contract management should be properly evaluated. ‘Expeditors’ from project authorities or consultants can be helpful in watching progress, expediting deliveries and giving advance warnings, as they will be stationed at or visiting the suppliers’ shops. Contractors should be considered as partners in project execution and help should be provided in solving their genuine problems, as otherwise project execution will be help up.

Monitoring - A simple and effective monitoring system is essential to identify and anticipate the deviations from implementation plan, analyse the underlying problem areas and suggest corrective action. Anticipation is important from the point of view of preventing or overcoming the problems before they occur or taking alternative steps to minimise their impact on project time and cost. A good data bank on implementation of activities of this and other similar projects (past and present) could greatly help in the monitoring process. Over-monitoring should be avoided as it leads to unnecessary paper work, tying up of project manpower resources and viewing of monitoring as an end in itself rather than as means to achieving the ends. Emergence of project monitoring, as a specialised profession should be encouraged. The objective of external agencies, which are monitoring the performance, should also be to provide help in solving problems rather than finding faults. Joint ‘Monitoring groups’ can be established under the auspices of the Ministry of Programme Implementation, which may consist of representatives of the project as well as inter-linked agencies and the ministries concerned. The groups could monitor and review the progress of the complete system - the project and the inter-linked activities/projects. For problem solving and action, the primary agency is the project authority. Where government action is needed, the main responsibility lies with the administrative ministry. For inter-ministerial problems, the ministry may seek the help of bodies such as Ministry of Programme Implementation, which could play a positive, coordinating role, Planning Commission, Cabinet Secretary (Chief Secretary in the case of State Government), committee of secretaries and cabinet committee.

Management techniques, systems, incentives - Industrial engineering and management techniques such as method study, value engineering, etc., can help in reducing time duration of activities and giving up of unnecessary items/activities. Over-specification can be avoided so that the costs can be reduced. The project organisation should be distinct, separate from operation side, complete with all functions, under the charge of one competent project leader and with all responsibilities clearly defined. There should be full delegation to project leader and his team and down the line. The systems and methods should be clearly laid down and manualised. Human side of project management is an important (if not more) as the quantitative techniques and attention to inter-personal skills, interaction, human resources development etc. is important from the very initial stage. After all, implementation of a project is a group or team effort. It is the effectiveness of this team effort, which will determine the success of the project. The consciousness to adhere to time and cost schedules is to be generated at all levels. In the projects which were successful in meeting their time cost targets, the core project management team, starting from the top person, had full commitment and made it a mission or a goal to complete the project within its time schedule/cost, whatever may be problems and they achieved this. This spirit should also be followed up with incentives (in the form of rewards, promotions, recognitions etc.) for those who achieve time and cost targets and punishment for those who fail badly, and this linkage between project performance and incentives/punishment should be clearly visible. The core project team should be properly chosen and placed preferably during the formulation stage and thereafter it should stay till the completion of the project. Changes in the team, particularly, the project leader, should be made only in exceptional cases.

Assurance of funds resources - Once a project is approved for investment and ‘go ahead’ is given, funds should be committed to meet the requirements (both for the project and for the inter-linked activities/projects of other agencies on which it is dependent) as determined from the programme of work projected by resource-based network. There should not be piecemeal or adhoc based network. It may be advisable to determine year-wise requirement of funds for all projects under implementation for the whole plan period, which may be updated at each annual plan. Similarly, year-wise requirements for key materials like cement; steel can also be worked out in advance which should be committed by the respective allocating agencies, till the completion of the project.

Conclusion 
Projects can be completed within the realistic estimates of time and cost (except for genuine price rise as project estimate are approved on constant base price, without provision for escalation). The fact that some projects have been completed without any time/cost over-runs/ in the same environment and government systems reflects on the differential quality of project management. Case studies on these successful projects, including a brief analysis of the systems used by them effectively, should be widely disseminated. A large-scale training effort should support various steps mentioned here. Implementation of a project requires effective partnership between various agencies-project personnel; government agencies, consultants, contractors, suppliers etc. and all of them have joint responsibility for ensuring successful of the project.