The Delhi Public Works Department (PWD), which is working on some of the capital’s most important infrastructure projects, has asked concessionaires to assess and estimate the cost increases of ongoing projects due to the foreclosure. , and submit a report in the first week of June.
PWD officials said the provisional increase in the estimated cost of projects is expected to be between 10% and 12% for the current quarter.
Experts said any potential increase in costs would also likely delay the respective project, as revised estimates would require government approval.
Officials said the cost of building materials had risen due to the nationwide lockdown, in place since March 25 to curb the spread of Covid-19. Increased tariffs on diesel and gasoline in Delhi have also made it more expensive to transport building materials.
With these factors together playing a role in the substantial increase in the cost of projects, officials said the assessment exercise would give the ministry a sense of the “financial health” of projects.
The Delhi government on May 5 increased the value-added tax (VAT) rates on gasoline and fuel.
“At present, taxes on gasoline and diesel have been increased, so the cost of transporting building materials will also increase. The cost of building materials such as stone grains, steel, iron and others have also increased. These will most certainly increase the cost of infrastructure projects, ”said a senior PWD official.
The official said the stone grains are bought in Rajasthan, but mining has not yet resumed properly in the state due to a shortage of manpower, which has made the materials available more expensive. “We asked our dealers to estimate the costs and file a report by the first week of June. The average cost increase for large projects is expected to be around 10% to 12% for the current quarter, ”the official said.
Another PWD official explained that costs will only increase in long-term projects, which typically take longer than 18 months.
“Small-scale projects are unlikely to be affected. Long-term projects such as the Barapullah Phase-3 elevated corridor will face the impact of escalating costs, ”the official said.
He explained that, for example, the estimated cost of phase 3 of the Barapullah project is so far ??1,260 crores. If a 10% cost increase is expected, its revised cost will eventually be ??1,386 crores.
The PWD is working on projects such as the construction of a 1.2 km tunnel between Purana Qila Road near Mathura Road and Ring Road, which is part of the ITPO Pragati Maidan redevelopment project; raised corridor Barapullah phase 3; underground passage of the ashram; overflights at Seelampur and Shastri Park; and the Benito-Juarez road underpass in South Delhi.
Construction on the majority of infrastructure projects had been on hold since November last year, when the Supreme Court banned the work due to toxic pollution levels in the city.
This ban was not fully lifted until February. But work was halted a few weeks later, on March 25, when the nationwide lockdown went into effect.
The Center last month asked states to authorize construction work on major infrastructure projects after April 20, an order that was not extending to Delhi due to the growing number of Covid cases. 19 in the capital. The Delhi government gave the green light to resume construction activities on infrastructure projects on May 3.
Sewa Ram, a professor at the School of Urban Planning and Architecture (SPA), said that in addition to expensive building materials and high transport costs, the slowness of the work also leads to an increase in the costs of a project.
“Cost escalations also cause obstacles in the progress of the project, as it requires government approval, which takes even longer. Resource mobilization will also be a big problem for the government. In some projects that have not yet started, the government may review some projects or stop them temporarily, ”Ram said.