CII moots SPV to cut project over-runs

"The solution lies in creating special purpose vehicles working independently to undertake large projects," the Chamber said.

In a recent "project management" paper submitted to the government CII outlined various suggestions including constitution of a single-window agency headed by a Cabinet Secretary to clear and co-ordinate projects.

PSUs lack the expertise to negotiate effectivelywith financial institutions and other organisations for raising funds for their projects and government should provide them a common service facility or appoint a panel of international experts on a long-term basis to negotiate financial deals for the PSU projects.

Criticising government’s approach of using the `least cost’ criterion to select construction companies in open competitive bidding for public sector projects, CII said the criterion of cost should be replaced with quality.

Tender documentation and procedures should be standardised and tight time-schedules instituted at every stage of the tender process to avoid delays, it said.

A sector-wise break-up of projects had revealed the highest share of increase in costs at 26.9 per cent was expected from the power sector followed by railways at 20.7 per cent, it added.

The Chamber said that though the Government and the PSUs had taken note of the huge losses caused by poor project implementation, steps for speedy redressal of this was too slow andthis should be done at the earliest.