ANALYSIS OF COST AND TIME OVERRUN OF HYDRO POWER PROJECTS

Abstract

With increasing number of hydroelectric projects in India and across the globe, delays in commissioning and cost overrun has been a regular feature of these projects. Almost all hydro projects barring few, have been victim of time and cost overrun owing to various reasons. There are various studies conducted for risk management of hydro projects but so far there are not many studies conducted on time and cost overrun specifically for hydroelectric projects in context of India. This study was started by preparing a report identifying the prominent causes behind delays and cost overrun in hydroelectric projects based on the literature review. As per the gaps identified, exclusive study has been done for hydroelectric projects regarding overruns considering only completed projects. This study analyses the reasons for cost as well as time overruns of hydroelectric projects across India to get an idea about range of cost and time overrun incurred to hydroelectric projects. Further analysis has to be done to draw comparison based on ownership, project location and installed capacity. This study is an attempt to analyse the arguments often given for government owned hydro projects to have lackluster record of overruns as compared to privately owned. The comparisons made here, have underlined motive to identify the poor performing sectors as compared to others. The present study has limited objective of bringing a comparison of overruns between them, not about the aspects of the reasons behind them. The comparison indicate that privately owned hydro projects do have better track record in most of the comparison criteria whereas state government owned projects shows a dismal track record. In terms of project location, south India projects have highest values of overrun but north India projects take the lead in having least value for overrun among north, south and north-east India located projects. Similarly, based on capacity, small hydro projects show better resource utilization while projects completion and at the same time, medium capacity hydro projects lag behind. As cost and time overrun are generally interdependent so an attempt is also made through this study to find a relation between cost overrun and time overrun based on data available. The relation obtained through non-linear regression shows that time overrun as well as inflation does impact cost overrun and have positive relationship with cost overrun. In developing this type of analysis, it is hoped to create diligent method to predict or estimate the probable cost overrun value for better estimation of cost.