Delhi PWD asks contractors to estimate projects’ cost escalation
nNEW DELHI: Delhi’s public works department (PWD), which is working on some important infrastructure projects, has asked concessionaires to estimate cost increases of projects due to the lockdown, and submit a report in the first week of June.
PWD officials said that the tentative increase in the estimated cost may range between 10% and 12% for the current quarter.
Experts have said any potential increase in costs would also likely delay the project, because the revised estimates would require government approval.
The officials said the cost of construction material has increased due to the lockdown, in place since March 25 to curb the spread of Covid-19. Hiked duties on diesel and petrol in Delhi also made transportation costlier.
The Delhi government had, on May 5, raised value-added tax (VAT) rates on petrol and fuel.
“At present, the duty on petrol and diesel has been increased, so the transportation cost of construction material will also go up. The cost of construction materials such as stone grits, steel, iron, and others have also increased. These will most definitely escalate the cost of infrastructure projects,” a senior PWD official said.
Another PWD official said costs will only escalate in longterm projects, which usually take more than 18 months to complete.
“Long term projects such as the Barapullah Phase-3 elevated corridor will face the impact of cost escalation,” the official said.
For instance, the estimated cost of Barapullah Phase-3 project is ₹1,260 crore. If a cost escalation of 10% is projected, its revised cost will be ₹1,386 crore.
The PWD is working on 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; Barapullah phase-3 elevated corridor; Ashram underpass; flyovers at Seelampur and Shastri Park; and Benito-juarez Road underpass in south Delhi.