Report No.7 of 2005 (PSUs)
NATIONAL HIGHWAYS DEVELOPMENT PROJECT PHASE-I
Overall performance of NHAI in terms of output in National HighwayDevelopment Project Phase-I was 29 per cent. NHAI completed only 1,846 km interms of completed stretches out of the target of 6,359 km of National Highwaysby the scheduled date of June 2004. There was no corporate plan to implementsuch a large project. Deficient planning and inefficient contract management bythe design and project consultants contributed to underperformance inachievement of the target. The underperformance was 59 per cent if partiallycompleted stretches were also reckoned.
(Paras 2.1 and 4)
Phase-I of the project consisted of the National Highways connecting the fourmetros, forming the Golden Quadrilateral consisting of 5,014 km; portconnectivity of 674 km and North-South-East-West corridors of 671 km. NHAImissed the completion goals of all three by 73, 67 and 58
respectively.NHDP Phase-I had been re-scheduled for completion by December 2005,overshooting the original schedule by 18 months.
(Paras 1.3 and 2.1)
The adverse impact of the significant underperformance resulted in unrealisedexpected benefit of free flow of traffic on these routes. Additionally, NHAI alsolost an opportunity to generate toll revenue of at least Rs.560 crore due to thedelay in completion of the highways. Besides, the road users also lost potentialeconomy in vehicle operating cost of about Rs.4,300 crore over the period of delay.
(Paras 2.1 and 2.2)
While the overall status of the output is stated in this report with reference to theentire NHDP Phase-I consisting of 175 stretches, the detailed finding andconclusions are with reference to scrutiny of a sample of 32 stretches, which wereselected on the basis of 50
or more progress. The audit tests on thesample disclosed that the completed works had suffered delays of upto 28 monthsfrom their scheduled dates, with cost overrun of over Rs.690 crore includingadditional items of work in these stretches alone. In the background of the delayin completion in other stretches, the cost overrun on the entire project is likely tobe substantially more, which may compromise the economy of the entire project.
Imprecise terms of contract with the design consultants, who were responsible forpreparation of detailed project reports (DPRs) and project supervision consultants(PSCs), who were responsible for supervision of the works and theirunderperformance constituted the foremost risk to the project. NHAI did notaddress the risk associated with the terms of contracts and performance of the two __________________________________________________________________ 1