Consultants under lens in Karnataka amid project cost overruns

Bengaluru: Consultants whose “faulty” work makes public projects costlier should be slapped with a hefty penalty, the finance department has proposed in a new set of guidelines aimed at tackling a common governmental menace: cost overruns.

According to draft guidelines, which DH has seen, if the revised estimate of a work exceeds the original cost projection by more than 10 per cent due to shoddy consultancy, a penalty of 10 per cent of the excess amount should be imposed on the consulting firm or consultant responsible for preparing the project plan.

“Additionally, all ongoing estimates prepared by such a firm currently in the tendering process shall be subject to review,” the guidelines say.

“If the penalty remains unpaid, the consultant or consulting firm shall be prohibited from preparing estimates for projects undertaken by government, corporations, boards or autonomous institutions.”

Government departments spend crores of taxpayers’ money on consultancy.

Faulty geotechnical investigation, incorrect alignment or inappropriate site selection have been identified as the most common mistakes consultants make, leading to cost escalations.

“We are proposing measures to curb avoidable cost escalations. We have seen cost escalations as high as 30-40 per cent due to faulty estimates by consultants,” said Chief Minister’s Additional Chief Secretary, L K Atheeq. “For example, if a project requires digging, the consultant would have said there is soft rock underground. When digging happens, there would be hard rock, causing a huge difference in the cost,” he added.

A Cabinet sub-committee under Deputy Chief Minister D K Shivakumar has been formed to review the finance department’s proposals.

It is said that the proposed crackdown on consultants rang alarm bells within the government, with some seeking a softer approach.

The finance department also wants an annual review of technical or estimate review committees.

If it is found that cost escalations happened in 10 per cent or more cases due to shoddy consultancy, then external members in the committees that vetted the excesses should be blacklisted, the guidelines say.

In other measures, the finance department has proposed that projects such as dams, bridges, tanks, layout development should be tendered only after 80 per cent of the required land is acquired.

The guidelines propose that any project whose cost escalation is 25 per cent or Rs 10 crore must come before the Cabinet for approval. The finance department also wants to prohibit bidders from quoting rates that exceed or fall below 20 per cent of the Schedule of Rates.