2.5. Contingencies
One of the key challenges that infrastructure projects face is time and cost overruns. The table below gives an indication of the time and cost overruns in various infrastructure projects in India.
| Sector | Number of Project | % of Projects with | % of Projects with |
| Road, Transport and Highways | 157 | 54.14% | 85.35% |
| Railways | 122 | 82.79% | 98.36% |
| Shipping and Ports | 61 | 31.15% | 95.08% |
| Urban Development | 24 | 41.67% | 100.00% |
| Civil Aviation | 47 | 42.55% | 91.49% |
| Health and Family Welfare | 2 | 100.00% | 100.00% |
Source: Adapted from an article in Economic & Political Weekly, May 22, 2010. (Delays and Cost Overruns in Infrastructure Projects: Extent, Causes and Remedies, by Ram Singh, DSE)
The possible causes for cost overruns are outlined in the diagram below:
It may be difficult to make very accurate estimations on the costs (capital and O&M) and revenues at the time of technical studies. It is thus prudent to provide margins for cost overruns and other contingencies. The quantum of such margins may be determined on the basis of past experience in developing similar type of projects.