Financial Impact Assessment of Time Overrun: A Case of Second Small Towns Water Supply and Sanitation Sector Project, Nepal

Abstract

Government of Nepal is implementing many water-supply projects through its regular and through many projects. Small Town water Supply Project is one of the major projects in water supply implemented by GoN in support of ADB. Second Small Towns Water Supply and Sanitation Sector Project (STWSSSP) project is based on cost recovery principle. The study is focused to find out factors, magnitude, cost and the way time and cost overrun decreasing the profitability
financially. All 21 sub projects are selected for study. The secondary data especially the requests by the Contractors, recommendations by Consultants and grants by Clients are used for the analysis of time and cost overrun. The financial evaluation of two projects is conducted after time and cost overrun to show the impacts of time and cost overrun in the profitability of the projects. The average time overrun of the overall projects are found 15.83 months with average time overrun of 11.58 months in Terai (plain land) located projects and 20.94 months in Hilly located projects. The sector project is found 10.68% increment in cost after variation with 9.33% in Terai located projects and 12.48% in Hill located projects. Financial profitability of the projects was found decreased due to time and cost overrun. The research concludes that project like SSTWSSSP which are based on the principle of cost recovery has significant impacts due to time and cost overrun. Because loan payment becomes delayed as tariff is only collected after completion of the project. It is therefore an equal role of Client, Consultants, Contractors and important stakeholders to foresee the probable factors of time and cost overrun and focus to reduce them