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Q.1. Explain the concept of part estimates? Is there any need for Accounts
Office to vet tender schedule? Write in details bringing out the Board’s
order on the subject?
INTERNAL FUNDS
a) Depreciation Reserve Fund (DRF)
b) Pension Fund
c) Development Fund
d) Capital Fund
RESERVE FUNDS
234 Railway Revenue Reserve Fund – This is a minor head under the major head 816-revenue Reserve Funds
(under J-Reserve Funds-(a) Reserve Funds bearing interest) the account of the Fund will be maintained in the
Office of the Railway Board only. The Fund will be credited mainly with appropriation from revenue surplus,
interest on the balances of the fund and loans from General Revenues. The accounts of the Fund will be debited
with (i) such sums as may be required for dividend equalisation that is to say to make up the shortfall in the
revenue surplus available for payment of dividend to the General Revenues, (ii) repayment of loans form General
Revenue and interest on loan. The balance of the fund will be carried forward from year to year.
Fund is closed.
235. Railway Development Fund- This is a minor head under the major head 817- Development Funds (under
J-Reserve Funds-(a)-Reserve Funds bearing interest). The accounts of the Fund will be maintained in railway
board’s Office. The Fund will be credited with appropriation from revenue surplus, interest on Fund balances and
loans from General Revenue. The withdrawals from the Fund will be in accordance with the rules of the Fund,
namely to meet the expenditure on providing amenities for passengers and other railway users, labour welfare
works, unremunerative operating improvements etc. The balance of the Fund will be carried forward from year to
year.
Fund is closed.
237 Accident Compensation, Safety and Passenger Amenities Fund - This is a minor head under the major
head 821-General and other Reserve Funds (under J-Reserve Funds, (a) Reserve Funds bearing interest). The
Fund will be credited with the amount collected as surcharge on passenger tickets (towards accident
compensation etc.) and interest on the balance in the Fund. The Fund will be debited with (a) payments of
compensation to passengers involved in railway accidents, (b) expenditure on safety works such as Track
Circuiting or Axle Counters, Automatic warning System, Vigilance Control Device, Lifting Barriers at level
crossings, inter-locking of level crossing gates with signals and such other safety works as may be authorised to
be financed out of this fund from time to time and (c) expenditure on specified items of passenger amenities and
allied works such as provision of platforms and covers there on, Train indicator Boards, Rest Shelters for
licensed porters etc. The balances of the Fund will be carried forward from year to year.
Fund is closed.
OLWR :
This fund is meant for debiting those expenditure Which are costing more than Rs 1 Lakh and upto Rs 10
Lakhs. New Minor Limits. The object of this fund is to enable those Expenditure costing more than Rs 10 Lakhs
to be charged not To Revenue but to this fund. This would reduce the Revenue Expenditure considerably.
Now closed
External Funds:
1. Market borrowing through Indian Railway Finance Corporation IRFC Raising bonds in
market Fund Rolling Stock production On lease basis Charges 16 % p a
2. General Exchequer – support from GOI Interest bearing loan in perpetuity 7 % p a
3. Railway Safety Fund – a share from the Central Road Fund – every lr of petrol sold railways
get 12.5 paise and diesel 6.25 paise meant for construction of ROB/RUB, manning
unmanned level crossing
4. Special Railway Safety Fund – non lapsable fund Rs 15000 Crores for renewal and
Rplacement of tracks, bridges, Rolling Stock Over aged coaches and wagons, signaling
gears
5. Ministry of Defence for rail lines in strategic areas – Udhampur – Katra – Baramulla –
Quazigund 100 % support
6. North East Development Forum – for all projects in the seven North Eastern States
7. State Participation: Since the construction of new Lines have cost dearly to the railways, the
RailwayMinisters Namely Shri George Fernandez and Shri Nitish Kumar have Raised this
issue in the Parliament through “Status Paper On Railways” and a “White Paper on Railway
Projects”. They have appealed the State Governments to take up The new lines under Infra
Structure Development Projects In their respective States.
Maharashtra: Mumbai Rail Vikas Corporation 2/3
Karnataka : Karnataka Rail Infrastructure Development Enterprises 2/3
Andhra Pradesh: 50 : 50 sharing
West Bengal : Metro Rail – Dolliganj – Dahria 1/3 share
Jarkhand : 2/3 sharing
Tamil Nadu : MRTS – Taramani – Velacheri 2/3
GC – MSB – TBM 50:50
GC - SA - COT 50:50
8. PPP Public Private Participation:
Pipavav Mundra Port Railway
9. LIC of India has come forward to invest Rs 150000 Crores in Indian Railways
The above works of asset replacement are targeted for liquidation in a period of five years. Outlay of the ₹20,000
crore has been allocated in Budget Estimates 2018-19 also.
Safety is accorded the highest priority by Indian Railways and all possible steps are undertaken on a continual
basis including upgradation of technology to aid safe running of trains. These include replacement of over-aged
assets, elimination of unmanned level crossings, adoption of suitable technologies for upgradation and
maintenance of track, rolling stock, signalling and interlocking systems, safety drives, greater emphasis on
training of officials and inspections at regular intervals to monitor and educate staff for observance of safe
practices.
As a safety culture a well established safety management systems is existing which identifies Safety hazards and
unsafe practices in the railway operation so that corrective action can be initiated much before occurrence of a
disaster. Instructions have been issued from time to time to inculcate safety habits amongst all railway
employees.
Are governed by (a) clause No.17.1, 17.2,17.3,17.4of General conditions of contracts (b)
chapter II of rules for entering into supply contracts (c) para 1267-E. It has been laid down
that though this clause appears in every contract agreement, it is mandatory for the Rly.
administration to serve a notice of intention of to recover the L.D.
This is applicable when the supply or works are not completed within the prescribed time
limit of the contract agreement and extension has to be granted. The delay can be on account
of (a) Railway administration by way of additional quantity, additional items, change in
scope of work etc. (b) due to failure of the contractor (c) due to reasons beyond the control of
the contractor / Railways i.e. act of god, lockout, strikes, fire etc.
If Railway administration is not in a position to cancel the contract for the balance
work/supply for awarding the same on risk & cost basis, but has suffered some kind of loss /
inconvenience, L.D. is imposed in proportion with the quantum of loss etc.
The authority that has approved the tender enjoys the full powers for imposing / waiving this
penalty in respect of contracts entered into. In case of waivel, full reasons for doing so have
to be recorded on file and communicated to FA & CAO.
In case of works contract, the penalty to the extent of one half of one percent of the contract
value for each week or a part of the week, the contractor is at fault for delayed execution of
work. In case of supply contract LD is recovered at 2% of the contract price/consignment per
month or a part of the month where the supply is in arrears. In case there is no actual loss /
inconvenience can not quantified in terms of money, the LD is recovered at 10% of the 2%
applicable.
While granting the extensions specific clause of the GCC under which it is being granted has
to be invariably indicated along with the percentage of LD to be imposed. Where time is the
essence of the contracts, extension shall be allowed on valid grounds & only if it is felt that
the contractor can complete the work in the extended period.
Q.No.3 What are the factors leading to time and cost over-run in projects? How can they be
avoided?
Answer: Cost over-runs and time over-runs in the case of number of construction projects,
of late, have become very common. Unless the cost-base of major inputs making up the
overall cost of the projects is realistically adopted and the overall cost of the projects so
assessed, cost over-runs are unavoidable consequences and the results of original cost-benefit
analysis are bound to be vitiated.
Main purpose of framing works estimates is to bring to the notice of the sanctioning
authority the scope of the work, time-frame of completion and the financial liability that is
being incurred. For preparing a proper estimate, it is necessary that the scope of the work is
well defined based on approved work plan. Structural computations and the availability of
the proposed structural materials.
The major areas causing concern with reference to Railway projects are delays
inefficiencies, alterations distortions in implementation and execution of works. At times the
systems of execution of works through agencies not competent to handle the delicious of
planning are same major areas causing concern they are namely:
I. Clear and specific job responsibilities with the time frame are not determined at all
levels and vigorously monitored in the field.
ii. The systems lack the method of identifying the areas of wastages, localizing them
and remedial actions to be taken up. It grapples with the problems as and when the surface at
higher cost.
iii. Rigorous performance oriented budgeting is not used as a parameter at key levels
of implementation to ensure optimum results.
Iv. Indian Railways cannot afford planning and execution on a trial and error method
of growth pattern.
v. Monitoring should become an integral part of planning. The present method of
productivity tests and reviews appear to have little significance.
vi. The management is in a hurry and anxious to implement a number of schemes and
at times they look as plans of expediency.
The works are started with the sanction of detailed estimates and works-in-progress
and matched with the allotment of funds. It is interesting to know that the time over runs and
cost over runs are in the range of 200% or above in respect of major as well as minor
projects. The analysis in retrospective, indicate distortions like under estimation, delays in
implementation and execution of works, unrealistic time span projected for completion of the
works. As the number of projects increase, not matching with the corresponding funds
allotments, the works get starved for want of resources resulting in time over –runs. The
emphasis of management should be to fix their priorities limit the number of projects and
ensure completion within the time frame and budget allocation.
i. The implementation of the scheme is within the financial and physical resources.
iii. A system to system to ensure all preliminary planning, like acquisition of land,
preparation of detailed plans, estimates and contract schedules.
iv. A monitoring system to ensure all preliminary planning, like acquisition of land ,
preparation of detailed plans , estimates and contract schedules.
vi. Many errors originate in imperfect knowledge of the field of enquiry. A good
knowledge of the area of investigation is essential.
vii. Development of suitable models for the solution of similar problems occurring
during the course of project implementation.
Although cost over-runs, in the case of major projects, are inevitable to some extant,
owing to the functional set up, operational procedures, price escalation, inflationary
conditions etc. yet, it can be minimized to a great extent by realistic cost assessment through
compilation of works estimate framed on a firm and realistic cost-base and initiating action
for processing revised estimates, no sooner it comes to light that the original sanctioned cost
is likely to be exceeded. The Board have taken a very serious view of the cost over-runs and
in this connection their latest instructions making it incumbent on the project authorities to
undertake a “Mandatory Review” of the cost estimates with a view to make sure whether
these would require upward revision, at the stage when funds to the extent of 50% of the
approved cost are released, are worth mentioning. It as a result of this review, the project is
likely to exceed the approved cost; the revised cost estimates should be drawn up and got
considered and sanctioned by the competent authority before any funds are released beyond
the sanctioned estimates.
Tender Schedules:
vi. Stage payment clause for the tenders costing more than Rs.15
crores,
xi. EMD shall be fixed @ 2% of the tender value upto Rs. 1 crore
and ½% of the tender value exceeding Rs.1 crore subject to a
maximum EMD of Rs.1 crore.
xiii. It should be ensured that the tenders are invited only for the
works which are covered by the sanctioned estimates with
sufficient availability of funds.
xiv. The quantum of work and the rates should match with the
details of the sanctioned estimate.
v 1264 E -Para No.64 of 12th chapter of Indian Railways Engineering Code - Click here
v GMs may, however, sanction within their delegation of powers - Those works which
are capital intensive and specialized nature and also when estimated value of the
tender exceeds Rs.25 Crores.
I-Mobilization Advance:
v Against New Machinery & Equipment, involving substantial outlay, brought to side
and essentially
required for the work. (No advance -Against old equipment)
v The Plant & equipment shall be insured for the full value and for the entire period.
v Such Plant & Equipment shall not be removed from the site of work without prior
written permission of the Railway Engineer.
III - Advances For Accelerating Progress Of The Work During Course Of Execution
Of Contract -
The Above Advances Are Subject To The Following Conditions - ACS 54 Click here
ü Interest rate - decided by the Railway Board at the beginning of the financial year. -
applicable for the tenders opened in that financial year.
ü The recovery shall commence - When the value of contract executed reaches 15% of
original contract value
ü The recovery shall complete - When the value of work executed reaches 85% of the
original contract value.
Recovery of Interest:
v Interest shall be recovered on the advance outstanding for the period commencing
from the date of payment of advance till date of particular on-account bill
v adjusted fully against on-account bill along with pro-rata principal recovery.
v In the event of any short-fall, the same shall be carried forward to the next on-account
bill and shall attract interest.
v The Bank Guarantee for such advances shall clearly cover at least 110% of the value
of the sanctioned advance amount (covering principal plus interest).
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ASSETS REGISTER
v All assets valued over and above Rs.20 lakhs should be entered in Assets Register.
v In the case of buildings, the information will be docketed in the Building Register in
form No. 1977 of Engineering Code.
v The completion Reports (CRs) of the said works need not be preserved, once
the information is docketed in the Assets Register or Building Register.
v However for works which are costing less than Rs.20 lakhs, the sanctioned CR -
Completion Report and Completion Estimate should be preserved for a period of
five years.
ü Execution authority - should justify the need to undertake the work immediately
(though not included in the Sanctioned works) and also why it could not be
anticipated/included in the Pink Book/LAW.
ü Funds should be provided for OOT works - duly re appropriated within the same Plan
Head from the Itemized works.
ü Prior Finance Concurrence of PFA/Sr.DFM is required for OOT works in Zonal Railway
& Division respectively.
ü Funds provided for OOT woks should be duly re appropriated within the same Plan
Head from itemized works.
ü Safety works under OOT - Should be completed within a maximum period of 8 months
from the date of sanction of Detailed Estimate. Otherwise, the object of OOT for safety
works itself is defeated.
ü Before obtaining Out of turn sanction of GM for traffic facilities/ line capacity work,
approval of PCOM should be taken.