Value for Money in Infrastructure Procurement

The report argues that while India has robust legal frameworks for environmental and social safeguards in infrastructure procurement, poor implementation and a narrow definition of 'value for money' (VfM) lead to significant ecological losses and financial risks. It examines four key safeguards—Environmental, Forest, Wildlife, and Land Acquisition clearances—finding a disconnect between pre-concession approvals and post-signing monitoring. The authors propose shifting to a 'whole-life value' approach to VfM, integrating sustainability criteria into tender documents, and reforming financial risk models like the Capital Asset Pricing Model (CAPM) to better account for long-term green infrastructure gains.

• Traditional interpretations of value for money (VfM) in India focus on the lowest price at commissioning, whereas a sustainable development approach requires assessing 'whole-life value' including planning, design, construction, operation, and decommissioning.
• Infrastructure projects in India face significant delays and cost overruns; as of May 2012, over 42% of 564 projects costing more than INR 1,027 billion were delayed, leading to an average cost escalation of 16.9%.
• The Environmental Clearance process is characterized by rigorous pre-concession requirements but suffers from a lack of post-signing monitoring and enforcement due to severe capacity gaps at the Ministry of Environment and Forests (MoEF).
• Forest clearances are often granted based on outdated land records, and the compensatory afforestation mechanism is poorly implemented, with an unutilized surplus of approximately INR 25,000 crore in CAMPA funds.
• The National Green Tribunal (NGT), established in 2010, has become a critical mechanism for the expeditious handling of environmental disputes and the enforcement of safeguards, including the power to revoke clearances.
• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (2012) improves upon the 1894 Act by linking land acquisition with mandatory resettlement and rehabilitation and providing fairer compensation.
• Road construction in India has a high carbon footprint; for instance, four-laning a national highway can emit 2,115 tonnes of CO2e per kilometre, though using recycled materials and cold-mix processes can significantly reduce these emissions.
• The Capital Asset Pricing Model (CAPM) is unsuitable for valuing green infrastructure because it ignores environmental risks and favors projects with early returns over those with long-term sustainability gains.
• To improve VfM, the report recommends that the government obtain all environmental, forest, and wildlife clearances before launching the tendering process to reduce private sector risk and project delays.

APA

International Institute for Sustainable Development (2014). Value for Money in Infrastructure Procurement. https://www.iisd.org/system/files/publications/value_for_money.pdf

Chicago

International Institute for Sustainable Development. Value for Money in Infrastructure Procurement. 2014. https://www.iisd.org/system/files/publications/value_for_money.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Value for Money in Infrastructure Procurement |date=January 2014 |url=https://www.iisd.org/system/files/publications/value_for_money.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2014value, author = {{International Institute for Sustainable Development}}, title = {{Value for Money in Infrastructure Procurement}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = jan, url = {https://www.iisd.org/system/files/publications/value_for_money.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }