---
title: "CAG Flags Unrealistic Rates and Cost Overestimations by CPWD"
url: https://projectchintan.com/article/cag-flags-unrealistic-rates-cpwd-cost-overestimation-6xefg
publisher: Project Chintan
author: Project Chintan Newsroom
section: Business
published: 2026-08-13T23:00:31.534Z
modified: 2026-08-14T01:45:05.886Z
language: en-IN
---

# CAG Flags Unrealistic Rates and Cost Overestimations by CPWD

The Comptroller and Auditor General of India (CAG) has identified significant discrepancies in the Central Public Works Department's (CPWD) rate-setting methodology. The report highlights that 93% of projects were awarded below CPWD's own cost estimates, suggesting inflated initial valuations.

## Key takeaways

- The CAG has identified unrealistic rates within the CPWD's Delhi Schedule of Rates (DSR) 2021.
- A significant majority of CPWD projects, 93%, were awarded at costs lower than their initial estimates.
- The CPWD failed to conduct market surveys before revising the DSR in 2021, contributing to the discrepancies.
- The audit also pointed to an inadequate process for calculating contractor profit and overhead charges.

## What Happened

The Comptroller and Auditor General of India (CAG) has reported irregularities in the Central Public Works Department's (CPWD) system for determining project costs. The CAG's findings, presented to Parliament, indicate that the rates used in the CPWD’s Delhi Schedule of Rates (DSR) for 2021 were unrealistic. This issue stems from the CPWD not conducting market surveys prior to revising the schedule in 2021.

The report detailed that between January 2022 and January 2023, a vast majority of works—4,666 out of 5,011, or 93%—were awarded at tender costs lower than the estimates generated using the DSR 2021. The CAG also pointed to a flawed process for calculating contractor profit and overhead expenses.

## Why It Matters

The CAG emphasized the critical importance of an accurate schedule of rates, as it forms the basis for the CPWD's budget. The department's budget estimates have seen a substantial increase, rising from Rs 2,027.33 crore in 2020-21 to Rs 4,314.08 crore in 2022-23. The report warns that if the scheduled rates are higher than actual market rates, it can inflate project cost estimations and potentially lead to undue benefits for contractors. Given the significant public funds involved, maintaining the accuracy of these estimates is essential.

## Background

The Central Public Works Department (CPWD) is responsible for project cost estimation and tendering based on its Schedule of Rates. The Delhi Schedule of Rates (DSR) is a key document used for this purpose. The CAG's report examines the methodology employed by CPWD in establishing these rates and subsequently estimating project costs.

## Key Facts

- The CAG found discrepancies in the CPWD's methodology for determining its Schedule of Rates.

- 93% of projects were awarded at costs below CPWD's own estimates.

- The CPWD did not conduct a market survey before revising the Delhi Schedule of Rates (DSR) in 2021.

- During January 2022 to January 2023, 4,666 out of 5,011 works were awarded at tendered costs less than DSR 2021-based estimates.

- The CPWD's Budget Estimates increased from Rs 2,027.33 crore in 2020-21 to Rs 4,314.08 crore in 2022-23.

- A faulty process for calculating contractor profit and overhead charges was also flagged.

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Canonical: https://projectchintan.com/article/cag-flags-unrealistic-rates-cpwd-cost-overestimation-6xefg
Reported from: Multiple Sources