Productivity Test or Review (Post Appraisal)

 Productivity Test / Review

 

·         Source: Chapter 2 of Indian Railway Finance Code

 

·         Also called as Post appraisal

 

·         Object: 

1. To compare the earnings or savings in working expenses  eventually realized after the new expenditure (capital) has fructified with that anticipated when the proposal was embarked upon.  

2.  That means to ensure that the estimated return at the time of proposal has attained or not.

3. Not only to furnish information as to the results actually achieved to the authority who sanctioned the expenditure but also to serve as a lesson for the future.

 ·         Applicable for all Major works.

 ·         Conducted by Financial branch.

 ·         Separate records of expenditure & earnings related to the selected works (for Productivity Test) have to be maintained by the Accounts officers. So that the Productivity Test can be conducted as soon as it falls due.

 ·         Additional earnings and working expenses   - computation should be done at the project estimate stage.

 

·         To avoid the changes in prices due to escalation – comparison in terms of physical units or throughput i.e., class wise passenger traffic & commodity wise Goods traffic may be carried out.

 

·         New Lines – A statement showing the financial results of its working in specified Form (F 244) should reach the Railway Board not later than 31st December

• Accompanied by a covering memorandum in which brief explanations should be given of important variations between the actual realization and the estimated earnings.

• Also a Note by the GM indicating how the actual net cash flow compares with what was estimated at the project stage.

• Also bring out the probable traffic prospects of the line in the 6th and the  11th year of opening.

 

• Open Line works - Such Tests applied within five to seven years of their completion.

• Selection will be made out of these works sanctioned (and/or charged to Capital) on grounds of remunerativeness.

• All such works costing over Rs. 1 crore will invariably be subjected to this test.

• The result of the test should be reported by the General Managers to the Railway Board.

• Works costing between Rs. 20 lakhs and Rs.1 crore charged to Capital and sanctioned by the General Manager within his powers 'of sanction  - Selection will be made by GM in consultation with PFA. 

• Productivity review  will be conducted for  Works costing above Rs.10 Lakhs - chargeable to DF. Though ROR is not mandatory for execution of those works.  

• The fact that productivity tests are to be applied to a particular work should be intimated to the authorities entrusted with its execution as also to the Accounts and Audit officers.

• Maintenance of Register with the following particulars. 

1. Reference to sanction of the estimate.

2. Brief particulars of work 

3. Total estimated expenditure

4. Nature and extent of "productivity" claimed in the estimate.

5. When the test or review is to be applied

6. Brief remarks about the results of the test or review.

• Review of Register - Half yearly

• PFA should submit a report embodying the results of the test or review to the GM. 

• Works selected by the Railway Board - The GM will submit the PFA’s report to the Board with his own comments.  The object of these reports is not only to furnish information as to the results actually achieved to the authority who sanctioned the expenditure but also to serve as a lesson for the future.

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