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Cost overrun in public works projects

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Dear colleagues.

I thought you might be interested to know about the article "Underestimating Costs in Public Works Projects: Error or Lie?", published in the Summer Issue of the Journal of the American Planning Association (abstract included below). You can download a copy of the article and read more about it at APA's site http://www.planning.org/japa/publicworks.htm or http://www.planning.org/japa/pdf/JAPAFlyvbjerg.pdf

Empirically and constructively, the article presents data, which make possible for the first time statistically valid risk assessment and benchmarking of cost overrun in major transport infrastructure projects.

Theoretically, and in the tradition of critical reflexivity, the article forms part of a research project in which we explore the role of deception, lying, and power in policy making and planning (as a supplement to theories that emphasize truth, rationality, and democracy).

We have in the pipeline several more articles plus a book about the issues involved. A description of the book, Megaprojects and Risk: An Anatomy of Ambition, may be found at Cambridge University Press' website at:
http://uk.cambridge.org/order/WebBook.asp?ISBN=0521804205#top.

If you know of reliable data on estimated and actual costs (or estimated and actual traffic/benefits) for one or more transportation or other infrastructure projects, I would greatly appreciate you sending them to me. We are constantly looking for additional projects to expand our database and project portfolio. Also, if you have personal experiences with/stories about cost estimation that you think might be useful in our research, please send them along as well.

I would value any comments you may have on the article. Please feel free to forward this email and the article to any interested colleagues.

If this mail is of no interest to you, I apologize for the inconvenience. Also apologies for any cross posting.

I hope your summer is fine.

Cheers,    Bent
--
Bent Flyvbjerg, Dr. Techn. & Ph.D.
Professor, Research Director
Aalborg University, Dept. of Development and Planning
Fibigerstraede 11, 9220 Aalborg, Denmark
Phone: +45 9816 9084, Fax: +45 9815 3537 (or call +45 9816 9084 and ask for fax)
Email: flyvbjerg(--nospam--at)i4.auc.dk
Homepage: http://www.i4.auc.dk/flyvbjerg

ABSTRACT
This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects. Based on a sample of 258 transportation infrastructure projects worth $90 billion (U.S.), it is found with overwhelming statistical significance that the cost estimates used to decide whether important infrastructure should be built are highly and systematically misleading. The result is continuous cost escalation of billions of dollars. The sample used in the study is the largest of its kind, allowing for the first time statistically valid conclusions regarding questions of cost underestimation and escalation for different project types, different geographical regions, and different historical periods. Four kinds of explanation of cost underestimation are examined: technical, economic, psychological, and political. Underestimation cannot be explained by error and is best explained by strategic misrepresentation, i.e., lying. The policy implications are clear: In debates and decision making on whether important transportation infrastructure should be built, those legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust the cost estimates and cost-benefit analyses produced by project promoters and their analysts. Independent estimates and analyses are needed as are institutional checks and balances to curb deception.