[sustran] FW: Error or Lie? Cost overrun in transportation projects

[Paul Barter]

This looks interesting and important.  
Paul.

-----Original Message-----
From: Bent Flyvbjerg [mailto:flyvbjerg at I4.AUC.DK] 
Sent: Tuesday, 27 August 2002 6:42 PM
To: UTSG at JISCMAIL.AC.UK
Subject: Cost overrun in transportation projects

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. 

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 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.