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Contradictory outcomes of cost-benefit analyses – Findings from Norwegian public-investment projects

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  • Bardal, Kjersti Granås

Abstract

This paper addresses the issue with contradictory outcomes of cost-benefit analyses (CBA) performed on the same project that can be seen in many Norwegian public-investment projects. Different stakeholders may order “their own” appraisals of a specific project, which sometimes conclude quite differently from the other appraisals. This phenomenon is explored by studying the appraisals performed on eight Norwegian public-investment projects. Each of the projects analysed have been subject to many appraisals, which have all been compared and analysed. The following research questions have been explored: (1) How may various appraisals of the same project differ? (2) How may clients be able to influence the results of the appraisals? (3) How may the challenge with differing results, technical bias and low transparency of the appraisals be addressed in order to help decision-makers evaluate the various outcomes of CBAs? The findings show that the appraisals did vary in the projects studied; for some of them, quite substantially. The differences between appraisals were mostly related to the benefit side of the projects, both regarding which types of benefits were quantified and how they were measured and monetised. Important project-specific assumptions also differed among the appraisals. The findings indicate that the clients ordering the appraisals may have impacted the outcome of the appraisals by, for example, impacting project specific assumptions and demanding certain methodologies and standards to be used when quantifying and valuing benefits. A CBA can never be a complete, objective description of the matters under consideration. However, it is crucial that the appraisals are transparent and report on important factors that have large impact on the results so that decision-makers can evaluate the various appraisals and are able to use the information from them in decision-making processes.

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  • Bardal, Kjersti Granås, 2020. "Contradictory outcomes of cost-benefit analyses – Findings from Norwegian public-investment projects," Research in Transportation Economics, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:retrec:v:82:y:2020:i:c:s073988592030072x
    DOI: 10.1016/j.retrec.2020.100874
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    More about this item

    Keywords

    Cost benefit analysis; Technical bias; Decision-making; Public investment projects;
    All these keywords.

    JEL classification:

    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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