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What Causes Cost Overrun in Transport Infrastructure Projects?"

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  • Bent Flyvbjerg
  • Mette K. Skamris Holm
  • S{o}ren L. Buhl

Abstract

This article presents results from the first statistically significant study of causes of cost escalation in transport infrastructure projects. The study is based on a sample of 258 rail, bridge, tunnel and road projects worth US$90 billion. The focus is on the dependence of cost escalation on (1) length of project implementation phase, (2) size of project and (3) type of project ownership. First, it is found with very high statistical significance that cost escalation is strongly dependent on length of implementation phase. The policy implications are clear: Decision makers and planners should be highly concerned about delays and long implementation phases because they translate into risks of substantial cost escalations. Second, it is found that projects have grown larger over time and that for bridges and tunnels larger projects have larger percentage cost escalations. Finally, by comparing cost escalation for three types of project ownership--private, state-owned enterprise and other public ownership--it is shown that the oft-seen claim that public ownership is problematic and private ownership effective in curbing cost escalation is an oversimplification. Type of accountability appears to matter more to cost escalation than type of ownership.

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  • Bent Flyvbjerg & Mette K. Skamris Holm & S{o}ren L. Buhl, 2013. "What Causes Cost Overrun in Transport Infrastructure Projects?"," Papers 1304.4476, arXiv.org.
    • Handle: RePEc:arx:papers:1304.4476
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    References listed on IDEAS

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    1. Elizabeth E. Bailey & Janet Rothenberg Pack (ed.), 1995. "The Political Economy Of Privatization And Deregulation," Books, Edward Elgar Publishing, number 528.
    2. repec:cup:cbooks:9780521009461 is not listed on IDEAS
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    Cited by:

    1. Ginés De Rus, 2007. "Economic Evaluation and Incentives in Transport Infrastructure Investment," Chapters, in: Massimo Florio (ed.), Cost–Benefit Analysis and Incentives in Evaluation, chapter 6, Edward Elgar Publishing.
    2. Nicole Adler & Chris Nash & Eric Pels, 2008. "High-Speed Rail & Air Transport Competition," Tinbergen Institute Discussion Papers 08-103/3, Tinbergen Institute.
    3. de Rus, Gines, 2006. "Infraestructuras: más iniciativa privada y mejor sector público [Infrastructure: more private participation and better public sector]," MPRA Paper 12000, University Library of Munich, Germany.
    4. Ofelia Betancor & Gerard Llobet, 2015. "Contabilidad Financiera y Social de la Alta Velocidad en Espana," Studies on the Spanish Economy eee2015-08, FEDEA.
    5. Campos, Javier & de Rus, Ginés, 2009. "Some stylized facts about high-speed rail: A review of HSR experiences around the world," Transport Policy, Elsevier, vol. 16(1), pages 19-28, January.
    6. Daniel Gurara & Mr. Kangni R Kpodar & Mr. Andrea F Presbitero & Dawit Tessema, 2020. "On the Capacity to Absorb Public Investment: How Much is Too Much?," IMF Working Papers 2020/048, International Monetary Fund.
    7. Adler, Nicole & Pels, Eric & Nash, Chris, 2010. "High-speed rail and air transport competition: Game engineering as tool for cost-benefit analysis," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 812-833, August.
    8. Gurara, Daniel & Kpodar, Kangni & Presbitero, Andrea F. & Tessema, Dawit, 2021. "On the capacity to absorb public investment: How much is too much?☆," World Development, Elsevier, vol. 145(C).
    9. Adriana Gómez-Cabrera & Amalia Sanz-Benlloch & Laura Montalban-Domingo & Jose Luis Ponz-Tienda & Eugenio Pellicer, 2020. "Identification of Factors Affecting the Performance of Rural Road Projects in Colombia," Sustainability, MDPI, vol. 12(18), pages 1-18, September.
    10. Joseph Sturm & Mashrur Chowdhury & Anne Dunning & Jennifer Ogle, 2011. "Analysis of cost estimation disclosure in environmental impact statements for surface transportation projects," Transportation, Springer, vol. 38(3), pages 525-544, May.
    11. Ayesha Anwar & Hong Leng & Pir Noman Ahmad, 2024. "Transforming Urban Environments: Understanding the Social Implications of Metrobus (MBS) Service Development in Lahore, Pakistan," Sustainability, MDPI, vol. 16(9), pages 1-36, April.
    12. de Rus, Gines & Nash, C.A., 2007. "In what circumstances is investment in HSR worthwhile?," MPRA Paper 8044, University Library of Munich, Germany.

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