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Lock-in and Its Influence on the Project Performance of Large-Scale Transportation Infrastructure Projects. Investigating the Way in Which Lock-in Can Emerge and Affect Cost Overruns

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  • Chantal C. Cantarelli
  • Bent Flybjerg
  • Bert van Wee
  • Eric J. E. Molin

Abstract

Lock-in, the escalating commitment of decision-makers to an ineffective course of action, has the potential to explain the large cost overruns in large scale transportation infrastructure projects. Lock-in can occur both at the decision-making level (before the decision to build) and at the project level (after the decision to build) and can influence the extent of overruns in two ways. The first involves the methodology of calculating cost overruns according to the formal decision to build. Due to lock-in, however, the real decision to build is made much earlier in the decision-making process and the costs estimated at that stage are often much lower than those that are estimated at a later stage in the decision-making process, thus increasing cost overruns. The second way that lock-in can affect cost overruns is through practice. Although decisions about the project (design and implementation) need to be made, lock-in can lead to inefficient decisions that involve higher costs. Sunk costs (in terms of both time and money), the need for justification, escalating commitment, and inflexibility and the closure of alternatives are indicators of lock-in. In this paper, two case studies, of the Betuweroute and the HSL-South projects in the Netherlands, demonstrate the presence of lock-in and its influence on the extent of cost overruns at both the decision-making and project levels. This suggests that recognition of lock-in as an explanation for cost overruns significantly contributes to the understanding of the inadequate planning process of projects and allows development of more appropriate means.

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  • Chantal C. Cantarelli & Bent Flybjerg & Bert van Wee & Eric J. E. Molin, 2013. "Lock-in and Its Influence on the Project Performance of Large-Scale Transportation Infrastructure Projects. Investigating the Way in Which Lock-in Can Emerge and Affect Cost Overruns," Papers 1307.2177, arXiv.org.
    • Handle: RePEc:arx:papers:1307.2177
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    References listed on IDEAS

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    1. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    2. Flyvbjerg,Bent & Bruzelius,Nils & Rothengatter,Werner, 2003. "Megaprojects and Risk," Cambridge Books, Cambridge University Press, number 9780521009461, September.
    3. Daniel Kahneman & Dan Lovallo, 1993. "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science, INFORMS, vol. 39(1), pages 17-31, January.
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    1. Abeysekara, Baudhi & Perera, Piyaruwan & Chhipi Shrestha, Gyan Kumar & Gunaruwan, Lalithasiri & Kumarage, Amal & Sadiq, Rehan & Hewage, Kasun, 2021. "Improving the capital deployment efficiency: An infrastructure investment planning process in transportation project," Research in Transportation Economics, Elsevier, vol. 88(C).
    2. Bent Flyvbjerg, 2013. "Quality Control and Due Diligence in Project Management: Getting Decisions Right by Taking the Outside View," Papers 1302.2544, arXiv.org.
    3. Chantal C. Cantarelli & Bert van Wee & Eric J. E. Molin & Bent Flyvbjerg, 2013. "Different Cost Performance: Different Determinants? The Case of Cost Overruns in Dutch Transportation Infrastructure Projects," Papers 1307.2179, arXiv.org, revised Jan 2015.
    4. Cantarelli, C.C. & van Wee, B. & Molin, E.J.E. & Flyvbjerg, B., 2012. "Different cost performance: different determinants?," Transport Policy, Elsevier, vol. 22(C), pages 88-95.
    5. Dotti, Nicola Francesco, 2018. "Knowledge that matters for the ‘survival of unfittest’: The case of the new Brussels' rail junction," Transport Policy, Elsevier, vol. 63(C), pages 131-140.
    6. Chiara Pancotti & Matteo Pedralli & Geert Smit & Silvia Vignetti, 2020. "Understanding transport project appraisal in its institutional dimension," Working Papers 201902, CSIL Centre for Industrial Studies.
    7. Daniel Albalate & Germá Bel, 2015. "La experiencia internacional en alta velocidad ferroviaria," Working Papers 2015-02, FEDEA.
    8. Cantarelli, C.C. & Molin, E.J.E. & van Wee, B. & Flyvbjerg, B., 2012. "Characteristics of cost overruns for Dutch transport infrastructure projects and the importance of the decision to build and project phases," Transport Policy, Elsevier, vol. 22(C), pages 49-56.
    9. Bert van Wee & Piet Rietveld, 2013. "CBA: ex ante evaluation of mega-projects," Chapters, in: Hugo Priemus & Bert van Wee (ed.), International Handbook on Mega-Projects, chapter 12, pages 269-290, Edward Elgar Publishing.
    10. Chantal C. Cantarelli & Bent Flyvbjerg, 2013. "Mega-projects’ cost performance and lock-in: problems and solutions," Chapters, in: Hugo Priemus & Bert van Wee (ed.), International Handbook on Mega-Projects, chapter 15, pages 333-355, Edward Elgar Publishing.
    11. Love, Peter E.D. & Sing, Michael C.P. & Ika, Lavagnon A. & Newton, Sidney, 2019. "The cost performance of transportation projects: The fallacy of the Planning Fallacy account," Transportation Research Part A: Policy and Practice, Elsevier, vol. 122(C), pages 1-20.
    12. Bent Flyvbjerg, 2014. "What You Should Know About Megaprojects, and Why: An Overview," Papers 1409.0003, arXiv.org.
    13. Marleau Donais, Francis & Abi-Zeid, Irène & Waygood, E. Owen D. & Lavoie, Roxane, 2022. "Municipal decision-making for sustainable transportation: Towards improving current practices for street rejuvenation in Canada," Transportation Research Part A: Policy and Practice, Elsevier, vol. 156(C), pages 152-170.
    14. Flyvbjerg, Bent & Ansar, Atif & Budzier, Alexander & Buhl, Søren & Cantarelli, Chantal & Garbuio, Massimo & Glenting, Carsten & Holm, Mette Skamris & Lovallo, Dan & Lunn, Daniel & Molin, Eric & Rønnes, 2018. "Five things you should know about cost overrun," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 174-190.
    15. Pansera, Mario & Lloveras, Javier & Durrant, Daniel, 2024. "The infrastructural conditions of (de-)growth: The case of the internet," Ecological Economics, Elsevier, vol. 215(C).
    16. EEA Wolf & Wouter Van Dooren, 2018. "‘Time to move on’ or ‘taking more time’? How disregarding multiple perspectives on time can increase policy-making conflict," Environment and Planning C, , vol. 36(2), pages 340-356, March.
    17. Giezen, Mendel & Salet, Willem & Bertolini, Luca, 2015. "Adding value to the decision-making process of mega projects: Fostering strategic ambiguity, redundancy, and resilience," Transport Policy, Elsevier, vol. 44(C), pages 169-178.
    18. Hugo Priemus & Bert van Wee (ed.), 2013. "International Handbook on Mega-Projects," Books, Edward Elgar Publishing, number 14791.

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