2009 April 29 Wednesday
Public Works Projects Go Over Budget Due To Lying

Lying about the reasonableness of cost estimates causes large cost overruns.

But a professor at Oxford University in England has done a compelling series of studies trying to get at why big public-works projects such as bridges, tunnels and light-rail systems almost always turn out to be far more costly than estimated.

"It cannot be explained by error," sums up one of his papers, matter-of-factly. "It is best explained by strategic misrepresentation that is, lying."

The professor, Bent Flyvbjerg (pronounced flew-byair), has become a flash point in civic-planning circles. Some think he's a rock star; others say his analysis is too cynical.

Rail systems promoted by lovers of mass transit suffer from especially high rates of lying. What does this tell us about the most enthusiastic mass transit supporters?

It started seven years ago, when he published the first large study of cost overruns in 258 mega-transportation projects. He found that nine out of 10 came in over budget, and that the average cost overrun was nearly 30 percent. Rail systems had an average cost escalation of 45 percent.

Okay, how to reduce the lying? How to make cost estimates more realistic? Got any ideas?

Share |      By Randall Parker at 2009 April 29 11:38 PM  Economics Government Costs


Comments
Audacious Epigone said at April 30, 2009 7:22 PM:

Add 30% to whatever the official government body making the estimate puts out. Okay, that will only work for a little while, but someone will think of something in the interim!

Steve Johnson said at May 3, 2009 6:57 PM:

Pay flat fees; bid cost is all that is paid out.

Uncompleted projects disqualify the principles of the head contractor from government contracting for life.

There, fixed it.


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