The accuracy of benefit-cost analyses (BCAs) in transportation: An ex-post evaluation of road projects

Ex-post evaluations of benefit-cost analyses (BCAs) of transportation projects are scarce in the literature. If conducted frequently, they could reveal the extent to which objectives are achieved and may give inputs that can improve the quality of ex-ante BCAs. The authors first explain the usefulness of ex-post BCA evaluations of transportation projects, depending on which planning phase a project is in. The authors then perform ex-post BCAs on 27 Norwegian road projects that have been in service for at least 5 years and compare the results with the ex-ante BCAs that were presented to the decision-makers. The authors use two different measures of aggregating the magnitudes of accuracy; the Mean Percentage Error (MPE) and Mean Absolute Percentage (MAPE). Using MPE, the authors find that: (1) ex-ante BCAs underestimate the actual net present value (NPV) by 50% on average and, the NPV per dollar invested by a mere 0.14% points on average; (2) the traffic level and traffic growth rates are often underestimated ex-ante, leading to an underestimation of the benefits and; (3) construction costs are underestimated by 5% on average, which is too small to offset the observed underestimation of benefits. By default, MAPE shows higher values of inaccuracies implying that one should not be indifferent as to the measure used. Overall, the Norwegian ex-ante BCAs perform fairly well. The authors urge that the authorities concerned must improve their traffic forecasts and construction cost estimates to assure that the ex-ante objectives are met. The upkeep of ex-ante data is essential to enable ex-post evaluation which, ceteris paribus, will enhance the transparency and credibility of BCA as an appropriate decision-making tool.

• Record URL:
  https://doi.org/10.1016/j.tra.2018.12.023
• Record URL:
  http://www.sciencedirect.com/science/article/pii/S0965856417309667
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/09658564
• Supplemental Notes:
  • © 2019 Elsevier Ltd. All rights reserved. Abstract reprinted with permission of Elsevier.
• Authors:
  • Odeck, James
  • Kjerkreit, Anne
• Publication Date: 2019-2

Language

• English

Media Info

• Media Type: Web
• Features: Figures; References; Tables;
• Pagination: pp 277-294
• Serial:
  • Transportation Research Part A: Policy and Practice
  • Volume: 120
  • Issue Number: 0
  • Publisher: Elsevier
  • ISSN: 0965-8564
  • Serial URL: http://www.sciencedirect.com/science/journal/09658564

Subject/Index Terms

• TRT Terms: Accuracy; Benefit cost analysis; Construction projects; Decision making
• Uncontrolled Terms: Net present value
• Geographic Terms: Norway
• Subject Areas: Construction; Finance; Highways; Planning and Forecasting;

Filing Info

• Accession Number: 01691378
• Record Type: Publication
• Files: TRIS
• Created Date: Jan 25 2019 10:34AM