The cost performance of transportation projects: The fallacy of the Planning Fallacy account

Delivering transportation projects to their budgeted cost remains a challenge for many governments worldwide. An issue that has hindered progress being made to address this problem has been the availability of empirical data that reflects the changing nature of cost estimates and their difference from a project’s final account. Using a homogenous dataset provided by a public sector authority in Hong Kong, the authors analyse the differences between the approved budget, pre-tender estimates, contract sum and final accounts for approximately HK$115 billion (≈US$14 billion) worth of transportation projects. The authors demonstrate that 47% (i.e. ≈ 5 out 10) of the projects deviate from their approved budget. In particular, when they consider the difference between the approved budget and the final contract sum, they reveal there are cases of both over and under estimating. The authors, therefore, question the Planning Fallacy as an appropriate explanation for describing ‘how large infrastructure projects work’. The fallacy of the Planning Fallacy account revealed in this paper leads the authors to call upon those agencies that have actively embraced this theory to reconsider their approaches to cost estimating and risk analysis used to deliver their transportation infrastructure to ensure taxpayers are provided with better value for money.

• Record URL:
  https://doi.org/10.1016/j.tra.2019.02.004
• Record URL:
  http://www.sciencedirect.com/science/article/pii/S0965856418310462
• 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:
  • Love, Peter E D
  • Sing, Michael C P
  • Ika, Lavagnon A
  • Newton, Sidney
  • 0000-0002-3239-1304
• Publication Date: 2019-4

Language

• English

Media Info

• Media Type: Web
• Features: Appendices; Figures; References; Tables;
• Pagination: pp 1-20
• Serial:
  • Transportation Research Part A: Policy and Practice
  • Volume: 122
  • Issue Number: 0
  • Publisher: Elsevier
  • ISSN: 0965-8564
  • Serial URL: http://www.sciencedirect.com/science/journal/09658564

Subject/Index Terms

• TRT Terms: Cost estimating; Infrastructure; Project management; Risk analysis
• Uncontrolled Terms: Cost performance
• Geographic Terms: Hong Kong (China)
• Subject Areas: Administration and Management; Finance; Transportation (General);

Filing Info

• Accession Number: 01696603
• Record Type: Publication
• Files: TRIS
• Created Date: Feb 28 2019 9:38AM