Cost Overruns in Large-Scale Transportation Infrastructure Projects: Explanations and Their Theoretical Embeddedness

European Journal of Transport Infrastructure Research, vol. 10, no. 1, pp. 5-18

21 Pages Posted: 24 Mar 2013 Last revised: 29 Jul 2013

Chantal Cantarelli

University of Oxford - Said Business School

Bent Flyvbjerg

University of Oxford - Said Business School

E.J.E. Molin

Delft University of Technology - Department of Transport and Logistics

B. van Wee

Delft University of Technology - Department of Transport and Logistics

Date Written: March 1, 2010

Abstract

Managing large-scale transportation infrastructure projects is difficult due to frequent misinformation about the costs which results in large cost overruns that often threaten the overall project viability. This paper investigates the explanations for cost overruns that are given in the literature. Overall, four categories of explanations can be distinguished: technical, economic, psychological, and political. Political explanations have been seen to be the most dominant explanations for cost overruns. Agency theory is considered the most interesting for political explanations and an eclectic theory is also considered possible. Non-political explanations are diverse in character, therefore a range of different theories (including rational choice theory and prospect theory), depending on the kind of explanation is considered more appropriate than one all-embracing theory.

Keywords: cost overruns, explanations, large-scale projects, theoretical embeddedness, transportation infrastructure

Suggested Citation

Cantarelli, Chantal and Flyvbjerg, Bent and Molin, E.J.E. and van Wee, B., Cost Overruns in Large-Scale Transportation Infrastructure Projects: Explanations and Their Theoretical Embeddedness (March 1, 2010). European Journal of Transport Infrastructure Research, vol. 10, no. 1, pp. 5-18. Available at SSRN: https://ssrn.com/abstract=2237990

Chantal Cantarelli

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Bent Flyvbjerg (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

E.J.E. Molin

Delft University of Technology - Department of Transport and Logistics

Jaffalaan 5
NL-2628BX
Delft
Netherlands

B. Van Wee

Delft University of Technology - Department of Transport and Logistics

Jaffalaan 5
NL-2628BX
Delft
Netherlands

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