How (In)Accurate Are Demand Forecasts in Public Works Projects? The Case of Transportation
Journal of the American Planning Association, vol. 71, no. 2, pp. 131-146.
16 Pages Posted: 23 Mar 2013 Last revised: 4 Oct 2013
Date Written: April 1, 2005
Abstract
This article presents results from the first statistically significant study of traffic forecasts in transportation infrastructure projects. The sample used is the largest of its kind, covering 210 projects in 14 nations worth US$59 billion. The study shows with very high statistical significance that forecasters generally do a poor job of estimating the demand for transportation infrastructure projects. For 9 out of 10 rail projects, passenger forecasts are overestimated; the average overestimation is 106%. For half of all road projects, the difference between actual and forecasted traffic is more than ±20%. The result is substantial financial risks, which are typically ignored or downplayed by planners and decision makers to the detriment of social and economic welfare. The data also show that forecasts have not become more accurate over the 30-year period studied, despite claims to the contrary by forecasters. The causes of inaccuracy in forecasts are different for rail and road projects, with deliberately slanted forecasts playing a larger role for rail than for road. The cure is transparency, accountability, and new forecasting methods. The challenge is to change the governance structures for forecasting and project development. The article shows how planners may help achieve this.
Listed as "Most Cited" article on the journal's home page.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Policy and Planning for Large Infrastructure Projects: Problems, Causes, Cures
-
Policy and Planning for Large-Infrastructure Projects: Problems, Causes, Cures
-
Delusions of Success: Comment on Dan Lovallo and Daniel Kahneman