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

See all articles by Bent Flyvbjerg

Bent Flyvbjerg

University of Oxford - Said Business School

Mette Holm

Aalborg Municipality

Søren Buhl

Aalborg University

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

Flyvbjerg, Bent and Holm, Mette and Buhl, Søren, How (In)Accurate Are Demand Forecasts in Public Works Projects? The Case of Transportation (April 1, 2005). Journal of the American Planning Association, vol. 71, no. 2, pp. 131-146. . Available at SSRN: https://ssrn.com/abstract=2238050

Bent Flyvbjerg (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Mette Holm

Aalborg Municipality

Aalborg
Denmark

Søren Buhl

Aalborg University ( email )

Fredrik Bajers Vej 7E
Aalborg, DK-9220
Denmark

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