Underestimating Costs in Public Works Projects: Error or Lie?

Journal of the American Planning Association, Vol. 68, No. 3, pp. 279-295

40 Pages Posted: 15 Jun 2013 Last revised: 6 Jan 2014

Bent Flyvbjerg

University of Oxford - Said Business School

Mette Holm

Aalborg Municipality

Søren Buhl

Aalborg University

Date Written: June 1, 2002

Abstract

This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects. Based on a sample of 258 transportation infrastructure projects worth US$90 billion and representing different project types, geographical regions, and historical periods, it is found with overwhelming statistical significance that the cost estimates used to decide whether such projects should be built are highly and systematically misleading. Underestimation cannot be explained by error and is best explained by strategic misrepresentation, that is, lying. The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.

Die deutsche Version dieses Artikels finden Sie unter: http://www.ssrn.com/abstract=2278383

Den Svenska versionen av denna artikel finns på: http://papers.ssrn.com/abstract=2278382

La versione italiana di questo documento è disponibile al seguente link: http://www.ssrn.com/abstract=2278294

Listed as "Most Cited" article on the journal's home page.

Suggested Citation

Flyvbjerg, Bent and Holm, Mette and Buhl, Søren, Underestimating Costs in Public Works Projects: Error or Lie? (June 1, 2002). Journal of the American Planning Association, Vol. 68, No. 3, pp. 279-295. Available at SSRN: https://ssrn.com/abstract=2278415

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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