Underestimating Costs in Public Works Projects: Error or Lie?

Bent Flyvbjerg · Mette Skamris Holm · Søren L. Buhl

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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.

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References

1979Lying: Moral Choice in Public and Private Life 1988The Anatomy of Major Projects: A Study of the Reality of Project Management 1980Great planning disasters 1979Forecasting: An appraisal for policy-makers and planners 1996The Dark Side of Planning: Rationality and 'Realrationalität'

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