MEGAPROJECTS NEED MORE STUDY UP FRONT TO AVOID COST OVERRUNS

Abstract

A Danish-led investigation of cost overruns on mega-projects in 20 countries found that deliberate deception by project sponsors was the single largest cause of price hikes (28%). Distortions are worse in developing countries, but also take place regularly in advanced economies. Researchers used statistical analysis to rule out as a cause unforeseen technical problems, which would have created a much more random pattern, they said. Cost-benefit exaggerations track back 70 years, so ignorance is not the cause. Mainly, it is to gain political leverage that most deceptions occur. Boston's Central Artery/Tunnel (CA/T) project was not part of the study but is being subjected to an independent review by the National Academy of Engineering, an independent group established by congress.

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