Edited by Robin Hickman, Moshe Givoni, David Bonilla and David Banister
Chapter 25: Decision-making and major transport infrastructure projects: the role of project ownership
Major projects are often defined as projects that cost more than US$1 billion (Flyvbjerg et al., 2003a). In addition to the size of the project in terms of costs, large-scale projects attract a high level of public attention or political interest because of substantial direct and indirect impacts on the community, environment, and budgets (FHWA in Capka, 2004). Overall, the main characteristics of major projects can be described by the ‘6Cs’ of Frick (2005): colossal, captivating, costly, controversial, complex, and laden with control issues. The characteristics are interrelated; colossal projects are usually more costly and complex and can become more controversial because they often captivate more stakeholders and citizens. A main problem in decision-making for major infrastructure projects is the high level of misinformation about costs and benefits that decision-makers face in deciding whether to build projects, and the high risks such misinformation generates. Construction cost and demand forecasts are the basis for socio-economic and environmental appraisal of transport infrastructure projects. Governments and parliaments base their decisions on incorrect information resulting in underestimated costs and overestimated benefits threatening project viability. Furthermore misinformation undermines parliament’s ability to exercise democratic control (Flyvbjerg, 2008). Let us examine the problem of inaccurate cost forecasts in more detail. There are four main concerns with cost overruns (Flyvbjerg, 2007). First, they lead to a Pareto-inefficient allocation of resources, i.e., waste.
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