Tales on the dark side of the transport infrastructure provision: a systematic literature review of the determinants of cost overruns

ABSTRACT

Cost overruns are an endemic feature of the provision of transport infrastructure worldwide. In recent decades, a considerable amount of studies has been devoted to assessing the magnitude and determinants of cost overruns in the transportation sector. However, the empirical findings are scattered between different strands of literature, ranging from the fields of construction engineering and management to that of applied economics. To shed light on the determinants of cost overruns in the execution of transport infrastructure projects, we conduct a systematic review of the empirical literature on the topic. Of the 945 articles retrieved, 26 articles published between 2000 and 2016 meet our inclusion criteria. For them, we describe the different empirical approaches, we provide a classification of the determinants employed in the analyses and summarise their impact on cost overruns. Finally, we suggest some directions for further research in the field.     

Do reforms reduce the magnitudes of cost overruns in road projects? Statistical evidence from Norway

Although governments often respond to the prevalent cost overruns of transportation projects by reforming the agencies charged with overseeing the construction of projects, the transportation research literature has not provided statistical evidence as to whether such reforms assist in reducing cost overruns. This paper provides such evidence using the Norwegian road sector as a case study. The agency in question was reformed twice, from a monopolistic to a semi-monopolistic organization, and finally, to a fully competitive organization in which road construction was divided out into a separate company and privatized. In this work, we use statistical inferences to explore the related issues. The data set is composed of 1045 projects evenly distributed across the three organizational forms. The results demonstrate that the impact of the reforms has not been equal. The most important impact occurred in the final reform of full competition in which both the cost overruns and delays in construction among larger projects were greatly reduced. The second reform appears to have had a contrasting impact. For transportation research in general, we call for additional studies that will reveal the extent to which efforts carried out by governments (such as reforms) improve the efficiency of these sectors.     

Analysis of cost estimation disclosure in environmental impact statements for surface transportation projects

Reliability in cost estimates in publicly funded projects is more important today than ever with increased governmental funding to infrastructure projects and associated accountability requirements, but surface transportation projects, large and small, in the United States have a legacy of cost overruns. The problems with these overruns start with the cost estimation process before projects begin. Studies have shown that early cost estimations reflect best-case scenarios rather than realistic expectations, and have attributed technical, economic, psychological, and political reasons for underestimation. The primary objectives of this research were to determine how costs have been presented and updated in environmental impact statements, to identify endemic technical problems with cost estimation during the environmental review of surface transportation projects, and to develop recommendations for improving cost estimation and disclosure. Cost estimation methods were analyzed from the documents of 100 projects, including draft environmental impact statements, final environmental impact statements, and records of decision. The study concluded that the lack of guidance on how to include cost estimation in environmental review revealed itself in the level of detail and attention given to estimating costs. Agencies omitted or included various aspects of cost estimation randomly. Professional organizations should fill the gap of the need for specific guidance to cost estimation for environmental review so it can evolve as a state of the practice.     

A cost performance analysis of transport infrastructure construction in Slovenia

Due to limited data availability only a few studies have been able to provide statistically significant evidence on cost overruns in transport infrastructure investments and their systematic nature, and fewer still for road infrastructure investments. The body of available evidence refers to the most economically developed countries, while very little evidence was found regarding other countries. In this article the authors focus on cost performance of road infrastructure constructed through the National Motorway Construction Programme in Slovenia. Methodologically the study departs from other studies in this field by building on detailed expenditure data and not aggregate reports from the relevant institution. This enabled the analysis of four individual project cost categories (construction cost, land acquisition damages and others) and comparably more accurate results. A representative sample of randomly selected completed projects in the period 1995–2007 revealed that the cost overruns (19%; SD = 46.10%) in the entire period studied do not appear to be higher than in other comparable studies. At the same time the study results showed that cost overruns were unstable, i.e. much higher for older projects.     

Mitigating environmental impacts in advance: Evidence of cost and time savings for transportation projects

The traditional model for mitigating a transportation project’s environmental impacts typically operates project-by-project and delivers the mitigation just-in-time. In contrast, the newer practice of advance mitigation comprehensively assesses and mitigates impacts from one or multiple transportation projects before or during project planning, sometimes long before project construction begins. The practice has gained adherents for its potential to improve ecological outcomes, by better aligning mitigation and conservation goals. Advance mitigation also stands to reduce mitigation costs, an important secondary benefit for transportation agencies with constrained resources. Evidence of cost savings, however, has been piecemeal and anecdotal. This paper advances knowledge of advance mitigation’s financial impacts in two ways. First, it critically assesses the evidence about cost savings realized through advance mitigation, both through avoided up-front costs and reduced project delay. Second, it directly estimates the project time savings that might accrue with advance mitigation of state highway projects in California. Overall, the balance of evidence is encouraging for transportation agencies that would introduce the practice, and general agreement exists on its financial benefits. Considering project delays related only to the environmental process, we estimate advance mitigation could reduce delivery times by 1.3–5.0 months per project. Still, we also identify factors limiting comprehensive analysis. Transportation agencies adopting advance mitigation practices into their operations could use a pilot approach that includes rigorous environmental and mitigation cost accounting; such pilots would build needed empirical evidence of advance mitigation’s financial and ecological outcomes.     

Variation in cost overruns of transportation projects: an econometric meta-regression analysis of studies reported in the literature

Transportation - This paper uses an econometric meta-regression analysis framework to examine how the mean percentage cost overruns (MPCOs) of transportation projects reported in the literature...     

Opportunities for collaboration between infrastructure agencies and conservation groups: Road-stream crossings in Oklahoma

Rivers and streams worldwide are highly fragmented by dams and road crossings, and there is a pressing need to retrofit the most problematic structures to ensure aquatic organism passage. At the same time, a majority of the transportation infrastructure within developed nations is beyond its projected lifespan and significant investments will be needed to ensure that this transportation infrastructure remains safe and functional. Historically, these two problems have been addressed separately. Here, we use a rapid survey methodology to identify road-stream crossings that are likely high-priority projects for both conservation and infrastructure agencies. We conducted a field assessment of more than 700 road-stream crossings across Oklahoma to determine if they blocked fish movements and to determine their physical condition. We then developed an index of ecological impact, and an index of infrastructure condition, based on physical variables measured at each crossing. This survey revealed a subset of crossings that are both fragmenting the river network and in poor physical condition. These crossings are high-priority locations where culvert replacement may have both high ecosystem benefit and would eliminate a piece of transportation infrastructure with a high risk of failure. We discuss opportunities for cost-sharing between conservation and transportation agencies.     

Cost escalations in the front-end of projects – empirical evidence from Norwegian road projects

This paper investigates an issue largely ignored in the transport literature on cost overruns, namely, cost increases in the early project phase, long before the decision to build is made. This is the phase of project planning that is referred to as the front-end phase in the literature. The rationale of the study is that unless cost estimates during the front-end phase are relatively accurate, the wrong projects may be selected for further development. We first argue for why it is important to address cost escalation during the front-end phase of project planning. We then use Norwegian data to demonstrate the magnitude of cost escalations during the front-end phase of projects and in comparison to the implementation phase. We find that even in a sample of projects with relatively small cost overruns as in the case of Norway, there are substantial cost increases before the formal decision to build was made. This raises the issue of whether decisions and priorities taken at the early stages of project development are based on false information and whether this may lead to the wrong project concepts being selected.     

an analysis of transportation energy conservation projects in developing countries

Industrialized countries have extensive experience with various transportation energy conservation measures and have been making steady progress in improving the efficiency of their transport sector. Less Developed Countries (LDCs) have also been making progress, but their experience in many aspects of transportation energy conservation is very limited. Development organizations have funded many transportation projects in developing countries, but the vast majority of these projects were designed to improve the transportation infrastructure. Very few transportation energy conservation projects have been implemented and decision-makers face a scarcity of information on effective strategies. This paper gives an overview of transportation projects in LDCs in order to identify those transportation energy conservation measures that offer the greatest potential for LDCs. Two case studies, from Tunisia and Costa Rica, are given to illustrate the issues involved in implementing transportation energy conservation measures in LDCs. Conclusions are drawn to suggest actions for developing countries and for development organizations.Acronyms DECAT Driver Energy Conservation Awareness Training - DSE Direccion Sectorial de Energia (Costa Rica) - GDP Gross domestic product - km Kilometer - LDCs Less Developed Countries - TOE Metric tonne of oil equivalent - USAID US Agency for International Development     

Efficiency of European Funds in the Accession Countries: The Case of Transport Infrastructure Investments in Latvia

ABSTRACT

A transport initiative, like any kind of public action, has an impact on the monetary cost, time cost, efficiency and comfort of the transportation of goods and people, in particular transport infrastructure investments. All such initiatives are subject to cost benefit analyses at the national and EU level to know whether the present value of total net benefits including environmental impacts exceeds their cost. However, several important policy issues remain unresolved in standard evaluation procedures. One issue is whether the so-called direct measurement of user benefit, which consists of quantifying changes in surplus of the users of the transport system, captures all welfare generated in the economy. Another issue is how the gains (or possibly losses) of a transport initiative are distributed among regions. The aim of this article is to perform a systematic and quantitative analysis of the socio-economic and spatial impacts of alternative transport investments by carrying out scenario simulations in order to improve the understanding of the impact of transportation policies on the short- and long-term spatial development in Latvia. The general result from the scenario simulations is that rail projects seem to be more effective in terms of promoting regional economic activity than road projects.     

Transport infrastructure costs in low-carbon pathways

The rate and manner in which transport infrastructure (e.g. roads, railway tracks, airports) is deployed, will play an important role in determining energy demand, greenhouse gas emissions and the economic impact of the transport sector. This paper describes an exercise where the costs of infrastructure deployment for the transport sector have been incorporated into the IMACLIM-R Global E3 IAM. In addition to adding these costs, the modelling of the criteria for the deployment of infrastructure for roads has also been improved. It is found that this model recalibration results in a more accurate baseline as compared to historically observed data (2001–2013) for investments in energy demand, road infrastructure, and passenger kilometers travelled. Regarding macroeconomic effects, it is found that the imposition of a carbon emission trajectory to 2100 cause GDP to decrease relative to the newly calibrated baseline – this is a standard IAM result. However, when the deployment of infrastructure for roads and air travel is further constrained, the GDP loss is less than with a fixed carbon emission trajectory only. This is because early restriction of infrastructure for roads and air travel allows an expansion of public transport infrastructure which is adequate to meet low-carbon transport service demand whereas when less public transport infrastructure is available, more costly mitigation investments must be made in other parts of the economy. This suggests that restricting infrastructure deployment as a complementary policy to carbon pricing, lowers the cost of mitigation.     

On including travel time reliability of road traffic in appraisal

In many countries, decision-making on proposals for national or regional infrastructure projects in passenger and freight transport includes carrying out a cost–benefit analysis for these projects. Reductions in travel times are usually a key benefit. However, if a project also reduces the variability of travel time, travellers, freight operators and shippers will enjoy additional benefits, the ‘reliability benefits’. Until now, these benefits are usually not included in the cost–benefit analysis. To include reliability of travel or transport time in the cost–benefit analysis of infrastructure projects not only monetary values of reliability, but also reliability forecasting models are needed. As a result of an extensive feasibility study carried out for the German Federal Ministry of Transport, Building and Urban Development this paper aims to provide a literature overview and outcomes of an expert panel on how best to calculate and monetise reliability benefits, synthesised into recommendations for implementing travel time reliability into existing transport models in the short, medium, and long term. The paper focuses on road transport, which has also been the topic for most of the available literature on modelling and valuing transport time reliability.     

Cost effective future derailment mitigation techniques for rail freight traffic management in Europe

Safe and reliable traffic management is vital for uninterrupted and successful operation of the European rail network, where mixed traffic (i.e. freight and passenger) services are run. Although rail freight derailment is infrequent, its consequences can be severe and may result in different forms of costs, including infrastructure; rolling stock; traffic disruptions; injuries and fatalities. The objective of this research paper is to conduct a cost benefit analysis (CBA) to identify cost effective mitigation techniques for efficient rail freight traffic management in Europe, by 2050. Reviewing previous derailments and studies, eight sets of derailment causes are analysed and, for each of them, sets of mitigation techniques are aimed at for their alleviation. The study finds that the highest cumulative costs of derailment are associated with ‘wheel failure’, while the lowest cumulative cost is identified for ‘excessive track width’. Regarding mitigation techniques, the lowest cumulative benefits are demonstrated for ‘track height’ interventions, whereas ‘wheel failure’ alleviation demonstrates the highest benefits, in value terms (all by 2050). In most cases, the benefit to cost ratio did not exceed 2.6; in two cases (‘track height’ and ‘rail failures’) the ratio remained below 1 – a negative outcome where cost is higher than benefit. The study suggests that the most cost-efficient interventions are those applied to ‘hot axle box and axle rupture’ and ‘spring and suspension failure’.     

Disruption risk management in railroad networks: An optimization-based methodology and a case study

We propose an optimization-based methodology for recovery from random disruptions in service legs and train services in a railroad network. A network optimization model is solved for each service leg to evaluate a number of what-if scenarios. The solutions of these optimization problems are then used in a predictive model to identify the critical disruption factors and accordingly design a suitable mitigation strategy. A mitigation strategy, such as adding flexible or redundant capacity in the network, is an action that is deliberately taken by management in order to hedge against the cost and impact of disruption if it occurs. It is important that managers consider the trade-offs between the cost of mitigation strategy and the expected cost of disruption. The proposed methodology is applied to a case study built using the realistic infrastructure of a railroad network in the mid-west United States. The resulting analysis underscores the importance of accepting a slight increase in pre-disruption transportation costs, which in turn will enhance network resiliency by building dis-similar paths for train services, and by installing alternative links around critical service legs.     

Mapping minibuses in Maputo and Nairobi: engaging paratransit in transportation planning in African cities

ABSTRACT

Often called paratransit because of their flexible stops, schedules and routes, minibuses make up the bulk of public transport in African cities. Despite their ubiquity and importance, these systems are poorly understood by transportation planners who tend to focus on large-scale urban infrastructure projects such as highways, commuter rail or bus rapid transit systems. The assumption within much of this planning is that these minibus systems are barriers to change and will become at most secondary “feeder” buses within large-scale projects, but structured plans detailing this vision are lacking. This paper argues that frequent failure to collect data and value important paratransit systems as a critical part of transportation in their own right is deeply problematic from the point of view of equity, access and inclusive and effective planning. We ask whether the growing number of bottom up mapping projects of minibus systems can disrupt this status quo. By comparing two mapping projects, Digital Matatus in Nairobi and the Mapa Dos Chapas in Maputo, we find that inclusive, collaborative mapping can help render these minibuses more visible in planning and provoke more grounded and inclusive “planning conversations” on multi-modal integration, passenger information and minibus upgrading, all key but relatively marginalised aspects of creating accessible, low emission, high quality and safe public transport in African cities.     

The spatial productivity of transportation infrastructure

Transportation infrastructure services may cause an impact on the economy of the region in which they are located and, additionally, they are likely to have an impact on other regions. This effect has been labeled the spillover effect. In this study, the existence of direct and spillover effects of road, railway, airport and seaport infrastructure projects is tested by estimating a production function. Together with this primary objective, two common concerns in the literature are addressed: the lack of theoretical foundations for spatial econometrics models and the likely endogenous relationship between transport infrastructure and economic development. The estimated production function takes the form of a Spatial Durbin Model and is estimated using panel data from the 47 peninsular Spanish provinces by alternatively applying a Maximum Likelihood estimator and Instrumental Variables/Generalized Method of Moments estimators. According to the estimates, road transport infrastructure positively affects the output of the region in which the infrastructure is located and its neighboring provinces, while the remaining modes of transportation projects cause no significant impacts on average.     

Evaluation,prioritization and selection of transportation investment projects in New York City

Over the last decade, a large number of high capital cost transportation projects have been proposed for the New York City Region. Many have resulted from addressing evolving capacity needs, changes in regional demographics and economics, meeting the improvements necessitated by operating century old subway systems and recognizing the impact of moving freight in a dense region. But the catalyst for bringing all of these projects to the attention of the public and all regional agencies was the tragedy of September 11, 2001. While these projects entail massive investments ($50–$60 billion), little analytical work has been carried out to measure the transportation and economic costs and benefits they entail and to categorize them accordingly. Competition among agencies to secure adequate resources to implement any of the desired projects makes such analysis necessary; yet there still remain political, vested economic interests and agency rivalry barriers to achieving this important planning objective. This paper reports the methodological approach taken by these authors for consistent and transparent project evaluation and then presents results from the ranking and prioritizing methodology. The policy underpinnings and implications of the analysis are discussed in a subsequent paper and thus only briefly touched upon here in the concluding section.     

Evaluating locational accessibility to the US air transportation system

Although there are hundreds of airports that support commercial air passenger traffic in the United States (US), not all areas are equivalently served by the commercial air transportation system. Locations in the US differ with respect to their level of access to the commercial air network and their overall accessibility within the system. Given the complexity of the domestic commercial air passenger network and supporting infrastructure, past research has only been able to provide a limited assessment of locational accessibility within the United States. To address these complexities, this paper proposes a new metric that incorporates measures of access to air transport as well as accessibility within air transportation networks. Using a comprehensive dataset on scheduled airline service, the developed approach is then applied to the US domestic commercial passenger air transportation network to explore geographic differentials in accessibility. Results suggest marked differences between core-based statistical areas throughout the US.     

Uncertainty modeling for bus selection and allocation in a private transportation system

ABSTRACT

This paper describes the development of a probabilistic formulation that provides global optimum selection and allocation of a fleet of buses in a private transportation system of an organization where a third party is hired to provide transportation for its employees and their dependents. In this private transportation system, a fleet of buses is to be selected and allocated to serve employees and their independents on different prescheduled trips along different routes from the organization’s headquarters and residential compound where round-trip times of scheduled trips are subject to uncertainty due to random delays. We propose a probabilistic approach based on 0-1 integer programming for the selection and allocation to determine the optimal number and size of buses assigned to a set of prescheduled trips in a particular time interval. Examples and a case study are presented to illustrate the applicability and suitability of the proposed approach.     

Happy or liberal? Making sense of behavior in transport policy design

Appropriate microeconomic foundations of mobility are decisive for successful policy design in transportation and, in particular, for the challenge of climate change mitigation. Recent research suggests that behavior in transportation cannot be adequately represented by the standard approach of revealed preferences. Moreover, mobility choices are influenced by factors widely regarded as normatively irrelevant. Here we draw on insights from behavioral economics, psychology and welfare theory to examine how transport users make mobility decisions and when it is desirable to modify them through policy interventions. First, we explore systematically which preferences, heuristics and decision processes are relevant for mobility-specific behavior, such as mode choice. We highlight the influence of infrastructure on the formation of travel preferences. Second, we argue that the behavioral account of decision-making requires policy-makers to take a position on whether transport policies should be justified by appealing to preference satisfaction or to raising subjective well-being. This distinction matters because of the (i) influence of infrastructure on preference formation, (ii) health benefits from non-motorized mobility, (iii) negative impact of commuting on happiness and (iv) status-seeking behavior of individuals. The orthodox approach of only internalizing externalities is insufficient because it does not allow for the evaluation of these effects. Instead, our analysis suggests that transport demand modeling should consider behavioral effects explicitly.