Cost overruns in transportation infrastructure projects: Sowing the seeds for a probabilistic theory of causation

Understanding the cause of cost overruns in transportation infrastructure projects has been a topic that has received considerable attention from academics and the popular press. Despite studies providing the essential building blocks and frameworks for cost overrun mitigation and containment, the problem still remains a pervasive issue for Governments worldwide. The interdependency that exists between ‘causes’ that lead to cost overruns materialising have largely been ignored when considering the likelihood and impact of their occurrence. The vast majority of the cost overrun literature has tended to adopt a deterministic approach in examining the occurrence of the phenomenon; in this paper a shift towards the adoption of pluralistic probabilistic approach to cost overrun causation is proposed. The establishment of probabilistic theory incorporates the ability to consider the interdependencies of causes so to provide Governments with a holistic understanding of the uncertainties and risks that may derail the delivery and increase the cost of transportation infrastructure projects. This will further assist in the design of effective mitigation and containment strategies that will ensure future transportation infrastructure projects meet their expected costs as well as the need of taxpayers.     

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.     

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.     

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...     

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.     

A Quantitative Analysis of the Performance of Transportation Projects in Developing Countries

Abstract

This paper presents the results of a detailed quantitative analysis of performance metrics of a sample consisting of 89 transportation projects sponsored by the World Bank. The sample and a subset consisting of 65 projects were evaluated using the performance metrics of project cost, schedule and scope. The effect of project size (dollar value) and project duration on performance metrics was investigated. Also, the achievement of project goals and potential improvement in planning and estimating over time (the learning effect) was studied. It was found that, in general, in transportation projects sponsored by the World Bank, costs are overestimated and schedules are optimistic. The outcome with respect to cost seems counter‐intuitive because previous work by other researchers had shown a systematic underestimation of project costs. There is significant evidence that there are no efficient controls in place to predict or prevent schedule delays. The study also showed that during the past 15 years, no improvement (learning effect) was evident in project cost and duration estimation as the level of accuracy has not changed significantly. Further, it is observed that project duration did not affect the performance with respect to cost and delay.     

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.     

Cost-effectiveness of reductions in greenhouse gas emissions from High-Speed Rail and urban transportation projects in California

A rising trend in state and federal transportation finance is to invest capital dollars into projects which reduce greenhouse gas (GHG) emissions. However, a key metric for comparing projects, the cost-effectiveness of GHG emissions reductions, is highly dependent on the cost-benefit methodology employed in the analysis. Our analysis comparing California High-Speed Rail and three urban transportation projects shows how four different accounting framings bring wide variations in cost per metric tonne of GHG emissions reduced. In our analysis, life-cycle GHG emissions are joined with full cost accounting to better understand the benefits of cap-and-trade investments. Considering only public subsidy for capital, none of the projects appear to be a cost-effective means to reduce GHG emissions (i.e., relative to the current price of GHG emissions in California’s cap-and-trade program at $12.21 per tonne). However, after adjusting for the change in private costs users incur when switching from the counterfactual mode (automobile or aircraft) to the mode enabled by the project, all investments appear to reduce GHG emissions at a net savings to the public. Policy and decision-makers who consider only the capital cost of new transportation projects can be expected to incorrectly assess alternatives and indirect benefits (i.e., how travelers adapt to the new mass transit alternative) should be included in decision-making processes.     

公路环境影响评价在饮用水源保护中的应用探讨

文章以广西灌阳至平乐高速公路环境影响评价项目为例,介绍了该路采取的饮用水源保护方案,探讨在环境影响评价工作中如何协调公路工程建设与饮用水源保护的关系,对同类项目环境影响评价工作及公路工程设计均具有借鉴与指导作用。     

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.     

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.     

The morgantown PRT: It is still running at West Virginia University

It has been over fifteen years since the Morgantown PRT system went into passenger service. Its start was marked by cost overruns, high operating costs and poor reliability. However over time, these initial problems and difficulties have been overcome, and today the system provides an extremely important and reliable service that links downtown Morgantown with three campuses of West Virginia University. It is still running. This paper provides background on the development of the system and current operating characteristics of this famous transit demonstration project.     

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.     

Resolving the property right of transportation emissions through public–private partnerships

The application of public–private partnerships (P3’s) in the transportation sector has grown in popularity worldwide. Despite this important shift in the provision of transportation service, there are clear gaps in knowledge about the impacts of P3 projects, especially on emissions from transportation systems as a whole. Not only should policy makers evaluate the emissions impacts from P3 projects, but they should also think about innovative models that address or charge for emissions into P3 contracts. This addition to P3 contracts could provide a new solution to the long-existing property right paradox: who owns (is responsible for) emissions from transportation systems? This study attempts to fill the research gap by analyzing these innovative models. Using the road network of Fresno, California, as our case study, we offer a number of interesting insights for policy makers. First, average peak emissions costs range from 1.37 cents per mile (the do-nothing case) to 1.20 cents per mile (profit-maximizing cases) per vehicle. Although emissions costs from the P3 projects are lowest for the profit-maximizing cases, the system-wide emissions costs of these cases are highest because of spillover effects. Second, charging project owners for the emissions costs of P3 projects is not an effective way to reduce emissions or the total costs of travel, especially on a VMT basis. Instead, the public sector should implement emissions-included social cost-based price ceilings. When employing these limits, project owners could still be charged for the emissions costs. Finally, using total travel time as the only objective function for evaluating P3 projects can be misleading. Several P3 projects have shown better outcomes using total travel cost with the inclusion of emissions and fuel consumption costs, instead of using total travel time as the only objective function.     

Financing congressional earmarks: Implications for transport policy and planning

This research documents the primary strategies used by the US Congress to fund transportation earmarks from the early 1990s to the mid-2000s. It draws on careful analysis of funding bills and primary and secondary sources including government reports, industry and policy newsletters, scholarly articles, and publicly available data on earmarks. It is also informed by interviews with transportation stakeholders involved with earmarks at federal, state, and regional levels. By detailing how Congress pays for earmarks, I show that earmarks do more to redistribute than add to existing transportation resources, and that the intricacy of Congressional funding maneuvers can make earmarks’ fiscal impacts hard to discern. Several implications follow for transportation policy and practice. First, critiques that earmarks increase federal transportation spending are misplaced. While such claims make it easy to discredit national investment in transportation, skepticism is in order when earmarks are invoked to throw out the baby with the bathwater. Second, earmarks’ true costs are related not to increased deficits but rather to opportunity costs incurred when unplanned earmarks replace other investments, particularly projects identified through regional and state planning or competitive selection by an executive agency. Finally, this work suggests productive directions for future earmark reform, such as limiting earmarks to projects in regional or state plans and making explicit for any earmarks in a bill the funding mechanisms that support them. Such steps could lessen the opportunity costs (and administrative inefficiencies) of earmarks, increase transparency in earmarking, and potentially make the practice less objectionable if used to facilitate passage of the long overdue surface transportation authorization bill.     

Solutions to the optimal network design problem with shipments related to transportation cost

Two versions of an optimal network design problem with shipments proportional to transportation costs are formulated. Extensions of an algorithm developed in prior research for solving these problems are proposed and tested. The performance of the algorithms is found to improve substantially as the dependence of shipments on costs is increased. Moreover, the optimal solutions obtained are unexpectedly robust with respect to a wide range of transportation cost assumptions. These findings could have important computational and policy implications if applicable to larger networks.     

An advanced traveler general information system for Fresno,California

This study estimates the effects of an advanced traveler general information system (ATGIS), which includes fuel consumption and health-related emissions cost information on transportation network users’ travel choice behavior for recurrent congestion conditions. The effects are estimated using four different formulations based on four different behavioral assumptions. Incorporating stochastic features in link cost estimation rather than in route choice, we provide a novel modeling approach that enables us to use transportation planning models of major metropolitan areas without a need for major computationally-expensive changes in the existing models. We examined the effects of an ATGIS on the Fresno, CA, road network and found several interesting results. First, the ATGIS impact is closely related to pre-system (prior to the implementation of an ATGIS) perceived fuel and emissions costs. Total travel time in the city can be reduced by 17% (no pre-system perceived costs) to 1% (accurate pre-system perceived costs), and even increased by 1% (higher-than-actual pre-system perceived costs). Second, the addition of emissions costs, although negligible relative to fuel and time costs, can effectively reduce total system-wide travel time by up to 1% and fuel consumption by up to 0.6% during peak hours. Third, the ATGIS can reduce annual social costs by as much as $1053 million (high gas price, no pre-system perception) to $48 million (medium gas price, accurate pre-system perception), which are comparable to social cost savings by a congestion pricing (CP) scheme in the study area.     

Network design: selection and design of links and facility location

In this paper we introduce new network design problems. A network of potential links is given. Each link can be either constructed or not at a given cost. Also, each constructed link can be constructed either as a one-way or two-way link. The objective is to minimize the total construction and transportation costs. Two different transportation costs are considered: (i) traffic is generated between any pair of nodes and the transportation cost is the total cost for the users and (ii) demand for service is generated at each node and a facility is to be located on a node to satisfy the demand. The transportation cost in this case is the total cost for a round trip from the facility to each node and back. We will consider two options in regard to the links between nodes. They can either be two-way only, or mixed, with both two-way and one-way (in either direction) allowed. When these options are combined with the two objective functions, four basic problems are created. These problems are solved by a descent algorithm, simulated annealing, tabu search, and a genetic algorithm. Extensive computational results are presented.     

Multi-criteria analysis of transport infrastructure projects

Planning, construction and operation of transport infrastructure are associated with a multitude of adverse effects on the environment. The Strategic Environmental Assessment (SEA) and Environmental Impact Assessment (EIA) are important legal instruments of the European Union's environmental policy that allows for identifying, predicting, preventing, and mitigating and or compensating for these adverse effects. As part of the environmental impact assessment, variants of planned activities and investment projects are considered in order to select the option, which is the most favourable from the environmental point of view. The primary goal of this work is to examine the possibility of using multi-criteria methods in order to select the route variant most favourable for the environment. In the first stage, a review of global literature from 2010 to 2019 was conducted on the subject of MCDM/MCDA (Multi-Criteria Decision Making/Multi-Criteria Decision Analysis) methods used in transportation. Based on the review, it was proven that the most popular methods used to solve multi-criteria decision problems in the field of transport are respectively: AHP with modifications, TOPSIS, DEMATEL, as well as methods encompassed in the so-called European trend, i.e. PROMETHEE and ELECTRE. Four selected methods were used in the empirical part of this work. They were used to select the variant of the expressway section in north-eastern Poland and compare the result of the analysis with the choice made in the analyzed environmental impact report.     

Impacts of motor vehicle operation on water quality in the US – Cleanup costs and policies

This paper investigates the costs of controlling some of the environmental impacts of motor vehicle transportation on groundwater and on surface waters. We estimate that annualized costs of cleaning-up leaking underground storage tanks range from $0.8 billion to $2.1 billion per year over 10 years. Annualized costs of controlling highway runoff from principal arterials in the US are much larger: they range from $2.9 billion to $15.6 billion per year over 20 years (1.6–8.3% of annualized highway transportation expenditures). Some causes of non-point source pollution were unintentionally created by regulations or could be addressed by simple design changes of motor vehicles. A review of applicable measures suggests that effective policies should combine economic incentives, information campaigns, and enforcement, coupled with preventive environmental measures. In general, preventing water pollution from motor vehicles would be much cheaper than cleaning it up.