How reliable are estimates of infrastructure costs? A comparative analysis
AbstractAlthough the economic importance of adequate infrastructure is generally recognised, in practice decision-makers - faced with the judgement of new large infrastructure projects - are hesitant to approve such new projects because of the uncertainty in the related cost estimates. It is often argued by them that expost the actual costs of new infrastructure appear to be usually underestimated. Sometimes even the term 'strategic underestimation ' is used. This paper investigates the causes of misjudgement of infrastructure costs by distinguishing systematically various classes of miscalculations and misrepresentations of costs. Based on a comparative analysis of cost estimates of infrastructure projects in the Netherlands and Finland, the interesting conclusion is found that in general cost estimates tend to be rather reliable. Underestimations are - in addition to inflationary backgrounds caused by the delay of projects over a long time span - mainly the result of additional political wishes in the form of adjustments or extensions imposed during the preparation and implementation stage of projects and which lead to excessive cost rises.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number 0029.
Date of creation: 1998
Date of revision:
Contact details of provider:
Web page: http://www.feweb.vu.nl
Other versions of this item:
- Nijkamp, Peter & Ubbels, Barry, 1998. "How reliable are estimates of infrastructure costs? A comparative analysis," Serie Research Memoranda 0029, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-03-14 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nijkamp, Peter & Rienstra, Sytze A, 1995. "Private Sector Involvement in Financing and Operating Transport Infrastructure," The Annals of Regional Science, Springer, vol. 29(2), pages 221-35, May.
- Julien Brunel, 2004. "Stochastic Risk vs. Policy Oriented Uncertainties: The Case of the Alpine Crossings," Post-Print halshs-00095852, HAL.
- Holz-Rau, Christian & Scheiner, Joachim, 2011. "Safety and travel time in cost-benefit analysis: A sensitivity analysis for North Rhine-Westphalia," Transport Policy, Elsevier, vol. 18(2), pages 336-346, March.
- Tore Langmyhr, 2001. "The rationality of transport investment packages," Transportation, Springer, vol. 28(2), pages 157-178, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (R. Dam).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.