IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v74y2019icp224-238.html
   My bibliography  Save this article

The determinants of cost deviations and overruns in transport projects, an endogenous models approach

Author

Listed:
  • Catalão, Francisco Pinheiro
  • Cruz, Carlos Oliveira
  • Sarmento, Joaquim Miranda

Abstract

Cost deviations and overruns are a recurrent topic in the transport infrastructure literature. Even though there is a general trend towards a more frequent occurrence of overruns the main determinants of such phenomena are still not consensual. This paper analyses a dataset of 1091 transport projects developed by the Portuguese government (central, regional, and local) between 1980 and 2012. The methodology builds on existing approaches but provides a more ambitious (and innovate) approach towards the incorporation of exogenous determinants, examples being political, legal and regulatory, and economic ones. The analysis suggests that these exogenous variables that have been under-valuated in the existing literature, and that they do, indeed, play a relevant role in understanding cost deviations.

Suggested Citation

  • Catalão, Francisco Pinheiro & Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2019. "The determinants of cost deviations and overruns in transport projects, an endogenous models approach," Transport Policy, Elsevier, vol. 74(C), pages 224-238.
    • Handle: RePEc:eee:trapol:v:74:y:2019:i:c:p:224-238
    DOI: 10.1016/j.tranpol.2018.12.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X18302245
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2018.12.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stef Proost & Fay Dunkerley & Saskia Loo & Nicole Adler & Johannes Bröcker & Artem Korzhenevych, 2014. "Do the selected Trans European transport investments pass the cost benefit test?," Transportation, Springer, vol. 41(1), pages 107-132, January.
    2. Skamris, Mette K. & Flyvbjerg, Bent, 1997. "Inaccuracy of traffic forecasts and cost estimates on large transport projects," Transport Policy, Elsevier, vol. 4(3), pages 141-146, July.
    3. Bertoméu-Sánchez, Salvador & Estache, Antonio, 2017. "Unbundling political and economic rationality: A non-parametric approach tested on transport infrastructure in Spain," Transport Policy, Elsevier, vol. 59(C), pages 181-195.
    4. Bent Flyvbjerg & Mette K. Skamris holm & Søren L. Buhl, 2003. "How common and how large are cost overruns in transport infrastructure projects?," Transport Reviews, Taylor & Francis Journals, vol. 23(1), pages 71-88, January.
    5. Cruz, Carlos Oliveira & Sarmento, Joaquim Miranda, 2017. "Airport privatization with public finances under stress: An analysis of government and investor's motivations," Journal of Air Transport Management, Elsevier, vol. 62(C), pages 197-203.
    6. Odeck, James, 2004. "Cost overruns in road construction--what are their sizes and determinants?," Transport Policy, Elsevier, vol. 11(1), pages 43-53, January.
    7. Zhang, Qiang & Geerlings, Harry & El Makhloufi, Abdel & Chen, Shun, 2018. "Who governs and what is governed in port governance: A review study," Transport Policy, Elsevier, vol. 64(C), pages 51-60.
    8. Robert Bain, 2009. "Error and optimism bias in toll road traffic forecasts," Transportation, Springer, vol. 36(5), pages 469-482, September.
    9. Kathrin Goldmann, 2019. "Time-declining risk-adjusted social discount rates for transport infrastructure planning," Transportation, Springer, vol. 46(1), pages 17-34, February.
    10. Leavitt, Dan & Ennis, Sean & McGovern, Pat, 1993. "The Cost Escalation of Rail Projects: Using Previous Experience to Re-Evaluate the CalSpeed Estimates," University of California Transportation Center, Working Papers qt2rt1w7xj, University of California Transportation Center.
    11. Cantarelli, C.C. & Molin, E.J.E. & van Wee, B. & Flyvbjerg, B., 2012. "Characteristics of cost overruns for Dutch transport infrastructure projects and the importance of the decision to build and project phases," Transport Policy, Elsevier, vol. 22(C), pages 49-56.
    12. Laird, James J. & Nellthorp, John & Mackie, Peter J., 2005. "Network effects and total economic impact in transport appraisal," Transport Policy, Elsevier, vol. 12(6), pages 537-544, November.
    13. Hugo Priemus, 2007. "Development and Design of Large Infrastructure Projects: Disregarded Alternatives and Issues of Spatial Planning," Environment and Planning B, , vol. 34(4), pages 626-644, August.
    14. Lundberg, Mattias & Jenpanitsub, Anchalee & Pyddoke, Roger, 2011. "Cost overruns in Swedish transport projects," Working papers in Transport Economics 2011:11, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    15. Frédéric Blanc-Brude & Hugh Goldsmith & Timo Välilä, 2009. "A Comparison of Construction Contract Prices for Traditionally Procured Roads and Public–Private Partnerships," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 19-40, September.
    16. Bucciol, Alessandro & Chillemi, Ottorino & Palazzi, Giacomo, 2013. "Cost overrun and auction format in small size public works," European Journal of Political Economy, Elsevier, vol. 30(C), pages 35-42.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Love, Peter E.D. & Ika, Lavagnon A. & Matthews, Jane & Li, Xinjian & Fang, Weili, 2021. "A procurement policy-making pathway to future-proof large-scale transport infrastructure assets," Research in Transportation Economics, Elsevier, vol. 90(C).
    2. Love, Peter E.D. & Ika, Lavagnon A., 2021. "The ‘context’ of transport project cost performance: Insights from contract award to final construction costs," Research in Transportation Economics, Elsevier, vol. 90(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dejan Makovšek & Marian Moszoro, 2018. "Risk pricing inefficiency in public–private partnerships," Transport Reviews, Taylor & Francis Journals, vol. 38(3), pages 298-321, May.
    2. Miranda Sarmento, J.J., 2014. "Public private partnerships," Other publications TiSEM c7d4c978-234c-4f88-83ed-1, Tilburg University, School of Economics and Management.
    3. Odeck, James, 2014. "Do reforms reduce the magnitudes of cost overruns in road projects? Statistical evidence from Norway," Transportation Research Part A: Policy and Practice, Elsevier, vol. 65(C), pages 68-79.
    4. Chong, Uven & Hopkins, Omar, 2016. "An international experience on the evolution of road costs during the project life cycle," Transport Policy, Elsevier, vol. 48(C), pages 60-66.
    5. Makovšek, Dejan, 2014. "Systematic construction risk, cost estimation mechanism and unit price movements," Transport Policy, Elsevier, vol. 35(C), pages 135-145.
    6. Verweij, Stefan & van Meerkerk, Ingmar & Korthagen, Iris A., 2015. "Reasons for contract changes in implementing Dutch transportation infrastructure projects: An empirical exploration," Transport Policy, Elsevier, vol. 37(C), pages 195-202.
    7. Love, Peter E.D. & Zhou, Jingyang & Edwards, David J. & Irani, Zahir & Sing, Chun-Pong, 2017. "Off the rails: The cost performance of infrastructure rail projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 99(C), pages 14-29.
    8. PhD. Otjela Lubonja, 2017. "Restoration in Objects and the Methodology of Intervention," European Journal of Interdisciplinary Studies Articles, Revistia Research and Publishing, vol. 3, May - Aug.
    9. Abeysekara, Baudhi & Perera, Piyaruwan & Chhipi Shrestha, Gyan Kumar & Gunaruwan, Lalithasiri & Kumarage, Amal & Sadiq, Rehan & Hewage, Kasun, 2021. "Improving the capital deployment efficiency: An infrastructure investment planning process in transportation project," Research in Transportation Economics, Elsevier, vol. 88(C).
    10. Jarosław Górecki & Manuel Díaz-Madroñero, 2020. "Who Risks and Wins?—Simulated Cost Variance in Sustainable Construction Projects," Sustainability, MDPI, vol. 12(8), pages 1-31, April.
    11. Lindsey, Robin & de Palma, André, 2014. "Cost recovery from congestion tolls with long-run uncertainty," Economics of Transportation, Elsevier, vol. 3(2), pages 119-132.
    12. James Odeck, 2019. "Variation in cost overruns of transportation projects: an econometric meta-regression analysis of studies reported in the literature," Transportation, Springer, vol. 46(4), pages 1345-1368, August.
    13. Cavalieri, Marina & Cristaudo, Rossana & Guccio, Calogero, 2019. "On the magnitude of cost overruns throughout the project life-cycle: An assessment for the Italian transport infrastructure projects," Transport Policy, Elsevier, vol. 79(C), pages 21-36.
    14. Love, Peter E.D. & Ahiaga-Dagbui, Dominic D., 2018. "Debunking fake news in a post-truth era: The plausible untruths of cost underestimation in transport infrastructure projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 357-368.
    15. Love, Peter E.D. & Sing, Michael C.P. & Ika, Lavagnon A. & Newton, Sidney, 2019. "The cost performance of transportation projects: The fallacy of the Planning Fallacy account," Transportation Research Part A: Policy and Practice, Elsevier, vol. 122(C), pages 1-20.
    16. Morten Skou Nicolaisen & Patrick A. Driscoll, 2016. "An International Review of Ex-Post Project Evaluation Schemes in the Transport Sector," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 18(01), pages 1-33, March.
    17. Edyta Plebankiewicz, 2018. "Model of Predicting Cost Overrun in Construction Projects," Sustainability, MDPI, vol. 10(12), pages 1-14, November.
    18. Chantal C. Cantarelli & Bert van Wee & Eric J. E. Molin & Bent Flyvbjerg, 2013. "Different Cost Performance: Different Determinants? The Case of Cost Overruns in Dutch Transportation Infrastructure Projects," Papers 1307.2179, arXiv.org, revised Jan 2015.
    19. Cantarelli, C.C. & Flyvbjerg, B. & Buhl, S.L., 2012. "Geographical variation in project cost performance: the Netherlands versus worldwide," Journal of Transport Geography, Elsevier, vol. 24(C), pages 324-331.
    20. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:74:y:2019:i:c:p:224-238. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.