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Project Evaluation and Uncertainty in Practice: A Statistical Analysis of Rate-of-Return Divergences of 1,015 World Bank Projects


  • Pohl, Gerhard
  • Mihaljek, Dubravko


This article analyzes the World Bank's experience with project evaluation for a sample of l,015 projects by comparing estimated rates of return at appraisal with reestimated rates of return when construction works are completed, usually 5 to 10 years after appraisal. The analysis highlights the high degree of uncertainty in project analysis. A wide range of variables has been introduced to explain the observed divergence in appraisal and reestimated rates of return, but only a relatively small part of the divergence can be explained, even with the benefit of hindsight. Project analysis thus has to cope with a large degree of uncertainty, which the traditional methods of project evaluation and selection have not been able to reduce. Copyright 1992 by Oxford University Press.

Suggested Citation

  • Pohl, Gerhard & Mihaljek, Dubravko, 1992. "Project Evaluation and Uncertainty in Practice: A Statistical Analysis of Rate-of-Return Divergences of 1,015 World Bank Projects," World Bank Economic Review, World Bank Group, vol. 6(2), pages 255-277, May.
  • Handle: RePEc:oup:wbecrv:v:6:y:1992:i:2:p:255-77

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    Cited by:

    1. Kilby, Christopher, 2000. "Supervision and performance: the case of World Bank projects," Journal of Development Economics, Elsevier, vol. 62(1), pages 233-259, June.
    2. Nicholas G. Hall & Daniel Zhuoyu Long & Jin Qi & Melvyn Sim, 2015. "Managing Underperformance Risk in Project Portfolio Selection," Operations Research, INFORMS, vol. 63(3), pages 660-675, June.
    3. Rui, Zhenhua & Cui, Kehang & Wang, Xiaoqing & Chun, Jung-Hoon & Li, Yuwei & Zhang, Zhien & Lu, Jun & Chen, Gang & Zhou, Xiyu & Patil, Shirish, 2018. "A comprehensive investigation on performance of oil and gas development in Nigeria: Technical and non-technical analyses," Energy, Elsevier, vol. 158(C), pages 666-680.
    4. Marco Percoco, 2012. "Are project appraisers chiromancers?," Applied Economics Letters, Taylor & Francis Journals, vol. 19(3), pages 237-241, February.
    5. Manoj Atolia, 2010. "Public Investment, Tax Evasion, And The Welfare Effects Of A Tariff Reform," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 219-239, April.
    6. Clements, Paul, 1995. "A poverty-oriented cost-benefit approach to the analysis of development projects," World Development, Elsevier, vol. 23(4), pages 577-592, April.
    7. Nourali, Hamidreza & Osanloo, Morteza, 2019. "Mining capital cost estimation using Support Vector Regression (SVR)," Resources Policy, Elsevier, vol. 62(C), pages 527-540.
    8. Mahadeva Lavan, 2014. "Why does natural resource abundance not always lead to better outcomes? Limited financial development versus political impatience," The B.E. Journal of Macroeconomics, De Gruyter, vol. 14(1), pages 1-37, January.
    9. Channing Arndt & Sam Jones & Finn Tarp, 2016. "What Is the Aggregate Economic Rate of Return to Foreign Aid?," World Bank Economic Review, World Bank Group, vol. 30(3), pages 446-474.
    10. M. Rouhani, Omid, 2019. "Transportation Project Evaluation Methods/Approaches," MPRA Paper 91451, University Library of Munich, Germany.
    11. Jérôme Trotignon, 1993. "Pourquoi les politiques d'ajustement ont-elles généralement mieux réussi en Asie du Sud-Est qu'en Afrique ?," Économie et Statistique, Programme National Persée, vol. 264(1), pages 33-51.

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