Virginia Postrel takes note of a report from the Oxford Review of Economic Policy of 278 projects from 20 countries over a period of 70 years. The history is a sorry one in which cost over-runs are the norm rather than the exception. The explanation?
“It is not the best projects that get implemented, but the projects that look best on paper,†Flyvbjerg writes. “And the projects that look best on paper are the projects with the largest cost underestimates and benefit overestimates, other things being equal.â€
Given the reality that we will continue to have public infrastructure projects, I think it behooves us to change how we look at them. Small is beautiful.
My own experience in this area is that most cost over-runs are due to delays and many if not most delays are bureaucratic in nature.
