Different cost performance: different determinants?

• Published in: Transport policy 2012-07, Vol.22, p.88-95
• Main Authors: Cantarelli, C.C., van Wee, B., Molin, E.J.E., Flyvbjerg, B.
• Format: Article
• Language: English
• Subjects: Cost overruns; Ex-post studies; Infrastructure; The Netherlands
• ISSN: 0967-070X; 1879-310X
• DOI: 10.1016/j.tranpol.2012.04.002

This paper examines three independent explanatory variables and their relation with cost overrun in order to decide whether this is different for Dutch infrastructure projects compared to worldwide findings. The three independent variables are project type (road, rail, and fixed link projects), project size (measured in terms of estimated costs) and the length of the project implementation phase. For Dutch projects, average cost overrun is 10.6% for rail, 18.6% for roads and 21.7% for fixed links. For project size, small Dutch projects have the largest average percentage cost overruns but in terms of total overrun, large projects have a larger share. The length of the implementation phase and especially the length of the pre-construction phase are important determinants of cost overruns in the Netherlands. With each additional year of pre-construction, percentage cost overrun increases by five percentage points. In contrast, the length of the construction phase has hardly any influence on cost overruns. This is an important contribution to current knowledge about cost overruns, because the period in which projects are most prone to cost overruns is narrowed down considerably, at least in the Netherlands. This means that to determine the causes and cures of overruns one should focus on the period. ► In contrast to worldwide findings, Dutch rail projects have the lowest cost overruns. ► Project size matters for Dutch transport projects in terms of percentage cost overruns. ► The longer the implementation phase, the higher the cost overruns, especially for fixed links. ► The length of the pre-construction phase is an important determinant for cost overruns. ► Determinants for cost overruns in the Netherlands differ from worldwide findings.