Advertisement

Why Unworthy Mega-Projects?

  • Joseph Berechman
Chapter

Abstract

In Chap.  2, I presented estimates of the enormous resources that developed countries require to maintain, upgrade and expand their in-place transportation infrastructure systems. The data also showed that over time, only one-third to one-half of these needed resources are actually invested. Against this dismal picture one would expect that only the best welfare-contributing infrastructure projects would be selected for implementation. Yet, as demonstrated throughout this book, this is not the case. A significant number of the implemented transportation projects, especially mega-projects, display unacceptable ex-ante or ex-post transportation-economic properties: inferior economic performance, grossly missed schedules, way-off budgets and non-delivery of promised benefits. Furthermore, the formal requirement to conduct a Cost-Benefit Analysis (CBA) or one of its variants notwithstanding, the data show that few projects in developed countries have actually undergone a comprehensive CBA prior to their selection. This phenomenon is especially disturbing because it implies that, at least in these countries, a significant proportion of the scarce resources allocated to transportation infrastructure improvement are being misused or wasted.

References

  1. Arrow, K. 1951. Social Choice and Individual Values. New York: Wiley.Google Scholar
  2. Berechman, J., and L. Chen. 2011. Incorporating Risk of Cost Overruns in Transportation Capital Project Decision Making. Journal of Transport Economics and Policy 45 (1): 83–104.Google Scholar
  3. Dutch Commission on Infrastructure Projects. 2004.Google Scholar
  4. Flyvbjerg, B. 2006. Design by Deception: The Politics of Megaproject Approval. In Urban Planning Today, ed. William S. Saunders, 131–148. Minneapolis: University of Minnesota Press.Google Scholar
  5. ———. 2009. Survival of the Unfittest: Why the Worse Infrastructure Gets Built, and What We Can Do About It. Oxford Review of Economics Policy 25 (3): 344–367.CrossRefGoogle Scholar
  6. ———. 2014. What You Should Know About Megaprojects and Why: An Overview. Project Management 45 (2): 6–19.CrossRefGoogle Scholar
  7. Flyvbjerg, B., B. Garbuio, and D. Lovallo. 2009. Delusion and Deception in Large Infrastructure Projects: Two Models for Explaining and Preventing Executive Disaster. California Management Review 51 (2): 170–193.CrossRefGoogle Scholar
  8. Haaretz. 2014. Israel Approves Controversial Rail Route to Eilat. September 21. http://www.haaretz.com/news/national/1.550777.
  9. He, G., A. Mol, and Y. Lu. 2016. Public Protest Against the Beijing-Shenyang High Speed Rail in China. Transportation Research D 43: 1–16.CrossRefGoogle Scholar
  10. Hirschman, A.O. 1976. Development Projects Observed. Washington, DC: The Brooking Institution Press.Google Scholar
  11. Kahneman, D. 2011. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux.Google Scholar
  12. Kahneman, D., and A. Tversky. 1979a. Prospect Theory: An Analysis of Decisions Under Risk. Econometrica 47: 313–327.CrossRefGoogle Scholar
  13. ———. 1979b. Intuitive Prediction: Biases and Corrective Procedures. In Studies in the Management Sciences: Forecasting, ed. S. Makridakis and S.C. Wheelwright, vol. 12, 313–327. Amsterdam: North Holland.Google Scholar
  14. Lovallo, D., and D. Kahneman. 2003. Delusions of Success: How Optimism Undermines Executives’ Decisions. Harvard Business Review 81: 56–63.Google Scholar
  15. Tuchman, B. 1981. Practicing History, 287–293. New York: Alfred Knoff.Google Scholar
  16. UK Department for Transport. 2006. The Estimation and Treatment of Scheme Costs: Transport Analysis Guidance. TAG Unit 3.5.9. http://www.dft.gov.uk/webtag/documents/expert/unit3.5.9.php.
  17. Viscusi, W.K., and T. Gayer. 2015. Behavioral Public Choice: The Behavioral Paradox of Government Policy. Harvard Journal of Law and Public Policy 38: 973–1007.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Joseph Berechman
    • 1
  1. 1.City College of New YorkUniversity of New YorkNew YorkUSA

Personalised recommendations