The cost performance of transportation projects: The fallacy of the Planning Fallacy account

Love, PED; Sing, MCP; Ika, LA; Newton, S

The cost performance of transportation projects: The fallacy of the Planning Fallacy account

Love, PED Sing, MCP Ika, LA Newton, S

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Publication Type:: Journal Article
Citation:: Transportation Research Part A: Policy and Practice, 2019, 122 pp. 1 - 20
Issue Date:: 2019-04-01

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Field	Value	Language
dc.contributor.author	Love, PED	en_US
dc.contributor.author	Sing, MCP	en_US
dc.contributor.author	Ika, LA	en_US
dc.contributor.author	Newton, S https://orcid.org/0000-0001-8334-1916	en_US
dc.date.issued	2019-04-01	en_US
dc.identifier.citation	Transportation Research Part A: Policy and Practice, 2019, 122 pp. 1 - 20	en_US
dc.identifier.issn	0965-8564	en_US
dc.identifier.uri	http://hdl.handle.net/10453/136704
dc.description.abstract	© 2019 Elsevier Ltd Delivering transportation projects to their budgeted cost remains a challenge for many governments worldwide. An issue that has hindered progress being made to address this problem has been the availability of empirical data that reflects the changing nature of cost estimates and their difference from a project's final account. Using a homogenous dataset provided by a public sector authority in Hong Kong, we analyse the differences between the approved budget, pre-tender estimates, contract sum and final accounts for approximately HK$115 billion (≈US$14 billion) worth of transportation projects. We demonstrate that 47% (i.e. ≈ 5 out 10) of the projects deviate from their approved budget. In particular, when we consider the difference between the approved budget and the final contract sum, we reveal there are cases of both over and under estimating. We, therefore, question the Planning Fallacy as an appropriate explanation for describing ‘how large infrastructure projects work’. The fallacy of the Planning Fallacy account revealed in this paper leads us to call upon those agencies that have actively embraced this theory to reconsider their approaches to cost estimating and risk analysis used to deliver their transportation infrastructure to ensure taxpayers are provided with better value for money.	en_US
dc.relation.ispartof	Transportation Research Part A: Policy and Practice	en_US
dc.relation.isbasedon	10.1016/j.tra.2019.02.004	en_US
dc.subject.classification	Logistics & Transportation	en_US
dc.title	The cost performance of transportation projects: The fallacy of the Planning Fallacy account	en_US
dc.type	Journal Article
utslib.citation.volume	122	en_US
utslib.for	1205 Urban and Regional Planning	en_US
utslib.for	1507 Transportation and Freight Services	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Design, Architecture and Building
pubs.organisational-group	/University of Technology Sydney/Faculty of Design, Architecture and Building/School of Built Environment
utslib.copyright.status	closed_access
pubs.publication-status	Published	en_US
pubs.volume	122	en_US

Abstract:

© 2019 Elsevier Ltd Delivering transportation projects to their budgeted cost remains a challenge for many governments worldwide. An issue that has hindered progress being made to address this problem has been the availability of empirical data that reflects the changing nature of cost estimates and their difference from a project's final account. Using a homogenous dataset provided by a public sector authority in Hong Kong, we analyse the differences between the approved budget, pre-tender estimates, contract sum and final accounts for approximately HK$115 billion (≈US$14 billion) worth of transportation projects. We demonstrate that 47% (i.e. ≈ 5 out 10) of the projects deviate from their approved budget. In particular, when we consider the difference between the approved budget and the final contract sum, we reveal there are cases of both over and under estimating. We, therefore, question the Planning Fallacy as an appropriate explanation for describing ‘how large infrastructure projects work’. The fallacy of the Planning Fallacy account revealed in this paper leads us to call upon those agencies that have actively embraced this theory to reconsider their approaches to cost estimating and risk analysis used to deliver their transportation infrastructure to ensure taxpayers are provided with better value for money.

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http://hdl.handle.net/10453/136704