Why big infrastructure projects always go over budget — and what to do about it
Across the world and throughout time, mega projects like new subway lines almost always go over budget. Now that we know it's a problem, can we fix it?
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The federal government is expected to flesh out a plan Wednesday to invest almost $190 billion in infrastructure over the next 12 years.
But will it be enough?
Whether it’s Boston’s Big Dig, Europe’s Chunnel or (insert your local project here), mega projects are rarely on-budget. In fact, they chronically rack up extra costs.
Metro Cities asked Matti Siemiatycki, a planning professor at the University of Toronto, why it happens, and how to fix it.
While mega projects are complex, consistent overruns suggest it’s not random, he said. If it was, planners would guess under budget sometimes, which rarely happens.
Instead, one theory goes that someone is lying, either to themself or to others.
Lying to oneself is called optimism bias. It means we imagine best-case scenarios and hope issues can be controlled even as things go off the rails.
Lying to others is what leading scholar Bent Flyvbjerg calls strategic misrepresentation. Large projects sometimes incentivize fudging both the costs and the benefits, like giving overly sunny ridership projections for a transit project, in order to win public and political support.
But Siemiatycki has solutions.
Collect data: Governments should fire up the analytics machine and turn infrastructure planning into a numbers game, collecting stats on mega projects as diligently as baseball teams do for batters.
Change incentives: Reward the best solution, not the cheapest. Data could help here, giving better insight into which builders provide accurate budget and time projections, and put them at the top of the heap for bids.
Budget boot camp: A U.K. program put all civil servants working on projects over a certain cost threshold through a training program to ward off bad planning.
Rope in private dollars: When public projects team up with private enterprise often the same people are responsible for designing, building and maintaining it, so they can’t pass the buck or dodge deadlines. Also, the deals generally reward meeting targets along the way.
However it’s done, fixes need to come soon, said Siemiatycki, who fears public confidence in government is waning “not only to deliver projects, but to use infrastructure to address the major challenges that our communities face.”