Danish expert investigates cost overruns in Dutch mega projects

In his inaugural speech on Wednesday September 26th, he explains why the costs of large-scale projects, such as High Speed Rail projects, new motorways, and the Channel Tunnel, systematically turn out to be higher than was forecast. In the coming years the Danish professor will focus on cost overruns in major Dutch projects.

Flyvbjerg is an international researcher focusing on cost overruns in mega projects, such as the TGV and the ‘Big Dig’ in Boston. He has found a similar pattern in more than twenty countries: the costs of these projects very often turn out to be higher than was planned, on average more than 30 percent higher. In the Netherlands the HSL-South is a prime example. It has a cost overrun of 45 percent. Flyvbjerg was questioned as an expert by the temporary committee infrastructure projects (Tijdelijke Commissie Infrastructuurprojecten (2004)) which conducted research into the HSL-South and other projects.

Explanations for the systematic cost overruns, are according to Flyvbjerg ungrounded optimism among planners but also strategic motives. The lower the costs presented, the higher the chances of the project actually taking place: ‘lying pays off’. This is called ‘inverted Darwinism’ by the professor, or ‘survival of the unfittest’, because the projects that look best on paper have the largest cost overruns and demand shortfalls.

According to Flyvbjerg, one of the (partial) remedies against cost overruns is reference class forecasting. This is a method with which the costs of a project are estimated by comparing it to similar projects in the past. Flyvbjerg has applied this method to the ‘Zuiderzeelijn’ project. This resulted in a cost estimate that was 40 percent higher than previous estimates. Because of this the project is now being re-evaluated.

In the coming years Flyvbjerg, who is a part-time professor at the faculty of Technology, Policy and Management of Delft University of Technology, will research mega projects in the Netherlands. ‘To my surprise, there is little systematic knowledge about this subject. We do not know if the general conclusions found in other countries apply to the Netherlands. That’s a pity, because the Netherlands are especially interesting in this respect because of the high density of infrastructures.’

Flyvbjerg detects a change in attitude towards mega projects. ‘The realisation that things have to change is sinking in.’ Flyvbjerg receives full support of the Ministry of Transport, Public Works and Water Management which finances the chair. In about two to three years, he hopes to present results on Dutch mega projects.