NCPA - National Center for Policy Analysis

Cost Estimates for Public Projects Haven't Improved in 90 Years

July 11, 2002

Cost overruns for large public works projects have stayed largely constant for most of the last century, according to a study by Bent Flyvbjerg of Aalborg University in Denmark. The study concentrated on 258 projects in the U.S., Europe and elsewhere and is being published this week in the Journal of the American Planning Association.

  • Project estimates between 1910 and 1998 were short of the final costs an average of 28 percent, the study found.
  • The biggest errors were in rail projects, which ran, on average, 45 percent over estimated costs.
  • Bridges and tunnels were 34 percent over estimates; with roads, 20 percent.
  • Nine out of every 10 estimates were low, and cost estimates are no more accurate now than they were 90 years ago.

"Either the people who do the estimates are incredibly stupid, but that is highly unlikely," Flyvbjerg commented. "The other possibility is they manipulated the budgets to make sure the projects are approved."

A number of American experts familiar with the field tended to agree.

  • Estimates for New York City's Holland Tunnel, completed in 1927, were 52 percent lower than the final $48 million cost.
  • The Channel Tunnel between England and France came in 80 percent over cost; and Boston's Big Dig, which began 15 years ago with a projected cost of $4.5 billion, now has a price of $14.6 billion.

The study found that the public was largely unaware of overruns because the media coverage is inconsistent.

Flyvbjerg said he had difficulty getting builders to discuss the subject. "People run away screaming," he said. "It doesn't look good for the profession."

Source: Michael Wilson, "Study Finds Steady Overruns in Public Projects," New York Times, July 11, 2002.


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