Cost overruns in transport projects - Experiences from Sweden

• Main Author: Anchalee, Jenpanitsub
• Format: Others
• Language: English
• Published: KTH, Transportvetenskap 2011
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-42444

Cost overrun of transport projects is one of the most important problems in transport planning. Apart from causing budget overruns, it also results in uncertain cost-benefit for decision making. This thesis studies cost overruns in Sweden and internationally, factors affecting cost overruns and possible improvements of cost calculations. The literature study confirms that cost overrun problem is a global phenomenon. The average cost overruns in rail projects are always higher than in road projects. We have compared cost estimations and outcomes of 167 road and rail projects in Sweden during the period 1997-2009. This reveals that average cost overruns are 11% (SD = 24.6%) and 21% (SD = 50.5%) for road and rail projects, respectively. In Sweden, the average cost overrun in road projects is similar to other countries, while the average cost overrun in rail projects is lower than in other countries. However, the standard deviation of cost overruns in Swedish rail projects is very high. The cost overruns in road and rail projects in Sweden have been constant for the 13-year period and cost estimates have not improved over time. Furthermore, small Swedish transport projects (< 100 million SEK) have much higher percentage of cost overruns than large projects. To improve cost estimates in Sweden, the Successive Calculation method has recently been applied. We have collected data for 295 planned projects and find that the variance is significantly lower in these than in actual outcomes, and that the difference is surprisingly small between projects in different planning stages. Another method, Reference Class Forecasting, is demonstrated in two case studies - Stockholm bypass and Västlänken. The two methods are also compared in the thesis. For both case studies, the project costs by using the Reference Class Forecasting method are higher than the project costs by using the Successive Calculation based on the equal costs at 50% confident level of cost overrun.