Cost overruns of infrastructure projects – distributions, causes and remedies

Jonas Eliasson

Transportation Research Part A: Policy and Practice, 2025, vol. 198, issue C

Abstract: This paper analyses the accuracy of cost estimates for Swedish transport infrastructure projects 2004–2022, discusses causes of cost overruns, and suggests remedies. Cost estimates for all projects in the national investment plans 2010–2022 are tracked from early planning to completion. Final costs for all projects finished 2004–2022 are compared to decision-to-build cost estimates. Results show considerable cost escalation during the planning stages, on average, while cost estimates at the decision-to-build are close to final costs, on average. Cost escalations during the planning stage are not uniform, however: the distribution of cost changes is highly skewed with a long right tail. The reason that final costs tend to exceed early cost estimates is that project decisions are effectively locked in before projects’ costs and benefits have been thoroughly assessed. Lock-in of premature decisions does not only cause cost overruns; even worse, it distorts project selection and design, reduces incentives to search for more cost-efficient designs, and increases opportunities and incentives for project beneficiaries to underestimate costs and overestimate benefits. Several ways to tackle these problems are suggested.

Keywords: Cost overruns; Transport infrastructure; Project management; Decision processes; Transport policy (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0965856425001600
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transa:v:198:y:2025:i:c:s0965856425001600

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tra.2025.104532

Access Statistics for this article

Transportation Research Part A: Policy and Practice is currently edited by John (J.M.) Rose

More articles in Transportation Research Part A: Policy and Practice from Elsevier
Bibliographic data for series maintained by Catherine Liu ().