The Causes of Infrastructure Project Cost Overruns – A Comparative Analysis

This presentation will examine a range of major studies into the causes of infrastructure project costs overruns and other related problems. It will commence with an analysis of the findings of the most comprehensive study ever undertaken in Australia on the cost outcome of infrastructure projects – a study by the Grattan Institute of 836 transport infrastructure projects valued over A$20 million carried out in Australian over the past 15 years. This will be followed by the Institute’s latest study on megaproject cost overruns in Australia (released this month). These findings will then be compared to other related infrastructure studies carried out in selected countries. This includes a study of 1603 road and rail projects each valued between US$1.5 million and US$8.5 billion carried out in 20 countries. All of the studies demonstrate that infrastructure project cost overruns are a significant global problem. The causes of these overruns are complex and intertwined with a wide range of other project factors and circumstances but the studies reveal a common thread of causal factors. However, contemporary studies are now drawing attention to the need to shift the typical focus on initial capital costs to the total life cycle and environmental costs of projects as operational and maintenance costs typically dwarf initial capital costs over the life term. This then needs to be balanced against the long term societal value of these projects – a different perspective that presents many challenges in measuring the real value of a project.