Cost overruns and demand shortfalls - Deception or selection?

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Cost overruns and demand shortfalls - Deception or selection? / Eliasson, Jonas; Fosgerau, Mogens.

I: Transportation Research Part B: Methodological, Bind 57, 2013, s. 105-113.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Harvard

Eliasson, J & Fosgerau, M 2013, 'Cost overruns and demand shortfalls - Deception or selection?', Transportation Research Part B: Methodological, bind 57, s. 105-113. https://doi.org/10.1016/j.trb.2013.09.005

APA

Eliasson, J., & Fosgerau, M. (2013). Cost overruns and demand shortfalls - Deception or selection? Transportation Research Part B: Methodological, 57, 105-113. https://doi.org/10.1016/j.trb.2013.09.005

Vancouver

Eliasson J, Fosgerau M. Cost overruns and demand shortfalls - Deception or selection? Transportation Research Part B: Methodological. 2013;57:105-113. https://doi.org/10.1016/j.trb.2013.09.005

Author

Eliasson, Jonas ; Fosgerau, Mogens. / Cost overruns and demand shortfalls - Deception or selection?. I: Transportation Research Part B: Methodological. 2013 ; Bind 57. s. 105-113.

Bibtex

@article{a392a4cf69834b73bff38241268c8535,
title = "Cost overruns and demand shortfalls - Deception or selection?",
abstract = "A number of highly cited papers by Flyvbjerg and associates have shown that ex ante infrastructure appraisals tend to be overly optimistic. Ex post evaluations indicate a bias where investment costs are higher and benefits lower on average than predicted ex ante. These authors argue that the bias must be attributed to intentional misrepresentation by project developers. This paper shows that the bias may arise simply as a selection bias, without there being any bias at all in predictions ex ante, and that such a bias is bound to arise whenever ex ante predictions are related to the decisions whether to implement projects. Using a database of projects we present examples indicating that the selection bias may be substantial. The examples also indicate that benefit-cost ratios remain a useful selection criterion even when cost and benefits are highly uncertain, gainsaying the argument that such uncertainties render cost-benefit analyses useless.",
keywords = "Appraisal, Cost escalation, Cost overruns, Cost-benefit analysis, Forecast accuracy, Selection bias",
author = "Jonas Eliasson and Mogens Fosgerau",
year = "2013",
doi = "10.1016/j.trb.2013.09.005",
language = "English",
volume = "57",
pages = "105--113",
journal = "Transportation Research. Part B: Methodological",
issn = "0191-2615",
publisher = "Pergamon Press",

}

RIS

TY - JOUR

T1 - Cost overruns and demand shortfalls - Deception or selection?

AU - Eliasson, Jonas

AU - Fosgerau, Mogens

PY - 2013

Y1 - 2013

N2 - A number of highly cited papers by Flyvbjerg and associates have shown that ex ante infrastructure appraisals tend to be overly optimistic. Ex post evaluations indicate a bias where investment costs are higher and benefits lower on average than predicted ex ante. These authors argue that the bias must be attributed to intentional misrepresentation by project developers. This paper shows that the bias may arise simply as a selection bias, without there being any bias at all in predictions ex ante, and that such a bias is bound to arise whenever ex ante predictions are related to the decisions whether to implement projects. Using a database of projects we present examples indicating that the selection bias may be substantial. The examples also indicate that benefit-cost ratios remain a useful selection criterion even when cost and benefits are highly uncertain, gainsaying the argument that such uncertainties render cost-benefit analyses useless.

AB - A number of highly cited papers by Flyvbjerg and associates have shown that ex ante infrastructure appraisals tend to be overly optimistic. Ex post evaluations indicate a bias where investment costs are higher and benefits lower on average than predicted ex ante. These authors argue that the bias must be attributed to intentional misrepresentation by project developers. This paper shows that the bias may arise simply as a selection bias, without there being any bias at all in predictions ex ante, and that such a bias is bound to arise whenever ex ante predictions are related to the decisions whether to implement projects. Using a database of projects we present examples indicating that the selection bias may be substantial. The examples also indicate that benefit-cost ratios remain a useful selection criterion even when cost and benefits are highly uncertain, gainsaying the argument that such uncertainties render cost-benefit analyses useless.

KW - Appraisal

KW - Cost escalation

KW - Cost overruns

KW - Cost-benefit analysis

KW - Forecast accuracy

KW - Selection bias

UR - http://www.scopus.com/inward/record.url?scp=84885198753&partnerID=8YFLogxK

U2 - 10.1016/j.trb.2013.09.005

DO - 10.1016/j.trb.2013.09.005

M3 - Journal article

AN - SCOPUS:84885198753

VL - 57

SP - 105

EP - 113

JO - Transportation Research. Part B: Methodological

JF - Transportation Research. Part B: Methodological

SN - 0191-2615

ER -

ID: 181872050