Abstract
In Chap. 2, I presented estimates of the enormous resources that developed countries require to maintain, upgrade and expand their in-place transportation infrastructure systems. The data also showed that over time, only one-third to one-half of these needed resources are actually invested. Against this dismal picture one would expect that only the best welfare-contributing infrastructure projects would be selected for implementation. Yet, as demonstrated throughout this book, this is not the case. A significant number of the implemented transportation projects, especially mega-projects, display unacceptable ex-ante or ex-post transportation-economic properties: inferior economic performance, grossly missed schedules, way-off budgets and non-delivery of promised benefits. Furthermore, the formal requirement to conduct a Cost-Benefit Analysis (CBA) or one of its variants notwithstanding, the data show that few projects in developed countries have actually undergone a comprehensive CBA prior to their selection. This phenomenon is especially disturbing because it implies that, at least in these countries, a significant proportion of the scarce resources allocated to transportation infrastructure improvement are being misused or wasted.
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Notes
- 1.
- 2.
See, for example, Flyvbjerg (2014), who regards the confluence of what he calls the four sublimes as key explanatory factors. These include the technological delight derived by planners and engineers from building large-scale innovative projects; political enhancement accruing to politicians who invite the projects meant to serve as their monuments; economic bliss in the form of financial gains to various stakeholders; and esthetic pleasure, derived by project designers.
- 3.
“News that the Transbay Terminal is something like $300 million over budget should not come as a shock to anyone. We always knew the initial estimate was way under the real cost. Just like we never had a real cost for the [San Francisco] Central Subway, or the [San Francisco–Oakland] Bay Bridge or any other massive construction project. So get off it. In the world of civic projects, the first budget is really just a down payment. If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.” Willie Brown, Assembly Speaker and Mayor of San Francisco, discussing a large cost overrun on the San Francisco Transbay Terminal mega-project in his San Francisco Chronicle column (July 27, 2013), quoted by Flyvbjerg (2014).
- 4.
An example, already mentioned, of this reality is the Access to the Region’s Core (ARC) rail project between New Jersey and New York’s Penn Station, which included a tunnel to be built under the Hudson River. The budget was estimated to be $8.7 billion. Construction began in mid-2009 but the project was canceled in October 2010 by New Jersey’s Governor Chris Christie, who cited cost overruns and the State’s lack of funds.
- 5.
There is some overlap between decision-making levels; hence, these figures do not add up to 100%.
- 6.
Generally speaking, national-level decision-makers play more dominant roles in European countries, whereas sub-national levels predominate in project decisions within federal states. In the USA, transportation decision-making is characterized by fragmentation and devolution.
- 7.
One example is the Alameda Corridor (Chap. 7), whose promoters successfully demonstrated to members of Congress the project’s economic benefits accrued to the national economy as well as to the their districts.
- 8.
In the sphere of economics, the concept of rationality has evolved over time from the optimal use of resources to maximization of a well-defined objective such as utility function subject to constraints, to compliance with a set of formal rules, such as consistency, completeness and transitivity of preferences, which define a rational choice.
- 9.
Exemplified by the ARC rail project, cited in Note 4, this chapter.
- 10.
The famed historian Barbara Tuchman once stated that, “When information is related to policy-makers, they respond in terms of what is already inside their heads and consequently make policy less to fit facts than to notions and intentions formed out of the mental baggage that has accumulated in their mind since childhood” (Tuchman 1981).
- 11.
- 12.
It is believed that extension of the Number 7 subway in New York City (from 8th to 11th Avenue at 34th street) was decided by the city’s sitting mayor at the time (Michael Blumberg). The city government began issuing bonds to fund the 1 mile, $2 billion project in November 2006.
- 13.
Building a railroad to Eilat, Israel’s southernmost city, involving about 260 km of electrified double-track rail, estimated at $8–10 billion, is a very complicated project to implement due to a range of engineering, economic, environmental and political factors. Over the last several decades, numerous expert committees and civil society groups (e.g., environmentalists) have concluded that the project is totally unworthy and even harmful. Nonetheless, Israel Katz, the current Minister of Transportation, backed by Prime Minster Netanyahu and cabinet approval, has decided to take active measures toward the project’s implementation (Haaretz, September 21, 2014).
- 14.
For example, various forms of computer applications are becoming available that allow, in real-time, shared-ride travel. These are expected to gradually assume a significant proportion of metropolitan transit travel.
- 15.
In the Netherlands, the Parliamentary Committee on Infrastructure Projects held extensive public hearings to identify measures to reduce the misinformation about proposed major infrastructure projects (Dutch Commission on Infrastructure Projects 2004).
- 16.
An additional benefit emanating from such an authority is the curbing of optimism bias. To illustrate, the UK’s Treasury now requires that all government ministries develop and implement procedures to curb such bias with respect to mega-projects (Flyvbjerg 2006). One such measure is the prohibition against funding projects that do not take optimism bias into account (UK Department for Transport 2006).
- 17.
The He et al. (2016) study of public participation with respect to high-speed rail projects in China shows how the lack of adequate public involvement resulted in welfare losses and planning errors.
- 18.
Manipulative framing is a major tool used by politicians to influence decisions (Robert Shiller, Economic View, New York Times, September 2, 2012).
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Berechman, J. (2018). Why Unworthy Mega-Projects?. In: The Infrastructure We Ride On. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-74606-7_11
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