Why do big projects always bust the budget?

|  April 30, 2009 |

A British professor has completed a study that examines why big public works infrastructure projects are always over budget. His answer: “delusional optimism.”

Or you can say it like Doctor House: “People lie.”

What’s more useful is to examine why. Politicians typically allow projects to be under-designed and underbid to make them more attractive to the public and planning boards. Contractors go along with this charade and then make it up on the change orders. This might seem terribly disingenuous, except, when it’s over, most people are glad to have the new infrastructure. Boston’s Big Dig was the most notorious example, ballooning from $2-billion to $14-billion. But the people I talk to in Boston love it now that the tunnel is complete and the city is starting to heal after half a century of being cut in two by an ugly freeway locals dubbed the Green Monster.

If the public and the planning boards were more realistic about costs and commitments this wouldn’t have to be such a game. But that’s human nature.

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