This chart—stuck in the middle of a serious academic report about why big public works projects go over budget—made me laugh out loud…
It’s from this article by the ever-fascinating Danish academic Bent Flyvbjerg (for more, see here), who’s made a career out of figuring out why engineers and governments do such a bad job of estimating the costs of megaprojects.
The graph, obviously, is meant to be more illustrative than scientific. But it does a pretty good job of explaining Flyvbjerg’s central thesis: through a combination of over-optimism (delusion) and strategic misrepresentation (deception), planners and boosters tend to low-ball the costs of a big project; and the higher the political stakes, the more likely it is that deception is involved.
The problem Flyvbjerg identifies is hardly limited to public projects. This short blog post has already taken twice as long as I hoped it would—call me delusional. And as loath as I am to admit it, I’m probably guilty of some strategic misrepresentation. ”I’m leaving right now, honey” often means that I hope to leave sometime in the next 10 minutes.
But scaled up to the size of a massive public project, those minor pecadillos balloon into crushing cost overruns. Boston’s Big Dig comes to mind. Or consider the Iraq war: a generous mixture of delusion and deception led the nation into an undertaking that’s been dozens of times more costly, in both money and lives, than the planners and boosters initially thought.
At some level, of course, I wonder how much outright deception there really is in mega-projects. Few people think of themselves as liars; but it’s easy to see people convincing themselves that wildly optimistic cost estimates are actually quite reasonable. Subjectively, “strategic misrepresentation” can feel a lot like honesty. (For a similar phenomenon, see last week’s Newsweek article on why people believe lies, even when shown a clear explanation of the truth.)
Flyvbjerg’s antidote to both delusion and deception in public megaprojects is called “reference class forecasting.” Rather than making cost forecasts based on how planners hope things will go, Flyvbjerg recommends looking at a group similar projects—a “reference class”–that have already been completed. The real-world experience of these projects, Flyvbjerg believes, gives a more reliable estimate of costs than the rosy estimates of project planners.
Has anyone tried the reference class approach for any of the big megaprojects in our own backyard? Not to my knowledge—which is an oversight that could spell trouble for the region’s taxpayers down the road.