Via Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it:
[…] Taken together, the UK and US studies both account well for existing data on cost underestimation and benefit overestimation. Both studies falsify the notion that in situations with high political and organizational pressure the underestimation of costs and overestimation of benefits is caused by non-intentional technical error or optimism bias. Both studies support the view that in such situations promoters and forecasters intentionally use the following formula in order to secure approval and funding for their projects:
underestimated costs + overestimated benefits = funding
Using this formula, and thus ‘showing the project at its best’ as one interviewee said above, results in an inverted Darwinism, i.e the survival of the unfittest. It is not the best projects that get implemented, but the projects that look best on paper. And the projects that look best on paper are the projects with the largest cost underestimates and benefit overestimates, other things being equal. But the larger the cost underestimate on paper, the greater the cost overrun in practice. And the larger the overestimate of benefits, the greater the benefit shortfall. Therefore the projects that have been made to look best on paper in this manner become the worst, or unfittest, projects in reality, in the sense that they are the very projects that will encounter most problems during construction and operations in terms of the largest cost overruns, benefit shortfalls, and risks of non-viability. They have been designed like that, as disasters waiting to happen.
The paper goes on to say, “Professional and occasionally even criminal penalties should be enforced for managers and forecasters who consistently and foreseeably produce deceptive forecasts”. Wise words yet we shall have to hope the HS2 project and all the other infrastructure projects planned by the Government are unique in not suffering from the endemic flaws described in the paper.
I’ll leave interested parties to read the paper for themselves but I will add this: while the Government has cloaked itself in the legacy of the great British railway pioneers, they were entrepreneurs risking private capital in commercial projects. The same cannot be said of HS2.
That matters and it matters for all the reasons we have historically defended free societies from the encroach of planning.
When hired to consider HS2, HS2 ltd had an interest in making HS2 happen; one reason was to keep HS2 ltds jobs (Alison Munro salary approx £200k). Since HS2 has been given the go ahead HS2 ltd are now in charge of developing and promoting HS2. Imagine the ‘random number generator’ that was mentioned during one of the TSC meetings. To make the case for HS2 appear plausible that ‘random number generator’ was fed with over inflated benefits by HS2 ltd to try to steer the figures towards a higher BCR (despite this HS2 ltd still found this difficult). I find it interesting that HS2 will ultimately be a whole Y network, yet phase 1 is only London/Birmingham, it is assumed by HS2 ltd that the rest of the Y will work. For too long HS2 ltd has pushed forward without ‘doing the work’ on vital areas of this major infrastructure project, leaving the public exposed to a major infrastructure project that is potentially not water tight with it’s figures and more than likely ‘not’ the answer to our current/future transport dilemma. I would liked to have seen a full transport strategy before Govt decided to force a change in transport behaviour that seemingly favours the more wealthy 1st class passengers.
Steve …..a very telling comment was made by the professor from Leeds University at the TSC sessions. When SNCF did their ” after school ” reports on TGV lines, it was found that in virtually all cases, High Speed Lines delivered exactly what they were supposed to. Its also interesting to note that HS1 ( ie the Channel Tunnel Rail Link ) is now under a 30 year operating concession which is in the hands of a Canadian Pension Fund, and thats despite this link not operating at full capacity. Seems to me as if high speed line infrastructure is a very sought after asset from all sorts of angles….