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Cost overruns and d...
Cost overruns and delays in infrastructure projects: the case of Stuttgart 21
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- Steininger, Bertram I. (author)
- KTH,Fastighetsekonomi och finans
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- Groth, Martin (author)
- RWTH Aachen University, Aachen, Germany
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- Weber, Birgitte (author)
- RWTH Aachen University, Aachen, Germany
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(creator_code:org_t)
- Emerald, 2021
- 2021
- English.
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In: Journal of Property Investment & Finance. - : Emerald. - 1463-578X .- 1470-2002. ; 39:3, s. 256-282
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Abstract
Subject headings
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- Purpose: We investigate causes for the cost overrun and delay of the railway project Stuttgart 21. Besides, we try to forecast the actual costs and completion date at an early stage. Design/methodology/approach: The results of exploratory research show the causes for the cost overrun and delay of Stuttgart 21; we compare our findings with other railway projects. To estimate the costs at an early stage, the reference class forecasting (RCF) model is applied; to estimate the time, we apply an OLS regression. Findings: We find that the following causes are relevant for the cost overrun and delay of Stuttgart 21: scope changes, geological conditions, high risk-taking propensity, extended implementation, price overshoot, conflict of interests and lack of citizens' participation. The current estimated costs are within our 95% confidence interval based on RCF; our time forecast underestimates or substantially overestimates the duration actually required. Research limitations/implications: A limitation of our approach is the low number of comparable projects which are available. Practical implications: The use of hyperbolic function or stepwise exponential discount function can help to give a clearer picture of the costs and benefits. The straightforward use of the RFC for costs and OLS for time should motivate more decision-makers to estimate the actual costs and time which are necessary in the light of the rising demand for democratic participation amongst citizens. Social implications: More realistic estimates can help to reduce the significant distortion at the beginning of infrastructure projects. Originality/value: We are among the first who use the RCF to estimate the costs in Germany. Furthermore, the hyperbolic discounting function is added as a further theoretical explanation for cost underestimation.
Subject headings
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business (hsv//eng)
Keyword
- cost overrun
- time overrun
- infrastructure
- reference class forecasting
- hyperbolic discounting
- principal-agent theory
- Nationalekonomi
- Economics
- Planering och beslutsanalys
- Planning and Decision Analysis
- Urban and Regional Studies
- Urbana och regionala studier
- Fastigheter och byggande
- Real Estate and Construction Management
Publication and Content Type
- ref (subject category)
- art (subject category)
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