Determinants of cost deviations and overruns in UK transport projects

Abstract

Cost deviations have long been a relevant research topic within the field of public works and infrastructure. Attempts to evaluate the frequency of cost deviations and overruns (CDOs), and the magnitude of these deviations, have been reported in the literature. Using data published by the UK National Audit Office in the period 1985–2018, a unique overview of 175 UK transport projects is provided in this paper. The aim of this work was to evaluate CDOs in the UK and to identify the main determinants, with a focus on exogenous determinants (context-related), which have been neglected in the existing literature. The results confirm that transport projects show a tendency towards overruns, although there are significant differences between road projects (with an average deviation of 18%) and other types of transport projects (with an average deviation of 60%). The results show that an increase in government efficiency levels leads to a decrease in cost overruns. The findings support an existing theory that there is evidence of the existence of political determinants in cost overruns, but also that economic dynamics play a role in explaining cost overruns. Whether the political bias is psychologically or strategically driven is yet to be demonstrated.