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Abstract
This article presents results from the first statistically significant study of causes
of cost escalation in transport infrastructure projects. The study is based on a sample
of 258 rail, bridge, tunnel and road projects worth US$90 billion. The focus is on
the dependence of cost escalation on (1) length of project implementation phase, (2)
size of project and (3) type of project ownership. First, it is found with very high
statistical significance that cost escalation is strongly dependent on length of implementation
phase. The policy implications are clear: Decision makers and planners should be highly
concerned about delays and long implementation phases because they translate into
risks of substantial cost escalations. Second, it is found that projects have grown
larger over time and that for bridges and tunnels larger projects have larger percentage
cost escalations. Finally, by comparing cost escalation for three types of project
ownership--private, state-owned enterprise and other public ownership--it is shown
that the oft-seen claim that public ownership is problematic and private ownership
effective in curbing cost escalation is an oversimplification. Type of accountability
appears to matter more to cost escalation than type of ownership.