Scandinavian Working Papers in Economics
Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
No 20/11: Cost overruns and delays in infrastructure projects: the case of Stuttgart 21
Bertram Steininger (), Martin Groth () and Birgitte Weber ()
Additional contact information
Bertram Steininger: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Division of real estate economics and finance, Teknikringen 10B, 100 44 Stockholm, Sweden
Martin Groth: RWTH Aachen University, Postal: School of Business and Economics, Templergraben 64, 52056 Aachen, Germany,
Birgitte Weber: RWTH Aachen University, Postal: School of Business and Economics, Templergraben 64, 52056 Aachen, Germany,
Abstract: Cost overruns and delays in infrastructure projects are not a recent problem. They have systematically occurred globally, in different sectors, and over time. We find that various causes are relevant for the cost overrun and delay of Stuttgart 21 – one of the largest railway projects in Germany in the last 100 years. Among them are project scope changes, geological conditions, high risk-taking propensity, extended implementation, price overshoot, conflict of interests, and lack of citizens’ participation. To estimate the costs at an early stage, we apply the reference class forecasting model and thereby forecast the current estimated costs within a confidence interval. To estimate the time, we apply an OLS regression for the different subsections and underestimate or substantially overestimate the duration actually required.
Keywords: Cost overrun; time overrun; infrastructure; reference class forecasting; hyperbolic discounting; principal-agent theory
43 pages, October 12, 2020
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