New research by Institute on Municipal Finance and Governance provides roadmap for better infrastructure planning, explores causes of persistent cost overruns
January 21, 2016
Toronto, ON – Cost overruns and schedule delays on municipal infrastructure projects are predictable – and in some cases avoidable – according to new research released today by the Institute on Municipal Finance and Governance (IMFG) at the Munk School of Global Affairs.
In a new IMFG Perspectives Paper, Cost Overruns on Infrastructure Projects: Patterns, Causes and Cures, Matti Siemiatycki shows the causes are not merely technical. Instead, he argues, “there are deep psychological and political economic factors that also contribute to the persistence of this phenomenon.”
Siemiatycki recommends five remedies, based on international best practices.
- Use big data to monitor projects and report on cost overruns.
- Draw on past experience to award contracts to the best-performing firms.
- Invest in training programs for government staff.
- Use data from previous projects to create more precise cost estimates.
- Take advantage of public-private partnerships for the largest projects.
International evidence suggests, the bigger the project, the more likely it will miss deadlines and run over budget. Every year, unexpected overruns cost governments tens, if not hundreds of millions of dollars, and individual project managers are often blamed, missing opportunities to identify root causes and propose solutions.
According to Siemiatycki, effective strategies are at governments’ fingertips. It remains to be seen whether the main stakeholders – politicians, city staff and firms – are willing to move beyond the status quo, and implement real change.
The paper can be accessed here: http://bit.ly/1ZNkxJE
About the Author
Matti Siemiatycki is Associate Professor in the Department of Geography and Planning at the University of Toronto. His teaching and research focus on infrastructure planning, financing, and project delivery. His recent studies explore the merits of delivering infrastructure projects through public-private partnerships, especially as they relate to value for money, risk transfer, and the meeting of public policy goals.
About the Institute on Municipal Finance and Governance (IMFG)
The Institute on Municipal Finance and Governance is a research hub and think tank that focuses on the fiscal and governance challenges facing large cities and city-regions. It is located within the University of Toronto’s Munk School of Global Affairs.
For more information, please contact: