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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.

  1. Use big data to mon­i­tor projects and report on cost over­runs.
  2. Draw on past expe­ri­ence to award con­tracts to the best-per­form­ing firms.
  3. Invest in train­ing pro­grams for gov­ern­ment staff.
  4. Use data from pre­vi­ous projects to cre­ate more pre­cise cost esti­mates.
  5. 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:

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:

Sele­na Zhang
Man­ag­er, Pro­grams and Research
Insti­tute on Munic­i­pal Finance and Gov­er­nance
Uni­ver­si­ty of Toron­to
Tel: 416–978-2168