Policy and Planning for Large Infrastructure Projects: Problems, Causes, Cures

TL;DR

This paper discusses the issues of misinformation and risk in large infrastructure project planning, identifies causes like optimism bias and strategic misrepresentation, and proposes measures such as incentive changes and improved methods to enhance decision making.

Contribution

It provides a comprehensive analysis of problems, causes, and solutions in infrastructure project planning, emphasizing the importance of addressing misinformation and risk.

Findings

Misinformation about costs and benefits hampers decision making

Optimism bias and strategic misrepresentation are key causes of risk

Proposes incentive reforms and better planning methods to improve outcomes

Abstract

This paper argues, first, that a major problem in the planning of large infrastructure projects is the high level of misinformation about costs and benefits that decision makers face in deciding whether to build, and the high risks such misinformation generates. Second, it explores the causes of misinformation and risk, mainly in the guise of optimism bias and strategic misrepresentation. Finally, the paper presents a number of measures aimed at improving planning and decision making for large infrastructure projects, including changed incentive structures and better planning methods. Thus the paper is organized as a simple triptych consisting in problems, causes, and cures.