Cost Overruns and Demand Shortfalls in Urban Rail and Other Infrastructure

TL;DR

This paper highlights the importance of empirical risk assessment in urban rail projects, demonstrating how benchmarking can improve economic and financial risk management, with a case study of Copenhagen Metro.

Contribution

It introduces an empirical approach for risk assessment and benchmarking in urban rail projects, providing a model for better economic and financial risk management.

Findings

Empirical evidence supports risk assessment methods.

Benchmarking improves project risk management.

Copenhagen Metro case illustrates practical application.

Abstract

Risk, including economic risk, is increasingly a concern for public policy and management. The possibility of dealing effectively with risk is hampered, however, by lack of a sound empirical basis for risk assessment and management. The paper demonstrates the general point for cost and demand risks in urban rail projects. The paper presents empirical evidence that allow valid economic risk assessment and management of urban rail projects, including benchmarking of individual or groups of projects. Benchmarking of the Copenhagen Metro is presented as a case in point. The approach developed is proposed as a model for other types of policies and projects in order to improve economic and financial risk assessment and management in policy and planning.