Friday, August 29, 2008

Using past boondoggles as a baseline

Over at Miller-McCune, Ryan Blitstein writes a fascinating article about Bent Flyvbjerg, who “believes he’s found the way to take the doggle out of multibillion-dollar boondoggles.” Since climate change adaptation will probably involve huge, very expensive mega-projects, it’s crucial to understand how these behemoths flounder into misery. It’s a long read, but well worth it: ….Adapted from Nobel Prize-winning research by American economists, the Flyvbjerg (pronounced “FLIU-bee-yah”) approach rests on close analysis of the history of similar, completed megaprojects. The strategy may seem obvious, but it could save billions of dollars by avoiding unworthy projects and restraining spending on those that proceed.

Already, the United Kingdom and the Netherlands have hired Flyvbjerg or adopted his methods. In the U.S., the ideas are also gaining traction: Federal Transit Administrator James Simpson name-checked Flyvbjerg in a June speech, lauding his research into managing megaproject risk management and accountability. “That’s exactly where we’re headed,” Simpson said.

A decade later, by collecting data from 20 nations on five continents, Flyvbjerg had produced the first statistically significant analysis to show … [t]he vast majority of public works projects go drastically over budget and aren’t as well patronized as proponents claim. He also found that modelers didn’t seem to be improving their estimates over time; the scale of overruns remained relatively constant. Rail and highway projects are often the worst boondoggles, and they form the bulk of Flyvbjerg’s research. But other researchers have found dangerous overoptimism in all kinds of megaprojects….

An aerial view of Boston's Big Dig, a project famously plagued by cost overruns and deadly accidents. Wikimedia Commons