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Optimism Bias
ESRI report warns of effect of 'optimism bias' on value of infrastructure projects
A new study from the ESRI says that rail projects typically overestimate their projected passenger levels, while road projects underestimate their traffic growth.
STATE INFRASTRUCTURE projects often fall victim to a ‘optimism bias’ which leads them to overspend and inaccurately project passenger and traffic figures for major rail and road projects, according to a new report.
A study of international evidence by the ESRI’s Dr Edgar Morgenroth is being presented at an ESRI conference on improving productivity and growth today.
Most of the public projects examined in the study overran their budgets by between 20 per cent and 45 per cent.
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Meanwhile, the study also found that road projects typically underestimate the expected volume of traffic, while rail projects overestimate the projected number of passengers.
In his study, Morgenroth says that investment decisions have to be taken very carefully, given that even in ‘normal’ economic times the demand for potential projects is far higher than the available resources for projects. He recommends careful cost benefit analysis prior to beginning a project to better evaluate their future value and help prioritise projects.
He also says that wider assessment of optimum bias (or not) in Irish infrastructure projects would help protect the taxpayer from future overspending and the under-utilisation of infrastructure.
The study notes that just because a project came in on budget, it does not mean that the costs of that project were the cheapest available options.
Morgenroth’s paper is one of a series of 12 studies being undertaken by the ESRI to assess issues relating to the state’s ongoing economic crisis. He recommends further assessment of infrastructure projects in Ireland to investigate the extent of optimum bias.
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The tunnel under the Shannon and the M3 motorway clearly illustrate that projected traffic volumes were wildly over estimated. The surveys on the old N3 counted all the construction vehicles on tens of thousands of little work trips.
We compensate the toll operators to the tune of Euro 150k per week to counter for low traffic volume. Still, no one is accountable.
I would like to see the scientific parameters used. The truth is that there are sometimes factors greater than just the sheer numbers involved in infrastructure projects, for example a confidence factor: when the public transport system is better and more complete more people will depend on it. New road projects are always likely to get more traffic than expected, because people find new ways of doing things that weren’t previously open to them!
Maybe the undercooked figures on rail is the fact that there is never enough carriages at peak times so people who might want to use the system can’t be bothered pushing and shoving to get on a train/Luas only to stand packed so tightly that if animals were treated like this we have do gooders chained to the carriages
TikTok accused of 'quietly' laying off Irish workers amid global job cuts
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