The preceding subsections, have taken a critical look at the methodological shortcomings of several groups of empirical technical studies, in explaining cause-effect relationships that lead to cost overruns. On the flip side of the argument, are the theorist, who make bold claims asserting why cost overruns are such a pervasive trend in public infrastructure projects. The researcher thus applies a similar critical analysis to spotlight the methodological validity of the studies driving this line of argument. An evaluation of several of these cost overrun studies based on theoretical explanations, indicate that political explanation, at the core of which is strategic misrepresentation, is the dominant discourse adopted by most studies in explaining cost overruns (Kain 1990; Pickerel 1992; Bruzelius et al. 2002; Altshuler and Luberoff, 2003). However, based on the critical analysis, the researcher notes, that the studies by Kain (1990) and Pickerel (1992), although underlain by the theory of strategic misrepresentation, were focused mostly on explaining the inaccuracies in transportation benefit forecasts. Kain (1990) described in detail, the use of unrealistic land use forecasts and optimistic ridership forecasts, as a form of appraisal optimism that was used by the Dallas Area Rapid Transit (DART), to promote sponsorship for a 91-mile rail transit system. When alternative analyses indicated that the proposed $2.6-billion rail system would carry only slightly more riders than an unimproved bus system. Similarly, Pickerel (1992), made similar assertions as Kain (1990), for eight rail transit projects chosen over competing less capital-intensive options. However, Pickerel (1992) admitted that the accuracy of forecasts for the rejected alternatives could not be evaluated, to infer conclusively, that the errors in projected ridership and costs, led decision makers to make uniformed decisions. Although the interesting findings from these studies, support the notion of strategic misrepresentation, no form of research methodology or data sources deployed, were provided in the articles, for the researcher to access the validity and credibility of their findings. The study by Bruzelius et al.’s (2002) was fundamentally presented as form of speculative commentary on the dynamics of decision making in mega projects, rather than based on any form of data analysis. The key theoretical assertions in the study by Bruzelius et al. (2002) were: The time frames typically involved in major project development and implementation, meant that different sets of political influences were often at work at the initial phase, when overly optimistic forecast are made, compared to the completion phase, when the full extent of cost overrun and unviability of the project is realised;
Varied groups of project promoters can afford to advocate for the financing of projects, based on tax payers’ money, because they do not bear the financial risk; except for contractors, who still bear minimum risk, but reap significant reward, even when over- optimistic tenders are forwarded;
“Real costs and real risks do not surface until construction is well under way” (p 145). Other studies revolving around this theme, are mostly text books, written on mega projects governance and investments, such as by Altshuler and Luberoff, (2003). It is thus, observed that the only empirical study out of the multiplicity of theoretical explanations evident in the literature, is the one by Flyvbjerg, et al. (2002), building on the arguments started by much earlier scholars (Hall 1980 and Wachs, 1989) and Bruzelius et al. (2002), promoting politically induced deception as a globally generalizable reason why public projects run over budget. The arguments from subsequent peer reviewed studies, after this time frame such asCantarelli et al. (2010), although adopting the findings of Flyvbjerg et al. (2002), by emphasizing the systematic nature of cost underestimation, as a deliberate strategy used by government officials in getting funding approval, were expressed as opinions, and not drawn based on any form of valid statistical inference. The study by Flyvbjerg et al. (2002), is thus spotlighted.
The study by Flyvbjerg, et al. (2002:280) was based primarily on cost overrun data on 258 projects, which displayed a statistical pattern to the differences in initial and final cost, skewed in the direction of underestimates, over time and project location. It was stated:
“the pattern of cost underestimation … is of general import and is statistically significant … the pattern holds for different project types, different geographical regions, and different historical periods…the large-sample pattern of cost underestimation uncovered by us lends statistical support to the conclusions about lying and cost underestimation”. The ‘statistical support’ as referred to by Flyvbjerg, et al. (2002:285), in this analysis was:
“If misleading forecasts were truly caused by technical inadequacies, simple mistakes, and inherent problems with predicting the future, we would expect a less biased distribution of errors in cost estimates around zero. In fact, we have found with overwhelming statistical significance (p<0.001) that the distribution of such errors has a nonzero mean”.
Solely based on this simplistic analysis, which lacked the merits of demonstrable causality, Flyvbjerg, et al. (2002:279), drew a generalised global conclusion that cost overruns in transportation projects were the deliberate outcome of political manipulation, and as such discounted all forms of technical explanations, primarily geologic factors, which became a trail blazer and empirical reference point for subsequent theoretical studies on cost overruns. It was stated:
“This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects … it is found with overwhelming statistical significance that the cost estimates used to decide whether important infrastructure should be built are highly and systematically misleading”.
Without any further inferential statistical test or supportive qualitative data, a visibly wild leap was made in drawing and generalising this theoretical conclusion, from an exploratory statistical trend analysis of project data, which reported that cost overruns were indeed a topical problem in transportation projects across the sampled locations, which had persisted over time. Several loopholes were thus spotted by the researcher, and other scholars in these premature conclusions.
Flyvbjerg, et al. (2002) study, carried out based on exploratory statistical measures, which provided an initial quantitative perspective of the project data, did not provide any form of qualitative data from inside the governmental client organization to support the study’s assertions. Love (2015: 490) noted this, and commented thus:
“Despite the considerable amount of research within the field of transport and planning in the past thirty years, limited progress has been made to improving the performance of projects. We contend that this will continue to be an issue as long as research efforts focus on the ‘outside view’ with emphasis being placed upon strategic misrepresentation and optimism bias. Understanding ‘why’ and ‘how’ projects overrun, particularly from both ‘outside’ and ‘inside’ perspectives, is pivotal to reducing their impact and occurrence”.
The highly artificialised nature of Flyvbjerg et al.’s (2002) study, which solely relied on trends in the data, is a significant limitation in the methodological validity of the conclusion drawn. Ahiagu- Dugbai et al. (2014:41) noting this shortcoming equally stated:
“it is almost impossible to draw valid distinctions along a continuum of motivation when promoting a project from reasonable optimism, through over-enthusiasm, culpable error, to deliberate deceit using statistical analysis, as adopted in the Flyvbjerg’s works”. Ahiagu-Dugbai et al. (2014:41) further asserted:
“Adopting a positivist perspective to understand a complex issue like construction project governance, which usually involves a complex interplay of construction professionals, planners, business strategy, institutional framework and politics, would merely be superficial at best and never actually provide substantial evidence to support the kind of conclusions reached by Flyvbjerg et al”.
Flyvbjerg et al.’s (2002) conclusions are further challenged in the academic arena by several other authors including Osland and Strand (2010) and Love et al. (2012). Arguing against both the theoretical and methodological validity of Flyvbjerg et al.'s assertions, Osland and Strand
(2010:80) challenged Flyvbjerg et al.'s research design, espousing “the research design did not support the general conclusion that the technical explanations can be ruled out”. It was argued that for the theory of deliberate underestimation, had little explanatory power, as its validation requires empirical data showing Cost Benefit Analysis for projects which should have been approved in place of the ‘better under-represented projects’. While Love et al. (2012) using a case study of Australian projects empirically showed that unintentionally overlooked technical factors inherent in projects dynamics can be triggered leading to cost overruns in public projects. Further to this, Flyvbjerg’s study is not adequate to provide the depth of understanding on the intrinsic contextual issues of cost overruns within the settings of highway development in specific countries and regions. Cantarelli et al. (2012) also argued against the global generalisability of Flyvbjerg’s study, on the premise of the large differences in cost overruns revealed in various studies reported over time, which showed that cost overruns in country specific studies were either lower or higher than the statistics provided by Flyvbjerg. It was stated
“the abovementioned findings do not support this expectation; some country specific studies have smaller average cost overruns and others higher average cost overruns compared to the worldwide study by Flyvbjerg et al” (Cantarelli et al 2012:50)
The global generalisability of Flyvbjerg’s findings which though spanning 75 years, is mostly limited to developed countries in the Europe and North America. Developing countries, such as those on the African continent, which mostly do not have historical data spanning this time frame, were not included in the sample data. However, Flyvbjerg, et al. (2002) acknowledged that cost overruns appear to be more pronounced in developing nations. Following Flyvbjerg’s argument, if this is the case, the theory of strategic misrepresentation cannot be said to provide a valid explanation for this disparity in the extent of cost overrun experienced in the developed and developing world. To overcome some of the shortcomings of the study by Flyvbjerg et al. (2002), in terms of geographical spread, Ubani (2015) attempted to replicate Flyvbjerg’s study in the context of Nigeria. However, several shortcomings were also noted in this study, foremost of which, is the statistical validity of conclusions based on the quantitative analysis of cost overrun trends in a very small sample of eight public projects.
Extensive research also shows that private sector projects experience cost overruns, despite the lack of political motive, to strategically misrepresent cost. Classic examples such as the Channel Tunnel between France and the UK, as noted by Flyvbjerg et al. (2004), which should serve as the international model of private financing, however experienced a monumental cost overrun of 80%, double the average recorded cost overrun range on publicly funded tunnels and bridges.
Following this line of logic, Love (2009) also statistically showed that re-work leading to cost overruns, were evident in both public and privately owned infrastructure. This calls into question, the veracity of Flyvbjerg assertions regarding public officials.