Cost overruns in large-scale transportation infrastructure projects: Which explanations can be given?

Managing large-scale transportation infrastructure projects is difficult due to frequent misinformation about the costs and benefits, which results in large cost overruns and benefit shortfalls that often threaten the project viability. This paper explores the explanations for cost overruns that have been presented in previous studies, and whether these explanations are theoretically embedded. Two categories of explanations for cost overruns are distinguished: political explanations and non-political explanations. This paper also investigates whether there are theories that have not yet been included in the literature on cost overruns that can contribute to the understanding of cost overruns. For political explanations agency theory is considered the most interesting and an eclectic theory is considered possible as well. Non-political explanations are diverse in character, therefore a range of different theories (including rational choice theory and prospect theory), dependent on the kind of explanation is considered more appropriate than one all-embracing theory.