High-Speed Rail 2 (HS2) for Scotland, 7,000 new offshore wind turbines, five new Type 31 warships. Regardless of whose manifesto you look at, promises to spend billions on massive infrastructure projects loom large in the UK election. All the major parties seem to consider infrastructure spending to be a good thing and a sure-fire vote winner.
Yet the UK’s history on the delivery of large infrastructure projects appears disastrous. When it comes to recent projects funded mainly by the public sector, Crossrail is a great example. This 73-mile railway under London is running more than two years late and will cost over £2bn more than the original £15.9 billion estimate – with further setbacks looking likely.
HS2, another public project, has seen its original cost estimate rise over threefold, while still in its early stages. Some say it will reach over £100 billion if and when the first two phases are completed in the mid-2030s.
Private projects do not fare much better. The Greater Gabbard offshore windfarm off the south coast of England was, at its construction, the biggest offshore windfarm in Europe. Owned and financed by the energy companies RWE and SSE, it still managed to be 18 months late and led to several legal fights between the main players for hundreds of millions of pounds.
The good, the bad and the ugly
The UK is not necessarily worse at these projects than rival countries. When I looked at 44 megaprojects across the EU in progress between 2000 and 2015, it became clear that they are frequently late and over budget. The graph below needs to be read with caution, because there are different numbers of projects in each category, but it hopefully illustrates that overruns occur in sector after sector.
This chimes with an earlier study of 60 megaprojects around the world carried out in the 1980s and 1990s, which found cost overruns in 18% of projects and delays in almost one-third. From the chart below, only 45% of projects met their stated objectives, while almost one in five had to be restructured after running into a crisis.
Outcomes of megaprojects worldwide
I should stress that none of this is intended to sound overly critical. The scale of the engineering triumph in delivering such projects is immense – almost miraculous at times. The 18 Crossrail breakthroughs where tunnelling machines bored through the ground for miles and miles were millimetre perfect, for instance.
The lead times of massive projects are also so long that it’s not surprising that the plan often changes along the way. This can elevate the cost estimates. When HS2 was announced in 2009, it was only concerned with the London-Birmingham route. Only with the parliamentary bill in 2017 were the full extent of plans described to run lines further north. And the precise nature of the future stages is still subject to argument, along with a number of key issues in the way that HS2 will integrate into the rest of the transport network.
The only way to really know how much an infrastructure project is going to cost is to find out by building it. Some projects are of such size and scale that we also need to be humble enough to accept that we don’t know what the benefits will be and may need to wait decades to identify them all.
One of the first megaprojects of recent times, for example, is the Hoover Dam in the US state of Colorado. It was built at the height of the Great Depression in the early 1930s. One of its main purposes was to provide employment in an era when the US hit its highest-ever rate of unemployment at 25%.
Less predictably, it enabled a huge flourishing of agriculture in California by controlling flooding on the River Colorado. And its cheap hydroelectric energy allowed for the development of Las Vegas. When the original engineers and designers were masterminding a massive new dam, it’s safe to say that drive-through weddings were not on their agenda.
How to view megaprojects
The cost-benefit of large infrastructure projects should be recognised as an art and not a science. That’s not to say that you can’t reduce costs and improve delivery times – researchers in complex programme management point to the benefits of straightforward approaches such as spending more on planning, really listening to external stakeholders and using novel organisational structures.
The point is that voters need to be aware that the numbers attached to infrastructure projects in the “fully costed plans” of political parties must be taken with a large pinch of salt. Nobody can accurately predict the costs and benefits that projects of this size are going to bring.
So, when voters ask themselves whether a proposed project in a manifesto is going to bring value for taxpayers – whether, say, it’s a better use of public funds than more doctors and nurses and teachers for our children – a good rule of thumb is to double the cost and halve any claimed financial benefits. At the same time, factor in that some completely unknown benefit will probably arrive from leftfield. Then, and only then, can you reach a sensible view of whether the party who is proposing the project is worthy of your vote.