Cost Overruns in U.S. Transit Rail Projects

Presenter: Nan Gao

Research Category: Engineering and Technology
Additional Authors: Ali Touran
PI: Nan Gao

Cost overrun in rail transit projects in the United States is a pervasive and constant phenomenon which has drawn considerable attention from both academia and the public. Several studies have reported the average cost overruns for projects completed in different periods, yet there has been a lack of rigorous statistical analysis on project costs. Hence, the cost overrun trends are not clear. Sample size is one of the main constraints. In addition, Federal Transit Administration (FTA) has required formal risk assessment on transit projects since 2003. Whether this strategy has improved the accuracy of cost estimates is not known.

To fill these gaps, this study collected cost data of 76 U.S. rail transit projects, the largest sample of its kind. One-way ANOVA result shows that the accuracy of cost estimates at the decision-making phase has improved over time. However, there is no statistical evidence to suggest that cost overruns differ between projects designed before and after 2003. So it is difficult to see the positive impact of FTA risk assessment program. This research can serve as a reference for studies on the accuracy of conceptual and FFGA (Full Funding Grant Agreement) cost estimates and help in budgeting future projects. It can also help in understanding the causes of capital projects’ cost overruns.