Large-scale billion-dollar infrastructure projects—known as “mega-projects”—are notorious for going over budget and behind schedule. From London’s Crossrail (i.e. the Elizabeth Line) to Boston’s Big Dig, these ambitious endeavours often make headlines for all the wrong reasons. But are budget blowouts inevitable?
Many mega-projects have exceeded their original budgets by staggering amounts. London’s Crossrail project saw costs balloon from £14.8 billion to around £19 billion (see this BBC News report). Boston’s “Big Dig”—a massive highway tunnel system—was initially projected at US$2.6 billion but ended up costing US$14.8 billion (see The Big Dig: Learning from a Mega Project). These examples highlight the systemic challenges in accurately forecasting and managing large-scale infrastructure costs.
This article draws on insights from a conversation between Adam Boddison, CEO of the Association for Project Management (APM), and Gene Tunny, Director of Adept Economics, featured on the Economics Explored podcast: What HS2, Channel Tunnel & Sydney Opera House Teach Us about Mega Projects w/ Adam Boddison OBE – EP275.
“Projects don’t go wrong—they start wrong,” said Boddison. “Nine times out of ten, you can trace failures back to decisions made at the very beginning.”
You can listen to the episode using this player:
Mega-projects typically involve budgets exceeding a billion dollars, numerous stakeholders, political oversight, and complex technical challenges. These factors create fertile ground for what Bent Flyvbjerg, the global expert on mega-projects, calls “optimism bias”, where costs are underestimated and benefits exaggerated to secure approval.
Boddison acknowledged this reality:
“If we pin our definition of success purely on time, cost, and quality, then yes, many mega-projects appear to fail. But the real question is—do they deliver long-term value?”
Scope changes, particularly those driven by political agendas, are another common culprit. In the HS2 project, repeated changes to the project scope led to skyrocketing costs and public frustration.
“There’s a misconception that stopping or scaling back a project automatically saves money,” Boddison noted. “But once you’ve mobilised resources and trained your workforce, winding down and starting up again can actually be more expensive.”
Boddison emphasised that proper planning and stakeholder engagement are critical. He advocated for rigorous upfront planning and the use of “pre-mortems”—a risk analysis tool that asks, What could cause this project to completely fail?
“If this goes catastrophically wrong, what would we point to as the cause? Thinking about that at the start can help prevent disaster later.”
Another underused approach is Critical Chain Project Management, which focuses on resource allocation and buffering key tasks. Buffering key tasks in project management means adding extra time, resources, or flexibility to the most critical tasks in a project schedule to account for uncertainties and prevent delays. Boddison described it as a “game changer” for complex projects operating in resource-constrained environments. Even though it seems inefficient to provide this buffering, it can prevent delays and other problems and save time and money on the overall project.
The conversation also touched on the need for post-project evaluation—something governments and businesses often overlook. The Channel Tunnel, for example, initially appeared to be a financial failure. However, decades later, it has proven immensely valuable—especially for transmitting electricity between France and the UK, a benefit not included in the original business case.
Boddison summed it up well:
“Success isn’t just whether we finished on time or within budget. It’s whether the project made the world a better place.”
As economists know, it’s critical to crunch the numbers in a credible cost-benefit analysis to determine if projects will deliver net benefits to the community.
Published on 8 May 2025. For further information, don’t hesitate to get in touch with us via contact@adepteconomics.com.au or by calling us on 1300 169 870.