Forecasting inaccuracies in transportation projects in selected South East Asian countries

Abstract

Past studies show that transportation infrastructure projects, such as roads and bridges, often perform poorly as compared to the forecasts made before they were constructed in that projected costs are underestimated while forecasted demand are overestimated. In this research, a database of transportation infrastructure projects from Thailand and the Philippines was assembled in order to verify whether inaccuracies in cost forecasts exist in the region. The sources of data that were compiled in this study include feasibility studies, official statistics, and annual reports of international aid agencies and government’s transportation authorities. A total of 135 road and bridge projects, complete with forecasted and actual costs were included in the database. From the results of the analysis, it has been verified that there are no significant differences in cost forecast errors between road and bridge projects. However, the errors found in transportation projects in Thailand are significantly different in magnitude from those in the Philippines. The level and frequency of cost forecast errors in the three countries were also examined as well. Out of the 135 transportation projects, 41% experience cost overruns, much lower than the result of a previous study which is 90%. Moreover, the magnitudes of cost overruns experienced in the region are smaller than those in the previous studies. Although the findings of this study can contribute in improving the method of cost forecasting in the South East Asian region, they should be used and interpreted with caution because of the small sample size of the study and the limited types of projects that were considered. A larger and more diverse database is needed in order to better represent the true condition of the accuracy of forecasts in the region.