Cost Control cp
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- Cost overruns lead to misallocation of resources and destabilization of policy planning
- Cost overruns kill other highway projects and take longer
- Large cost overruns in projects threaten economic collapse
- Plan Fails—laundry list
***Ptix***Obama Good is a Net BenefitCP stops partisanship—accountability, transparency, reformBAFEF 2k12 (Building America’s Future Education Fund, “Building America’s Future,” pg online @ http://www.bafuture.org/sites/default/files/12.1%20NH-AdMemo_1.pdf //um-ef) BAFEF conducted focus groups and polling on the issue of transportation and infrastructure investment among 2012 Republican primary election likely voters (including Tea Party supporters) in South Carolina and New Hampshire in September and October. Among the most encouraging of these findings is that Republicans and conservatives are willing to support infrastructure spending when reform, accountability and transparency are included as part of the proposal. The importance of having a long-term strategic plan that focused on need and not politics was also a key take away. ***Cost Overruns***Cost overruns badCost overruns lead to misallocation of resources and destabilization of policy planningFlyvbjerg 5, Professor of Major Programme Management at Oxford University's Saïd Business School and is Founding Director of the University's BT Centre for Major Programme Management, winner of the Fulbright Scholarship, (Bent, Policy and planning for large infrastructure : projects problems, causes, and cures, World Bank Publications, January 2005, Google Scholar)//AG Cost overruns and benefit shortfalls of the frequency and size described above are a problem for the following reasons: They lead to a Pareto0-inefficient allocation of resources, i.e. waste. They lead to delays and further cost overruns and benefit shortfalls. They destabilize policy, planning, implementation, and operations of projects. The problem is getting bigger, because projects get bigger. Let’s consider each point in turn. First, and argument often heard in the planning of large infrastructure projects is that cost and benefit forecasts at the planning stage may be wrong, but if one assumes that forecasts are wrong by the same margin across projects, cost-benefit analysis would still identify the best projects for implementation. The ranking of projects would not be affected by the forecasting errors, according to this argument. However, the large standard deviations show in tables 1 and 2 falsify this argument. However, the large standard deviations shown in tables 1 and 2 falsify this argument. The standard deviations show that cost and benefit estimates are not wrong by the same margin across projects; errors vary extensively and this will affect the ranking of projects. Thus we see that misinformation about costs and benefits at the planning stage is likely to lead to Pareto-inefficiency, because in terms of standard cost-benefit analysis decision makers are likely to implement inferior projects. Turns HighwaysCost overruns kill other highway projects and take longerGAO 97, Investigative arm of Congress charged with examining matters relating to the receipt and payment of public funds, (Government Accountability Office, Transportation Infrastructure: Managing the Costs of Large-Dollar Highway Projects, Government Accountability Office, February 1997,http://www.gao.gov/assets/160/155775.pdf)//AG The nation’s highways and bridges are vital to its economy and national defense. Because of limited resources available to build and maintain them, it is essential that highway and bridge projects be well managed. Because large-dollar projects generally take longer to build and usually have more significant environmental and community impacts than the majority of federal-aid highway projects, they have greater potential to experience substantial cost increases and lengthy construction delays. These cost increases can potentially overwhelm other highway projects and erode the already limited funds available to meet overall highway needs. Effective project management related to containing costs can help ensure that cost growth resulting from schedule delays and other factors are minimized and that our transportation capital investment dollars are spent wisely and efficiently. As reauthorization of the federal-aid highway program approaches in 1997, discussion has already begun on how the federal programs should be structured and what the federal role should be. Balancing the states’ desire for flexibility and more autonomy with the federal role of ensuring that taxpayers get the most bang for their federal dollar, as well as safe, quality highways, is difficult. FHWA’s “full” oversight approach does not focus on management of highway project costs. In contrast, cost management requirements promulgated by OMB for the federal government on its own large-dollar projects are very specific. Further, from a broader perspective, the federal government has been moving in the direction of managing programs by establishing goals and measuring performance through such initiatives as the Government Performance and Results Act of 1993. Turns EconomyLarge cost overruns in projects threaten economic collapseFlyvbjerg 5, Professor of Major Programme Management at Oxford University's Saïd Business School and is Founding Director of the University's BT Centre for Major Programme Management, winner of the Fulbright Scholarship, (Bent, Policy and planning for large infrastructure : projects problems, causes, and cures, World Bank Publications, January 2005, Google Scholar)//AG Finally, as projects grow bigger, the problems with cost overruns and benefit shortfalls also grow bigger and more consequential (Flyvbjerg, Holm, and Buhl, 2004: 12). Some megaprojects are becoming so large in relation to national economies that cost overruns and benefit shortfalls from even a single project may destabilize the finances of a whole country or region. This occurred when the billion-dollar cost overrun on the 2004 Athens Olympics affected the credit rating of Greece and when benefit shortfalls hit Hong Kong’s new $20 billion Chek Lap Kok airport after it opened in 1998. The desire to avoid national fiscal distress has recently become an important driver in attempts at reforming the planning of large infrastructure projects, as we will see later. Plan Fails—laundry listAlmost all transportation infrastructure projects overestimate trafficFlyvbjerg et al 5, professor of planning at Aalborg University, Denmark. He is founder and director of the university’s research program on large-scale infrastructure planning, (Bent, “ How (In)accurate Are Demand Forecasts in Public Works Projects?”, Journal of the American Planning Association, Spring 2005, Google Scholar, http://www.honolulutraffic.com/JAPAFlyvbjerg05.pdf)//AG We follow common practice and define the inaccuracy of a traffic forecast as actual minus forecasted traffic in percentage of forecasted traffic. Traffic is measured as number of passengers for rail, and number of vehicles for roads Actual traffic is counted for the first year of operations (or the opening year). Forecasted traffic is the traffic estimate for the first year of operations (or the opening year) as estimated at the time of decision to build the project. Thus the forecast is the estimate available to decision makers when they made the decision to build the project in question. If no estimate was available at the time of decision to build, then the closest available estimate was used, typically a later estimate, resulting in a conservative bias in our measure for inaccuracy. We measured inaccuracy of traffic forecasts in a sample of 210 transportation infrastructure projects with comparable data for forecasted and actual traffic. The sample comprises a project portfolio worth approximately U.S.$59 billion in actual costs (2004 prices). The portfolio includes 27 rail projects and 183 road projects completed between 1969 and 1998. The project types are urban rail, high-speed rail, conventional rail, bridges, tunnels, highways, and freeways. The projects are located in 14 countries on 5 continents, including both developed and developing nations: Brazil, Chile, Denmark, Egypt, France, Germany, Hong Kong, India, Mexico, South Korea, Sweden, Tunisia, the U.K., and the U.S. Projects were selected for the sample based on the availability and quality of data.1 As far as we know, this is the largest sample of transportation infrastructure projects that has been established with comparable data on forecasted and actual traffic. For a full description of the sample, data, and methods of testing for inaccuracy, please see Flyvbjerg (2004). Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. 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