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Why do big government projects cost so much?

Graham Watson

13th February 2020

Here is a fascinating insight into why government projects are so frequently over-budget.

Why is it that big projects often cost more than first anticipated and what can be done to price them more accurately? If it were an easy problem to solve, then it would have been resolved. I suspect that the answer to the first question is straightforward: vanity.

However, you also wonder how far more accurate cost-benefit analysis would reduce the number of infrastructure projects undertaken, and whether there would be significant efficiency gains as a result. Another lovely return to first principles, and consideration of marginal cost and marginal benefit.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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