What is the most common cause of big projects over running on their estimated budget? For example, I recently learned that the HS2 train line in the UK will be nearly £75bn over the estimated budget! How was the estimate so wrong?

Question

What is the most common cause of big projects over running on their estimated budget? For example, I recently learned that the HS2 train line in the UK will be nearly £75bn over the estimated budget! How was the estimate so wrong?

In: Engineering

Answer 1

With HS2 specifically one of the big reasons for the original estimate and current estimate being so different is the Chiltern hills.

The original estimate was based around running the HS2 line at surface level, with some cut throughs and some small tunnels, but during the consultation phase, the local residents and environmental groups got this changed so pretty much the whole thing will run through tunnels. Some of this is pure nimbyism (my idylic views will be disrupted by trains running through them!), some of it is genuine issues (like train tracks creating noise near villages), some if it is environmental (sites of special scientific interest, areas of outstanding natural beauty etc).
tunnels are expensive and when they started actually working on the geological side of it, they found the hills are more difficult to tunnel through than thought, so the costs keep going up.

There’s a good FT article about this here: [https://www.ft.com/content/cf3ff750-d92a-11e9-8f9b-77216ebe1f17](https://www.ft.com/content/cf3ff750-d92a-11e9-8f9b-77216ebe1f17)

It’s not the only reason and the stuff they talk about at the end of the article is going to be an increasing issue as more and more of HS2 gets built. Once Curzon St, Birmingham Interchange and Euston Station are finished, they won’t be giving up on this project no matter how much costs rise, and this gives an incentive for the private companies contracted to do this to push up their costs to make more profits.

Add to that the government’s tendencies to accept the lowest credible bidder, means companies put in bids they know are too low, intending to push the price up afterwards.
Inflation has a part to play, mostly the original estimates (which were in 2010) are quoted at around £30bn and played against £100bn, but with inflation that would be £38bn now. Also original estimates ranged up to abound £37bn, which would be nearly £48bn now.

But there’s also genuine social/engineering issues that have caused the cost of HS2 to rise so far above original estimates.