As part of writing a book about the Panama Canal, Carlos and I had to do a lot of research into cost overruns on big infrastructure projects. We found the usual horror stories. The Panama Canal went over-budget by a factor of 2.0. BART exceeded projections by 1.6, and the Washington Metro hit 1.8. Miami’s Metrorail jumped the limit by 2.1, the Big Dig ran over by 2.9, and the Brooklyn-Queen Expressway beat its budget by an astonishing 5.1.
Sounds bad, right? And in the case of the BQE, it is bad. But you haven't seen overruns until you've seen the private sector try build multi-billion dollar stuff in the Albertan oil sands. Suncor's Millenium project ran over by 1.6, about the same as BART. Shell's expansion of the Muskeg River mine has hit 2.2, and counting. In 2008, Syncrude's Stage 3 expansion passed 2.4. The Canadian Association of Petroleum Producers estimates that capital costs for ongoing projects are going to average as much as 2.7 times the 2005 projections.
Not quite the Big Dig, but making the Panama Canal look good. I have some thoughts as to why this happens, but before I reveal them, what do you think?