Why do so many big projects regularly come in above budget? Corruption? Stupidity? Or something else? Well, I vote for “something else.” Let's consider the French nuclear reactor project at Flamanville, which I had the honor to visit.
EDF initially costed the reactor in 2005 at €3.3 billion. It is now estimated to cost €4.0 billion. What happened? Well, according to EDF, costs rose by €250 million due to inflation. Special escalator clauses tied to the price of particular commodities (like steel) caused another €150 million. Finally, an additional €300 million came from “évolutions techniques et réglementaires,” a fancy way of saying, “We learned on the job that some things are a little more complicated than we thought, but mostly the regulator kept changing the goal posts.”
Considering that the head of L’Autorité de sûreté nucléaire, André-Claude Lacoste, actually said, “We wanted to show an example,” in regards to the construction of the first new reactor in 20 years, I find that last quite believable.
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