Lock-in and its Influence on the Project Performance of Large-Scale Transportation Infrastructure Projects: Investigating the Way in Which Lock-in Can Emerge and Affect Cost Overruns

Abstract

Lock-in, the escalating commitment of decision-makers to an ineffective course of action, has the potential to explain the large cost overruns in large scale transportation infrastructure projects. Lock-in can occur both at the decision-making level (before the decision to build) and at the project level (after the decision to build) and can influence the extent of overruns in two ways. The first involves the "methodology" of calculating cost overruns according to the "formal decision to build". Due to lock-in, however, the "real decision to build" is made much earlier in the decision-making process and the costs estimated at that stage are often much lower than those that are estimated at a later stage in the decision-making process, thus increasing cost overruns. The second way that lock-in can affect cost overruns is through "practice". Although decisions about the project (design and implementation) need to be made, lock-in can lead to inefficient decisions that involve higher costs. Sunk costs (in terms of both time and money), the need for justification, escalating commitment, and inflexibility and the closure of alternatives are indicators of lock-in. In this paper, two case studies, of the Betuweroute and the HSL-South projects in the Netherlands, demonstrate the presence of lock-in and its influence on the extent of cost overruns at both the decision-making and project levels. This suggests that recognition of lock-in as an explanation for cost overruns significantly contributes to the understanding of the inadequate planning process of projects and allows development of more appropriate means.

Cost overruns – helping to define what they really mean

“…Assessment of cost overruns in the literature Nevertheless, especially for long projects in the public sector, it is likely that multiple changes occur over time (Flyvbjerg et al 2002), which affects the definition of "original estimates". Cantarelli et al (2010, p.4), quoting (Cantarelli et al 2009), highlight that "the estimated costs at the real decision to build are usually lower than those at later stages of the decision-making process", which is a situation called "lock-in", and that "references to the formal decision to build do not always provide an accurate picture of cost overruns" (Cantarelli et al 2010). Merrow (2011, p.38) defines as the "estimate made at the full-funds authorization", and suggests to evaluate cost overruns through (i) a systematic collection of a large number of cases, (ii) the calculation of cost overruns of single projects, and (iii) the definition of a threshold (25%) to determine the actual cost overruns.…”

Seed for change : the making and implementation of seed policies in Ethiopia

“…Chapter 5 answers research question number four, and is a continuation of Chapter 4. This chapter analyses why the widely used DSM is not officially endorsed by the government, using the concept of non-decision making and institutional lock-in (Bonal 2012;Cantarelli et al 2010;Geels 2011). This chapter presents the different institutional lock-ins that hindered decision making on the future use of DSM.…”

“…Institutional lock-in becomes an issue when an institution becomes inflexible and continues to restrict the consideration of other alternatives (Nordensvärd and Urban 2015). By limiting the consideration of other options, institutional lock-in leads to the use of sub-optimal policies even though alternative policies may be available (Cantarelli et al 2010;Geels 2011;North 1990). Thus, actors continue to do the same without noticing the alternatives or without seeing their advantages.…”

“…Thus, actors continue to do the same without noticing the alternatives or without seeing their advantages. Cantarelli et al (2010) distinguish over-commitment, self-justification, and inflexibility as indicators of institutional lock-in. Even if actors notice an alternative and acknowledge the benefits of a new system, they present the commitment already made to the existing system as a reason to continue the same.…”

“…Thus, institutions are "humanly devised constraints that shape human interactions" (North 1990: p. 3). By default, institutions block actors from acting outside the existing sets of norms and rules (Cantarelli et al 2010;Geels 2011;Klitkou et al 2015).…”