This is a cautionary tale. It has been shown that, for nearly all privately financed projects, the outturn traffic is lower than that forecast by the company winning the concession. There are a number of reasons why this is the case including technical errors, unrealisitic assumptions (pure optimism bias) and external pressure. For reasons of commercial confidentially, the facts on individual projects rarely emerge. This paper dispenses with the facts by taking a ficticious completed project and examining why a number of organisations produced unreliable forecasts. It is set in a courtroom with the presiding judge Mr Justice Urts. All witnesses are compelled to tell the truth (which is a novelty for some of them), and a reconciliation is made between their forecasts and the outturn traffic. Despite the lack of facts, the situations described are realistic (though sometimes exaggerated) in that similar situations have been observed in real projects. The witnesses represent organisations who make characteristic forecasts. The paper concludes by considering how the various parties have been punished (or otherwise) for their crimes. As companies will avoid behaviour that is punished and repeat behaviour that is rewarded, the paper concludes that great care should be exercised in interpreting the forecasts. For the covering abstract please see ITRD E135207.
Abstract