Cost Overruns: It’s the Same in Britain

The Taxpayers’ Alliance has published a new study examining a sample of 240 government capital projects in Britain, including weapons systems, highway projects, computer upgrades, health care spending, and other items. The results mirror the serious cost overrun problems we have in the U.S. federal government.

The Alliance study found that 32 percent of projects sampled had cost overruns, while 24 percent came in under budget, but that the projects with overruns were generally much larger. As a result, the average net cost overrun on all the projects was 38 percent. Thus, when the government says that a new project will cost taxpayers 1 billion UK pounds, on average it will actually cost them 1.38 billion.

The study also explores the reasons why UK government projects run into trouble, and I have observed that most of the same problems are also chronic in our government. To me, this provides more evidence that the inefficiencies in government stem from deep, structural factors, not the skills of the particular politicians or administrators in office.