Crystal Balls and Black Boxes: Policy Effects on Optimism in Ridership and Cost Forecasts for New Starts Projects

Author: Carole Voulgaris, UCLA

Summary: 

Several studies have observed an optimistic bias in cost and ridership forecasts for rail transit projects around the globe, which has led to billions of dollars of public investment in projects that have not performed as promised. This bias has been a major cause of concern for project stakeholders, including the Federal Transit Administration (FTA), which has spent an average of over three billion of dollars each year over the past two decades on new rail transit projects in the United States through its Capital Investment Grants program, commonly known as New Starts. Partly in response to credibility concerns raised by forecast bias, the FTA has made changes to the New Starts program over the years. Unfortunately, there has been no research to date that has examined how these changes in the New Starts program have influenced forecast accuracy for rail transit projects that receive funding.

This study addresses this gap in the literature through a mixed-methods approach involving semi-structured interviews with a dozen transit planning and forecasting professionals and a quantitative analysis of 65 completed transit projects to determine whether and to what extent forecast accuracy has changed over the past 40 years and the degree to which these changes can be attributed to perceptions about the Federal program that funds these projects. 

 

Abstract