Abstract
Several studies have observed an optimism bias in cost and ridership forecasts for rapid transit projects around the globe (Flyvbjerg, Skamris Holm, and Buhl 2005; Kain 1990; Richmond 2005; Lewis-Workman et al. 2008; Pickrell 1992), which has led to billions of dollars of public investment in projects that have not performed as promised — in terms of either cost or ridership, and usually both. This bias has been a major cause of concern for project stakeholders, including the Federal Transit Administration (FTA), which spends about two billion dollars per year on new rapid 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 both to increase forecast accuracy and reduce reliance on forecasts in selecting projects for funding. Such changes include a requirement for ex post analyses of cost and ridership for completed projects and the introduction of several new criteria in addition to cost and ridership to evaluate proposed projects — such as anticipated environmental benefit and transit-supportive land use policies. Unfortunately, there has been no research to date that has examined how these changes in Federal policy have influenced forecast accuracy for rapid transit projects that receive New Starts funding.
