How Infrastructure Projects Cost Has Increased Dramatically in Developed Countries

This VOX article poses a great question ‘Why does it cost so much to build things in America?‘ in the context of infrastructure and mass transit construction. This can be generalized probably to all developed countries, with some differences: why has it become (relatively) so expensive to build infrastructure in those countries?

Research by New York Federal Reserve Bank and Brown University researchers reveals that the cost to construct a “lane mile of interstate increased five-fold” between 1990 and 2008. New construction — widening and building interchanges and building new sections of road altogether — is where the bulk of the problem lies

Reasons mentioned beyond the density of those locations where infrastructure are being built include institutional reasons (in particular, more power given to opposing groups leading to complaints and lawsuits). The article also mentions the lack of experience of government agencies and construction companies due to the lack of construction in the last decades. I personally suspect also financing mechanisms – long projects like infrastructure will get heavily burdened by financial costs if the government does not step in for part of the financing.

In any case, it is certainly the accumulation of layers of requirements in developed countries that lead to substantial delays and even more substantial increase in cost for transportation and other infrastructure building. This is a concern for our societies that need to be overcome if we want to remain competitive.