Crystal Balls and Black Boxes: Optimism Bias in Ridership and Cost Forecasts for New Starts Rapid Transit Projects

Research Lead: Carole Turley Voulgaris

UC Campus(es): UCLA

Problem Statement: Since its inception over 40 years ago, the Federal Transit Administration’s New Starts program for funding capital transit system projects has evolved, partly in response to early criticisms that the rapid transit projects they funded commonly had higher costs and lower ridership than suggested by the forecasts on which the decisions to fund and construct them were based. A better understanding of the effects these changes have had and overall trends in the accuracy of cost and ridership forecasts would be useful to local transit agencies that have received New Starts grants in the past and plan to seek funding in the future from either New Starts or state equivalent capital grants program, TICRP (Transit and Intercity Rail Capital Program).

Project Description: This research applies a mixed-methods approach to determine the causes and consequences of changes in New Starts policies and procedures over the history of the program, with a particular emphasis on changes in the accuracy of capital cost estimate and ridership forecasts for federally funded rapid transit projects. The research includes interviews with experienced public and private-sector transit professionals, and analyses of cost and ridership forecasts for all 68 federally-funded rapid transit projects that were completed with federal funds in the United States between 1983 and 2011 to determine: whether and to what extent cost and ridership forecast accuracy has changed over time; what changes in forecast accuracy have been associated with specific changes in federal policies governing the programs that fund these projects; and how forecast accuracy varies by project characteristics including project mode, duration of project development, the presence of an existing system, and the share of a project that was federally funded.policy brief =

Status: Completed

Budget: $27,729

Policy Brief(s):