“The Problem Factory”- Preemptive risk aversion in infrastructure planning and the role of professional services is an interesting analysis of why infrastructure projects are so expensive in the “anglosphere”.

This kind of risk – very high stakes and very low visibility of probabilities – is extremely difficult to manage and consequently extremely unattractive to private-sector investors and developers. It creates a tendency to attempt to “bulletproof” infrastructure projects. Rather than an expected net present value approach, the costing of large infrastructure projects is a process of casting the net wide to define a “risk surface” covering all possible issues which might present a probability above some threshold value of derailing the project, then spending as much as needed to mitigate those risks below the threshold value. And since almost any possible objection or issue could (with unknown and unknowable probability) be the reason for an entire project to fail, almost no potential issue is ignorable, and any expense spent on mitigating the risks is likely to look like value for money.

A key point is summarized by the phrase “the cost factory is owned by the benefit factory”. An entire industry is deeply embedded in these projects to propose, evaluate, and document potential issues, all with an incentive to put significant effort into the task.

At no stage in this process are any of the major actors likely to feel that they have a genuine choice as to what to do. Lawyers cannot ignore new precedents; they need to inform their clients and potential clients. The planning authorities are institutionally averse to losing judicial reviews, and so they consider all the objections placed before them. Objectors to planning, in an adversarial system, are unlikely to leave any potential weapons on the ground. Developers need to maximise the chances of carrying through a viable infrastructure project. The professional and scientific services firms are literally doing their job. So, the risk surface expands. Apart from the objectors, everyone involved is trying to help, but the final, systemic and predictable consequence of their actions is the gradual sclerosis of the system.

The article goes on to contrast this approach with the more statist one used in many other countries and incorporates this into some lessons and potential mitigations that would fit into the anglosphere model.