Megaprojects and regional development: Pathologies in project planning

Post-project assessments are essential for understanding the strengths and weaknesses of regional development planning. Unfortunately, assessments of projects involving private sector participants that compare pre-project forecasts to post-project outcomes are rare because the necessary data are usually not publicly available. This paper helps fill this void in the literature by completing an evaluation that compares pre-project forecasts to post-project outcomes for one of the largest and most comprehensively planned megaprojects; ever undertaken in Canada: the Northeast Coal Project (NECP). The evaluation shows that instead of achieving the expected net,benefit of Can$0-9 billion (2000 Canadian $), the NECP incurred a net loss of Can$2.8 billion. The project also generated less than one-half of expected regional employment and failed to mitigate structural problems in the regional economy Although project planners had all the information that should have led them to forecast this negative outcome, this information was either ignored or dismissed. The explanation for this seemingly irrational behaviour on the part of project planners is explained by a combination of errors in the evaluation methodology and interest group behaviour in regional resource development. Strategies to reduce the likelihood of these errors in future projects include improvements in evaluation methodology and changes in the institutional structure of project evaluation.