Acknowledgements
My interest in cost overrun, and its causes and consequences, derived from an interest in corporate finance and cost–benefit analysis, as well as the observation that textbooks and articles on these subjects disregarded the problem of estimating the costs and revenues needed to make the calculations proven theoretically correct. The figures and the probabilities, when such were used, put into our calculations were assumed to be correct, although they were seldom based on reviews of implemented investments. We did not seem to learn from experience, which made the link between theory and practice weak.
An opportunity to research the area opened up in 1982 when I, as part of a larger research programme designed by Göran Bergendahl and Lennart Hjalmarsson, received the assignment of finding out the true cost, in real monetary value, of two nuclear power reactors at Barsebäck, which the owner, and funder of the research programme, the South Swedish Power Company, had constructed. It turned out to be time-consuming work due to all the calculations that had to be made, but it offered the opportunity for very informative discussions with former project managers, and the power company later asked me to review two more of their major investments in new power plants.
These experiences led me to apply for funding to study investment planning and deviations in major construction projects in both the private and public sectors, which were reported in my doctoral dissertation and book published in 1986. Having defended my dissertation, I left the cost overrun area and devoted my research time to other issues. Most important to the present book are three other empirical studies of investments in industry. The first was a study of the way some major ventures in new areas had been initiated and implemented, the second a study of investments and investment processes in major industrial groups, and the third a similar study of intangible investments and investment processes in major service groups.
In 1979–80 Göran Bergendahl and I had had an assignment for a government committee on the organization and finance of nuclear waste to propose a system for its financing. The committee resulted in the creation of the Swedish Nuclear Waste Fund, an organization for which I would undertake a few assignments in the years to come. It was probably these earlier experiences that, in 2003, led Per-Anders Bergendahl and Peter Rosén to ask me to review the cost development for the nuclear waste programme on behalf of a new government committee on the financing of nuclear waste. This gave me a reason to review the literature on cost overrun published since I left the area in 1986. To my disappointment, I observed that there had been a great number of new publications and studies in the area, but many of them were just replications, often without reference to similar earlier studies. Surprisingly few radically new ideas had been advanced, and it was still a fragmented area of research. This made me think: It seems time to summarize what we know about cost overrun, its causes, and its consequences, before embarking on any major new study of the subject matter.
Later, when time permitted, this allowed me to sketch out a book summarizing what research has taught us about cost overrun, its causes, and the consequences to firms and society. It led to an application for funding to Ragnar Söderberg’s Foundation, without whose generous financial support the book would never have been written.
Many other organizations and people have contributed to this book. Of great importance has been my team of supervisors back in the early 1980s, namely Göran Bergendahl, Bertil Gandemo, Thomas Polesie, and Ulf Peter Welam, and also Lennart Hjalmarsson, who granted me access to the Swedish State Power Board.
Further, I want to thank my colleagues Gary Jordan, Leif Carlsson, Jan Löwstedt, and Svante Schriber, who all have given me constructive comments on the book's manuscript.
Another group of contributors of great importance is, of course, all of the managers who participated in my research, as without their help my studies of investments and cost overrun could not have been made. They are many, but I will refrain from listing them all as they do not appear in earlier studies, the reason being that some of them gave me interviews and help only on the condition that their names were not revealed.
I am also thankful for the useful advice I received during finalization of my manuscript from Valerie Appleby, and James Gregory, David Moore, and Paula Parish at Cambridge University Press, three anonymous Cambridge University Press reviewers, and Leanne Johnstone and Kate Kirk for language editing. It has been a pleasure to work with you.
