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Actuarial Credibility Approach in Adjusting Initial Cost Estimates of Transport Infrastructure Projects

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dc.abstract.enThis paper presents a novel methodology based on the modified actuarial credibility approach. It allows for the adjustment of initial cost estimates of public infrastructure projects by accounting for the additional risk/uncertainty factor. Hence, it offers an interesting alternative to other existing forecasting methods. We test our approach by applying data for over 300 major infrastructure projects implemented in Poland between 2004 and 2020. We prove that, despite its simplicity, the actuarial credibility approach can deliver accurate cost estimates compared to more complex methods such as regression analysis (OLS) or machine learning (LASSO). In particular, we show that, although the forecasting accuracy varies among different project categories, actuarial credibility outperforms other forecasting approaches in the majority of cases. As a result, we argue that actuarial credibility should be considered as a relatively simple tool with very modest data requirements that can be easily applied by investors and policy makers in order to improve project planning and avoid cost overruns.
dc.affiliationUniwersytet Warszawski
dc.contributor.authorRokicki, Bartłomiej
dc.contributor.authorOstaszewski, Krzysztof
dc.date.accessioned2024-01-24T15:38:04Z
dc.date.available2024-01-24T15:38:04Z
dc.date.copyright2022-10-17
dc.date.issued2022
dc.description.accesstimeAT_PUBLICATION
dc.description.financePublikacja bezkosztowa
dc.description.number20
dc.description.versionFINAL_PUBLISHED
dc.description.volume14
dc.identifier.doi10.3390/SU142013371
dc.identifier.issn2071-1050
dc.identifier.urihttps://repozytorium.uw.edu.pl//handle/item/100216
dc.identifier.weblinkhttps://www.mdpi.com/2071-1050/14/20/13371/pdf
dc.languageeng
dc.pbn.affiliationeconomics and finance
dc.relation.ispartofSustainability
dc.relation.pages13371
dc.rightsOther
dc.sciencecloudnosend
dc.titleActuarial Credibility Approach in Adjusting Initial Cost Estimates of Transport Infrastructure Projects
dc.typeJournalArticle
dspace.entity.typePublication