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Over the last several decades population and economic growth in urban areas has intensified the need for more efficient transportation, including the expansion of existing transportation networks, or the construction of new transit projects. In either case, these infrastructure investments require careful prioritization and selection among available alternatives, and are subject to budgetary and other resource constraints. As the New York metropolitan area is facing major present and future investment decisions, the associated challenges related to infrastructure investment decision-making become obvious. The Trans-Hudson Passenger Rail Tunnel project, terminated in October 2010, or New York’s Second Avenue Subway project, are telling illustrations of the tensions between the need for improved transportation, and the multiple challenges decision-makers face. A rich transportation-economic literature has been developed to assist analysts and decision makers in the selection of investments. In practice, however, decision-making rarely seems to follow a rational process. This can be seen in massive cost over-runs and demand over-estimates that characterize many transportation investment projects. While more recent research on transportation mega-projects attempts to account for political considerations (e.g., Flyvbjerg et al. 2003; Berechman and Paaswell, 2005), to date no research has established the types, nor the range of factors, which explain the decision-making processes of transportation investment. Against this background, this research explores why inferior transportation projects are implemented, when they are defined as investments and do not meet acceptable transportation economic criteria.

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