Economic Analysis: Theory and Practice
 

International experience in creating major infrastructure projects

Vol. 16, Iss. 10, OCTOBER 2017

Received: 28 July 2017

Received in revised form: 10 August 2017

Accepted: 29 August 2017

Available online: 27 October 2017

Subject Heading: EVALUATION OF INVESTMENT PROJECTS

JEL Classification: D61, E22, H41, H82, L83

Pages: 1859–1877

https://doi.org/10.24891/ea.16.10.1859

Zhuk A.A. Southern Federal University, Rostov-on-Don, Russian Federation zhukaa@sfedu.ru

Kolesnikova I.V. Southern Federal University, Rostov-on-Don, Russian Federation ira7925@yandex.ru

Subject The article considers cost efficiency of creating major infrastructural projects.
Objectives We analyze experience in creating major infrastructural projects in different foreign countries.
Methods The research rests on the systems approach methodology, using the NPV (Net Present Value), IRR (Internal Rate of Return) and ARR (Accounting Rate of Return) methods.
Results Foreign countries have enormous experience in materializing major investment infrastructure projects, such as hosting the Olympic Games. There are examples of failed projects and successful ones. Due to their particular nature, namely, the technical and technological complexity and high risk, the vast majority of megaprojects face problems related to cost and schedule overruns. Nevertheless, these obstacles neither diminish the importance of the projects for the society, nor they imply refusal of their implementation.
Conclusion and Relevance Infrastructure megaprojects cannot be considered as pure commercial benefit; they fall into the special category of socially significant projects, should be regarded from the perspective of social utility, and their creation – as creation of public goods with maximum potential of continuous exploitation.

Keywords: effectiveness, investment, infrastructure megaproject, Olympic Games

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