Value for money, as measured by cost–benefit analyses (CBAs), is a crucial part of the business case for major public investment projects. However, the literature points to a range of challenges and weaknesses in CBAs that may cause their degree of usefulness in decision-making to be limited. The paper presents an empirical study of CBA practice in Norway, a country that has made considerable efforts to promote quality and accountability in CBAs of public projects. The research method is qualitative, based on a case study of 58 projects. The results indicate that the studied CBAs are largely of acceptable quality and heeded by decision-makers. Appraisal optimism seems to have been reduced by the introduction of external quality assurance of CBAs. However, there is need for a more consistent assessment of the non-monetized benefits, and distinguishing them from other decision perspectives such as the achievement of political goals. The paper offers a set of practical recommendations to increase CBA usefulness further.

Introduction

The project management community has increasingly shifted its attention beyond the ‘iron triangle’ of cost, time, and quality, to take a wider, strategic view of projects. Projects are implemented to deliver benefits and create value for users, the parent organization, and/or society at large (Morris, 2013; Samset and Volden, 2012). Accordingly, project governance has become an important issue in project research and practice. It refers to the processes, systems, and regulations that the financing party must have in place to ensure that relevant and viable projects are chosen and delivered efficiently (Müller, 2009; Volden and Samset, 2017b). Williams and Samset (2010) refer to the choice of project concept as the most important decision that project owners make. The choice of concept ought to be approved on the basis of a business case, in which the expected benefits and strategic outcomes are described (Jenner, 2015). The business case provides a rationale for the preferred solution, and is therefore crucial for future benefits and cost management (Musawir et al., 2017; Serra and Kunc, 2015).