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Why do we need to pay billions of pounds for big projects?

The London Olympics of 1908 cost £20,000. The budget for the austerity games of 1948 was £750,000. The current estimate for the cost of the Olympics in 2012 is £11bn.

This escalation in price is extraordinary, but today big schemes seem to imply very big budgets. The earliest underground railway lines in London – and the world – cost half a million pounds a mile to build. Roughly, you can assume that average prices in Britain multiplied by 10 between the Victorian era and 1960, and by another factor of 10 in the 50 years following. The cost of the Victoria line, built in the 1960s, had risen in line with general inflation and came in at about £7m per mile.

This, however, now seems an astonishing bargain. A decade later, the Jubilee line cost £36m per mile to build and its extension in the 1990s 10 times as much. The tunnels for Crossrail, the newest underground railway connection in London, are budgeted at almost £1bn per mile. The explosion of the cost of mega projects appears to be a phenomenon of the past 50 years. The Forth Bridge, an engineering marvel that connects Edinburgh with Fife, was completed in 1890 at a cost of £3.2m. The parallel road bridge erected in the 1960s cost £19.5m – broadly in line with general inflation. The budget for a third crossing is currently £1.6bn.

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约翰•凯

约翰•凯(John Kay)从1995年开始为英国《金融时报》撰写manbetx20客户端下载 和商业的专栏。他曾经任教于伦敦商学院和牛津大学。目前他在伦敦manbetx20客户端下载 学院担任访问学者。他有着非常辉煌的从商经历,曾经创办和壮大了一家咨询公司,然后将其转售。约翰•凯著述甚丰,其中包括《企业成功的基础》(Foundations of Corporate Success, 1993)、《市场的真相》(The Truth about Markets, 2003)和近期的《金融投资指南》(The Long and the Short of It: finance and investment for normally intelligent people who are not in the industry)。

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