Alberti Vázquez, Juan Antonio; (2025) Mega-transport projects and the formal "rules of the game": The role of transaction costs in the planning and appraisal process in Latin America. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

Mega-transport projects (MTPs) are frequently seen as being critical to the economic, social, environmental and territorial development of the areas they traverse and influence. However, they are understood to represent high risk undertakings, particularly because they are developed under conditions of considerable uncertainty, frequently leading to underperformance in their delivery of planned objectives and benefits. Given their uncertainty can be driven by the political and social influences they incorporate, all interwoven in complex stakeholder decision-making processes over long periods of time, there is a growing body of literature suggesting MTPs should be planned and appraised with an “open- systems” approach to decision-making. Yet, in Latin America (LatAm), a “closed-systems” approach to decision-making, with a “hard thought system”, is formally requested and applied by central governments. Although there is evidence that decision-makers understand this incongruence, this “closed- systems” approach is kept in place. While there may be different institutional elements that sustain this status quo, this research concentrated on analysing this topic using a New Institutional Economics theoretical perspective. It particularly sought to understand if formal rules can be promoting these decision-making practices in the LatAm context, and identify pathways of change towards open systems planning of MTPs. Using a mixed methods research design, applied to a multiple-case study including three Latin American MTPs, this thesis examines the relationship between construction risks and contractual hazards, and explores if governmental decision-makers can perceive that the decision-making approach at the planning and appraisal stages can impact on those contractual hazards. The overall conclusion of the thesis is that the current formal rules can be promoting the use of a “closed- systems” approach to decision-making because it may help decision-makers to minimise transaction costs when developing the contracts. Decision-makers can be sustaining the status quo because it can be, at least in part, a rational behaviour.

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