Public works

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Public works are the construction or engineering projects carried out by the state on behalf of the community.

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The notion of internal improvements or public works is a concept in economics and politics. The term public infrastructure refers only to the infrastructural capital involved in these activities.

An internal improvement is some constructible object that augments a nation's economic infrastructure; examples include airports, canals, dams, dikes, pipelines, railroads, roads, tunnels, and artificial harbours.

Public works is a slightly broader term, it can include such things as: mines, schools, hospitals, water purification and sewage treatment centers. It is often used interchangeably with municipal infrastructure, e.g. urban infrastructure which is often, in big-city contexts, just called infrastructure.

In some cases, it is argued that internal improvements can be used to reduce unemployment. Opponents of internal improvement programs argue that such projects should be undertaken by the private sector, and not the public sector. However, in the private sector entrepreneurs bear their own losses and so private sector firms are generally unwilling to undertake projects that will result in losses. Since it is politically unpopular for governments to use public revenues to bail out private firms that lose money, many times the preferred alternative is to have governments undertake unprofitable projects directly. Consequently, almost all significant infrastructure in the U.S., including the Transcontinental Railroad, the Tennessee Valley Authority, and the Interstate highway system, were created through federal investment (often employing private subcontractors). Large public works are associated with the opening of internal frontiers, as in the case of the Erie Canal and Trans-Siberian Railway.

Cost overruns and demand shortfalls frequently haunt public works projects. The main causes of cost overrun and demand shortfall are optimism bias and strategic misrepresentation (Flyvbjerg et al. 2002, 2005). Reference class forecasting was developed to curb optimism bias and strategic misrepresentation and thus arrive at more accurate cost and demand estimates.

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