Be careful with averages; they can mislead

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

30 January 2022

Charles Ouko is concerned about the cost of rehabilitating the old railway line from Nairobi to Kisumu. He says that he read in the media that the work cost Sh10.2 billion over the 400km track. He has asked me to work out how much this is per kilometre.

Well, I wonder why Charles didn’t just punch the numbers into his calculator – Sh10.2 billion divided by 400, equals Sh25.5 million. It can’t be that he doesn’t have a calculator! Perhaps he did so and was surprised by the answer. Unfortunately, he doesn’t say if this is too high or too low in his opinion.

Charles might be interested to know that similar rehabilitation work was done on the 240km Nairobi – Nanyuki line at a cost about Sh30 billion. This works to Sh12.5 million per km. It is about half of the unit amount for the Kisumu line. However, it is not right to compare the cost of projects in this manner.

This would be similar to comparing the cost of constructing a house per square metre of its livable space. The rates vary widely from about sh15,000 to over Sh50,000. It all depends on the king of materials used. A fair assessment can only be done after looking at the detailed tender document that lists at the works that will be done and the respective charges for each item.

Furthermore, working out the rate per kilometre is, in effect, calculating the mean (average) cost. The challenge with averages is that many people assume that the value is what should be charged for each kilometre of the work. Unfortunately, this is not the case.

Consider this: the heights of the three goalkeepers of the Leicester City Football Club of England are 189cm, 191cm and 191cm. The average comes to 190.3cm. Now, if you look back at the individual heights, it is clear that none of the goalkeepers are that average height!

In the same way, the average cost per km for the Nairobi-Kisumu lime was Sh25.5 million, but I am quite sure that no single one-km section of the line cost Sh25 million. So, it is not right to judge the cost simply on the basis of average per kilometre.

Charles also asks me what else we could do with the Sh10.2 billion. Again, this would not be right. The more apt question is: what will we gain from the rehabilitated railway line?