Performers, trackers, lemmings and the lost: sustained false optimism in forecasting project outcomes—evidence from a quasi-experiment
TL;DR: In this article, the authors investigate whether optimism bias persists beyond the planning phase and into the execution phase, and if so, explore the reasons why, and demonstrate on-going or sustained false optimism.
Abstract: The consistently successful delivery of projects remains an ambition that many organisations do not achieve. Whilst the reasons behind project failure are many, one recognised factor is the ‘planning fallacy’ – over-optimism in the planning phase of a project. Whilst the planning phase of a project may be a battle for acceptance and resource allocation, the execution phase is a battle for delivery. Based on both qualitative and quantitative data gathered from a project management simulation, this study set out to establish whether optimism bias persists beyond the planning phase and into the execution phase, and, if so, to explore the reasons why. The results confirm the extent and impact of optimism bias in initial project planning. More importantly, the contribution of this study is to demonstrate on-going or sustained false optimism.
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TL;DR: The paper attempts to address the risk response factors that lead to successful achievement of project scope & quality, schedule and cost targets, by using a series of regressions followed with Seemingly Unrelated Regression Equations (SURE) modelling.
Abstract: Risk management and success in projects are highly intertwined – better approaches to project risk management tend to increase chances of project success in terms of achieving scope & quality, schedule and cost targets. The process of responding to risk factors during a project’s life cycle is a crucial aspect of risk management referred to as risk response strategies, in this paper. The current research explores the status of risk response strategies applied in the software development projects in India. India provides a young IT-savvy English-speaking population, which is also cost effective. Other than the workforce, the environment for implementation of software projects in India is different from the matured economies. Risk management process is a commonly discussed theme, though its implementation in practice has a huge scope for improvement in India. The paper talks about four fundamental treatments to risk response – Avoidance, Transference, Mitigation and Acceptance (ATMA). From a primary data of 302 project managers, the paper attempts to address the risk response factors that lead to successful achievement of project scope & quality, schedule and cost targets, by using a series of regressions followed with Seemingly Unrelated Regression Equations (SURE) modelling. Mitigation emerged as the most significant risk response strategy to achieve project targets. Acceptance, transference, and avoidance of risk were mostly manifested in the forms of transparency in communication across stakeholders, careful study of the nature of risks and close coordination between project team, customers/end-users and top management.
16 citations
TL;DR: This article analyzed the usage of such framing in 20 business cases for large information systems (IS) projects of the Dutch government and found that newly proposed systems are systematically framed using positive adjectives, whereas the existing systems are framed using negative adjectives.
1 citations
TL;DR: In this article , the authors tried to answer whether bidders exhibit optimism bias-like behavior when bidding for construction projects and whether financial ramifications would follow, and they found that optimistic bias is one of the undisputed factors or reasons affecting cost underestimation and cost overrun.
Abstract: In the construction management literature, it is not an ultimately settled matter that optimism bias is one of the undisputed factors or reasons affecting cost underestimation and cost overrun. This study tried to answer whether bidders—usually legal entities, not natural persons—would exhibit optimism bias-like behavior when bidding for construction projects and whether financial ramifications would follow. Two hundred eighty-six projects delivered to the Ohio Department of Transportation between 2011 and 2020 were analyzed to test the proposed hypothesis. It was observed that bidders were more optimistically biased when bidding for long-duration projects than short-duration projects. The observation strengthens the causal nature between optimism bias and cost underestimation and encourages stakeholders to develop internal or external monitoring systems that call out optimism bias at the organizational level.
TL;DR: A review of literature on optimism bias and transport infrastructure project cost overruns can be found in this paper , where the authors identify significant gaps and unanswered questions about the relationship between optimism bias in project cost appraisal and cases of transport infrastructure cost overrun.
Abstract: There is a growing face-value acceptance of optimism bias as the primary cause of transport cost overruns. This article provides a timely review of literature on optimism bias and transport infrastructure project cost overruns. The article identifies significant gaps and unanswered questions about the relationship between optimism bias in project cost appraisal and cases of transport infrastructure cost overruns. The presence and nature of optimism bias in the complex institutional environment of project cost appraisal are largely understudied and not well understood. Consequently, this has significant implications for the development of effective mitigation strategies for improving transport project cost performance.
TL;DR: In this paper , the authors synthesize management science concepts such as strategic alignment with enterprise architecture concepts and artificial intelligence (AI)-driven business process optimization to increase innovation productivity and master the increasing rate of business dynamics at the same time.
Abstract: New business opportunities, driven by smart digitalization technology and initiatives such as Industry 4.0, significantly change business models and their innovation rate. The complexity of methodologies developed in recent decades for balancing exploration and exploitation activities of digital transformation has risen. Still, the desired integration levels across organizational levels were often not reached. Systems thinking promises to holistically consider interdisciplinary relationships and objectives of various stakeholders across supply chain ecosystems. Systems theory-based concepts can simultaneously improve value identification and aligned transformation among supply networks’ organizational and technical domains. Hence, the study proposes synthesizing management science concepts such as strategic alignment with enterprise architecture concepts and artificial intelligence (AI)-driven business process optimization to increase innovation productivity and master the increasing rate of business dynamics at the same time. Based on a critical review, the study explores concepts for innovation, transformation, and alignment in the context of Industry 4.0. The essence has been compiled into a systems engineering-driven framework for agile value generation on operational processes and high-order capability levels. The approach improves visibility for orchestrating sustainable value flows and transformation activities by considering the ambidexterity of exploring and exploiting activities and the viability of supply chain systems and sub-systems. Finally, the study demonstrates the need to harmonize these concepts into a concise methodology and taxonomy for digital supply chain engineering.
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13 Feb 2003
TL;DR: In this paper, the authors explore the role of politicians and the public in the process of land-use development megaprojects and suggest practical solutions drawing on theory and scientific evidence from the several hundred projects in twenty nations and five continents.
Abstract: Promoters of multi-billion dollar land-use development megaprojects systematically misinform parliaments, the public and the media in order to get them approved and built This book not only explores these issues, but suggests practical solutions drawing on theory and scientific evidence from the several hundred projects in twenty nations and five continents It is of interest to students, scholars, planners, economists, auditors, politicians and concerned citizens
2,044 citations
Posted Content•
TL;DR: In this paper, the authors present a comparative study of actual and estimated costs in transportation infrastructure development, with a sample of 66 transportation projects, which approaches a large-sample study and takes a step toward valid statistical analysis.
Abstract: Es gibt nur wenige vergleichende Studien uber reale und geschatzte Kosten derEntwicklung von Verkehrsinfrastruktur. Wo solche Studien vorliegen, beziehen siesich auf Einzelfalle, oder die Stichprobe ist zu klein, um systematische statistische Analysen zuzulassen (Bruzelius et al. 1998, Fouracre et al. 1990, Hall 1980, Nijkamp/Ubbels 1999, Pickrell 1990, Skamris/Flyvbjerg 1997, Szyliowicz/Goetz 1995, Walmsley/Pickett 1992). Nach unserem Kenntnisstand ist bislang nur eine Studie veroffentlicht, die auf der Basis von 66 Transportprojekten einen breit angelegtenZugang wahlt und erste Schritte auf dem Weg zu einer stichhaltigen statistischen Analyse unternimmt (Merewitz 1973a, 1973b).Existing comparative studies of actual and estimated costs in transportation infrastructure development are few. Where such studies exist, they are typically single-case studies or they cover a sample of projects too small to allow systematic, statistical analyses (Bruzelius et al., 1998; Fouracre et al., 1990; Hall, 1980; Nijkamp & Ubbels, 1999; Pickrell, 1990; Skamris & Flyvbjerg, 1997; Szyliowicz & Goetz, 1995; Walmsley & Pickett, 1992). To our knowledge, only one study exists that, with a sample of 66 transportation projects, approaches a large-sample study and takes a first step toward valid statistical analysis (Merewitz, 1973a, 1973b).The English version of this article can be found at: http://www.ssrn.com/abstract=2278415Den Svenska versionen av denna artikel finns pa: http://papers.ssrn.com/abstract=2278382La versione italiana di questo documento e disponibile al seguente link: http://www.ssrn.com/abstract=2278294
1,237 citations
TL;DR: This article examined the usefulness of placing risk propensity and risk perception in a more central role in models of risky decision making than has been done previously, and found that the importance of risk perception and propensity for risk in decision making has been overlooked.
Abstract: The reported research examined the usefulness of placing risk propensity and risk perception in a more central role in models of risky decision making than has been done previously. Specifically, t...
1,131 citations
TL;DR: In this paper, the authors present results from the first statistically significant study of cost escalation in transportation infrastructure projects and find that the cost estimates used to decide whether such projects should be built are highly and systematically misleading.
Abstract: This article presents results from the first statistically significant study of cost escalation in transportation infrastructure projects. Based on a sample of 258 transportation infrastructure projects worth US$90 billion and representing different project types, geographical regions, and historical periods, it is found with overwhelming statistical significance that the cost estimates used to decide whether such projects should be built are highly and systematically misleading. Underestimation cannot be explained by error and is best explained by strategic misrepresentation, that is, lying. The policy implications are clear: legislators, administrators, investors, media representatives, and members of the public who value honest numbers should not trust cost estimates and cost-benefit analyses produced by project promoters and their analysts.
1,123 citations