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.
References
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01 Jan 2008
TL;DR: The Handbook of Project-Based Management, Fourth Edition as discussed by the authors has been thoroughly updated to cover the recent developments in the project management field to help deliver the organization's strategy, regardless of the industry.
Abstract: One of the most influential books ever written on the development of project management-fully revised Handbook of Project-Based Management, Fourth Edition has been thoroughly updated to cover the recent developments in the project management field to help deliver the organization's strategy, regardless of the industry. This new edition focuses on the role of the global Project Manager, and how to embark on a successful project in the digital age. Rodney Turner, editor of the International Journal of Project Management, explains how to employ the proven structured approach that he has popularized over the last four decades.
704 citations
Book•
01 Aug 1989TL;DR: In mature engineering disciplines, risk management has been de rigeur for centuries as discussed by the authors, and we routinely practice risk management in our stewardship of the environment, in planning financial strategy, in construction engineering, and in medicine.
Abstract: In mature engineering disciplines, risk management has been de rigeur for centuries. When Michelangelo set out to raise the dome of St. Peters in 1547, he was well aware of the potential collapse zones under the staging, the possibility of materials failure, and the human capacity for error. For each of these major risks he prepared a mitigation plan: a fallback, a safety factor, or an alternative. Today, we routinely practice risk management in our stewardship of the environment, in planning financial strategy, in construction engineering, and in medicine. But how do we apply it to the ultimate risky business, software development?
562 citations
TL;DR: The tendency for people with high self-esteem to make inflated assessments and predictions about themselves carries the risk of making commitments that exceed capabilities, thus leading to failure, and the danger of letting egotistical illusions interfere with self-regulation processes is indicated.
Abstract: The tendency for people with high self-esteem to make inflated assessments and predictions about themselves carries the risk of making commitments that exceed capabilities, thus leading to failure. Ss chose their performance contingencies in a framework where larger rewards were linked to a greater risk of failure. In the absence of ego threat, Ss with high self-esteem showed superior self-regulation: They set appropriate goals and performed effectively. Ego threat, however, caused Ss with high self-esteem to set inappropriate, risky goals that were beyond their performance capabilities so they ended up with smaller rewards than Ss with low self-esteem. The results indicate the danger of letting egotistical illusions interfere with self-regulation processes. (PsycINFO Database Record (c) 2012 APA, all rights reserved) KW: partner violence
540 citations
TL;DR: De Meyer et al. as mentioned in this paper studied 16 major projects in a variety of industries and identified four major uncertainty categories: unforeseen uncertainty, predicted uncertainty, expected uncertainty and chaos, and predicted uncertainty is characterized by identifiable and understandable influences that the team cannot be sure will occur.
Abstract: The word of the hour is uncertainty; it permeates all of modern life and business. Uncertainty so strongly affects companies' project management, for example, that three project-management experts decided to study companies that successfully embrace it. The authors acknowledge the challenges of increased complexity, the shrinking of development cycles and the inadequacy of traditional risk management in shifting markets. But they observe that, counterintuitively, projects conducted in such environments often have high returns. The secret is a willingness to redefine everything in midcourse on the basis of the predominant type of uncertainty.
Arnoud De Meyer, Christoph H. Loch and Michael T. Pich, professors of technology management at INSEAD Singapore, observed 16 major projects in a variety of industries. Using interviews and research on project documentation, they identify four major uncertainty categories. In variation, the project plan is detailed and stable, but project schedules and budgets drift from their projected values. Foreseen uncertainty is characterized by identifiable and understandable influences that the team cannot be sure will occur. Unforeseen uncertainty and chaos are the hardest categories to address because they require a balance between planning and learning. Projects featuring unforeseen uncertainty or chaos are common when the technology is in upheaval or when research, not development, is the main goal. At such times, a project may have successful results that are completely unexpected.
Companies must learn to ascertain what kind of uncertainty is likely to dominate a project. For those that do, the authors reveal the best mix of tools and techniques to select when managing each type. Uncertainty is here to stay. Successful companies will be those that keep adapting.
473 citations
TL;DR: In this article, the authors make a case for a shift to strategy-based project management, a component of which is real time management of risks, uncertainties and opportunities using a life cycle project management approach.
460 citations
"Performers, trackers, lemmings and ..." refers background in this paper
...In particular, past events will be considered of little importance when their failure is attributed to external factors and/or when implications of the past project could challenge optimistic future plans (Jaafari, 2001)....
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...This misperception leads them to believe that their locus of control to steer a scenario toward a desired outcome is greater than warranted by objective judgement (Jaafari, 2001)....
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