Optimism bias and cost overruns: experimenting on the internal and external views in resources and time estimation.
Doctoral thesis (Ph.D), UCL (University College London).
Access restricted to UCL open access staff until 1 December 2023.
Optimism bias affects most estimation based human decisions, from daily
activities to the appraisal of big infrastructure projects. Building upon the
underlying constructs of this behaviour through the lenses of support and
prospect theories, operationalised in the internal and external view in the
project management context, helped me to formulate a conceptual framework.
This framework, called the “Holistic view” suggests ways to integrate the two
perspectives with the aim to improve the quality of forecasts in infrastructure
management. Integration can be achieved by including subjective probabilities
and unpacking techniques into case-based reasoning methods. Based on this
framework and on the analysis of the relevant policies, perspectives,
definitions and techniques provided by the literature on optimism bias in
project forecasting, I designed and administered four experiments, with a
sample of 231 participants. The results of the first experiment show that there
is a positive relationship between different levels of dispositional optimism and
resource overruns. In the second experiment, I found that adding an optimism
uplift to an estimate structurally increases forecast precision, however, this
might lead to the use of more resources than when optimism uplift is not
applied. In the third experiment, I found that unpacking, whilst making
estimations slightly more precise, does not influence the estimations as in the
previous case, but only the estimator. The results of the fourth experiment,
combining unpacking with optimism uplift, indicated that forecast precision
starkly increased, supporting the adoption of an “Holistic view”. This research
shows the relevance of experimental methods in project management, unveils
new relationships between different perspectives in the project forecasting field, and analyses, net of other factors, the impact of forecasting tools
integrated in some of the policies addressing the effect of optimism bias in
estimations, suggesting ways to improve those and the overall forecasting
process of infrastructure projects.
|Title:||Optimism bias and cost overruns: experimenting on the internal and external views in resources and time estimation|
|Additional information:||Copyright © The Author 2022. Original content in this thesis is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY-NC 4.0) Licence (https://creativecommons.org/licenses/by-nc/4.0/). Any third-party copyright material present remains the property of its respective owner(s) and is licensed under its existing terms. Access may initially be restricted at the author’s request.|
|Keywords:||Optimism bias, Behavioural Science, Cost overruns, Holistic view, Project Forecasting|
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