Results from the first statistically significant study of the causes of cost escalation in transport infrastructure projects are presented. The study is based on a sample of 258 rail, bridge, tunnel and road projects worth US$90 billion. The focus is on the dependence of cost escalation on: (1)...

Dan Lovallo and Daniel Kahneman must be commended for their clear identification of causes and cures to the planning fallacy in, “Delusions of Success: How Optimism Undermines Executives’ Decisions” (July 2003). Their look at overoptimism, anchoring, competitor neglect, and the outside...

Despite the hundreds of billions of dollars being spent on infrastructure development — from roads, rail and airports to energy extraction and power networks to the Internet — surprisingly little reliable knowledge exists about the performance of these investments in terms of actual costs,...

In terms of risk, many appraisals of very large infrastructure investments assume, or pretend to assume, that infrastructure policies and projects exist in a predictable Newtonian world of cause and effect where things go according to plan. In reality, the world of policy and project preparation...

Pervasive misinformation about the costs, benefits and risks involved is a big problem in major project development. Consequences of misinformation are cost overruns, benefit shortfalls and waste. This chapter identifies optimism bias and strategic misrepresentation as main causes of...

Despite the enormous sums of money being spent on transportation infrastructure, surprisingly little systematic knowledge exists about the costs, benefits and risks involved. The literature lacks statistically valid answers to the central and self-evident question of whether transportation...

The American Planning Association recently endorsed a new forecasting method called reference class forecasting, which is based on theories of planning and decision-making that won the 2002 Nobel prize in economics. This paper details the method and describes the first instance of reference...

Chapter 3 identified as a main problem in large-scale investment projects the existence of optimism bias and strategic misrepresentation with project promoters. A consequence of such bias is a high incidence of cost overruns and benefit shortfalls in projects. This chapter develops a number of...

If we want to empower and re-enchant organization research, we need to do three things. First, we must drop all pretence, however indirect, at emulating the success of the natural sciences in producing cumulative and predictive theory, for their approach simply does not work in organization...