In Boston we have heard many reporters claim that
the delays in the Big Dig (the highways tunneled
under the city and the harbor) were increased by
contractors stretching out the work to increase
their incomes. This suggests that there are strong
incentives, particularly in projects paid for
through government, to over promise (underbid)
and under deliver (negotiate higher pay when
work is under way).
Not so much a planning bias as a pocket book bias.
But there’s been research on this in recent years. See Bent Flyvbjerg’s papers on “strategic misrepresentation”, where he outlines how perverse incentives can lead people to intentionally make overconfident predictions in government work projects.
However, Flyvbjerg also points out that there is probably a combination of psychological factors involved, too, as we continue to see this kind of overconfidence/optimism in areas like student predictions or trading (where actively trading often does worse).
In Boston we have heard many reporters claim that the delays in the Big Dig (the highways tunneled under the city and the harbor) were increased by contractors stretching out the work to increase their incomes. This suggests that there are strong incentives, particularly in projects paid for through government, to over promise (underbid) and under deliver (negotiate higher pay when work is under way).
Not so much a planning bias as a pocket book bias.
John
Very very very late reply.
But there’s been research on this in recent years. See Bent Flyvbjerg’s papers on “strategic misrepresentation”, where he outlines how perverse incentives can lead people to intentionally make overconfident predictions in government work projects.
However, Flyvbjerg also points out that there is probably a combination of psychological factors involved, too, as we continue to see this kind of overconfidence/optimism in areas like student predictions or trading (where actively trading often does worse).