Project Management Biases – How Do We Manage Them?

We know why projects fail; we know how to prevent their failure – so why do they still fail?” – Cobb’s Paradox

Bent Flyvbjerg “Top Ten Behavioral Biases in Project Management: An Overview” (2021)

Introduction

The causes of project failures are legion.  Failures can stem from bad luck, poor management, lack of technical skills, political interference, and many other sources. One cause of failure that is often discussed in the literature is the role of behavioural biases.  Building upon his prior research into project management, Bent Flyvbjerg’s most recent study identifies the top 10 behavioural biases in project management, reproduced in the table 1 above.[1]

Seasoned project managers would be aware of many of these biases, but what can we do to prevent them jeopardising our projects? One strategy is to dilute the influence of such biases through collaborating, encouraging input from multiple perspectives, and reducing the likelihood of groupthink. Continuing on our theme of collaboration, this blog explores how we can mitigate the effects of each of these biases.

Strategic Misrepresentation

Strategic misrepresentation (a charitable name for lying) arises where projects have champions or sponsors that are mainly motivated by monument building[2], creating a legacy, rent seeking, or to pork barrel the electorate.  Credible cost benefit analyses are subordinate to the goal of getting the project approved.  We see this phenomenon occur regularly in Public Private Partnerships where stakeholders are awarded ‘success fees’ for getting projects approved and traffic forecasters are motivated to be exceptionally cavalier in the their traffic estimates. The solution to such manipulation is to ensure business cases are independently verified, benefits realisation plans are developed, and business cases are continually evaluated throughout the project lifecycle.  This risk can also be reduced by ensuring all relevant stakeholders have skin in the game. The designers, traffic forecasters, engineers, operators, and maintenance organisations that derived the cost estimates and establish the benefits baseline need to be held accountable if their estimates are awry.  Likewise, sponsors need to be held accountable.

Optimism Bias and the Planning Fallacy

Unlike Murphy’s law, optimism bias and the planning fallacy are based on the assumption that Everything Goes According to Plan (the EGAP principle).[3]  This will result in overoptimistic estimates of cost, schedule, and project performance.  This bias can be mitigated by gaining input from relevant stakeholders who have the battle-scars from previous projects. Other strategies include early industry engagement to validate key assumptions; or evolutionary acquisition, agile approaches, and prototype/Fast Inexpensive Restrained Elegant (FIRE) methodologies to retire key risks early.[4] Overestimation can also be curtailed by ensuring there are tangible consequences for planners who adopt unrealistic expectations. This may mean liabilities arise for poor planning, performance fees are abated, or follow on work is not provided.

Uniqueness Bias

By definition, projects are unique, but this does not mean that each project will do things completely different to every other project.  as Flyvbjerg states, “uniqueness bias tends to impede managers’ learning, because they think they have little to learn from other projects as their own project is unique.”[5] Uniqueness bias can be dealt with by ensuring we capitalise on lessons learned registers, engage with subject matter experts who have performed similar tasks, and exploit open architectures or Commercial Off the Shelf Technology.  High risk or custom solutions should only be pursued where absolutely necessary.

Over Confidence Bias, Hindsight Bias, and Availability Bias

These three related biases arise from planners being unable to; account for uncertainty, effectively estimate risks, and latch on to readily available information (rather than information that is needed).  Similar to dealing with optimism biases, planning should be more diffuse with input from subject matter experts and selection of procurement models that are better able to deal with uncertainty. Big bang or waterfall development approaches will exacerbate these biases. Pursuit of joint risks and opportunities registers, and early risk identification is another useful approach to deal with these biases. The key is to ensure all relevant stakeholders are involved in the planning process.

Base Rate Fallacy

The base rate fallacy often stems from planners focussing on the low likelihood, high consequence risks. Flyvbjerg describes a subset of the base rate fallacy as variance neglect. That is, planners do not apply the full range of applicable data or base rates to their projects, rather these planners cherry pick a subset of the data. This leads to a false base rate and poor estimates. The solution is to adopt an outside view (avoid group think), and forecast based on a suitable reference class.  This involves selecting a class of similar projects and exploring the distributions of costs, schedules, and benefits delivered by these projects.  The base rate fallacy can be exacerbated by uniqueness bias.  It would be alluring to claim that my project will only employ the ‘A-Team’ and therefore our likely outcome will be the P25 (25th percentile) outcome of a given reference class.  No doubt, all the preceding project managers who delivered the outcomes that went into that given reference class made similar bold assumptions. An example of reference classes for projects is available at page 3-4 at the British Department for Transport, Procedures for Dealing with Optimism Bias in Transport Planning Guidance Document.

Anchoring

Anchoring arises where we intuitively base our decisions on only the readily available information. This may arise based on competencies and experiences. For example, a Project Manager with an engineering background may anchor their plans and estimates based on the technical risks and their experiences on only the projects they have worked on.  Anchoring therefore requires planners to adopt a multi-disciplinary approach. Project managers need to cast their nets wide when looking for suitable reference classes and ensure a holistic view is adopted in decision making with suitable subject matter expert input.

Escalation of Commitment

Escalation of Commitment is akin to throwing good money after bad.  Once a project is afoot and significant resources have been expended, there is a great temptation to keep on going even is the costs blow out, the schedule extends, and the expected benefits will not materialise.  There must be an appetite to allow sunk costs if the planned benefits will not materialise.  This requires continuous review of the business case, benefits tracking, and the moral courage to say ‘stop’ when things are not going to plan. Escalation of commitment can be curtailed by building in robust gate review milestones into a project and ensure theses gate reviews are not too infrequent.  The procurement model also needs to be crafted to effectively deal with change and ensure termination for convenience clauses are fair and change management processes are effective.  Nonetheless, there may be significant motivations that can thwart decision makers from a political perspective. In the public sector, cancelling a project can be seen as an admission of failure.  Where a public sector project manager is contemplating cancelling of a project then it would be unwise to initiate such action immediately before an election.  

A summary of the mitigation techniques to deal with project management biases is included in Table 2 below.

Table 2- Strategies for Dealing with Project Management Biases

Conclusion

Several strategies have been discussed to help us deal with project management biases. These are not exhaustive.  We need to avoid groupthink and recognise that decision makers are not omnipotent. Effective decision makers must engage with the right people and encourage innovation.  Simply pursuing diffusion of decision making or initiating an internal task-group is not enough. As identified by Mueller et al, internal groups are ‘highly prone to groupthink – quick agreement around status quo solutions with little discussion or deliberation.’[6] Sunstein and Hastie go further to state that, ‘groups do not merely fail to correct the errors of their members; they amplify them’.[7] Decisions must therefore incorporate input from the right stakeholders including suppliers. This includes all project management disciplines, subject matter experts, and the people and organisations that will ultimately be accountable for delivering project outputs, outcomes and capabilities. In addition we need a procurement model that does not ‘paint us in a box’.  Flexibility and a means to effectively deal with emergence is essential. 


[1] Bent Flyvbjerg, “Top Ten Behavioral Biases in Project Management: An Overview” Project Management Journal Vol 52, Issue 6, 2021

[2] Flyvbjerg, Bruzelius, and RothenGatter “Megaprojects and Risk: An Anatomy of Ambition” (2003).

[3] Bent Flyvbjerg, “Top Ten Behavioral Biases in Project Management: An Overview” Project Management Journal Vol 52, Issue 6, 2021

[4] See esp. United States Government “Innovative Contracting Case Studies” (2014) https://obamawhitehouse.archives.gov/sites/default/files/microsites/ostp/innovative_contracting_case_studies_2014_-_august.pdf

[5] Bent Flyvbjerg, “Top Ten Behavioral Biases in Project Management: An Overview” Project Management Journal Vol 52, Issue 6, 2021

[6] Jennifer Mueller, Sarah Harvey, and Alec Levenson ‘How to Steer Clear of Groupthink’ Harvard business Review March 2022.

[7] Cass R. Sunstein and Reid Hastie ‘Making Dumb Groups Smarter’ Harvard Business Review December 2014.

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About John Davies

John is a recognised authority in collaborative contracts, relational contracts, and novel procurement options. John has conducted extensive research into alliance contracts and governance frameworks from both the buy side and sell side. John has authored collaborative contract better practice guides, performance-based contract evaluation guides, and tender evaluation guidelines for major programs. You can find his CV at LinkedIn.