Managing Optimism Biases in the Delivery of Large-Infrastructure Projects: A Corporate Performance Benchmarking Approach

Abstract

Optimism bias has been a considerable challenge in the planning and delivery of public services, particularly infrastructure mega projects.  This has resulted in consistently underestimated costs and overestimated benefits, as well as delivery delays.  This paper explores whether innovative mechanisms of collecting and publicly disseminating information about the performance of government contractors on past projects can contribute to improving the success rate of future initiatives.  Drawing on international examples from North America, Europe and Asia, it is found that the production and dissemination of greater information through benchmarking does not on its own lead to reductions in the prevalence of optimism biases.  However, there is evidence that when combined with incentives built formally into government procurement processes that reward strong past performance, benchmarking can support improvements in the quality of project outputs.