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 argued that the production of widely available league tables of corporate performance will have two key benefits. First, public sector procurement managers will have greater information with which to select companies with a strong reputation of successfully planning and delivering similar projects. Second, with performance rankings being used by decision-makers as part of the criteria to select future tenders, private sector partners will have greater incentive to challenge the institutional forces that cause optimism biases.