Optimism bias
The Green Book, Central Government Guidance On Appraisal And Evaluation, Published by HM Treasury in 2018, suggests that: ‘Optimism bias is the proven tendency for appraisers to be over-optimistic about key project parameters, including capital costs, operating costs, project duration and benefits delivery.’
Project Routemap, Setting up projects for success, Organisational Design & Development, UK Module, published by the Infrastructure and Projects Authority, defines optimism bias as: ‘The demonstrated and systematic tendency to overemphasise positive benefits and opportunities and undervalue the costs and negative risks of projects. This bias should be quantified when developing cost plans and schedules.’
Guide for Effective Benefits Management in Major Projects, published by the Infrastructure and Projects Authority in October 2017, defines optimism bias as: ‘The tendency to overestimate the probability of positive events (e.g. realisation of benefits) and underestimate the probability of negative events (e.g. risks and costs).’
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