Delusion and Deception in Large Infrastructure Projects: Two Models for Explaining and Preventing Executive Disaster

California Management Review, vol. 51, no. 2, pp. 170-193

25 Pages Posted: 8 Mar 2013 Last revised: 12 Jun 2013

See all articles by Bent Flyvbjerg

Bent Flyvbjerg

University of Oxford - Said Business School; IT University of Copenhagen; St Anne's College, University of Oxford

Massimo Garbuio

The University of Sydney

Dan Lovallo

The University of Sydney

Date Written: February 2009

Abstract

"Over budget, over time, over and over again" appears to be an appropriate slogan for large, complex infrastructure projects. This article explains why cost, benefits, and time forecasts for such projects are systematically over-optimistic in the planning phase. The underlying reasons for forecasting errors are grouped into three categories: delusions or honest mistakes; deceptions or strategic manipulation of information or processes; or bad luck. Delusion and deception have each been addressed in the management literature before, but here they are jointly considered for the first time. They are specifically applied to infrastructure problems in a manner that allows both academics and practitioners to understand and implement the suggested corrective procedures. The article provides a framework for analyzing the relative explanatory power of delusion and deception. It also suggests a simplified framework for analyzing the complex principal-agent relationships that are involved in the approval and construction of large infrastructure projects, which can be used to improve forecasts. Finally, the article illustrates reference class forecasting, an outside view de-biasing technique that has proven successful in overcoming both delusion and deception in private and public investment decisions.

Keywords: Project management, forecasting, cost control, strategic planning

Suggested Citation

Flyvbjerg, Bent and Garbuio, Massimo and Lovallo, Dan, Delusion and Deception in Large Infrastructure Projects: Two Models for Explaining and Preventing Executive Disaster (February 2009). California Management Review, vol. 51, no. 2, pp. 170-193, Available at SSRN: https://ssrn.com/abstract=2229781

Bent Flyvbjerg (Contact Author)

University of Oxford - Said Business School ( email )

Oxford
Great Britain

IT University of Copenhagen ( email )

Copenhagen
Denmark

St Anne's College, University of Oxford ( email )

Oxford
United Kingdom

Massimo Garbuio

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

Dan Lovallo

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

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