Improving the accuracy of project schedules

36 Pages Posted: 19 Aug 2019 Last revised: 7 Oct 2020

See all articles by Matej Lorko

Matej Lorko

Macquarie University - Macquarie Graduate School of Management

Maroš Servátka

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory

Le Zhang

Macquarie University, Macquarie Business School; Macquarie University - Macquarie Graduate School of Management

Date Written: October 7, 2020

Abstract

How to avoid project failures driven by overoptimistic schedules? Managers often attempt to mitigate the duration underestimation and improve the accuracy of project schedules by providing their planners with excessively detailed project specifications. While this traditional approach may be intuitive, solely providing more detailed information has proven to have a limited effect on eliminating behavioral biases. We experimentally test the effectiveness of providing detailed specification and compare it to an alternative intervention of providing historical information about the average duration of similar projects in the past. We find that both interventions mitigate the underestimation bias. However, since providing detailed project specification results in high variance of estimation errors due to sizable over- and underestimates, only the provision of historical information leads to more accurate project duration estimates. We also test whether it is more effective to anchor planners by providing historical information simultaneously with the project specification or to provide the historical information only after beliefs regarding the project duration are formed, in which case planners can regress their initial estimates towards the historical average. We find that the timing of disclosing information does not play a role as the estimation bias is mitigated and the accuracy is improved in both conditions. Finally, we observe that the subjective confidence in the accuracy of duration estimates does not vary across the interventions, suggesting that the confidence is neither a function of the amount nor the detail of available information.

Keywords: project management, project planning, time management, duration estimation, historical information, project specification

JEL Classification: C91, D83, O21, O22

Suggested Citation

Lorko, Matej and Servátka, Maroš and Zhang, Le, Improving the accuracy of project schedules (October 7, 2020). Available at SSRN: https://ssrn.com/abstract=3437760 or http://dx.doi.org/10.2139/ssrn.3437760

Matej Lorko

Macquarie University - Macquarie Graduate School of Management ( email )

Australia

Maroš Servátka (Contact Author)

Macquarie Graduate School of Management - MGSM Experimental Economics Laboratory ( email )

Sydney
Australia

Le Zhang

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Macquarie University - Macquarie Graduate School of Management ( email )

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