Impact of Optimism Bias Regarding Organizational Dynamics on Project Planning and Control

Abstract

Schedule delays and cost overruns in large-scale construction projects are caused by a variety of reasons including unrealistic expectations at the planning stage. This paper examines, through computer simulation, the phenomenon of optimism bias regarding organizational dynamics as a potential cause for unrealistic expectations on schedules and budgets. A theoretical framework is introduced to examine how optimism bias regarding organizational dynamics can affect the performance of construction processes. A variety of “what-if” scenarios is tested, and based on our results, we claim that managers who maintain an unbiased attitude during project planning tend to outperform those having either an optimistic or a conservative approach. Therefore, we argue that developing an explicit method for analyzing and taking into account organizational dynamics would be a stepping stone toward adding more realism to construction planning and control practice.