Top-Ten Behavioral Biases in Project Management

Top-Ten Behavioral biases, © Copyright by the author, AAM 1
Top-Ten Behavioral Biases in Project Management:

An Overview
By Bent Flyvbjerg
First BT Professor and Inaugural Chair of Major Programme Management
University of Oxford’s Saïd Business School
Villum Kann Rasmussen Professor and Chair of Major Program Management
IT University of Copenhagen
Professorial Fellow, St Anne's College, University of Oxford
Project Management Journal, vol. 52, no. 6, 2021, pp. 531–546
Abstract
Behavioral science has witnessed an explosion in the number of biases identified by behavioral
scientists, to more than 200 at present. The paper identifies the ten most important behavioral biases
for project planning and management. First, we argue it is a mistake to equate behavioral bias with
cognitive bias, as is common. Cognitive bias is only half the story; political bias is the other half.
Second, we list the top-ten behavioral biases in project management: strategic misrepresentation;
optimism and uniqueness bias; the planning fallacy; overconfidence, availability, and hindsight bias;
the base-rate fallacy; anchoring; and escalation of commitment. Each bias is defined and its impacts on
project management explained, with examples. Third, base-rate neglect is identified as a primary
reason projects underperform. This is supported by presentation of the most comprehensive set of base
rates that exists in project management scholarship, from 2,062 projects. Finally, recent findings of
power-law outcomes in project performance are identified as a possible first stage in discovering a
general theory of project management, with more fundamental and more scientific explanations of
project outcomes than found in existing theory.
Keywords: Behavioral science, behavioral economics, project planning, project management, behavioral
bias, cognitive bias, political bias, strategic misrepresentation, optimism bias, uniqueness bias, planning
fallacy, overconfidence bias, hindsight bias, availability bias, base-rate fallacy, anchoring, escalation of
commitment, preferential attachment, power laws.
Full reference: Flyvbjerg, Bent, 2021, "Top Ten Behavioral Biases in Project Management: An
Overview," Project Management Journal, vol. 52, no. 6, pp. 531–546, DOI: 10.1177/87569728211049046
Electronic copy available at: https://ssrn.com/abstract=3979164

Introduction
Since the early work of Amos Tversky and Daniel Kahneman, the number of biases identified by
behavioral scientists has exploded in what has been termed a behavioral revolution in economics,
management, and across the social and human sciences. Today, Wikipedia's list of cognitive biases
contains more than two hundred items (Wikipedia 2021). The present paper gives an overview of the
most important behavioral biases in project planning and management, summarized in Table 1. They
are the biases most likely to trip up project planning and management and negatively impact project
outcomes, if the biases are not identified and dealt with up front and during delivery.
Many would agree with Kahneman (2011: 255) that optimism bias "may well be the most
significant of the cognitive biases." However, behavioral biases are not limited to cognitive biases,
though behavioral scientists, and especially behavioral economists, often seem to think so. For instance,
Nobel laureate Richard Thaler (2017: 261), godparent of behavioral economics, defines what he calls
"the real point of behavioral economics" as "to highlight behaviors that are in conflict with the
standard rational model." But nothing in this definition limits the object of behavioral economics to
cognitive bias. Thaler (2017: 357) speaks of "the unrealism of hyperrational models," and we agree.
But behavioral economics itself suffers from such unrealism, because it ignores that many behavioral
phenomena are better explained by political bias than by cognitive bias.
Behavioral economics in its present form suffer from an overfocus on cognitive psychology:
Economic decisions get overaccounted for in psychological terms, when other perspectives – for
instance political, sociological, and organizational – may be more pertinent. If all you have is a
hammer, everything looks like a nail. Similarly, if all you have is psychology, everything gets diagnosed
as a psychological problem, even when it is not. Behavioral economics suffer from a "psychology bias,"
in this sense. Cognitive bias is therefore only half the story in behavioral science. Political bias is the
other half.
Political bias – understood as deliberate strategic distortions – arises from power relations,
instead of from cognition, and has long been the object of study in political economy. Political bias is
particularly important for big, consequential decisions and projects, which are often subject to high
political-organizational pressures. In fact, for very large projects – so-called megaprojects – the most
significant behavioral bias is arguably political bias, more specifically strategic misrepresentation
(Flyvbjerg et al. 2002, Wachs 2013, Flyvbjerg et al. 2018). Cognitive bias may account well for
outcomes in the simple lab experiments done by behavioral scientists. But for real-world decision-
making – in big hierarchical organizations, involving office politics, salesmanship, jockeying for
position and funds, including in the C-suite and ministerial offices, with millions and sometimes
billions of dollars at stake – political bias is pervasive and must be taken into account. Or so I argue.

Table 1: Top-ten behavioral biases in project planning and management

Name of bias Description
1. Strategic misrepresentation The tendency to deliberately and systematically distort or misstate
information for strategic purposes. A.k.a. political bias, strategic bias, or
power bias.
2. Optimism bias The tendency to be overly optimistic about the outcome of planned actions,
including overestimation of the frequency and size of positive events and
underestimation of the frequency and size of negative ones.
3. Uniqueness bias The tendency to see one's project as more singular than it actually is.
4. Planning fallacy (writ large) The tendency to underestimate costs, schedule, and risk and overestimate
benefits and opportunities.
5. Overconfidence bias The tendency to have excessive confidence in one's own answers to
questions.
6. Hindsight bias The tendency to see past events as being predictable at the time those events
happened. Also known as the I-knew-it-all-along effect.
7. Availability bias The tendency to overestimate the likelihood of events with greater ease of
retrieval (availability) in memory.
8. Base-rate fallacy The tendency to ignore generic base-rate information and focus on specific
information pertaining to a certain case or small sample.
9. Anchoring The tendency to rely too heavily, or "anchor," on one trait or piece of
information when making decisions, typically the first piece of information
acquired on the relevant subject.
10. Escalation of commitment The tendency to justify increased investment in a decision, based on the
cumulative prior investment, despite new evidence suggesting the decision
may be wrong. Also known as the sunk-cost fallacy.
It should be emphasized again that many other behavioral biases exist than those mentioned in Table
1, which are relevant to project planning and management, e.g., illusion of control, conservatism bias,
normalcy bias, recency bias, probability neglect, the ostrich effect, and more. But the ten mentioned
here may be considered the most important, in the sense they are deemed to be the most common
biases with the most direct impact on project outcomes.
Discussions with Kahneman

My first opportunity to reflect systematically on the relationship between political and cognitive bias
was an invitation in 2003 from the editor of Harvard Business Review (HBR) to comment on an article by
Dan Lovallo and Daniel Kahneman (2003). The year before, Kahneman had won the Nobel Prize in
Economics for his pathbreaking work with Amos Tversky (who died in 1996) on heuristics and biases
in decision-making, including optimism bias, which was the topic of the HBR article. The editor
explained to me that he saw Kahneman and me as explaining the same phenomena – cost overruns,
delays, and benefit shortfalls in investment decisions – but with fundamentally different theories. As a
psychologist, Kahneman explained outcomes in terms of cognitive bias, especially optimism bias and

the planning fallacy. As an economic geographer, I explained the same phenomena in terms of
political-economic bias, specifically strategic misrepresentation. So which of the two theories is right,
asked the HBR editor?
The editor's question resulted in a spirited debate in the pages of HBR. I commented on
Kahneman and Lovallo's article that they,
"underrate one source of bias in forecasting – the deliberate 'cooking' of forecasts to get
ventures started. My colleagues and I call this the Machiavelli factor. The authors
[Kahneman and Lovallo] mention the organizational pressures forecasters face to
exaggerate potential business results. But adjusting forecasts because of such pressures
can hardly be called optimism or a fallacy; deliberate deception is a more accurate term.
Consequently, Lovallo and Kahneman's analysis of the planning fallacy seems valid
mainly when political pressures are insignificant. When organizational pressures are
significant, both the causes and cures for rosy forecasts will be different from those
described by the authors" (Flyvbjerg 2003:121)
Kahneman and Lovallo (2003: 122) responded:
"Flyvbjerg and his colleagues reject optimism as a primary cause of cost overruns
because of the consistency of the overruns over a significant time period. They assume
that people, particularly experts, should learn not only from their mistakes but also from
others' mistakes. This assumption can be challenged on a number of grounds."
Ultimately, the HBR debate did not so much resolve the question as clarify it and demonstrate its
relevance. Kahneman and I therefore continued the discussion offline. Others have commented on
Kahneman's generosity in academic interactions. He invited me to visit him at home, first in Paris and
later New York, to develop the thinking on political and cognitive bias, and how they may be
interrelated. He was more rigorous than anyone I'd discussed bias with before, and I found the
discussions highly productive.
In addition to being generous, Kahneman is deeply curious and empirical. Based on our
discussions, he decided he wanted to investigate political bias firsthand and asked if I could arrange for
him to meet people exposed to such bias. I facilitated an interview with senior officials I knew at the
Regional Plan Association of the New York-New Jersey-Connecticut metropolitan (tri-state) area, with
offices near Kahneman's home in New York.1 Their work includes forecasting and decision-making for
major infrastructure investments in the tri-state region, which are among the largest and most complex

in the world and which are the type of project I studied to develop my theories of strategic
misrepresentation. Decision-making on such projects are a far cry from the lab experiments used by
Kahneman and other behavioral scientists to document classic cognitive biases like loss aversion,
anchoring, optimism, and the planning fallacy.
When Kahneman and I compared notes again, we agreed the balanced position regarding
real-world decision-making is that both cognitive and political bias influence outcomes. Sometimes one
dominates, sometimes the other, depending on what the stakes are and the degree of political-
organizational pressures on individuals. If the stakes are low and political-organizational pressures
absent, which is typical for lab experiments in behavioral science, then cognitive bias will dominate
and such bias will be what you find. But if the stakes and pressures are high – for instance, when
deciding whether to spend billions of dollars on a new subway line in Manhattan – political bias and
strategic misrepresentation are likely to dominate and will be what you uncover, together with
cognitive bias, which is hardwired and therefore present in most, if not all, situations.
Imagine a scale for measuring political-organizational pressures, from weak to strong. At the
lower end of the scale, one would expect optimism bias to have more explanatory power of outcomes
relative to strategic misrepresentation. But with more political-organizational pressures, outcomes
would increasingly be explained in terms of strategic misrepresentation. Optimism bias would not be
absent when political-organizational pressures increase, but optimism bias would be supplemented and
reinforced by bias caused by strategic misrepresentation. Finally, at the upper end of the scale, with
strong political-organizational pressures – e.g., the situation where a CEO or minister must have a
certain project – one would expect strategic misrepresentation to have more explanatory power
relative to optimism bias, again without optimism bias being absent. Big projects, whether in business
or government, are typically at the upper end of the scale, with high political-organizational pressures
and strategic misrepresentation. The typical project in the typical organization is somewhere in the
middle of the scale, exposed to a mix of strategic misrepresentation and optimism bias, where it is not
always clear which one is stronger.
The discussions with Kahneman taught me that although I had fully acknowledged the
existence of cognitive bias in my original work on bias (Flyvbjerg et al. 2002) I needed to emphasize
cognition more to get the balance right between political and psychological bias in real-life decision
making. This was the object of later publications (Flyvbjerg et al. 2004, Flyvbjerg 2006, Flyvbjerg et al.
2009, Flyvbjerg 2013, Flyvbjerg et al. 2016). More importantly, however, in our discussions and in a
relatively obscure paper by Kahneman and Tversky (1979a) I found an idea for how to eliminate or
reduce both cognitive and political bias in decision-making. I developed this into a practical tool called
"reference class forecasting" (Flyvbjerg 2006) and in Thinking, Fast and Slow Kahneman (2011: 251) was

kind enough to endorse the method as an effective tool for bringing the outside view to bear on
projects and decisions to de-bias them.
Finally, it has been encouraging to see Kahneman begin to mention political bias in his
writings, including in his seminal book, Thinking, Fast and Slow, where he explicitly points out that,
"Errors in the initial budget are not always innocent. The authors of unrealistic plans are
often driven by the desire to get the plan approved – whether by their superiors or by a
client – supported by the knowledge that projects are rarely abandoned unfinished
merely because of overruns in costs or completion times" (Kahneman 2011: 250-51).
That is clearly not a description of cognitive bias, which is innocent per definition, but of political bias,
specifically strategic misrepresentation aimed at getting projects underway.
Most likely, none of the above would have happened without the HBR editor's simple
question, "Strategic misrepresentation or optimism bias, which is it?" The discussions with Kahneman
proved the answer to be: "Both."
Below we use this insight to describe the most important behavioral biases in project planning
and management, starting with strategic misrepresentation, followed by optimism bias and eight other
biases.
1. Strategic Misrepresentation
Strategic misrepresentation is the tendency to deliberately and systematically distort or misstate
information for strategic purposes (Jones and Euske 1991, Steinel and De Dreu 2004). This bias is
sometimes also called political bias, strategic bias, power bias, or the Machiavelli factor (Guinote and
Vescio 2010). The bias is a rationalization where the ends justify the means. The strategy (e.g., achieve
funding) dictates the bias (e.g., make projects look good on paper). Strategic misrepresentation can be
traced to agency problems and political-organizational pressures, for instance competition for scarce
funds or jockeying for position. Strategic misrepresentation is deliberate deception, and as such it is
lying, per definition (Bok 1999, Carson 2006, Fallis 2009).
Here, a senior Big-Four consultant explains how strategic misrepresentation works in practice:
"In the early days of building my transport economics and policy group at [name of
company omitted], I carried out a lot of feasibility studies in a subcontractor role to
engineers. In virtually all cases it was clear that the engineers simply wanted to justify the project
and were looking to the traffic forecasts to help in the process ... I once asked an engineer why their

cost estimates were invariably underestimated and he simply answered ‘if we gave the true
expected outcome costs nothing would be built'" (personal communication, author's archives,
italics added).
Signature architecture is notorious for large cost overruns. A leading signature architect, France's Jean
Nouvel, winner of the Pritzker-Prize, explains how it works:
"I don't know of buildings that cost less when they were completed than they did at the
outset. In France, there is often a theoretical budget that is given because it is the sum
that politically has been released to do something. In three out of four cases this sum
does not correspond to anything in technical terms. This is a budget that was made because it
could be accepted politically. The real price comes later. The politicians make the real price
public where they want and when they want" (Nouvel 2009: 4, italics added).
This is strategic misrepresentation. Following its playbook, a strategic cost or schedule estimate will be
low, because it is more easily accepted, leading to cost and schedule overrun. Similarly, a strategic
benefit estimate will be high, leading to benefit shortfalls. Strategic misrepresentation therefore
produces a systematic bias in outcomes. And this is precisely what the data show (see Table 2).2 We see
the theory of strategic misrepresentation fits the data. Explanations of project outcomes in terms of
strategic misrepresentation have been set forth by Wachs (1989, 1990, 2013), Kain (1990), Pickrell
(1992), and Flyvbjerg et al. (2002, 2004, 2005, 2009), among others.
Strategic misrepresentation will be particularly strong where political-organizational pressures
are high, as argued above, and such pressures are especially high for big, strategic projects. The bigger
and more expensive the project, the more strategic import it is likely to have with more attention from
top management and with more opportunities for political-organizational pressures to develop, other
things being equal. For project planning and management the following propositions apply:
Proposition 1: For small projects, with low strategic import and no attention from top management,
bias, if present, is likely to originate mainly with cognitive bias, e.g., optimism bias.
Proposition 2: For big projects, with high strategic import and ample attention from top
management, bias, if present, is likely to originate mainly with political bias, e.g., strategic
misrepresentation, although cognitive bias is also likely to be present.

Strategic misrepresentation has proved especially important in explaining megaproject outcomes. For
megaproject management, strategic misrepresentation may be expected to be the dominant bias
(Flyvbjerg 2014).
Professor Martin Wachs of UC Berkeley and UCLA, who pioneered research on strategic
misrepresentation in transportation infrastructure forecasting, recently looked back at more than 25
years of scholarship in the area. After carefully weighing the evidence for and against different types of
explanations of forecasting inaccuracy, Wachs summarized his findings in the following manner:
"While some scholars believe this [misleading forecasting] is a simple technical matter
involving the tools and techniques of cost estimation and patronage forecasting, there is
growing evidence that the gaps between forecasts and outcomes are the results of
deliberate misrepresentation and thus amount to a collective failure of professional ethics
... Often ... firms making the forecasts stand to benefit if a decision is made to proceed
with the project" (Wachs 2013: 112).
Wachs found a general incentive to misrepresent forecasts for infrastructure projects and that this
incentive drives forecasting outcomes. Wachs's review and the studies cited above falsify the notion
that optimism and other cognitive biases may serve as a stand-alone explanation of cost
underestimation and benefit overestimation, which has been the common view in behavioral science.
Explanations in terms of cognitive bias are especially wanting in situations with high political and
organizational pressures. In such situations forecasters, planners, and decision makers intentionally use
the following Machiavellian formula to make their projects look good on paper, with a view to securing
their approval and funding:
Underestimated costs + Overestimated benefits = Funding
Finally, recent research has found that not only do political and cognitive biases compound each other
in the manner described above. Experimental psychologists have shown that political bias directly
amplifies cognitive bias in the sense that people who are powerful are affected more strongly by various
cognitive biases – e.g., availability bias and recency bias – than people who are not (Weick and
Guinote 2008). A heightened sense of power also increases individuals' optimism in viewing risks and
their propensity to engage in risky behavior (Anderson and Galinsky 2006: 529). This is because people
in power tend to disregard the rigors of deliberate rationality, which are too slow and cumbersome for
their purposes. They prefer – consciously or not – subjective experience and intuitive judgment as the
basis for their decisions, as documented by Flyvbjerg (1998: 69 ff.), who found that people in power

will deliberately exclude experts from meetings when much is at stake, in order to avoid clashes in
high-level negotiations between power's intuitive decisions and experts' deliberative rationality.
Guinote and Vescio (2010) similarly found that people in power rely on ease of retrieval more than
people without power. In consequence, total bias -- political plus cognitive -- escalates, but not in a
simple linear manner where total bias equals the sum of political and cognitive biases, but instead in a
complex, convex way where political bias amplifies cognitive bias, leading to convex risk. This,
undoubtedly, is one reason we find strong convexities in the planning and management of big projects.
Decisions about big projects are typically made by highly powerful people, and such individuals are
convexity generators, with political bias driving their cognitive biases, which are larger for powerful
individuals than for non-powerful ones.
2. Optimism Bias
Optimism bias is a cognitive bias and it is the tendency for individuals to be overly bullish about the
outcomes of planned actions (Kahneman 2011: 255). Sharot (2011: xv) calls it "one of the greatest
deceptions of which the human mind is capable." Where strategic misrepresentation is deliberate,
optimism bias is non-deliberate. In the grip of optimism, people – including experts – are unaware
they are optimistic. They make decisions based on an ideal vision of the future rather than on a
rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate
costs. They involuntarily spin scenarios of success and overlook the potential for mistakes and
miscalculations. As a result, plans are unlikely to deliver as expected in terms of benefits and costs.
Almost a hundred years ago, when Geoffrey Faber founded what would become Faber &
Faber, the renowned London publishing house, he was so certain of his project that he bet his
mother's, his own, and a few friends' fortune on it, concluding, "everybody would benefit ... with a
substantial income" (Faber 2019: 6, underline in the original). A year later, the new publishing house
was in its first of several near-bankruptcies, and Faber wrote in his diary:
"I find it hard to justify my buoyant self-confidence of last year ... I ought, I think, to
have foreseen trouble and gone more cautiously" (Faber 2019: 27-28).
That's optimism bias and what it does to individuals. Geoffrey Faber is not the only entrepreneur to
have been tripped up like this. It's typical. What's less typical is that Faber & Faber survived to tell the
story. Most companies fail and are forgotten.
Optimism bias can be traced to cognitive biases, i.e., systematic deviations from rationality in
the way the mind processes information (Shepperd et al. 2002, Sharot et al. 2007, O’Sullivan 2015).
These biases are thought to be ubiquitous. In project planning and management, an optimistic cost or

schedule estimate will be low, leading to cost and schedule overrun. An optimistic benefit estimate will
be high, leading to benefit shortfalls. Optimism therefore produces a systematic bias in project
outcomes, which is what the data show (see Table 2). The theory of optimism bias thus fit the data,
which lends support to its validity.
Interestingly, however, when researchers ask forecasters about causes of inaccuracies in their
forecasts, they do not mention optimism bias as a main cause, whereas they do mention strategic
misrepresentation and the usual suspects: scope changes, complexity, price changes, unexpected
underground conditions, bad weather, etc. (Flyvbjerg et al. 2005: 138-140). Psychologists would argue
this is because optimism bias is a true cognitive bias. As such it is unreflected by forecasters, including
when they participate in surveys about causes of forecasting inaccuracy. Psychologists would further
argue there is a large body of experimental evidence for the existence of optimism bias (Buehler et al.,
1994, 1997; Newby-Clark et al. 2000). However, the experimental data are mostly from simple
laboratory experiments with students. This is a problem, because it's an open question to what extent
the results apply outside the laboratory, in real-life situations like project planning and management.
Optimism bias can be both a blessing and a curse. Optimism and a "can-do" attitude are
obviously necessary to get projects done. Kahneman (2011: 255) calls optimism "the engine of
capitalism." I would go further and call it the engine of life. But optimism can seriously trip us up if we
are unaware of its pitfalls and therefore take on risks we would have avoided had we known the real,
non-optimistic, odds. This has been known and reflected since at least the ancient Greeks. More than
two millennia ago, the Greek historian Thucydides (2009: 220) said about the Athenians that "they
expected no reverses" to "their current good fortune" -- i.e., they were optimistic, specifically
overconfident -- and this caused the fall of Athens in the Peloponnesian War, according to Thucydides.
No upside can compensate for the ultimate downside, death. This is a fundamental asymmetry
between upside and downside in human existence and is probably why humans are predisposed for
loss aversion, as documented by prospect theory (Kahneman and Tversky 1979b). Quite simply, it is
rational in evolutionary terms to be more concerned about downside than upside. "Death" does not
have to be of an individual, needless to say. It can be of a nation, a city, a business, or a project.
In my research I have found that successful leaders have a rare combination of hyper realism
and can-do optimism (Flyvbjerg and Gardner, forthcoming). I call such individuals "realistic
optimists." Risto Siilasmaa, chairman of Nokia during its recent successful turnaround, goes one step
further in highlighting the two disparate dispositions, when he emphasizes "paranoid optimism" as the
key to success in leading projects and businesses, always planning for the worst-case scenario: "The
more paranoid we are, the harder we will continue to labor to shift the probability curve in our favor
and the more optimistic we can afford to be" (Siilasmaa 2018: xvi). If you are looking for someone to
successfully lead a project, this is the type of person you want: a realistic optimist, if not a paranoid

one. You would never get on a plane if you overheard the pilot say to the co-pilot, "I'm optimistic
about the fuel-situation." Similarly, one should not trust a project leader who is optimistic about the
budget or schedule, which is the fuel of projects.
During the Apollo program (1961–1972), the NASA administration criticized its cost engineers
for being optimistic with a US$10 billion estimate for the program (approximately US$90 billion in
2021 dollars). The administration told the engineers that their assumption “that everything’s going to
work” was wrong (Bizony, 2006: 41). The engineers then increased their estimate to US$13 billion,
which the administration adjusted to US$20 billion and got approved by Congress, to the shock of
the engineers. Today, the NASA administration's US$7 billion increase has a technical name:
“optimism bias uplift.” NASA jokingly called it the “administrator’s discount.” But they were serious
when they advised that all senior executives in charge of large, complex projects must apply such a
discount to make allowance for the unknown. Whatever the name, it is the single most important
reason Apollo has gone down in history as that rare species of multi-billion-dollar project: one
delivered on budget. The NASA administration “knew exactly what [it] was doing” with Apollo, as
rightly observed by space historian Piers Bizony (ibid.).
Explanations of project outcomes in terms of optimism bias originate with Kahneman and
Tversky (1979a) and have been further developed by Kahneman and Lovallo (1993), Lovallo and
Kahneman (2003), Flyvbjerg (2009a), and Flyvbjerg et al. (2009).
Above we saw that strategic project planners and managers sometimes underestimate cost and
overestimate benefit to achieve approval for their projects. Optimistic planners and managers also do
this, albeit non-intentionally. The result is the same, however, namely cost overruns and benefit
shortfalls. Thus optimism bias and strategic misrepresentation reinforce each other, when both are
present in a project. An interviewee in our research described this strategy as "showing the project at
its best" (Flyvbjerg et al. 2004: 50). It results in an inverted Darwinism, i.e., "survival of the unfittest"
(Flyvbjerg 2009b). It is not the best projects that get implemented like this, but the projects that look
best on paper. And the projects that look best on paper are the projects with the largest cost
underestimates and benefit overestimates, other things being equal. But the larger the cost
underestimate on paper, the greater the cost overrun in reality. And the larger the overestimate of
benefits, the greater the benefit shortfall. Therefore, the projects that have been made to look best on
paper become the worst, or unfittest, projects in reality.
3. Uniqueness Bias
Uniqueness bias was originally identified by psychologists as the tendency of individuals to see
themselves as more singular than they actually are, e.g., singularly healthy, clever, or attractive (Suls
and Wan 1987, Suls et al. 1988, Goethals et al. 1991). In project planning and management, the term

was first used by Flyvbjerg (2014: 9), who defined uniqueness bias as the tendency of planners and
managers to see their projects as singular. It is a general bias, but it turns out to be particularly
rewarding as an object of study in project management, because project planners and managers are
systematically primed to see their projects as unique.
The standard definition of a project, according to the biggest professional organization in the
field, the US-based Project Management Institute (PMI 2017: 4), directly emphasizes uniqueness as
one of two defining features of what a project is: “A project is a temporary endeavor undertaken to
create a unique product, service, or result” (italics added). Similarly, the UK-based Association for
Project Management (APM 2012) stresses uniqueness as the very first characteristic of what a project is
in their official definition: "A project is a unique, transient endeavour, undertaken to achieve planned
objectives " (italics added). Academics, too, define projects in terms of uniqueness, here Turner and
Müller (2003: 7, italics added): "A project is a temporary organization to which resources are assigned
to undertake a unique, novel and transient endeavour managing the inherent uncertainty and need for
integration in order to deliver beneficial objectives of change" (Turner and Müller 2003: 7, italics
added). Similar views of uniqueness as key to the nature of projects may be found in Grün (2004: 3,
245), Fox and Miller (2006: 3, 109), and Merrow (2011: 161).
We maintain that the understanding of projects as unique is unfortunate, because it
contributes to uniqueness bias with project planners and managers. In the grip of uniqueness bias,
project managers see their projects as more singular than they actually are. This is reinforced by the
fact that new projects often use non-standard technologies and designs.
Uniqueness bias tends to impede managers’ learning, because they think they have little to
learn from other projects as their own project is unique. Uniqueness bias may also feed overconfidence
bias (see below) and optimism bias (see above), because planners subject to uniqueness bias tend to
underestimate risks. This interpretation is supported by research on IT project management reported
in Flyvbjerg and Budzier (2011), Budzier and Flyvbjerg (2013), and Budzier (2014). The research
found that managers who see their projects as unique perform significantly worse than other managers.
If you are a project leader and you overhear team members speak of your project as unique, you
therefore need to react.
It is self-evidently true, of course, that a project may be unique in its own specific geography
and time. For instance, California has never built a high-speed rail line before, so in this sense the
California High-Speed Rail Authority is managing a unique project. But the project is only unique to
California, and therefore not truly unique. Dozens of similar projects have been built around the
world, with data and lessons learned that would be highly valuable to California. In that sense projects
are no different from people. A quote, often ascribed to the anthropologist Margaret Mead, captures
the point well: "Always remember that you are absolutely unique. Just like everyone else." Each person

is obviously unique, but also has a lot in common with other people. The uniqueness of people has not
stopped the medical profession from making progress based on what humans have in common. The
problem with project management is that uniqueness bias hinders such learning across projects,
because project managers and scholars are prone to "localism bias," which we define as the tendency
to see the local as global, due to availability bias for the local. Localism bias explains why local
uniqueness is easily and often confused with global uniqueness. In many projects it does not even occur
to project planners and managers to look outside their local project, because "our project is unique,"
which is a mantra one hears over and over in projects, and which it is surprisingly easy to get project
managers to admit to.
Uniqueness bias feeds what Kahneman (2011: 247) calls the "inside view." Seeing things from
this perspective, planners focus on the specific circumstances of the project they are planning and seek
evidence in their own experience. Estimates of budget, schedule, etc. are based on this information,
typically built "from the inside and out," or bottom-up, as in conventional cost engineering. The
alternative is the "outside view," which consists in viewing the project you are planning from the
perspective of similar projects that have already been completed, basing your estimates for the planned
project on the actual outcomes of these projects. But if your project is truly unique then similar projects
clearly do not exist, and the outside view becomes irrelevant and impossible. This leaves you with the
inside view as the only option for planning your project. Even if a project is not truly unique, if the
project team thinks it is then the outside view will be left by the wayside and the inside view will reign
supreme, which is typical. "In the competition with the inside view, the outside view does not stand a
chance," as pithily observed by Kahneman (2011: 249). The inside view is the perspective people
spontaneously adopt when they plan, reinforced by uniqueness bias for project planners and managers.
The inside view is therefore typical of project planning and management. The consequences are dire,
because only the outside view effectively takes into account all risks, including the so-called "unknown
unknowns." These are impossible to predict from the inside, because there are too many ways a
project can go wrong. However, the unknown unknowns are included in the outside view, because
anything that went wrong with the completed projects that constitute the outside view is included in
their outcome data (Flyvbjerg 2006). Using these data for planning and managing a new project
therefore leaves you with a measure of all risk, including unknown unknowns. Uniqueness bias makes
you blind to unknown unknowns. The outside view is an antidote to uniqueness bias.
For project managers, in addition to being predisposed, like everyone else, for the inside view
and uniqueness, they have been indoctrinated by their professional organizations to believe projects
are unique, as we saw above. Thus it's no surprise it takes substantial experience to cut loose from the
conventional view. Patrick O'Connell, an experienced megaproject manager and Practitioner Director
of Oxford's BT Centre for Major Programme Management, told me, "The first 20 years as a

megaproject manager I saw uniqueness in each project; the next 20 years similarities." The NASA
administration, mentioned above, balked when people insisted the Apollo program, with its aim of
landing the first humans on the moon, was unique. How could it not be, as putting people on the
moon had never been done before, people argued. The administration would have none of it. They
deplored those who saw the program “as so special—as so exceptional,” because such people did not
understand the reality of the project. The administration insisted, in contrast, that “the basic
knowledge and technology and the human and material resources necessary for the job already
existed,” so there was no reason to reinvent the wheel (Webb, 1969, p. 11, p. 61). The NASA-Apollo
view of uniqueness bias saw this bias for what it is: a fallacy.
In sum, uniqueness bias feeds the inside view and optimism, which feeds underestimation of
risk, which make project teams take on risks they would likely not have accepted had they known the
real odds. Good project leaders do not let themselves be fooled like this. They know PMI and APM are
wrong when they say projects are unique. Projects are often unique locally, yes. But to be locally
unique is an oxymoron. This, however, is typically the meaning of the term "unique," when used in
project management. It is a misnomer that undermines project performance and thus the project
management profession. Truly unique projects are rare. We have lots to learn from other projects,
always. And if we don't learn, we will not succeed with our projects.
4. The Planning Fallacy (Writ Large)

The planning fallacy is a subcategory of optimism bias that arises from individuals producing plans
and estimates that are unrealistically close to best-case scenarios. The term was originally coined by
Kahneman and Tversky (1979a: 315) to describe the tendency for people to underestimate task-
completion times. Buehler et al. (1994, 1997) continued work following this definition. Later, the
concept was broadened to cover the tendency for people to, on the one hand, underestimate costs,
schedules, and risks for planned actions and, on the other, overestimate benefits and opportunities for
those actions. Because the original narrow and later broader concepts are so fundamentally different in
the scope they cover, Flyvbjerg and Sunstein (2017) suggested the term "planning fallacy writ large" for
the broader concept, to avoid confusing the two.
Flyvbjerg et al. (2003: 80) call the tendency to plan according to best-case scenarios the
"EGAP-principle," for Everything Goes According to Plan. The planning fallacy and the EGAP-
principle are similar in the sense that both result in a lack of realism, because of their overreliance on
best-case scenarios, as with the NASA cost engineers above. Both lead to base-rate neglect, illusion of
control, and overconfidence. In this manner, both feed into optimism bias.
At the most fundamental level, Kahneman and Tversky identified the planning fallacy as
arising from a tendency with people to neglect distributional information when they plan. People who

plan would adopt what Kahneman and Tversky (1979a: 315) first called an "internal approach to
prediction," and later renamed the "inside view," under the influence of which people would focus on
"the constituents of the specific problem rather than on the distribution of outcomes in similar cases."
Kahneman and Tversky (ibid.) emphasized that, "The internal approach to the evaluation of plans is
likely to produce underestimation [of schedules]." For the planning fallacy writ large, such
underestimation applies to costs, schedules, and risk, whereas overestimation applies to benefits and
opportunities.
Interestingly, Guinote (2017: 365-66) found in an experiment that subjects who had been
made to feel in power were more likely to underestimate the time needed to complete a task than those
not in power, demonstrating a higher degree of planning fallacy for people in power. Again, this is an
example of how power bias and cognitive bias interact, resulting in amplification and convexity.
The planning fallacy's combination of underestimated costs and overestimated benefits
generates risks to the second degree. Instead of cost risk and benefit risk cancelling out one another –
as other theories predict, e.g., Hirschman's (2014) principle of the Hiding Hand – under the planning
fallacy the two types of risk reinforce each other, creating convex (accelerated) risks for projects from
the get-go. The planning fallacy goes a long way in explaining the Iron Law of project management:
"Over budget, over time, under benefits, over and over again" (Flyvbjerg 2017). As a project leader,
you want to avoid convex risks because such risks are particularly damaging. You want to avoid
committing the planning fallacy, and especially for people in power.
5-7. Overconfidence Bias, Hindsight Bias, and Availability Bias

Overconfidence bias is the tendency to have excessive confidence in one's own answers to questions,
and to not fully recognize the uncertainty of the world and one's ignorance of it. People have been
shown to be prone to what is called the "illusion of certainty" in (a) overestimating how much they
understand and (b) underestimating the role of chance events and lack of knowledge, in effect
underestimating the variability of events they are exposed to in their lives (Pallier et al. 2002, Moore
and Healy 2008, Proeger and Meub 2014). Overconfidence bias is found with both laypeople and
experts, including project planners and managers (Fabricius and Büttgen 2015).
Overconfidence bias is fed by illusions of certainty, which are fed by hindsight bias, also known
as the "I-knew-it-all-along effect." Availability bias – the tendency to overweigh whatever comes to
mind – similarly feeds overconfidence bias. Availability is influenced by the recency of memories and
by how unusual or emotionally charged they may be, with more recent, more unusual, and more
emotional memories being more easily recalled. Overconfidence bias is a type of optimism and it feeds
overall optimism bias.

A simple way to illustrate overconfidence bias is to ask people to estimate confidence intervals
for statistical outcomes. In one experiment, the Chief Financial Officers (CFOs) of large US
corporations were asked to estimate the return next year on shares in the relevant Standard & Poor's
index (Kahneman 2011: 261). In addition, the CFOs were asked to give their best guess of the 80
percent confidence interval for the estimated returns by estimating a value for returns they were 90
percent sure would be too low (the lower decile, or P10) and a second value they were 90 percent sure
would be too high (the upper decile, or P90), with 80 percent of returns estimated to fall between these
two values (and 20 percent outside). Comparing actual returns with the estimated confidence interval,
it was found that 67 percent of actual returns fell outside the estimated 80-percent confidence interval,
or 3.35 times as many as estimated. The actual variance of outcomes was grossly underestimated by
these financial experts, which is the same as saying they grossly underestimated risk. It is a typical
finding. The human brain, including the brains of experts, spontaneously underestimates variance. For
whatever reason, humans seem hardwired for this.
In project management, overconfidence bias is unfortunately built into the very tools experts
use for quantitative risk management. The tools, which are typically based on computer models using
so-called Monte-Carlo simulations, or similar, look scientific and objective, but are anything but.
Again, this is easy to document. You simply compare assumed variance in a specific, planned project
with actual, historic variance for its project type, and you find the same result as for the CFOs above
(Batselier and Vanhoucke 2016). The bias is generated by experts assuming thin-tailed distributions of
risk (normal or near-normal), when the real distributions are fat-tailed (lognormal, power law, or
similar probability distribution) (Taleb 2004). The error is not with Monte-Carlo models as such, but
with erroneous input into the models. Garbage in, garbage out, as always. To eliminate
overconfidence bias you want a more objective method that takes all distributional information into
account, not just the distributional information experts can think of, which is subject to availability
bias. The method needs to run on historical data from projects that have actually been completed.
Flyvbjerg (2006) describes such a method.
In the thrall of overconfidence bias, project planners and decision makers underestimate risk
by overrating their level of knowledge and ignoring or underrating the role of chance events in
deciding the fate of projects. Hiring experts will generally not help, because experts are just as
susceptible to overconfidence bias as laypeople and therefore tend to underestimate risk, too. There is
even evidence that the experts who are most in demand are the most overconfident. I.e., people are
attracted to, and willing to pay for, confidence, more than expertise (Kahneman 2011: 263, Tetlock
2005). Risk underestimation feeds the Iron Law of project management and is the most common cause
of project downfall. Good project leaders must know how to avoid this.

Individuals produce confidence by storytelling. The more coherent a story we can tell about
what we see, the more confident we feel. But coherence does not necessarily equal validity. People tend
to assume "what you see is all there is," called WYSIATI by Kahneman (2011: 87-88), who gives this
concept pride of place in explaining a long list of biases, including overconfidence bias. People spin a
story based on what they see. Under the influence of WYSIATI they spontaneously impose a coherent
pattern on reality, while they suppress doubt and ambiguity and fail to allow for missing evidence,
according to Kahneman. The human brain excels at inferring patterns and generating meaning based
on skimpy, or even non-existent, evidence. But coherence based on faulty or insufficient data is not
true coherence, needless to say. If we are not careful, our brains quickly settle for anything that looks
like coherence and uses it as a proxy for validity. This may not be a big problem most of the time, and
may even be effective, on average, in evolutionary terms, which may be why the brain works like this.
But for big consequential decisions, typical of project planning and management, it is not an advisable
strategy. Nevertheless, project leaders and their teams often have a very coherent – and very wrong –
story about their project, for instance that the project is unique, as we saw above under uniqueness
bias, or that the project may be completed faster and cheaper than the average project, or that
everything will go according to plan. The antidote is better, more carefully curated stories, based on
better data.
Gigerenzer (2018: 324) has rightly observed that overconfidence, presented by psychologists as
a non-deliberate cognitive bias, is in fact often a deliberate strategic bias used to achieve predefined
objectives, i.e., it is strategic misrepresentation. Financial analysts, for instance, "who earn their money
by mostly incorrect predictions such as forecasting exchange rates or the stock market had better be
overconfident; otherwise few would buy their advice," argues Gigerenzer, who further observes about
this fundamental confusion of one type of bias for a completely different one that, "[c]onceptual clarity
is desperately needed" (ibid.).
Finally, regarding the relationship between power bias and cognitive bias mentioned above,
powerful individuals have been shown to be more susceptible to availability bias than individuals who
are not powerful. The causal mechanism seems to be that powerful individuals are affected more
strongly by ease of retrieval than by the content they retrieve, because they are more likely to "go with
the flow" and trust their intuition than individuals who are not powerful (Weick and Guinote 2008).
This finding has been largely ignored by behavioral economists, including by Thaler (2015) in his
history of the field. This is unfortunate, because the finding documents convexity to the second degree
for situations with power. By overlooking this, behavioral economists make the same mistake they
criticize conventional economists for, namely overlooking and underestimating variance and risk.
Conventional economists make the mistake by disregarding cognitive bias; behavioral economists by
ignoring power bias and its effect on cognitive bias. Underestimating convexity is a very human

mistake, to be sure. We all do it. But it needs to be accounted for if we want to understand all relevant
risks and protect ourselves against them in project planning and management.
8. The Base-Rate Fallacy

The base-rate fallacy – sometimes also called base-rate bias or base-rate neglect – is the tendency to
ignore base-rate information (general data pertaining to a statistical population or a large sample, e.g.,
its average) and focus on specific information (data only pertaining to a certain case, or a small number
of cases) (Bar-Hillel 1980, Tversky and Kahneman 1982). If you play poker and assume different odds
than those that apply, you are subject to the base-rate fallacy, and likely to lose. The objective odds are
the base rate.
People often think the information they have is more relevant than it actually is, or they are
blind to all the relevant information they do not have. Both situations result in the base-rate fallacy.
"Probability neglect" – a term coined by Sunstein (2002: 62-63) to denote the situation where people
overfocus on bad outcomes with small likelihoods, for instance terrorist attacks – is a special case of
the base-rate fallacy.
The base-rate fallacy is fed by other biases, for instance uniqueness bias, described above,
which results in extreme base-rate neglect, because the case at hand is believed to be unique,
wherefore information about other cases is deemed irrelevant. The inside view, hindsight bias,
availability bias, recency bias, WYSIATI bias, overconfidence bias, and framing bias also feed the
base-rate fallacy. Base-rate neglect is particularly pronounced when there is a good, strong story. Big,
monumental projects typically have such a story, contributing to extra base-rate neglect for those.
Finally, we saw above that people, including experts, underestimate variance. In the typical project,
base-rate neglect therefore combines with variation neglect, along the following formula:
Base-rate neglect + variation neglect = strong convexity
Preliminary results from our research indicate that variation neglect receives less attention in project
management than base-rate neglect, which is unfortunate, because the research also indicates that
variation neglect is typically larger and has even more drastic impact on project outcomes than base-
rate neglect.
The base-rate fallacy runs rampant in project planning and management, as documented by
the Iron Law described earlier. Table 2 shows the most comprehensive overview that exists of base
rates for costs and benefits in project management, based on data from 2,062 projects covering eight
project types. Most projects do not get base rates right – not even close, as documented by averages
that are different from one (1.0 ≈ correct base rate) at a level of statistical significance so high (p <

0.0001 ≈ "overwhelmingly high," in statisticians' language) it is rarely found in studies of human

behavior. The base-rate fallacy is deeply entrenched in project management, the data show. Flyvbjerg
and Bester (forthcoming) argue that base-rate neglect results in a new behavioral bias, which they call
the "cost-benefit fallacy," which routinely derail cost-benefit analyses of projects to a degree where
such analyses cannot be trusted.
Table 2: Base rates for cost and benefit overrun in 2,062 capital investment projects across eight types. Project planners
and managers clearly do not get base rates right. The data show strong biases for (a) cost underestimation and overrun and
(b) benefit overestimation and shortfall. Overrun is measured as actual divided by estimated costs and benefits (A/E),
respectively, in real terms, baselined at the final investment decision.
Investment Cost overrun (A/E) Benefit overrun (A/E)

type
N Average p* N Average p*
Dams 243 1.96 < 0.0001 84 0.89 < 0.0001
BRT† 6 1.41 0.031 4 0.42 0.12
Rail 264 1.40 < 0.0001 74 0.66 < 0.0001
Tunnels 48 1.36 < 0.0001 23 0.81 0.03
Power plants 100 1.36 0.0076 23 0.94 0.11
Buildings 24 1.36 0.00087 20 0.99 0.77
Bridges 49 1.32 0.00012 26 0.96 0.099
Roads 869 1.24 < 0.0001 532 0.96 < 0.0001
Total 1603 1.39/1.43†† < 0.0001 786 0.94/0.83†† < 0.0001
*) The p-value of Wilcoxon test with null hypothesis that the distribution is symmetrically centered around one.
†) Bus rapid transit.
††) Weighted and unweighted average, respectively.
Note: See Flyvbjerg (2016: 181-182) for a description of the dataset used in the table.
As pointed out by Kahneman (2011: 150), "anyone who ignores base rates and the quality of evidence
in probability assessments will certainly make mistakes." The cure to the base-rate fallacy, in and out of
project management, is to get the base rate right by taking an outside view, for instance through
reference class forecasting, carrying out premortems, or doing decision hygiene (Flyvbjerg 2006, Klein
2007, Kahneman et al. 2011, 2021: 312-324, 371-72).
If you're a project planner or manager, the easiest and most effective way to get started with
curbing behavioral biases in your work is getting your base rates right, for the projects you're working
on. Hopefully, most can see that if you don't understand the real odds of a game, you're unlikely to
succeed at it. But that's the situation for most project planners and managers: they don't get the odds
right for the game they are playing: project management. Table 2 documents this beyond reasonable
doubt, and establishes realistic base rates for a number of important areas in project management that
planners can use as a starting point for getting their projects right. Data for other project types were
not included for reasons of space but show similar results.

9. Anchoring
Anchoring is the tendency to rely too heavily, or "anchor," on one piece of information when making
decisions. Anchoring was originally demonstrated and theorized by Tversky and Kahneman (1974). In
their perhaps most famous experiment, subjects were asked to estimate the percentage of African
countries in the United Nations. First, a number between 0 and 100 was determined by spinning a
wheel of fortune in the subjects' presence. Second, the subjects were instructed to indicate whether that
number was higher or lower than the percentage of African countries in the United Nations. Third,
the subjects were asked to estimate this percentage by moving upward or downward from the given
number. The median estimate was 25 percent for subjects who received the number 10 from the wheel
of fortune as their starting point, whereas it was 45 percent for subjects who started with 65. A random
anchor significantly influenced the outcome.
Similar results have been found in other experiments for a wide variety of different subjects of
estimation (Chapman and Johnson 1999, Fudenberg et al. 2012). Anchoring is pervasive. The human
brain will anchor in most anything, whether random numbers, previous experience, or false
information. It has proven difficult to avoid this (Wilson et al. 1996, Epley and Gilovich 2006,
Simmons et al. 2010). The most effective way of dealing with anchoring therefore seems to be, not to
avoid it, but to make sure the brain anchors in relevant information before making decisions, e.g., in
base rates that are pertinent to the decision at hand, as proposed by Flyvbjerg (2006). This advice is
similar to recommending gamblers must know the objective odds of each game they play, to increase
their chances of winning and limit their losses. It is sound advice, but often goes unheeded.
Project planners and managers tend to err by anchoring their decisions in plans that are best-
case, instead of most-likely, scenarios, as mentioned above. Planners and organizations also frequently
anchor in their own limited experience, instead of seeking out a broader scope of histories, which
would be more representative of the wider range of possible outcomes that actually apply to the project
they are planning.
This happened to Hong Kong's MTR Corporation when they were tasked with building the
first high-speed rail line in the territory. MTR anchored in its own experience with urban and
conventional rail instead of throwing the net wider and looking at high-speed rail around the world.
High-speed rail is significantly more difficult to build than urban and conventional rail and MTR had
never built a high-speed rail line before. Despite – or perhaps because of – MTR's proven competence
in building urban and conventional rail, the anchor for the high-speed rail line proved optimistic,
resulting in significant cost and schedule overruns for the new venture (Flyvbjerg et al. 2014).
Ansar et al. (2014: 48) similarly found that planners of large dams around the world have
generally anchored in the North-American experience with building dams, for no better reason than
North America built their dams first. By choosing this anchor, planners ended up allowing insufficient

adjustments to fully reflect local risks, e.g., exchange rate risks, corruption, logistics, and the quality of
local project management teams. This resulted in optimistic budgets and higher cost overruns for dams
built outside North America.
Anchoring is fed by other biases, including availability bias and recency bias, which induce
people to anchor in the most available or most recent information, respectively. Anchoring results in
base-rate neglect, i.e., underestimation of the probabilities, and thus the risks, that face a project (see
previous section). Smart project leaders avoid this by anchoring their project in the base rate for
similar projects to the one they are planning, for instance by benchmarking their project against
outcomes for a representative class of similar, completed projects. Kahneman (2011: 154) explicitly
identifies anchoring in the base rate as the cure for the WYSIATI bias mentioned above. Anchoring in
the base rate is similar to taking an outside view, and the outside view is "an anchor that is
meaningful," as rightly observed by Tetlock and Gardner (2015: 117-120), whereas spontaneous
anchors typically are less meaningful and lead to biased decisions with hidden risks.
10. Escalation of Commitment

Last, but not least, escalation of commitment (sometimes also called commitment bias) is the tendency
to justify increased investment in a decision, based on the cumulative prior investment, despite new
evidence suggesting the decision may be wrong and additional costs will not be offset by benefits.
Consider the example of two friends with tickets for a professional basketball game a long drive from
where they live. On the day of the game there is a big snowstorm. The higher the price the friends
paid for the tickets, the more likely they are to brave the blizzard and attempt driving to the game,
investing more time, money, and risk (Thaler 2015: 20). That's escalation of commitment. In contrast,
the rational approach when deciding whether to invest further in a venture would be to disregard what
you have already invested.
Escalation of commitment applies to individuals, groups, and whole organizations. It was first
described by Staw (1976) with later work by Brockner (1992), Staw (1997), Sleesman et al. (2012), and
Drummond (2014, 2017). Economists use related terms like the "sunk-cost fallacy" (Arkes and Blumer
1985) and "lock-in" (Cantarelli et al. 2010b) to describe similar phenomena. Escalation of commitment
is captured in popular proverbs such as, "Throwing good money after bad" and, "In for a penny, in for
a pound."
In its original definition, escalation of commitment is unreflected and non-deliberate. People
don't know they are subject to the bias, as with other cognitive biases. However, once you understand
the mechanism it may be used deliberately. In his autobiography, Elia Kazan (1997: 412-13), a famous
Hollywood director who discovered film star Marlon Brando, explains how he used sunk costs and
escalation of commitment to get his projects going:

"Quickly I planned my position on costs ... My tactic was one familiar to directors who
make films off the common path: to get the work rolling, involve actors contractually,
build sets, collect props and costumes, expose negative, and so get the studio in deep.
Once money in some significant amount had been spent, it would be difficult for Harry
[Cohn, President and co-founder of Columbia Pictures] to do anything except scream
and holler. If he suspended a film that had been shooting for a few weeks, he'd be in for
an irretrievable loss, not only of money but of 'face.' The thing to do was get the film
going."
Kazan here combines strategic misrepresentation with cognitive bias to achieve take-off for his
projects. The misrepresentation consists in initially (a) being "economical with the truth" regarding the
real cost of his projects, and (b) just "get the film going" to sink in sufficient cost to create a point of no
return. After this, Kazan trusts the studio head to fall victim to cognitive bias, specifically sunk cost and
escalation of commitment, in the grip of which he will allocate more money to the film instead of
halting it, which might have been the rational decision. This is the studio head's version of Thaler's
"driving into the blizzard," described above. As argued earlier, such interaction between cognitive and
political bias is common in shaping project outcomes. Most project managers will know examples
similar to Kazan's. It is too simple to think of outcomes as being generated solely by either cognitive bias
or political bias. Such purity may be constructed in lab experiments. In real life, both are typically at
play with complex interactions between the two.
A number of excellent case studies exist that demonstrate the pertinence of escalation of
commitment to project planning and management, e.g., of Expo 86 (Ross and Staw 1986), the
Shoreham nuclear power plant (Ross and Staw 1993), and Denver International Airport (Monteagre
and Keil 2000), each of which present their own version of "driving into the blizzard."
Above we saw how optimism bias undermines project performance. Escalation of commitment
amplifies this. Consider that once a forecast turns out to have been optimistic, often the wisest thing
would be to give up the project. But escalation of commitment and the sunk-cost fallacy keep decision
makers from doing the right thing. Instead they keep going, throwing good money after bad.
Escalation of commitment often co-exists with and is reinforced by what has been called
"preferential attachment" or the "Yule process" (Barabási and Albert 1999, Gabaix 2009, Barabási
2014). Preferential attachment is a procedure in which some quantity, e.g., money or connections in a
network, is distributed among a number of individuals or units according to how much they already
have, so that those who have much receive more than those who have little, known also as the
"Matthew effect."

In project planning and management, Flyvbjerg (2009) argued that the investments that look
best on paper get funded, and that these are the investments with the largest cost underestimates and
therefore the largest need for additional funding during delivery, resulting in preferential attachment of
funds to these investments, once they have their initial funding. After an investment has been approved
and funded, typically there is lock-in and a point of no return, after which escalation of commitment
follows, with more and more funds allocated to the original investment to close the gap between the
original cost underestimate and actual outturn cost (Drummond 2017, Cantarelli et al. 2010b).
Interestingly, preferential attachment has been identified as a causal mechanism that generates
outcome distributions with a fat upper tail, specifically power-law distributions (Krapivsky and
Krioukov 2008, Barabási 2014). In the case of cost, this would predict an overincidence (compared
with the Gaussian) of extreme cost overruns. So far, we have tested the thesis of power-law outcomes
for cost and cost overrun with the Olympic Games, where the thesis found strong support in the data
(Flyvbjerg et al. 2021). Currently we are further testing the thesis for information technology projects,
while tests of other project types are in the pipeline. Should the thesis hold across project types, we
may be in the first stages of discovering a general theory of project management, with more
fundamental and more scientific explanations of project outcomes than those found in conventional
theory.
Discussion
Scientific revolutions rarely happen without friction. So, too, for the behavioral revolution. It has been
met with skepticism, including from parts of the project management community (Flyvbjerg et al.
2018). Some members prefer to stick with conventional explanations of project underperformance in
terms of errors of scope, complexity, labor and materials prices, archaeology, geology, bad weather,
ramp-up problems, demand fluctuations, etc. (Cantarelli et al. 2010a).
Behavioral scientists would agree with the skeptics that scope changes, complexity, etc. are
relevant for understanding what goes on in projects, but would not see them as root causes of
outcomes. According to behavioral science, the root cause of, say, cost overrun, is the well-documented
fact that project planners and managers keep underestimating scope changes, complexity, etc. in
project after project.
From the point of view of behavioral science, the mechanisms of scope changes, complex
interfaces, price changes, archaeology, geology, bad weather, business cycles, etc. are not unknown to
project planners and managers, just as it is not unknown that such mechanisms may be mitigated.
However, project planners and managers often underestimate these mechanisms and mitigation
measures, due to optimism bias, overconfidence bias, the planning fallacy, strategic misrepresentation,
etc. In behavioral terms, unaccounted for scope changes etc. are manifestations of such

underestimation on the part of project planners and managers, and it is in this sense bias and
underestimation are root causes and scope changes etc. are just causes. But because scope changes etc. are
more visible than the underlying root causes, they are often mistaken for the cause of outcomes, e.g.,
cost overrun.
In behavioral terms, the causal chain starts with human bias (political and cognitive) which
leads to underestimation of scope during planning which leads to unaccounted for scope changes
during delivery which lead to cost overrun. Scope changes are an intermediate stage in this causal
chain through which the root causes manifest themselves. Behavioral science tells project planners and
managers, "Your biggest risk is you." It is not scope changes, complexity, etc. in themselves that are the
main problem; it is how human beings misconceive and underestimate these phenomena, through
optimism bias, overconfidence bias, strategic misrepresentation, etc. This is a profound and proven
insight that behavioral science brings to project planning and management. You can disregard it, of
course. But if you do, project performance would likely suffer. You would be the gambler not knowing
the odds of their game.
Behavioral science is not perfect. We saw above how behavioral economics suffers from a
"psychology bias," in the sense it tends to reduce behavioral biases to cognitive biases, ignoring
political bias in the process, thus committing the very sin it accuses conventional economics of, namely
theory-induced blindness resulting in limited rationality. Gigerenzer (2018) goes further and criticizes
behavioral economics for "bias bias," and he is right when he calls for conceptual clarification. Not all
behavioral biases are well defined, or even well delineated: many and large overlaps exist between
different biases that need clarification, including for the ten above. Just as seriously, many biases have
only been documented in simplified lab experiments, but are tacitly assumed to hold in real-life
situations outside the lab, without sound demonstration that the assumption holds. Finally, the
psychology used by behavioral economists is not considered cutting-edge by psychologists, a fact
openly acknowledged by Thaler (2015: 180), who further admits it is often difficult to pin down which
specific behavioral bias is causing outcomes in a given situation or to rule out alternative explanations
(ibid. 295).
Nevertheless, the behavioral revolution seems to be here to stay and it entails an important
change of perspective for project management: The problem with project cost overruns and benefit
shortfalls is not error but bias, and as long as we try to solve the problem as something it is not (error),
we will not succeed. Estimates and decisions need to be de-biased, which is fundamentally different
from eliminating error. Furthermore, the problem is not even cost overruns or benefit shortfalls, it is
cost underestimation and benefit overestimation. Overrun, for instance, is mainly a consequence of
underestimation, with the latter happening upstream from overrun, for big projects often years before
overruns manifest. Again, if we try to solve the problem as something it is not (cost overrun), we will

fail. We need to solve the problem of upstream cost underestimation in order to solve the problem of
downstream cost overrun. Once we understand these straightforward insights, we understand that we
and our projects are better off with an understanding of behavioral science and behavioral bias than
without it.
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Endnotes
1 Specifically, Kahneman met with and interviewed the Chair for Transportation at RPA, Jeff Zupan, and his
team.

2 Table 2 shows the results from the largest dataset of its kind. Other studies, based on smaller datasets, show
similar results, e.g., Albalate and Bel (2014), Altshuler and Luberoff (2003), Bain (2009), Bain and Polakovic
(2005) Bain and Wilkins (2002), Caro (1975), Delaney and Eckstein (2003), Feynman (2006: 397-407; 2007a,b),
Flyvbjerg (2005), Flyvbjerg et al. (2002), Goldblatt (2016), Kain (1990), Pickrell (1992), Richmond (2005), Winch
(2008), and Zimbalist (2015).

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Top-Ten Behavioral biases, © Copyright by the author, AAM 1

Top-Ten Behavioral Biases in Project Management:

Project Management Journal, vol. 52, no. 6, 2021, pp. 531–546

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Table 1: Top-ten behavioral biases in project planning and management

Discussions with Kahneman

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Kahneman and Lovallo (2003: 122) responded:

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Underestimated costs + Overestimated benefits = Funding

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4. The Planning Fallacy (Writ Large)

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5-7. Overconfidence Bias, Hindsight Bias, and Availability Bias

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8. The Base-Rate Fallacy

Base-rate neglect + variation neglect = strong convexity

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0.0001 ≈ "overwhelmingly high," in statisticians' language) it is rarely found in studies of human

Investment Cost overrun (A/E) Benefit overrun (A/E)

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10. Escalation of Commitment

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