Curbing optimism bias and strategic misrepresentation in planning: Reference class forecasting in practice

Flyvbjerg, Bent (2008) Curbing optimism bias and strategic misrepresentation in planning: Reference class forecasting in practice. European Planning Studies, 16 (1). pp. 3-21.

Abstract

The American Planning Association recently endorsed a new forecasting method called reference class forecasting, which is based on theories of planning and decision-making that won the 2002 Nobel prize in economics. This paper details the method and describes the first instance of reference class forecasting in planning practice. First, the paper documents that inaccurate projections of costs, demand, and other impacts of plans are a major problem in planning. Second, the paper explains inaccuracy in terms of optimism bias and strategic misrepresentation. Third, the theoretical basis is presented for reference class forecasting, which achieves accuracy in projections by basing them on actual performance in a reference class of comparable actions and thereby bypassing both optimism bias and strategic misrepresentation. Fourth, the paper presents the first case of practical reference class forecasting, which concerns cost projections for planning of large transportation infrastructure investments in the UK, including the Edinburgh Tram and London's £15 billion Crossrail project. Finally, potentials for and barriers to reference class forecasting are assessed.

Item Type: Article
Keywords: Reference class forecasting; transport; transportation infrastructure; cost projection; strategic misrepresentation; optimism bias
Subject(s): Project management
Centre: BT Centre for Major Programme Management
Date Deposited: 18 Mar 2011 09:06
Last Modified: 23 Oct 2015 14:05
URI: http://eureka.sbs.ox.ac.uk/id/eprint/717

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