Economic experiments in project management
A business project is as an endeavour constrained by a scheduled beginning and end, undertaken in order to deliver a unique product or service. Given the project's temporary nature, efficient planning of time is of crucial importance and determines the probability of project success. However, evidence shows that a majority business projects suffer from unrealistically optimistic schedules and end up running late, triggering budget extensions and/or quality cuts. Understanding the causes of prediction biases and uncovering approaches to mitigate them can lead to more efficient allocation and utilization of company resources and will enable the executives to make attainable long-term development strategies. The presented doctoral thesis is a collection of five controlled incentivized laboratory experiments, organized into three research studies. The studies are closely related and focus on the project planning process, especially on determinants of bias and (in)accuracy in project duration estimates. Study 1 tests the impact of anchors, such as wild guesses, uninformed suggestions, or expectations, on project duration estimates, and also whether the estimation bias caused by anchors can persist into future estimations of similar projects. Study 2 compares the effect two different interventions designed to mitigate the underestimation bias and improve the estimation accuracy, namely providing historical information from past projects and providing more a detailed project specification. The study also tests the effect of quantity and quality of information at hand on subjective confidence in duration estimates. Study 3 tests whether estimation accuracy incentives and project performance incentives induce on-time and quick project delivery, but also whether making planners accountable for accuracy of project schedules can result in deliberately inflated project estimates and inefficient project execution. All of the three studies aspire to bring not only interesting research findings, but also generate important implications for project managers and other practitioners of project management methodology.