What is optimism bias?

It is almost always the case that major projects are delivered late and over budget. Why is this such a
common occurrence?

The first reason is optimism bias. The definition of optimism bias is:

"a cognitive predisposition found with most people to

judge future events in a more positive light than is
warranted by actual experience. " - (Flyvbjerg 2008, p.6).

The UK Treasury has recognised that optimism bias is common in project management:

"There is a demonstrated, systematic, tendency for

project appraisers to be overly optimistic." -(Her
Majesty's Treasury (HMT), 2013, p.1).
Optimism bias is a cognitive bias that causes a person to believe that they are at a lesser risk of experiencing a
negative event than the real risk would suggest. This explains why some people tend to be late when they go
somewhere or when they have a deadline, despite thinking you have plenty of time. It also causes a person to
believe that they are more likely to experience a positive event than is realistic. This explains why you might play the
lottery, despite the low odds of winning.

Optimism bias is common for all human beings. Therefore, you unintentionally underestimate the cost and time
required in a project, and you overestimate the benefits. You have probably experienced this yourself. For instance,
you might plan for a vacation and expect to spend 100 dollars but you might discover that the vacation cost 120
dollars or more.

Similarly, there is no mathematical reason to play the lottery because the combined amount paid in by the people
who buys a ticket, is typically less than the amount paid out to the winner. However, people play the lottery because
they are optimistic about their chances of winning.

You can measure your own optimism bias by estimating how long it takes you to get to work each day. For the next
month, make a note of when you leave home and arrive at work and then calculate the average. Did it take longer to
get to work than you estimated?

Please refer to the glossary to check any terminology you are unfamiliar with: Glossary of Project Management
Terms