From Nobel Prize to project management

getting risks right

In 2005, the American Planning Association (APA) endorsed the use of a new forecasting method called reference class forecasting (RCF), a method developed through a study--involving this author and two others--on the inaccuracy of demand forecasts used for public works projects, a method that offers an outside view--as opposed to the traditional inside view--of forecasting, a view that bypasses human biases by cutting directly to outcomes. This paper examines the first case of using RCF in relation to project management, a case involving the planning of the Edinburgh (Scotland) Tram Line 2. In doing so, it reviews the field's literature on the inaccuracy of project forecasting, comparing transportation project cost data from the past 70 years and describing conventional forecasting's psychological and political problems--optimism bias and strategic misrepresentation.
member content locked

Become a PMI member to gain access

or Join



Related Content

  • Project Management Journal

    Narratives of Project Risk Management member content locked

    By Green, Stuart D. | Dikmen, Irem The dominant narrative of project risk management pays homage to scientific rationality while conceptualizing risk as objective fact.

  • Project Management Journal

    Identifying Subjective Perspectives on Managing Underground Risks at Schiphol Airport member content locked

    By Biersteker, Erwin | van Marrewijk, Alfons | Koppenjan, Joop Drawing on Renn’s model and following a Q methodology, we identify four risk management approaches among asset managers and project managers working at the Dutch Schiphol Airport.

  • Project Management Journal

    Collective Mindfulness member content locked

    By Wang, Linzhuo | Müller, Ralf | Zhu, Fangwei | Yang, Xiaotian We investigated the mechanisms of collective mindfulness for megaproject organizational resilience prior to, during, and after recovery from crises.

  • PMI Case Study

    Saudi Aramco member content open

    This in-depth case study outlines a project to increase productivity with Saudi Arabian public petroleum and natural gas company, Saudi Aramco.

  • PM Network

    The Certainty of Uncertainty member content open

    By Fewell, Jesse, As much as we yearn for a pre-pandemic return, it's naive to think the old ways of work will ever return—even for agile.