Eliminating bias in early project development through reference class forecasting and good governance

Chapter 3 identified as a main problem in large-scale investment projects the existence of optimism bias and strategic misrepresentation with project promoters. A consequence of such bias is a high incidence of cost overruns and benefit shortfalls in projects. This chapter develops a number of measures aimed at eliminating, or at least reducing, optimism bias and strategic misrepresentation in project development. The measures include changed governance structures and better planning methods. The aim is to ensure that decisions on whether to build projects or not are based on valid information about costs and benefits, instead of being based on misinformation as is often the case today.