Improving decision making on large scale investment projects: A psychological perspective

There is a substantial history of academic and professional interest in the planning, execution and performance of very large projects, typically focussing on underperformance relative to financial and social expectations. However, a lot of evidence in the professional, academic and public media that suggests these projects often underperform. This underperformance is continued to be reported and believed to be at least partly because of poor management and poor decision making. One of the key issues that has been identified as a cause for their underperformance is poor project estimation. The focus of this thesis is to answer why they still show a poor performance record and to explore the influence of cognitive biases on decision stakeholders that lead to produce inadequate estimates. We combine a psychological perspective, the prospect theory in particular, on the decision making undertaken in managing such megaprojects with an in-depth, qualitative investigation of the knowledge of experienced managers and other key stakeholders, up to ministerial level (n= 29). We take this approach in order to complement previous studies of megaproject decision making which have often been undertaken from either a statistical perspective, or an experimental one, based on psychological laboratory studies. Key contributions: our results identify important and practically relevant insights in relation both to cultural specifics and generic issues of management decision making. A theoretical framework was developed and initially validated that explains megaproject poor estimates and poor performance from a psychological perspective along with identifying some underpinning causes for megaproject poor performance.