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The question—what explains cost overruns and benefit shortfalls—remains an important conversation in project management. Two theoretical principles, the Planning Fallacy and the Hiding Hand, shed light on project behavior, that is how projects take different and complex out-turns. The Planning Fallacy denotes the tendency for forecasts of project schedules, costs, and benefits to be unrealistically close to best-case scenarios. The Hiding Hand, however, suggests that it is not always bad to overrate benefits and underrate costs and difficulties of the proposed projects as creativity may help succeed in unforeseen ways. This article focuses on the Planning Fallacy versus Hiding Hand or the Planning Fallacy debate. The bone of contention is whether the Planning Fallacy trumps the Hiding Hand and thus best explains project behavior and performance. We unravel the ontological, epistemological, theoretical, and methodological assumptions behind the debate. Then, considering these contrasting assumptions and the uncertainties and complexities that surround large-scale projects, we complexify the debate in line with the tradition of complexity thinking. In the face of the either/or framing that prevails, we propose a balanced theoretical approach that would accommodate both the Planning Fallacy and the Hiding Hand explanations of project behavior, to understand why projects experience cost overruns and benefit shortfalls. In so doing, we lay the foundations for the emergence of a new project behavior principle—The Fifth Hand. We conclude with a research agenda that highlights the key methodological challenges that need to be addressed to determine the presence of the Fifth Hand. [ABSTRACT FROM AUTHOR]

The planning fallacy is at play in projects when optimism bias and/or strategic misrepresentation are present. We examine the cost performance of approximately US$ 6.5 billion worth of social infrastructure projects that were procured in Hong Kong and specifically the differences between their final accounts and the various types of estimates that were prepared prior to construction. We focus on the (honest) planning fallacy and hence aim to determine whether estimates are more optimistic than actual costs. Our data shows that 43% of projects incurred a cost underrun from their contract award. We therefore infer that at best 57% of projects may be explained by the presence of the planning fallacy. Based on our findings, we argue that optimism and pessimism bias coexist. Likewise, the planning fallacy and competing explanations can simultaneously account for cost deviations in social infrastructure projects. We submit that the prevalence of the planning fallacy has been exaggerated and hence provide an explanation as to why this has occurred. We finally suggest there is a need for additional empirical work to test the claim that the planning fallacy is the underlying cause of cost overruns and thus the best “theory” to explain “how projects work.” [ABSTRACT FROM AUTHOR]

Engineers and other construction professionals need to take the lead to clarify the facts when a possible fraud in public infrastructure procurement is identified. A robust approach for producing scientific evidence to determine the presence of collusive bidding where questionable confessions need to be proven in court is presented. The concepts of game theory are used to demonstrate that economic principles support the confessions of senior executives from a cartel of 16 large construction companies. Relying on the confessions and defendants’ statements from the Brazilian Federal Police's anti-corruption investigation referred to as “Operation Car Wash,” the article demonstrates that the behavior of criminals was conscious and intentional rather than incidental, proving the mens rea necessary to establish the white-collar crime of collusion. [ABSTRACT FROM AUTHOR]

Rework can be a significant and costly problem during the construction of large-scale transport (>$500 million) projects. There is, however, limited understanding and knowledge about the underlying dynamics and causal mechanisms of rework. Both the public and private sector organisations tend to ignore the costs of rework and thus have been unable to contain and manage its risks. This article takes a look at the wicked and inter-organizational problem of rework and invites the public and private sectors to work in unison to thwart this risk. The paper makes a twofold contribution: (1) it calls on the public and private sectors to consider the likelihood of rework as a part of their risk management strategy; and (2) suggests that there is need use a smart data approach to ‘anticipate what might go’ wrong in terms of rework so as to deliver large-scale transport projects successfully. [ABSTRACT FROM AUTHOR]

Summary In a recent paper in this journal, “ The Fallacy of Beneficial Ignorance: A Test of Hirschman’s Hiding Hand ”, Professor Bent Flyvbjerg claims that there is no such thing as beneficial ignorance and that ignorance is detrimental to project success. Moreover, he argues that if Hirschman’s principle of the Hiding Hand were correct, then benefit overruns would exceed cost overruns. Thus, with a statistical test, he demonstrates that the Hiding Hand is in fact less common than its “evil twin”, the Planning Fallacy. In this rejoinder, the author shows that Flyvbjerg’s test is built on a straw man fallacy and that he fails to refute the Hiding Hand. Contrary to Flyvbjerg—who focuses on the narrow costs and benefits—this paper provides evidence that while the Hiding Hand is found among projects that are project management failures but project successes, the Planning Fallacy fits with projects that are both project management and project failures. On that basis, the author analyzes a sample of 161 World Bank-funded projects of different types and finds that the Hiding Hand prevails. While future research should ascertain this finding, the author then points out the methodological limitations of Flyvbjerg’s test. Indeed, it is ironic that the Hiding Hand, a principle crafted against the very idea of cost–benefit analysis, is refuted on that very basis. Even worse, Flyvbjerg, in his cost–benefit analysis, ignores the full life-cycle project costs and benefits, the unintended project effects, the difficulties, and problem-solving abilities so dear to Hirschman, and, thus, treats the management of projects as a kind of “black box”. Finally, the author submits that Hirschman was a behavioral project theorist, and argues that it is more important to shed light on the circumstances where the Hiding Hand works than to question whether the principle of the Hiding Hand is right. [ABSTRACT FROM AUTHOR]