A large new global study of project performance over 86 years confirms that ingrained optimism bias results in forecast-based cost-benefit analyses "so misleading as to be worse than worthless," say UK researchers. While construction technology and practice have developed over the decades, failures of cost-benefit analysis "seem universal across space and time," they add.
Developed long before the emergence of behavioral science, "cost-benefit theory and practice ... have yet to adapt to its findings about the nature and causes of bias," say study authors from the University of Oxford’s Saïd Business School. As a result, they find that benefit-cost ratios for various project types continue to be overestimated by between 50% and 200%.