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Moving Beyond the Planning Fallacy: The Emergence of a New Principle of Project Behavior



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.
Moving Beyond the Planning Fallacy: The
Emergence of a New Principle of Project Behavior
Lavagnon A. Ika , Peter E. D. Love, and Jeffrey K. Pinto
Abstract—The question—what explains cost overruns and ben-
efit shortfalls—remains an important conversation in project man-
agement. 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, the-
oretical, 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
Index Terms—Benefit shortfalls, complexity, cost overruns,
hiding hand, planning fallacy, project behavior.
PROJECT-BASED-WORK is at flood tide as projects are
being undertaken to levels previously unseen. Thus, there
is a concomitant increase in scholarship. This is a testament
to the sheer number of scholars from a variety of disciplines
actively engaging and undertaking project management research
from varying perspectives. Project management scholarship is,
in essence, a conversation [33] often with “neighboring” fields of
inquiry such as construction, strategy, organizational behavior,
Manuscript received July 1, 2020; revisedOctober 13, 2020; accepted Novem-
ber 19, 2020. Review of this manuscript was arranged by Department Editor Y.
H. Kwak. (Corresponding author: Jeffrey K. Pinto.)
Lavagnon A. Ika is with the Telfer School of Management, University of
Ottawa, Ottawa, ON K1N 6N5, Canada (e-mail:
Peter E. D. Love is with the School of Civil and Mechanical Engineering,
Curtin University, Perth, WA 6845, Australia (e-mail:
Jeffrey K. Pinto is with the Black School of Business, Penn State, Erie, PA
16563 USA (e-mail:
Digital Object Identifier 10.1109/TEM.2020.3040526
human resources management, operations management, infor-
mation systems, and innovation management [9], [26], [42],
[45], [53].
Though enriching, this conversation with other fields of re-
search may be challenging in light of the diversity of theories for
the studies in, on, and around projects [17], [22]. Accordingly,
there prevails a tendency for scholars to borrow hand-me-down
theories from other disciplines [42], which, we contend, may
not be able to fully deal with the uncertainties and complexities
associated with getting the right projects right, particularly when
they are of a large and/or complex nature [6], [9], [34], [36], [43],
[45], [62]. Indeed, the shoehorning of these imported theories to
project settings may create a false currency or prompt a debate
based on misguided or misinterpreted assumptions. The upshot
in this instance can be confusion, which can adversely impact
decision-making and jeopardize the performance and practice
of projects [57], [76].
Perhaps, the topic of conversation where the aforementioned
challenges are acute concerns what explains cost overruns and
benefit shortfalls. Prospect theory, for example, developed by
the Nobel Laureate Daniel Kahneman with Amos Tversky
[38], [71] is drawn upon by Flyvbjerg [15] to explain project
performance using the Planning Fallacy principle. Under the
banner of prospect theory, the Planning Fallacy emerges as a
phenomenon whereby planners and managers display optimism
bias during the framing and valuation phases of projects. The
upshot is the tendency for forecasts of project times, costs, and
benefits to be close to best-case scenarios [46]. This has been
the case for a wide variety of projects such as the 2004 Greece
Olympics, the Airbus A380 passenger aircraft [15], the Ciudad
Real Airport in Spain and the Canadian Firearms Program [34],
which all incurred cost overruns and benefit shortfalls. Conse-
quently, planners and managers create a fertile environment in
which projects—due to irrational or overoptimistic choices or
unintentional or deliberate actions they take apriori—are bound
to underperform.
Notwithstanding the contribution of the Planning Fallacy
[15], the everlasting puzzle in project management research—
what explains cost overruns and benefit shortfalls—remains a
scholarly conversation “that has been stuck for more than 20
years” [27, p. 717]. Hence, the focus of this article is on the
more recent yet enlightening debate over the significance of the
Planning Fallacy [15], [16] [34], [49], [50], [51]. Remarkably, a
leitmotiv that resonates throughout the literature is that project
performance statistics are troubling, as planners and managers
tend to overrate the benefits and underrate the times, costs,
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difficulties, and risks of their projects. Hirschman [30], however,
considered this tendency to be good news in some instances, as
planners and managers may also underrate their own creativity
ex-ante, and once things take a wrong turn, they manage to get
out of the shambles and “stumble into achievement” (p. 14).
This is the case for projects such as the Danish Great Bell Toll
Bridge, the German Karlsruhe-Bretten Light Rail Line [15], the
Sydney Opera House in Australia and the US Hoosac Tunnel
[34], which all experienced significant cost overruns and yet
exceeded benefit expectations. Hence, the emergence of the
Principle of the Hiding Hand [30] or the benevolent twin of
the Planning Fallacy.
As a result of the work undertaken by Flyvbjerg and his
colleagues on the causes of cost overruns [15], [17], we have
witnessed an eye-opening conversation with the fields of psy-
chology and economics and the extension of their behavioral
theories such as optimism bias and/or strategic misrepresenta-
tion or the Planning Fallacy. The application of these theories
to project settings has provoked a debate whereby the following
1) Daniel Kahneman’s Planning Fallacy is pitted against
Albert Hirschman’s Hiding Hand as the best theoretical
explanation for project misperformance [15], [16], [34],
[35], [49].
2) Bias (e.g., the Planning Fallacy) competes with error (e.g.,
scope changes, complexity, and uncertainty) as the root
cause of project misperformance [16], [17], [48], [49],
[50], [51].
Both conversations, while seemingly different, are part and
parcel of what we call the Planning Fallacy debate. The bone of
contention is notably whether the Planning Fallacy trumps the
Hiding Hand or, put another way, whether bias trumps error
[49]. In this article, however, we give pride of place to the
first conversation as to whether the Planning Fallacy trumps
the Hiding Hand. Complicating this peculiar debate has been
a general unwillingness of scholars to seek a point of synthesis
between these antagonistic positions. The academic debate has
sponsored a rival camps approach, which has made it difficult for
scholars to credit the veracity of other perspectives or propose a
way forward that acknowledges the valid elements of alternative
perspectives [48]. For example, according to Ika [34], the Hiding
Hand should not be reduced to a mere ratio between benefit and
cost performance and the all-important role that complexity, un-
certainty, and creativity play in project management overlooked.
Yet, the methodological approach taken by Flyvbjerg [15] es-
pouses a narrow cost-benefit lens and discounts the complexity
and uncertainty that prevail in the management of large-scale
projects. In Flyvbjerg’s [15] view, human bias is the overarching
cause of cost overruns and benefit shortfalls.
Drawing on insights from the fields of psychology and eco-
nomics, we take project behavior to be the study of “how
projects work” [16] or “behave” or take different and com-
plex “out-turns” [75].1Specifically, project behavior consists of
1Oftentimes scholars refer to the concept of project behavior but seldom do
they define it. Here, we use the concept in the system behavior,not organizational
behavior, sense. Thus, our focus is on how project systems as a whole behave,
“explaining and anticipating successes and failures, systematic
veerings from preassigned paths, propensities toward specific
difficulties, as well as opportunities for special payoffs” [30,
p. 4]. Error refers to the use of imperfect techniques, making
honest forecasting and execution mistakes, lacking experience,
and having inadequate data [17]. Bias, however, means a sys-
tematic deviation between the (average) judgment of a person or
a group and a true value or norm, or in most cases in the Planning
Fallacy debate, a deviation from a statistical principle [25].
This article seeks to dissect, complexify, and further the
Planning Fallacy debate and thus propose a new principle of
project behavior. We begin by shedding light on the significance
of the debate for project management theory and practice. Then,
we unravel the ontological, epistemological, theoretical, and
methodological assumptions that lie behind the Planning Fallacy
debate in the next sections of this article. Moreover, in light of
these contrasting assumptions and the complexities and uncer-
tainties surrounding projects [52], [58], [62], we also attempt
to complexify2the Planning Fallacy debate based on Tsoukas’s
[70] work on theoretical sophistication as a way to better cope
with organizational complexity. Inspired by the disagreements
between Gerd Gigerenzer and Daniel Kahneman on whether
human decision-making is success-prone [25] or error-prone
[37], we suggest building on the insights from Gigerenzer’s work
and his theoretical sophistication [70] to further the Planning
Fallacy debate. In the face of the either/or framing of the Plan-
ning Fallacy debate, 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.
More concretely, we lay the ground for the emergence of a new
principle of project behavior, which would better reflect the lived
experience of managing large and/or complex projects. In so
doing, we reconcile the twin principles of the Planning Fallacy
and the Hiding Hand. This article concludes with an agenda
highlighting pertinent research and methodological challenges
that will confront us as we strive to create a robust theory of how
projects work.
A cursory reading of the Planning Fallacy debate would
oppose upbeat [32] and downbeat [31] observers about project
performance [49]. At a time when there are calls for insightful
not how individuals, work groups or teams within the peculiar organizational
contexts that are projects behave.Williams [75], an influential project complexity
scholar, discusses the concept in light of cost overruns and in a true systemic
modeling tradition, where projects are deemed complex systems that can behave
in complex ways and take complex out-turns. Accordingly, project behavior is
a “complex,” “counterintuitive,” and systemic phenomenon, which stems from
“systemic interrelated sets of causal factors rather than tracing effects to single
causes” (p. 499). Weconcur with this stance but turn to Hirschman’s [30] view of
project behavior. After all, he is an early systems thinker and behavioral theorist
in project management and, more importantly, the author of the Hiding Hand
principle [35].
2In true spirit of complexity thinking, it is customary to distinguish between
contrasting strategies for dealing with complexity such as complexity reduction
versus complexity absorption [5], restricted complexity versus generalized com-
plexity [54], or simplifying versus complexifying complexity [70]. In this article,
however, we focus on Tsoukas’s [70] view on complexification of complexity.
theories [55] and thought-provoking academic conversations in
the field of project management [22], this characterization is
enough to convey the importance of the debate for researchers
and practitioners alike [49]. Suffice it to say, a recurring and
critical theme in project management theory and practice has
been to address the continued difference between its idealized
principles and the harder truths underlying its track record
in numerous industries. Research in information technology
projects, for example, offers dismal reading: one out of six
has an overage cost overrun of 200% [14]. Researchers for the
Chaos Reports, studying some 50 000 projects worldwide, report
that the average success rate for “business-critical” application
development projects is 29%. Their statistics have remained
remarkably steady since 1994 [12]. The nature of this challenge
is critical as project-based work, as we noted, continues to
fuel economic development, both in developed and developing
countries. We are, therefore, at the juncture of a critical debate
on the directions for project management theory and practice, at
a time when its use continues to grow apace.
From a practical viewpoint, the approach of planning one’s
work and then working one’s plan that often holds sway in
traditional practice may fall short for large and/or complex
projects characterized by high levels of novelty, complexity,
and uncertainty and a considerable need for creativity, exper-
imentation, and iteration during their execution [9], [34], [45],
[62]. This is the case of radical innovation projects [45], which
in contrast to those of an incremental nature such as small
product changes [36] or “routine execution projects” [43] de-
livered in low technology or market uncertainty settings, are
not well handled by traditional risk management approaches
[75]. Such projects are likely to require managing according
to their uncertainty profile [10], [28], dealing with unwelcome
surprises [6], [7] and, above all, managing in a flexible and
adaptive way [36], [62]. In this instance, the Hiding Hand
offers a compelling alternative to the Planning Fallacy, owing
to the kind of entrepreneurialism characterized by risk-taking
and creative problem-solving behavior that these projects often
require. Conversely, the Planning Fallacy may prevail when pro-
moters engage in profiteering and corruption as they maneuver
to take advantage of information asymmetries and other market
and governance failures. Consequently, the Hiding Hand and
the Planning Fallacy may explain project behavior in different
circumstances [2], [3].
While the Hiding Hand brings to the fore creative problem-
solving behavior during project execution [45], the (intentional)
Planning Fallacy is a step further to the notion of a willful
ignorance or the suppression by promoters of the negative
aspects of projects while accentuating the positive [58]. The
Planning Fallacy, whereby project planners and managers tend
to overpromise and under-deliver, is notably the result of a
combination of an awareness of fuller knowledge and willful
underestimation of project complexity and thus includes the
manipulation of cost and benefit estimates [2], [3]. Noteworthy,
the Hiding Hand and Planning Fallacy are not merely focused
on the project planning phase. Quite the contrary, they both
concern the upstream, midstream, and downstream of projects
[45]. Indeed, the Hiding Hand is characterized by cost overruns
and benefit overruns and the Planning Fallacy by cost overruns
and benefit underruns [34]. Neither the Hiding Hand nor the
Planning Fallacy or any other principle for that matter can alone
account for underperformance in large-scale projects [11].
Furthermore, the Planning Fallacy debate is significant as it
addresses whether ignorance is good or bad for projects and
whether human bias trumps competing explanations of cost
overruns such as scope changes, complexity, and uncertainty
[49]. The debate may help planners and managers understand
the ignorance that may have set a project in motion when it
should not have been undertaken [15]. Alternatively, they may
appreciate how ignorance can beneficially hide difficulties and
eventually bring about unexpected success [34]. The debate is
also consequential for how best to avoid cost overruns and benefit
shortfalls by ensuring the accountability of decision-makers or
applying best practices in project management [18], [48]. Last
but not least, from a theoretical standpoint, the Planning Fallacy
debate matters in that the project management field lacks a
theory of project behavior to better understand how projects take
complex out-turns and, in particular, the circumstances under
which the Planning Fallacy and the Hiding Hand work [3]. In
what follows, we turn our attention to the content of the Planning
Fallacy debate and position the protagonists at its forefront.
The Planning Fallacy debate [15], [34] centers around two
contrasting positions [41]. Let us first consider their underlying
theoretical and methodological assumptions.
A. Planning Fallacy Debate: Theoretical and Methodological
As noted earlier, the Planning Fallacy debate is theoretically
articulated around the Planning Fallacy and the Hiding Hand
principles [30], [37] and methodologically on an (economic)
cost-benefit lens [15] in contrast to a project management lens
[34]. Here, we solely focus on the latter two contributions as
they are the only ones that have empirically provided insights
into whether or not the Planning Fallacy outweighs the Hiding
1) Planning Fallacy Trumps the Hiding Hand Position: In an
article published in the Project Management Journal, Flyvbjerg
[14] lamented a “break-fix” model of megaprojects where it
is first necessary that they reach a break point before planners
and managers attempt to fix the issues that confront them in a
desperate move to win some sort of success. This tendency of
weak upstream planning and poor downstream management, he
claims, underlies his so-called iron law of megaprojects: that is
projects run over budget, over and over again.
Along with the megaproject paradox where projects tend
to fail yet remain sought after, the break-fix model leads to a
preference for those that look economically and socially viable
on paper. In this process of gaming the system or presenting the
project based on best case or even fraudulent information, Fly-
vbjerg [14], argues that the overarching rule for their selection is
often survival of the unfittest, a phenomenon that is explained by
The p-value of the test with the null hypothesis that benefit overrun is actually larger than cost overrun, using Mann–Whitney test (smaller p-values are better).
Bus rapid transit.
Weighted and unweighted average, respectively.
Adapted from Flyvbjerg [15, p. 182].
ignorance, power imbalances, and psychology. Thus, he asserts
that the Planning Fallacy outweighs the Hiding Hand.
“The iron law of megaprojects, …, trumps Hirschman’s Hiding Hand
at a high level of statistical significance, and we know why. The
Hiding Hand is itself an example of optimism and does therefore not
capture the reality of megaproject management. For such capture and
true explanatory power, we must turn to theories of optimism bias,
the planning fallacy, strategic misrepresentation, and principal-agent
behavior” [14, p. 14].
At best, this claim that the Planning Fallacy is being played out
in projects calls for further investigation considering the inherent
flaws in the supporting data [48]. If, however, we are to accept
Flyvbjerg’s [14] view, then the corollary is that the Planning
Fallacy and the Hiding Hand become two competing theoret-
ical principles of project behavior [35]. The Planning Fallacy
rests on two hypotheses. Simply put, the delusion hypothesis
relates to optimism bias or the belief that decision-makers are
less likely to face risks, difficulties and failures than statistical
reality warrants; hence, the honest Planning Fallacy [8]. The
deception hypothesis, however, relates to strategic misrepresen-
tation, which suggests that decision-makers intentionally decide
to undertake projects based on deliberately manipulated cost and
benefit estimates [15], [17], leading to the intentional Planning
Fallacy [8].
Flyvbjerg [14] understands that statistical evidence outper-
forms that of an anecdotal nature. Thus, to further his case for the
Planning Fallacy principle, Flyvbjerg [15] undertook a statistical
test of the Hiding Hand with a larger sample, a database of
2062 projects, of which 327 had data for both cost and benefit
performance. In his conclusions, Flyvbjerg [15] summarizes
Hirschman’s Hiding Hand as being a “disastrous” explanation of
optimistic business cases and a “fallacy of beneficial ignorance”
as it sets in motion projects that should not have been undertaken
(p. 176).
From a methodological viewpoint, Flyvbjerg [15] takes an
economic view, focuses on decision-making, uses a cost-benefit
lens, and conjectures that if the Hiding Hand were at work,
then on average, benefit shortfalls would exceed cost overruns.
These are considered to be ratios of actuals over estimates at the
time of the decision to build (final business case) in real terms
(pp. 182–187). In Flyvbjerg’s [15] paper, cost-benefit ratios are
calculated in absence of full life-cycle costs and benefits, and
based on actual costs that are assessed as outturn construction
costs and actual benefits as first-year benefits. As the Hiding
Hand fails to fit Flyvbjerg’s [15] data, as presented in Table I, he
observes, “on average not only is benefit overrun not larger than
cost overrun, as the Hiding Hand says it would be, but there is
no benefit overrun at all. Instead, we find the opposite, namely
a benefit shortfall (benefit overrun <1)” (p. 182). Flyvbjerg’s
[15] statistical test shows that the Planning Fallacy outweighs
the Hiding Hand by a factor of four to one and reveals that it
occurs in 80% of the projects.
In sum, Flyvbjerg [15] rejects explanations involving the
Hiding Hand and concludes that the average project experiences
a “double whammy” of significant cost overruns and benefit
shortfalls. In so doing, he argues that the Planning Fallacy is
Adapted from Ika [34, p. 378].
the best theory to explain how projects typically work [16]. To
be sure, Flyvbjerg’s [15] critique of Hirschman’s Hiding Hand
has generated a reaction not only regarding his methodological
approach but also his claims. For example, Anheier [2] notes
that by dwelling on the Planning Fallacy, Flyvbjerg’s [15] work
demonstrates an excessively narrow focus and does not address
the critical issues of complexity and uncertainty in project
planning, a point we will revisit later in this article. Room [60]
echoes the narrowness criticism, arguing that in his attempt to
reject the Hiding Hand, Flyvbjerg [15] does not capture the
interconnections that exist between and within projects and their
wider social, economic, and political impacts. Lepenies [44]
further warns of the danger in terms of understanding when
researchers like Flyvbjerg judge the contribution of qualitative
scholarship like Hirschman’s using quantitative analysis with
large samples.
2) Planning Fallacy Does Not Trump the Hiding Hand Po-
sition: Theoretically, the Hiding Hand relies on two pillars.
The “pseudoimitation” pillar, which is akin to a one-size-fits-
all approach to project management, suggests “nothing but a
straightforward application of a well-known technique that has
been successfully used elsewhere” [30, p.21]. The “pseudocom-
prehensive program” pillar rather considers the project as part
of a strategy, not a piecemeal initiative. However, it falls foul to
the illusion that projects are unsuccessful due to “the failure to
follow the experts’ instructions rather than on the shortcomings
of their advice” [30, p. 23].
Dimly aware of Hirschman’s [30] battle against cost-benefit
analysis, Ika [34] argues there are three fundamental flaws in
Flyvbjerg’s [15] refutation of the Hiding Hand: 1) a logical and
rhetorical flaw or a strawman fallacy in that a weaker version
of the Hiding Hand argument without key notions of difficul-
ties, problem-solving abilities, and creativity was discredited;
2) an empirical shortcoming in that Flyvbjerg [15] considers
the type of project—infrastructure—where the Hiding Hand is
least likely to work due to the prevailing approach of planning
one’s work and working one’s plan, as noted earlier; and 3) a
methodological error or the failure to consider the full life-cycle
costs and benefits and unintended project consequences so fun-
damental for a valid appraisal of the Hiding Hand. Ika [34] thus
takes issue with the narrow cost-benefit lens used by Flyvbjerg
[15] to refute the Hiding Hand.
As a consequence, from a methodological standpoint, Ika
[34] adopts instead a project management lens and an ex-post
performance evaluation focus, and proposes a more nuanced
framework to assess project performance. Table II provides a
summary of Ika’s [34] findings. Ika [34] assumes that the Hiding
Hand works when we underrate difficulties, problem-solving
abilities, and sometimes still succeed albeit unexpectedly. In
testing these assumptions, Ika [34] demonstrates that the Hiding
Hand explanation fits with projects that, although successful in
that they delivered benefits to their client, would be considered
project management failures by standard metrics of time and/or
budget adherence.
Note: Based on Kreiner [41] and Love et al. [51].
Contrastingly, the Planning Fallacy explanation is more com-
pelling when times, costs, difficulties, creativity, and benefits
are close to best-case scenarios. Thus, the Planning Fallacy
falls within the category of project management and project
failures where not only time and/or cost overruns but also
benefit shortfalls prevail. Acknowledging the importance of
reproducibility of research and drawing, like Hirschman [30],
on 161 World-Bank funded projects of varying types, Ika [34]
attempted to replicate Flyvbjerg’s [12] findings while applying
this hypothesis: “If Flyvbjerg is correct, then the Hiding Hand
would typically be less empirically common than the Planning
Fallacy” (p. 378).
Overall, Ika [34] concluded that the Hiding Hand outweighs
the Planning Fallacy by a factor of four to one; the opposite of
Flyvbjerg’s [15] results. Like Hirschman [30], Ika [34] claims
that ignorance can be good and eventually lead to unexpected
project success and that Flyvbjerg’s statistical analysis does not
disprove the Hiding Hand (p. 371). Moreover, Ika [34] noted that
the cost-benefit lens used by Flyvbjerg [15] is flawed and does
not do justice to the Hiding Hand as the focus is on the upstream
and downstream aspects of projects with no consideration being
given to the messy and complex processes that go on in between,
leading Ika [34] to suggest that Flyvbjerg [15] had treated the
function of project management as a black box [34, p. 380].
Nevertheless, whether or not the principles of the Planning
Fallacy and the Hiding Hand can be tested against data and
evidence remains an open call [49], [67]. As Kreiner [41] sug-
gests, the protagonists of the Planning Fallacy debate espouse
two underlying but conflicting positions, the understanding of
which settles how we judge the data and where we look for
evidence. A case in point, if the Planning Fallacy trumps the
Hiding Hand, then bias trumps error [49] and scholars cannot
afford to ignore these aprioriconvictions. Consequently, there
is a need to further examine the foundations that lay beneath the
Planning Fallacy debate.
B. Planning Fallacy Debate: Ontological and Epistemological
We submit that, inter alia, a further source of disagreement
in the Planning Fallacy debate rests with the taken-for-granted
yet underlying and crucial ontological and epistemological po-
sitions espoused by the protagonists [15], [34], [41], [47], [51]
(see Table III). Indeed, the root assumptions of the debate
about ontology (what is out there to know) and epistemol-
ogy (how we can know about it) impact the way the pro-
tagonists conceive reality and view knowledge (e.g., what is
“true” or “false”) [20], [65]. While there are different ways of
unraveling the ontological and epistemological positions behind
the Planning Fallacy debate, we now focus on the contributions
of Kreiner [41].
From an ontological point of view, the Planning Fallacy
debate assumes conflicting views as to what constitutes a project
[41]. Markedly, the Planning Fallacy proffers a narrow view of
projects as deliberate leaps into a planned future. Hence, plan-
ners and managers may objectively establish their firm success
criteria upfront in a plan and consider project performance as be-
ing “causally insulated” from the project management process.
Instead, the Hiding Hand proffers a broader view of projects
as processes of pursuit, experimentation, and discovery. Thus,
owing to a consequential agency and unforeseen resourcefulness
in the face of uncertainty and complexity, what is seen as a
project management failure (e.g., cost overrun) may become a
project success (e.g., benefit overrun).
As Kreiner [41] argues:
“If, by axiom, we treat the right forecasts as the way to success, there
is nothing much we can learn except for more ways that a project
can fail. However, following Hirschman, we might think of success
criteria as partly endogenously established, thus functioning as a
premise for and as an outcome of the project process” (p. 406).
While the Planning Fallacy principle rests on the fundamental
conviction that the root cause of a cost overrun or benefit shortfall
is bias [15], the Hiding Hand proffers that it is both bias and error
[34]. Indeed, as planners and managers tend to be optimistically
biased under both principles, a key difference remains that
the Hiding Hand relies on a “creative error,” leading them to
underestimate their sheer creativity only to stumble into success
in the face of unexpected challenges [30, p. 16].
Equally, from an epistemological standpoint, the twin princi-
ples of the Planning Fallacy and the Hiding Hand appear to
hold contrasting views when it comes to the task of project
management and the role of agency in “successfulness.” The
former proffers an ideal of knowing and building a body of
knowledge as the destination and the latter, learning and being
open to new ways of learning as the journey [41]. As such, the
Planning Fallacy cherishes the idea of purposive human action
and thus assumes that, collectively, we know how to deliver
projects successfully. So, if we fail it is because we have not
applied, properly or at all, the best practices inherent within a
body of knowledge. The task of the management process is hence
equated to being “inconsequential” for project performance as
we need to adhere to the plan. After all, as planners and managers
cannot collectively plead they do not know how to plan and
manage projects, when projects fail, they are seen as planning
or governance failures [15]. This leads Kreiner [41] to suggest
that “the poor track record of projects is no reason to renounce
the ideal. The challenge is to bring practice close to the ideal,
not vice versa” (p. 405).
Contrastingly, the Hiding Hand assumes we should not pre-
sume we already know what success is and how to measure it.
Moreover, we cannot know in advance what is lying in store
for us in projects due to their inherent complexities and uncer-
tainties. Thus, the task of project management is to escape the
straitjacket of the established bodies of knowledge and look for
alternative paths down the road, search for opportunities at every
corner of its “long voyage of discovery” [30, p. 35], exercise
practical judgment and improvise in light of the unforeseen
circumstances, and learn from experience so as to eventually
stumble into success. Hirschman [32] calls this search for the
“unique rather than the general, the unexpected rather than the
expected and the possible rather than the probable” possibilism
[44]. As Kreiner [41] claims, “project management is the never-
ending task of exercising the right agency, attending wisely to
what is happening, and of drawing on accumulated experience
in a casuistic manner” (p. 406).
In sum, the pillars supporting the Planning Fallacy and the
Hiding Hand principles appear to be conflicting. However, as
we noted earlier, when the two antagonistic positions assume
the veracity of their stance without considering synthetic al-
ternatives, we run the risk of framing problems incorrectly
and obtaining results that merely seek confirmation rather than
clarity or validity. Like Kreiner [41], we contend there is room
to reconcile these “incommensurable” though “supplementary”
positions (p. 406) so as to advance the Planning Fallacy debate.
Below, we complexify the debate and outline a balanced theo-
retical explanation to account for how projects work.
In the face of a theoretical deadlock existing between the
characteristics of the Planning Fallacy and the Hiding Hand,
we contend that there is a need to reconcile the twin principles
of project behavior, but in order to do so, the first step is to
complexify the debate.
A. Do Not Simplify, Complexify: From a Disjunctive to a
Conjunctive Style of Thinking
Large-scale projects are often confronted with complexities
and uncertainties [7], [52], [62]. Thus, following Tsoukas’s [70]
call to complexify complexity in both theory and practice, we
complexify the underpinning of the Planning Fallacy debate. In
this article, we have chosen to focus on Tsoukas’s [70] work,
an organization theory view, as it aligns with Ashby’s law of
requisite variety (“only variety can absorb variety”) [4, p. 207],
Weick’s position that “it takes richness to grasp richness” [74,
p. 16], and Morin’s [43] recommendation to shift from the
paradigm of simplification to that of complexification. Put dif-
ferently, Tsoukas [70] is aligned with the tradition of complexity
thinkers, which suggests that complex management challenges
require complex ways of thinking, a stance that we concur within
our argumentation. More specifically, according to Tsoukas [70],
following the cybernetic work of von Foerster [72], projects
should not be considered as trivial machines or “systems whose
outputs and inputs are connected with a predetermined rule” [70,
p. 139] but instead as nontrivial machines, which “keep changing
their rule of transformation” [70, p. 140].
This leads us to suggest that Tsoukas’s [70] view is especially
instructive as it views project management as a practical, not
a mere theoretical, discipline that requires “complex types of
inquiry” for a complex object of study (p. 138). Accordingly,
Tsoukas’s [70] view calls for scholars to move from a disjunctive
and trivial machine to a conjunctive and nontrivial machine
style of thinking, which builds on an open world ontology, a
performative epistemology, and a poetic praxeology (p. 132).
An open world ontology conveys the idea that the real project
complexity world is always in a process of becoming and thus
under a number of interrelated and changing influences that
scholars must not allow themselves to disregard. A performative
epistemology draws attention away from complexity as a thing to
theorizing it as a process. In doing so, it highlights the influence
of scholars as they create complexity knowledge and construes
knowing as action. A poetic praxeology views the practitioner as
a purposeful, active, and reflexive “nontrivial agent who, while
inevitably shaped by the discursive practices he/she is thrown
into, he/she necessarily shapes them back by taking a stand on
his/her experience through undertaking purposive action that
is relatively opaque in its consequences, variably clear in its
motives and desires, and contextually situated” [70, p. 148].
A case in point, the Planning Fallacy debate falls prey to
disjunctive thinking as it divides the project domain, sets apart
the scholar and the project under consideration, and overlooks
the complexity of that world, including context, values, and
time [70]. The upshot is that the debate has been framed in
either-or choices between the Planning Fallacy and the Hiding
Hand or between bias and error, notwithstanding Flyvbjerg
et al.’s[18] assertion that there is no dichotomy and therefore
delusion and deception and bias and error are not black and white
arguments (p. 185). Maintaining this dichotomy, we submit, is
unlikely to lead to advances in theory and may actually act as a
thought-stopper [29], [56]. As a result, we note a tendency for
protagonists on both sides of the debate to “acknowledge the
complexity of the world but deny it in [their] theorizing” only to
fall foul of the risk of oversimplifying their theories and having
practitioners question them as they appear detached from reality
[70, p. 135].
For example, Flyvbjerg et al. [18] acknowledge the complex-
ity of cost overruns as they state that “it is not always clear
how cost overrun is defined, why it happens, and how to best
avoid it, which has led to misperceptions about the concept with
policy-makers, planners, investors, academic, and the public”
(p.175). Still, as the cost overrun problem centers around human
bias, according to Flyvbjerg et al. [18], their solution is to
oversimplify complexity and apply Reference Class Forecasting
(RCF), which they admit is “a simplification, like any forecast,
will be” but one that “has been documented to produce better
estimates on average than any other simplification” (p. 185).
Notably, RCF is supposed to accommodate the risk of optimism
bias and strategic misrepresentation being present when an
estimate is formulated.
However, Flyvbjerg et al. [17] and Flyvbjerg [15] have never
examined the processes associated with formulating a project’s
cost estimates. As a result, the accuracy of RCF as a risk
management technique, especially in the face of complexity,
remains questionable [49], [69]. The disjunctive simplification
of complexity does not help the Planning Fallacy debate. While
we are not against simplicity per se, we are “against mistak-
ing superficial simplicity for simplicity that is profound” [74,
p. 662].3Certainly, the question—what explains cost overruns
and benefit shortfalls—may lie at a previously unexplored nexus
between the Planning Fallacy and the Hiding Hand. Indeed,
the Planning Fallacy (Malevolent Hand) and the Hiding Hand
(Benevolent Hand) have two other siblings, which have not been
addressed in the project management literature: the 1) Protecting
Hand and 2) Passive Hand.
As Anheier [2], [3] suggests, the aforementioned Four Hands
or theoretical principles of behavior individually and collectively
hold a particular relationship to complexity and uncertainty.
Indeed, they emerge as a result of the relationship that exists be-
tween the state of knowledge at the start of the project (ignorance
or awareness) and the estimation of complexity (underestima-
tion or overestimation). The Hiding Hand arises as a result of
two offsetting underestimations of knowledge and complexity,
whereas the Malevolent Hand is the outcome of the combination
of an awareness of fuller knowledge and willful underestimation
of project complexity.
The Protecting Hand or what has been known as the pre-
cautionary principle in policy-making and planning takes hold
when there is both an awareness of a lack of fuller knowledge
and an overestimation of complexity. The Passive Hand occurs
when planners overestimate project complexity even though the
state of knowledge is such that few unknowns should come as a
surprise [3].
The Four Hands, respectively, perform different functions.
The Hiding Hand makes active problem-solving possible in the
face of ignorance. The Malevolent Hand exploits the relative
ignorance of third parties such as investors for the sake of
profiteering. The Protecting Hand tackles ignorance through
risk management and worst-case scenario planning. The Pas-
sive Hand stifles creativity and avoids risks. Table IV presents
a sketch of the Four Hands and outlines how they relate
to complexity and uncertainty as well as the functions they
While under the Planning Fallacy projects face cost overruns
and benefit underruns and there is not enough creativity to save
the day, the Four Hands taken together offer greater explanatory
power for project behavior [49]. Notably, the Hiding Hand has
a downside in that it pushes adventurism and risky behavior to
the maximum under uncertainty, which eventually leads to a
project’s failure. The Malevolent Hand, however, has an upside
as it may help game the system not merely for personal gains
but to make things happen, especially where there are planning
obstacles and system blockages [3]. Altogether, the Four Hands
could help project theorists and practitioners shy away from
what Hirschman [31] would call “the propensity to see gloom
and failure everywhere” (p. 337). For example, the Hiding Hand
delivers unexpected success and the Passive Hand may well
lead to project success. The Four Hands alone are not enough,
however, to surmount the shortcomings of the disjunctive and
unproductive simplification of complexity, which is inherent
within the Planning Fallacy debate.
3Let us note that Weick [74] borrows this argument from Schutz [61] who
claims that understanding proceeds through three stages: 1) superficial simplic-
ity; 2) confused complexity; and 3) profound simplicity.
Adapted from Anheir [2], [3].
Thus, we would propose a conjunctive style of theorizing
for advancing project behavior research and seek to make con-
nections between different, but interconnected and interdepen-
dent, or even paradoxical, ambivalent or contradictory aspects
of human experience [70]. We therefore propose a theoretical
position for project behavior based on a synthesis between the
dialectical poles that have formed and framed the Planning
Fallacy debate. Hence, we suggest moving away from dualisms
like Planning Fallacy versus Hiding Hand [15], [34] or bias
versus error [18], [48] to dualities [67] of Planning Fallacy
and Hiding Hand or bias and error, which altogether better
reflect the lived experience of delivering large and/or complex
B. Moving the Planning Fallacy Debate Forward: The
Emergence of a Balanced Theoretical Approach and a New
Principle of Project Behavior
As we have put forward in this article, to reconcile the twin
and dualist principles of the Planning Fallacy and the Hiding
Hand, there is a need for a balanced theoretical approach to better
understand how projects work, and thus for a new principle of
project behavior. With this in mind, we turn our attention to the
pioneering work of the German psychologist Gerd Gigerenzer,
Daniel Kahneman’s strongest critic over the years, and their
debate over whether human decision-making is success-prone
[19] or error-prone [39].
1) Gigerenzer–Kahneman Debate on Bias and Error in
Decision-Making: In essence, Gigerenzer [25] takes issue with
Kahneman’s heuristics-and-biases approach and the underlying
statistical reasoning where statistical analysis always trumps
intuition and bias always outweighs error [37]. The main goal of
the heuristics-and-biases approach was “to understand the cog-
nitive processes that produce both valid and invalid judgments”
[39, p. 582]. Contrastingly, recognizing that people make deci-
sions under time, knowledge, and computational limitations and
borrowing Simon’s [63], [64] cognitive and ecological notions of
bounded rationality and “satisficing,” Gigerenzer and Goldstein
[24] propose a fast-and-frugal heuristics approach or a sort of
rules of thumb way for decision-making in complex real-world
Markedly, fast-and-frugal heuristics can be defined as smart
rules of thumb or “simple, task-specific decision strategies that
are part of a decision maker’s repertoire of cognitive strate-
gies for solving judgment and decision tasks” and that “yield
decisions that are ecologically rational rather than logically
consistent” [59, p. 1]. In other words, decision makers should
not upfront reject heuristics but instead “find out when they
work and when they don’t” [25, p. 281]. As Gigerenzer and
Goldstein [24] warn, their unique approach focuses on “the
psychological and ecological rather than on logic and probability
theory” and “questions classical rationality as a universal norm
and thereby questions the very definition of ‘good’ reasoning
on which both the Enlightenment and the heuristics-and-biases
views were built” (p. 651).
In layman’s terms, when it comes to risk, instead of focusing
on how bad people are at making decisions [37], Gigerenzer [25]
endeavors to understand how to help people use simple rules of
thumb to obtain good outcomes. Gigerenzer [25] seeks to move
away from probability theory and embrace smart heuristics by
preferring gut feelings as effective tools for dealing with uncer-
tainty. Moreover, Gigerenzer [25] argues that Kahneman’s fast
but error-prone unconscious “system one” versus the conscious
and more reliable “system two” stories is a dichotomy in the
sense that they hold “opposing characteristics” (p. 281). In this
instance, all heuristics are considered to be bad or second best.
Moreover, simple heuristics and precise models for so-called
rational decision-making such as Bayesian models are lumped
together and cast as being unreliable [1]. Kahneman’s system
one versus system two does not predict anything, but explains
almost everything after the fact [19]. Bearing in mind this view,
we argue that this is also the case of Flyvbjerg’s work on the
Planning Fallacy as the best explanation for a project’s cost
overruns and benefit shortfalls.
Gigerenzer’s critique of Kahneman’s [37] approach to
decision-making also focuses on an outside versus inside view,
which forms an innate feature of Flyvbjerg and his colleagues’
Planning Fallacy [18]. When they take the inside view and make
forecasts themselves, decision-makers may be fooled by opti-
mism bias (delusion) and/or swayed by strategic misrepresenta-
tion (deception). To mitigate delusion and deception in project
settings, the trick is to acquire objective past performance data
from similar projects [46]. Hence, as noted earlier, the introduc-
tion of the optimism bias uplift and RCF [18], which have been
advocated as ways to improve the accuracy of cost estimates
and forecasts. In Gigerenzer’s [23] view, statistical thinking in
general and probability theory in particular as advocated by
Kahneman and Flyvbjerg works best in a context of risk when
all relevant alternatives and consequences and probabilities are
known. Yet, in a complex and uncertain world where unknown
unknowns prevail, probability theory not only falls short but
creates an illusion of certainty and becomes part of the problem
[25], pp. 2–42]. This has led Gigerenzer [25] to suggest that “the
two-system view has overlooked the distinction between risk and
uncertainty” (p. 281). In other words, Kahneman’s approach may
well work in a risk context but not under uncertainty.
Of course, this distinction is not new in the project manage-
ment field. It has been long recognized that conventional project
management approaches “can be inappropriate and potentially
actually disadvantageous” for projects that face high levels of
complexity and uncertainty [75, p. 505]. It is customary to
distinguish between foreseen and unforeseen uncertainty [10],
known and unknown unknowns [7], [58] or between risk and
uncertainty [25], [45], and therefore between conventional risk
management methods and uncertainty-driven ones [10], [45].
However, the temptation to “understand, reduce, respond” [52,
p. 1076] is strong in project management theory and practice.
Therefore, when it comes to dealing with uncertainty, there is a
tendency in the literature to adopt a reductionist perspective;
that is to seek to reduce, not embrace uncertainty [70]. For
example, while some authors consider that many unknowns
are not really unknown at all and thus differentiate between
knowable and unknowable unknowns, they still fall back to
reducing unwelcome surprises or uncertainty [7], [58].
Hirschman [30] warned against this reductionist tendency as
he submitted that “optimal rather than minimal uncertainty or
difficulty is the appropriate as well as the only feasible goal” (p.
85). Echoing this point, Gigerenzer [25] suggests that when mak-
ing decisions, we may turn to two sets of tools: “RISK: If risks
are known, good decisions require logic and statistical thinking.
Uncertanity: If some risks are unknown, good decisions also
require intuition and smart rules of thumb” (pp. 23–24). An
example of a statistical analysis tool is RCF [18]. An example
of rule of thumb, notably in a risky situation, is the max–min
criterion or selecting “the project with the least threatening worst
case, eliminating the left tail of the outcome distribution (in
project management this is referred to as ‘ensuring the floor’)”
[45, p. 598].
Additionally, Gigerenzer [25] states that “by suggesting a
false sense of certainty, models of a known risk can promote
rather than prevent disaster” (p. 36). He further disputes the
assumption that rational decision-making models always lead
to the best outcomes. It is time for the project management
field to get past what Gigerenzer [26] calls “a bias bias” or the
tendency to spot bias where there is none. Thus, the idea that
cost overruns and benefit shortfalls are all about human bias [18]
is exaggerated [49], [50], [51]. Like the gloomy view of projects
the proponents of the Planning Fallacy proffer, they present an
unfairly negative view of the human mind where it is believed
that people are bad at making decisions [25]. Thus, in focusing
only on bias, they push the idea that people are “idiots” [1] or
that forecasters are “fools” and “liars” when they incorrectly
determine passenger demand forecasts [68]. In essence, fools
are aligned with people who are subject to optimism bias and
liars with those who practice strategic misrepresentation [18].
Gigerenzer [25], however, views people as being neither
inherently stupid nor chronically misled by their gut feelings,
but merely ill-educated in risk literacy, arguing that if we could
teach them when to trust their guts more and turn to simple
and learned rules of thumb, they would be in a better position to
handle risk and uncertainty. While Kahneman [37] seeks to warn
people against their own biases and chooses to familiarize them
with rigorous statistical analysis, Gigerenzer [25] wants to em-
power decision-makers with simple and learned rules of thumb
(heuristics) to help them navigate the complex and uncertain
settings in which they operate. For Gigerenzer [25], education
and teaching of critical thinking about statistical analysis and
probability theory is the best way to understand and manage
2) Toward a New and Balanced Principle of Project Behav-
ior: The Fifth Hand: In light of the above discussion, we suggest
that Gigerenzer’s [25] stance on decision-making is akin to a
conjunctive theorizing and a profound simplicity inasmuch as
his ideas entertain dualities not dualisms, and, thus, display,
as we have seen, ambivalences, tensions, contradictions, and
paradoxes [61], [70], [74]. In so doing, they provide a balanced
theoretical approach that is needed to advance and complexify
the Planning Fallacy debate. As a result, we would be better
positioned to reconcile the issues of bias and error, optimism
bias and pessimism bias, risk and uncertainty, statistical analysis
and intuition, biases and heuristics, governance and project
management paradigms for cost overruns and benefit short-
falls explanations. Considering this contextual backdrop, we
suggest an overarching principle—the Fifth Hand—that can
provide a balanced theoretical explanation of project behavior
and pragmatically reflect the lived experience of managing
The Fifth Hand shares with the Hiding Hand and the Plan-
ning Fallacy an underestimation of costs and challenges and an
overestimation of project benefits and odds to success. Like the
twin principles, it only helps understand project performance
in hindsight as it allows complexity and uncertainty to take
hold. Like the Hiding Hand and the Planning Fallacy, the Fifth
Hand has an upside and a downside. While its advantage is
to help make the best of the evolving context surrounding the
project and learn from experience, its disadvantage consists
in an indeterminacy of project performance as it becomes a
feeling project stakeholders collectively feel about what had
been achieved and not a calculation decision-makers make in
advance of the project [41].
Unlike the Hiding Hand, the Fifth Hand should not just
focus on “felicitous and surprising escapes from disaster” [67,
p. xiii], that is, help projects succeed in unforeseen ways [34].
Nor should it, like the Planning Fallacy, merely emphasize cost
overruns and benefit shortfalls. Instead, it should provide project
planners, managers, and teams with an understanding of when
explanations involving the Planning Fallacy or the Hiding Hand
may well work in the true spirit of ecological rationality [25].
Thus, under the Fifth Hand, any sort of project performance
is possible including the shades of grey between success and
failure. The Fifth Hand hence accommodates failure-success
paradoxes (e.g., the Hiding Hand), success-failure paradoxes
(e.g., projects that come within budget but fall short of business
expectations), and outright failures (e.g., the Planning Fallacy).
Creativity may be underestimated, overestimated, exactly esti-
mated or even triggered or stifled or not before and after project
completion. Ignorance can thus be good or bad according to
the circumstances [34]. The Fifth Hand thus fits with many
different types of projects in contrast to the Hiding Hand, which
favors emerging or changing fields such as semiautonomous
cars or health care, and the Planning Fallacy, which thrives in
well-regulated fields such as air or road infrastructure and in an
organizational culture where drawing and learning from expe-
rience is rewarded [3]. The Fifth Hand may well accommodate
pessimism bias in that it also allows for an overestimation of
costs and challenges and an underestimation of project benefits
and odds to success [50], [51].
Moreover, as we theorize, following Gigerenzer [25], the Fifth
Hand would be risk savvy as it can assist people to understand
when to trust their guts, use statistical analysis or learned rules
of thumb and better handle the project scope, complexity, risk,
uncertainty and management along with surprises down the
road. This new principle should promote the optimal outcomes
possible in light of the sheer circumstances surrounding the
proposed project. Unlike the Planning Fallacy that seeks to
simplify complexity, the Fifth Hand even further complexify
complexity and notably holds an even greater ability to handle
tensions than the Hiding Hand. This is attested by the shades
of grey between success and failure it allows. Thus, there is a
need in the Fifth Hand realm for even broader rationality as in the
Hiding Hand compared to the narrower rationality underpinning
the Planning Fallacy [41].
After all, projects harbor tensions between projections and
plans, decisions and actions, outputs and outcomes, success
criteria and success, and project management success and project
success, the ignorance of which may be the reason why projects
fail more than they succeed [34], [40], [41]. As such, the Fifth
Hand would open up the Planning Fallacy debate and thus en-
tertains “more things,” “a greater variety of interpretations” and
enables people to “differentiate their ideas, argue, listen to one
another, work to reconcile differences, and commit to revisiting
and updating whatever profound simplicities they settle on as
guidelines for action” [74, p. 663]. Table V summarizes our key
insights on how to move forward the Planning Fallacy debate.
Table VI contrasts the Fifth Hand with both the Hiding Hand
and the Planning Fallacy.
In light of the above, we would suggest an antidualist ontology
and a pragmatist epistemology for the Fifth Hand. Indeed, such
an antidualist stance fosters a broader notion of projects not
only as processes of pursuit, experimentation, and discovery but
a view that would overcome and reconcile opposing categories
like bias and error or the Planning Fallacy and the Hiding Hand.
People are thus plural and paradoxical, and may be subject
to both bias and error. Moreover, the pragmatist epistemology
proffers the belief that a true theory is what people find useful
in the face of complexity and uncertainty and that much like
action-taking and meaning-making are part of the same process,
action and thought cannot be separated [13].
3) Agenda for Research and Methodological Challenges: In
line with the Fifth Hand as we denote in Table VI, the research
agenda we propose is twofold.
1) In what circumstances does the Fifth Hand really work,
when, why, and how? For example, does the type of
project, industry-sector, institutional, organizational, or
cultural setting matter?
2) How can we ensure that planners, managers, and teams
are empowered and risk savvy so that they know when
to use statistical analysis or learned rules of thumb to
deliver projects successfully in the face of uncertainty and
However, this complexification of the Planning Fallacy debate
does not come without its methodological challenges. We note
that the above agenda for research presents several challenges to
project scholars, whether they focus on ex-ante decision-making
and a cost-benefit lens [15] or on ex-post performance evaluation
and a project management lens [34]. While difficulties may be
measured by risks and uncertainties (or unwelcome surprises),
other issues such as creativity or problem-solving abilities that
are so critical for the Hiding Hand assessment are still difficult
to measure.
Even with a cost-benefit lens, access and availability of whole
life-cycle costs and benefits of projects is a challenge to demon-
strate the presence of the Hiding Hand, the Planning Fallacy,
or the Fifth Hand, as information (e.g., feasibility studies, cost
and benefit data and final accounts) is generally incomplete,
often contains noise and is invariably confidential. Seldom, if at
all, is the performance of projects measured during their oper-
ation phase. Thus, the determination of actual benefits remains
burdensome, as performance measurement is rarely an innate
feature of a project’s operations.
Another methodological challenge centers around the deter-
mination of optimism bias within a cost or benefit estimate that
is typically prepared by a team. Notably, the Planning Fallacy
was originally based upon experiments whereby individuals
were required to complete tasks (not teams) within a specific
time-period. Moreover, the emphasis of the (original) Planning
Fallacy has been on time, and not the determination of cost and
benefits. Until now, there is no reliable empirical evidence to
support the presence of optimism bias in forecasting costs or
benefits within a team environment [51]. In the case of strategic
misrepresentation, we face a similar encounter as promoters and
planners would unlikely admit that they have lied or fudged the
figures to ensure their projects go ahead.
Finally, the Hiding Hand and the Planning Fallacy may ex-
plain project performance only in hindsight, not in foresight.
Indeed, it is only in retrospect that we can know whether com-
plexity or creativity has been underestimated or overestimated as
project behavior and project performance may be coproduced by
the project management process. As such, in line with attribution
theory, the Hiding Hand and the Planning Fallacy may at best
represent attribution errors about project performance. We tend
to blame deviations from plans and targets excessively more on
planners and managers than on the complexity of both the cir-
cumstances and the project [40]. This makes the twin principles
difficult to assess empirically [41]. The issues we have identified
for the Planning Fallacy and the Hiding Hand equally apply to
the Fifth Hand.
It has been acknowledged that there has been a paucity of
thought-provoking academic debates within the project man-
agement literature. Without such debates, we stymie critical
thinking and creativity and the ability to innovate and respond to
change. Furthermore, there is a danger that scholars may become
complacent and unresponsive to the demands and needs of orga-
nizations and governments, which projects in particular the large
and/or complex ones should meet. Over the last couple of years,
however, there has been a debate brewing in the background
that has focused on explaining how projects work: the Planning
Fallacy versus Hiding Hand or the Planning Fallacy debate.
In sum, this article presented the case for a new project
behavior principle, a Fifth Hand that would reconcile bias and
error, the Planning Fallacy and the Hiding Hand, optimism bias
and pessimism bias, risk and uncertainty, statistical analysis
and intuition, biases and heuristics, governance and project
management paradigms for cost overruns and benefit shortfalls
explanations and, above all, empower planners, managers, and
teams. As a result, the article proffers an antidualist ontology
and a pragmatist epistemology for the Fifth Hand that allow
greater accommodation of complexity and uncertainty. More
importantly, however, it overcomes the unproductive Hiding
Hand versus Planning Fallacy stalemate in which the debate
was caught from an ontological, epistemological, theoretical,
and methodological point of view.
From a practical standpoint, in contrast to the gloomy view of
the Planning Fallacy and the serendipitous view of the Hiding
Hand, the Fifth Hand pragmatically considers projects as even
more complex and messy processes of pursuit, experimentation,
and discovery with many shades of grey not only between op-
timism and pessimism but also success and failure. It construes
planners and managers as plural and paradoxical, optimistic and
pessimistic, and prone to both bias and error, but with the agency
to make the best of the evolving context and draw and learn
from experience in the face of complexity and uncertainty. In so
doing, while the Fifth Hand, like the Hiding Hand and the Plan-
ning Fallacy, may not help understand project performance in
foresight, this article contributes to project management theory
and practice, especially in large-scale project settings. The key
questions remain whether or not the Fifth Hand can be assessed
empirically; in what circumstances the Fifth Hand works; and
how to empower planners and managers so that they know when
to use statistical analysis or learned rules of thumb, especially in
conditions of complexity and uncertainty. This, however, goes
beyond the remit of this article and is what we will turn our
attention to in our future works.
The authors would like to thank T. Browning, Professor at the
Neely School of Business and Co-Editor-in-Chief of the Journal
of Operations Management and K. Kreiner, Professor Emeri-
tus at the Copenhagen Business School for their eye-opening
comments on two preliminary versions of the paper. They are
also grateful for the encouraging feedback they generously
received on the first draft of the paper at the 7th International
Megaprojects Workshop at Montreal in 2019. Notably, they are
indebted to C. Bredillet, Professor and Dean at the Université du
Québec à Trois-Rivières and S. Tywoniak, Professor at the Telfer
School of Management who have helped shape their antidualist
and pragmatist stance in the face of uncertainty and complexity.
Last but not least, this article could not have crossed the finish
line without the support and critique of the Department Editor,
Prof. Y. H. Kwak and the four anonymous reviewers. Reviewer
four was particularly helpful. By the same token, they extend
their thanks to the Editor-in-Chief, Prof. T. Daim, who shared
the great news of the acceptance of the article with them.
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Lavagnon A. Ika receivedthe Ph.D. degree in admin-
istration from the Université du Québec, Montréal,
QC, Canada, in 2011.
He is currently a Professor of project management
with the Telfer School of Management, University
of Ottawa, Ottawa, ON, Canada. His research has
been published in prestigious journals such as the
GINEERING MANAGEMENT,Production Planning and
Control, Transportation Research Part A: Policy and
Practice, International Journal of Project Manage-
ment,andProject Management Journal.
Dr. Ika is an Associate Editor for the International Journalof Project Manage-
ment and a member of the distinguished Academic Boards of the international
project management associations PMI and IPMA. His work on project behavior
has earned him an Emerald Outstanding Paper in 2017 and an IPMA Research
Award in 2017.
Peter E. D. Love received the Ph.D. degree in
operations management from Monash University,
Melbourne, VIC, Australia, in 2002, and the Higher
Doctorate of Science for his contributions in the field
of civil and construction engineering from the Curtin
University, Perth, WA, Australia, in 2012.
He is currently a John Curtin Distinguished Pro-
fessor with the School of Civil and Mechanical En-
gineering, Curtin University. His research interests
include operations and production management, re-
silience engineering, infrastructure development and
digitization in construction. His research has appeared in leading journals such
as the European Journal of Operations Research,Journal of Management
Information Systems,Journal of Management Studies, IEEE TRANSACTIONS
IN ENGINEERING MANAGEMENT,International Journal of Operations and Pro-
duction Management,Production Planning and Control,andTransportation
Research A: Policy and Practice.
Jeffrey K. Pinto received the Ph.D. degree in or-
ganization theory from the University of Pittsburgh,
Pittsburgh, PA, USA, in 1986.
He is the Andrew Morrow and Elizabeth Lee Black
Chair in Management Technology with the Black
School of Business, Penn State–Erie, The Behrend
College, Erie, PA, USA. He is the author or editor of
more than 25 books. His research has been published
in the Management Science,Research Policy,Journal
of Management,Expert Systems With Applications,
Sloan Management Review,Journal of Management
Studies,Journal of Product Innovation Management, and the IEEE TRANSAC-
... Ultimately, the ongoing debate regarding the Hiding Hand has led to it being considered a competing, or even complementary, explanation to the Planning Fallacy [78], [79], [83], [84]. ...
... Even though considerable support exists for the Planning Fallacy theory explanation [85][86][87], it is not without methodological and theoretical limitations, which we will address in the next section of this article. We hasten to note that the construction engineering and management and project management literature, bar the work of a few authors such as Ika et al. [79], Liu and Napier [88], Jennings [89], and Lind and Brunes [90], has been unable to provide original and adequate explanations of cost overruns beyond the studies published before 2002an explanatory theory has not been forthcoming. Needless to say, we repeatedly see the same causes being identified and a tendency to focus on explaining the failings of a project's internal management and operations [91][92][93]. ...
... While the work of Flyvbjerg et al. [7] has been identified as seminal [85], several authors have raised concerns about the reliability and validity of the work and the use of RCF [2], [78], [79], [88], [95], [96]. Hence, the truth claims and causal mechanisms underpinning the Planning Fallacy explanation for cost overruns, though compelling, are still an open question. ...
Full-text available
The cost overrun phenomenon plagues capital projects worldwide. While policymakers and practitioners are aware of the potential for cost overruns to occur while procuring their projects, they have struggled to mitigate them. This article takes stock of cost overrun research and suggests two major periods stand out. First, it focuses on the period from 1960 to 2002 and briefly reviews studies examining issues influencing cost estimation accuracy. Then, we look at the present period (2002 to 2022), where the Planning Fallacy theory has been championed and identified as the best way to explain why cost overruns occur. While the Planning Fallacy has filled the theoretical void in the literature, we question its legitimacy as it has been unable to effectively address the cost overrun phenomenon. Moving forward, we suggest a line of inquiry based on the theoretical polyphony of the 'Fifth Hand' principle, which offers a new framing to remedy cost overruns in capital projects.
... One key issue here is where the 'original budget' is specified, as this is needed to consider whether there has been 'cost overrun': the long gestation period of public projects means that estimates can rise (or fall) during this period -we will look further at this in a few paragraphs. Another key issue is the role of the 'Hiding Hand' in projects, an idea, due to Hirschman, discussed at length in Ika et al. (2021) (with Love again and Pinto) pointing to "projects such as the Danish Great Bell Toll Bridge, the German Karlsruhe-Bretten Light Rail Line, the Sydney Opera House in Australia and the US Hoosac Tunnel, which all experienced significant cost overruns and yet exceeded benefit expectations". For them, "the Hiding Hand assumes we should not presume we already know what success is and how to measure it". ...
Full-text available
... So, the World Bank might apply CBA, whenever relevant, along with other rules of thumb for project appraisal such as collective deliberation. But, the World Bank should expect to adapt to changing circumstances, whether they are welcome or unwelcome surprises, that is revisit assumptions, adjust plans, and make changes, particularly when projects veer from assigned paths and take complex out-turns (Hirschman, 1967;Ika et al., 2022). ...
This paper examines the correlates of optimism bias and its impact on World Bank project performance. We measure optimism bias in different ways using estimated Economic Rates of Return (ERR) of projects at approval and closure. We examine over 2,800 World Bank projects that were appraised between 1960 and 2019. We find that approximately 60% of projects in the sample were prone to optimism bias. Correlates of optimism bias include both project and country characteristics. Findings also indicate that the incidence of optimism bias reduces the chance of a satisfactory project performance rate at the time of evaluation by 17–20%. Recommendations include embracing complexity and uncertainty in considering projects for approval, providing organizational incentives for ensuring projects are successful rather than ERRs being accurate, shifting some resources from appraisal to implementation, and changing the nature of project supervision.
Project management research has evolved over the past five decades and is now a mature disciplinary field investigating phenomena of interest to academics, practitioners and policymakers. Studies of projects and project management practices are theoretically rich and scientifically rigorous. They are practically relevant and impactful when addressing the pursuit of operational, tactical and strategic advancements in the world of organisations. We want to broaden the conversation between project management scholars and other scholars from cognate disciplines , particularly business and management, in a true scholarship of integration and cross-fertilisation. This Manifesto invites the latter scholars to join efforts providing a foundation for further creative, theoretical and empirical contributions , including but not limited to tackling grand challenges such as climate change, pandemics, and global poverty. To this end, we identify five theses: 1. Projects are often 'agents of change' and hence fundamental to driving the innovation and change required to tackle grand challenges. 2. Much project management research leverages and challenges theories across disciplines, including business, organisation and management studies, contributing to developing new theories, including those specific to projects and temporary organisations. 3. 'Projects' are useful units of analysis, project management research is ideal for scientific cross-fertilisation and project management scholars welcome academics from other communities to engage in fruitful conversations. 4. As in many other fields of knowledge, the project management research community embraces diversity, welcoming researchers of different genders and various scientific and social backgrounds. 5. Historically rooted in 'problem-solving' and normative studies, project management research has become open to interpretative and emancipatory research, providing opportunities for other business, management and orga-nisational scholars to advance their knowledge communities. K E Y W O R D S business schools, policy, productivity WHY WE NEED THIS MANIFESTO The projectification of society and the need to tackle grand challenges We live in a 'project society' where projects shape people, organisations and society (Lundin et al., 2015), a phenomenon that was dubbed 'projectification' in a business context about 30 years ago (Midler, 1995). In this 'project economy', projects (which drive change and innovation) and operations (which make organisations run daily) compete and collaborate as leading economic agents (Nieto-Rodriguez, 2021). This goes beyond the mere focus on single organisations since coalitions are
Project managers need support to diagnose project management performance problems. Diagnosis happens when managers learn about prior project management performance by using outside view information about past projects to situate focal projects within the context of past project management performance. No prior research has incorporated outside view information into performance measures. Hence, we propose a comparative performance measure that compares overrun of a focal project to overrun of past similar projects to promote an understanding of trends across projects. Traditional overrun measures that only compare performance to initial estimates fail to encourage learning from past performance. Our comparative measure can be used to evaluate how well lessons have been leveraged, addressing a lack of existing quantitative measures for learning from previous projects. Project managers need encouragement to use new comparative project performance measures, so they should be embedded in performance management systems with incentives for continuous improvement.
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Decades of research demonstrate that practitioners and scholars may have only a vague notion of what project success is and thus settle for conflicting or inaccurate attributions of this still-elusive phenomenon. Stakeholder evaluations may differ as multiple groups and coalitions seldom hold the same viewpoint. A project that meets business expectations may have unintended consequences on society, highlighting the importance of sustainability. Thus, it remains challenging to devise a parsimonious success model that key stakeholders, internal and external, can minimally agree upon. This paper updates, recalibrates and further “complexifies” project success based on four multidimensionality sources: benefits realization, stakeholder perceptions, issues of timing, and sustainability. The paper proposes a four-dimensional model of success to assess project plan success, business case success, and green efficacy, along with the shared feeling of key stakeholders. The paper concludes with an agenda highlighting future research to further our understanding of the project success phenomenon.
Full-text available
The project management field has two blind spots: a focus on “run-of-the-mill” projects at the expense of pioneering “push-the-envelope” projects and a rigor-relevance gap in the research. There are simply too few scholarly works devoted to project management and grand challenges, those wicked, complex, uncertain, messy, boundary-crossing problems that confront the world. Drawing on the grand challenges of sustainable development and COVID-19 and the projects they provoke, this essay highlights five insights for theory and practice and suggests that selectionism and instructionism are worthwhile approaches, while collaborative rationality may trump linear rationality. We argue that project management for grand challenges is a promising land of “push-the-envelope” portfolios that can help overcome these two blind spots, regain relevance, avoid anomia, and revitalize theory and practice. To this end, we show that there is a concomitant need for a theory of grand challenge project behavior and offer an agenda for future research.
Full-text available
Cost overruns are a threat to project performance and continue to attract interest in both the popular media and the academic literature. Numerous studies from all continents have demonstrated that overruns remain prevalent in all industries. Although there are different suggestions as to what are the main causes of this problem, few studies have demonstrated what can be done to improve cost performance. This article provides evidence that improved cost estimation methodologies combined with external quality assurance can significantly reduce the extent of cost overruns in projects. The authors use data from 96 government projects in Norway, which implemented a quality assurance regime for large investment projects in the year 2000. The results showthat cost performance was reasonably good. Only c. 25% of the projects subject to the regime experienced cost overruns. This suggests that by using proper cost estimation methodologies that are embedded in a governance framework that ensures that projects are subject to external scrutiny, the risks of cost overruns can be significantly reduced. The results should be encouraging for project owners who may have the impression that overrun is an unavoidable part of project delivery.
Full-text available
Abstract Purpose-Worldwide, major projects often make the headlines as they suffer from a fourfold whammy of delays, cost blowouts, benefit shortfalls, and stakeholder disappointments. It seems that error and bias can explain their underperformance. Which overarching explanation outweighs the other? It is the question this article aims to address. Design/methodology/approach-Insights are garnered from decades of research on thousands of major projects in developed and developing countries worldwide. In particular, two high-profile project cases, the Veteran Affairs (VA) Hospital in Aurora, Colorado (US) and the Philarmonie de Paris (France), are explored. Findings-The case projects show that error and bias combine to best explain project (under) performance. Applying best practices or de-biasing project cost and benefit estimates is insufficient to prevent cost blowouts and benefit shortfalls. The confrontation of the two overarching explanations is not merely platonic. It is real and may lead to a media and legal battle. Originality-The viewpoint calls practitioners to transcend the error versus bias debate and reconcile two key characters in the world of major projects: (1) the 'over-optimistic' who hold a bias for hope and firmly believe that, despite error down the road, many projects would, in the end, 'stumble into success' as creativity may come to the rescue and (2) the 'over-pessimistic' who hold a bias for despair and think many projects should not have been started.
Full-text available
The Planning Fallacy is at play in projects when optimism bias and/or strategic misrepresentation are present. We examine the cost performance of approximately U$ 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 co-exist. 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'.
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The Planning Fallacy has been heralded as the best theoretical perspective to explain 'how projects work', particularly within the transport area. However, we contend that the data and the resulting conclusions relied upon to support the Planning Fallacy have been based on methodological artefacts that do not stand up to close scrutiny. We suggest these flaws stem from 'the compulsion to theorise', which predisposes to explain every project behaviour by the Planning Fallacy. We then unpack the method and data used to support the 'Planning Fallacy'. Therefore, we 'open a new door' for the development of a more robust theoretical explanation for 'how projects work'.
The field of project management has erected an impressive edifice of knowledge that apparently hinders us in learning anything from experience except what we already know. We will use the recent controversy between Hirschman and Flyvbjerg to trace this academic imposition to a narrow notion of a project and to find inspiration in a radically different notion for opening the field to new types of issues and lessons.
This systematic literature review explores the megaproject management literature and contributes by improving our understanding of the causes and cures of poor megaproject performance. The review analyzes 6,007 titles and abstracts and 86 full papers, identifying a total of 18 causes and 54 cures to address poor megaproject performance. We suggest five avenues for future research that should consider examining megaprojects as large-scale, inter-organizational production systems: (1) designing the system architecture; (2) bridging the gap with manufacturing; (3) building and leading collaborations; (4) engaging institutions and communities; and (5) decomposing and integrating the supply chain.
Governments worldwide are introducing “reference class forecasting” to improve the accuracy of megaproject cost estimation and thus ultimately the ability to deliver megaprojects on budget without altering the project specifications and/or changing the time schedule. In contrast to current findings, which show that reference class forecasting leads to more accurate project cost estimates by counteracting human cognitive and organizational biases, this article indicates the contrary, that reference class forecasting does not lead to more accurate cost estimates. The article theorizes that reference class forecasting fails to produce more accurate project cost estimates because estimates are always a relational network effect of human and nonhuman actors’ “biased” efforts to establish them. This finding challenges the existing literature by pointing to a more complex understanding of project cost estimation and biases. The finding is based on a longitudinal case study of a 23.6‐billion‐kroner Danish public megaproject, which failed to meet its objectives despite the application of reference class forecasting.