How to Improve the Accuracy of Project Schedules? The Effect of Project Specification and Historical Information on Duration Estimates

Abstract

The success of a business project often depends on the accuracy of project estimates. Inaccurate, often overoptimistic schedules can lead to significant project failures. In this paper, we experimentally investigate the effectiveness of two interventions designed to mitigate the pervasive underestimation bias and improve the accuracy of project duration estimates: (1) increasing the quantity of available information prior to estimation by providing historical information regarding the average duration of similar projects in the past and (2) increasing the quality of available information prior to estimation by providing a more detailed project specification. In addition, we also test whether it is more effective to provide historical information together with the project specification or only after the initial beliefs regarding the project duration are formed. We find that increasing both the quantity and quality of project relevant information successfully mitigates the underestimation bias. However, only the provision of historical information is also associated with significant improvement in absolute estimation accuracy. The timing at which such information is disclosed to planners does not seem to influence the effectiveness of the intervention. We also find that subjective confidence in the accuracy of duration estimates does not vary across experimental treatments, suggesting that the confidence in estimates is neither a function of the quantity nor the quality of available information prior to estimation.