There is a demonstrated, systematic, tendency for project appraisers to be overly optimistic, especially in the absence of data (i.e., scope) to “fill in the blanks” by providing their own insight based on their experience. Over-optimistic estimates can lock in undeliverable targets.

This Optimism bias is the demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters, including capital costs, operating costs, project duration and benefits delivery.

To redress this tendency HM Treasury's Green Book suggests that appraisers should make explicit, empirically based adjustments to the estimates of a project’s costs, benefits, and duration. The Green Book (2022) guidance provides cost and time uplift percentages for generic project categories which should be used in the absence of more robust primary data.

The Supplementary Green Book Guidance on Optimism Bias (HM Treasury 2003) with reference to the Review of Large Public Procurement in the UK (Mott MacDonald 2002) notes that there is a demonstrated, systematic, tendency for project appraisers to be overly optimistic and that to redress this tendency appraisers should make explicit, empirically based adjustments to the estimates of a project’s costs, benefits, and duration. Here, the Department for Transport (DfT) contracted Bent Flyvbjerg in association with COWI to undertake the consultancy assignment "Procedures for dealing with Optimism Bias in Transport Planning".

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