Project managers’ overconfidence: how is risk reflected in anticipated project success?

Abstract

Projects tend to exceed planned timelines and budgets. One reason may be that potential project risks are insufficiently reflected in anticipations of project success. Furthermore, project managers’ overconfidence may lead them to assess risk in a biased manner. The present study examines how risk assessment relates to overall anticipated project success and how overconfidence on the part of project managers influences such assessments. We assume that project managers’ risk awareness serves as a mediator between overconfidence and risk assessment. To observe the planning behavior of 204 project managers, we used a standardized, case-based survey. The results show that overconfidence reduces risk awareness among project managers, leading them to assess risks more optimistically and come to more positive conclusions about anticipated project success. When judging project success, project managers only consider the probability of a risk occurring; they do not factor in the impact of said risks on project success should the risks arise. Risks thus seem to be insufficiently reflected in anticipations of project success which might be a reason for high failure rates of projects.

The Influence of Project Manager’s Age on Project Success

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Behavioral Cost of Managerial Decisions Under Risk Perception and Culture: A Comparative Study Between the United States and Pakistan

“…Perception of risk goes beyond the individual and it is a social and cultural construct reflecting values, symbols, history, and ideology (Weinstein, 1989). Fabricius and Büttgen (2015) extended the knowledge in this regard by arguing that manager’s RISKP serves as a mediator between OVERCB and risk assessment linked with the decision-making process. The study focused on the mediating role of RISKP between behavioral biases and firm decisions in the United States and Pakistan.…”

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“…This suggests that the more adaptive leadership is practiced in the HEIs, the better the attainment of goals could be. The result is reinforced by the findings of Ebrahimi, Moosavi, andChirani (2016), andFabricius andBüttgen (2015), who described that to secure organizational success, leaders must utilize adaptive leadership strategies. In addition, the results of this study were consistent with Nolan (2017), who stated that effectiveness in organizations depended on the effectiveness of their leaders, and adaptive leadership was the cornerstone of organizational effectiveness.…”