Magical vs Methodical: Choosing by Advantages as Antidote to the Planning Fallacy

Cost and schedule overruns are the bane of construction projects, in part due to overly optimistic predictions of project progression. This “optimism bias” is called the planning fallacy, a form of “magical thinking” where planners convince themselves that their project will be different (and better) than others. “Choosing by Advantages” (CBA) is a methodical approach for decision-making. By engaging “slow thinking” at the organizational level, CBA can help counteract the tendency to default to best-case scenarios when selecting among designs and production methods, even in the middle of a project. In this paper, a case study of a Pumped Hydroelectric Energy Storage facility that had to choose between a bottom-up raise boring and a top-down shaft sinking construction method for the vertical shaft connecting the reservoirs is presented. The paper then examines how CBA helped shift the thinking of the project team away from fallacious planning and overcome the sunk-cost fallacy.