What is strategic misinterpretation?

Aside from optimism bias, strategic misinterpretation is another reason why projects are delivered over budget and with a delay.

Sometimes forecasters and decision makers deliberately and strategically overestimate benefits and underestimate costs of projects. This is to increase the likelihood that their projects gain approval and funding instead of competitors’ projects.

Professor Bent Flyvbjerg explained the difference between the two concepts.

"Strategic misrepresentation can be traced to political and organizational pressures, for instance competition for scarce funds or jockeying for position. Optimism bias and strategic misrepresentation are both deception, but where the latter is intentional, i.e., lying, the first is not, optimism bias is self-deception. Although the two types of explanation are different, the result is the same: inaccurate forecasts and inflated benefit-cost ratios” - (Flyvbjerg 2008, p.6).

So, while optimism bias is unconscious, strategic misinterpretation is deliberate. Think about an example in everyday life. Perhaps at some point, you have been to a fast food restaurant and you saw a picture of a juicy burger on the screen, and you ordered one. What did you get? Probably something that did not look as nice as the picture suggested. This is an example of misinterpretation, because the company has intentionally made the product seem more appealing to encourage you to buy it.

Forms of bias lead to further optimism when creating a project’s budget and schedule:

"In its grip, managers make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. As a result, managers pursue initiatives that are unlikely to come in on budget or on time, or to ever deliver the expected returns." - (Flyvbjerg, 2010, p.325).

Please refer to the glossary to check any terminology you are unfamiliar with: Glossary of Project Management Terms

Coming up...

In the next section you will explore strategies to mitigate against strategic misinterpretation.