G.4  Second Supply Estimate Study (Larger Capital Value)

This study examined projects with an average capital expenditure greater than £100 m. The capital expenditure optimism bias has been measured from full business case unlike the Mott MacDonald study that principally considered the strategic outline case and outline business case and also the contract award stage.

Table 14  Comparison of Supply Estimates and MM Studies

As a project life-cycle progresses, the optimism bias levels for a project should decrease. Since both studies consider similar projects (with overlapping project lists), it is to be expected that the Mott MacDonald study results fall on either side of the SE result as the optimism bias levels were measured at project life-cycle stages on either side of the full business case stage.

The similarity between the SE optimism bias result and the Mott MacDonald optimism bias result measured at outline business case is of interest. The Mott MacDonald study includes a number of PFI projects that tended to have significantly lower optimism bias levels as compared to traditionally procured projects, thus reducing the average optimism bias.