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7.  Optimism bias is commonly assumed when assessing the cost of projects. Do you have a view whether it is right for assessing a public sector comparator?

The evidence on which optimism bias is based is seriously flawed (Pollock et al 2007). In any case, an adjustment for optimism bias ought to be applied to both the PSC and the PFI, since the latter is associated with significant cost increases (of, on average, more than 100% in terms of hospitals) during the procurement process.

The concept of optimism bias should be applied sensitively. In particular, it must take into account that public procurement is now largely undertaken on the basis of fixed price, or in target price contracts in which construction risk is transferred or shared-as a matter of OGC guidance. The current approach, which takes optimism bias figures from flawed studies and applies it only to the public sector option, is clearly wrong.