Risk and Uncertainty in the Cost Contingency of Transport Projects: Accommodating Bias or Heuristics, or Both? Love, PED, Ika, LA, Matthews, Jane and Fang, W 2022, Risk and Uncertainty in the Cost Contingency of Transport Projects: Accommodating Bias or Heuristics, or Both?, IEEE Transactions on Engineering Management, doi: 10.1109/TEM.2021.3119064. Title Risk and Uncertainty in the Cost Contingency of Transport Projects: Accommodating Bias or Heuristics, or Both? Author(s) Love, PED Ika, LA Matthews, Jane orcid.org/0000-0003-3367-9278 Fang, W Journal name IEEE Transactions on Engineering Management Total pages 15 Publisher Institute of Electrical and Electronics Engineers Place of publication Piscataway, N.J. Publication date 2022 ISSN 0018-9391 1558-0040 Keyword(s) Social Sciences Science & Technology Technology Business Engineering, Industrial Management Business & Economics Engineering Costs Uncertainty Monte Carlo methods Mechanical engineering Estimation Contracts Australia Bias contingency heuristics probability risk transport projects DECISION-MAKING INFRASTRUCTURE PROJECTS OPTIMISM BIAS OVERRUNS MODELS ACCURACY JUDGMENT RATIONALITY PERSPECTIVE Summary Transport projects are regularly subjected to cost misperformance. The contingency set aside to cover any increases in cost due to risk and uncertainty issues is often insufficient. We review approaches that have been used to estimate a cost contingency. We show that some approaches such as reference class forecasting, which underpins the planning fallacy theory, take a biased view to formulate a contingency. Indeed, there is a perception that the risks and uncertainties that form the parts of a cost contingency cannot be accurately assessed using heuristics. The absence of an overarching theory to support the use of heuristics has resulted in them often being downplayed in a project's investment decision-making process. This article fills this void and provides the theoretical backdrop to support the use of heuristics to formulate a cost contingency. We make a clarion call to reconcile the duality of the bias and heuristic approaches, propose a balanced framework for developing a cost contingency, and suggest the use of uplifts to derisk cost estimates is redundant. We hope our advocacy for a balanced approach will stimulate debate and question the legitimacy of uplifts to solely debias cost estimates. Language eng DOI 10.1109/TEM.2021.3119064 Field of Research 08 Information and Computing Sciences 09 Engineering 15 Commerce, Management, Tourism and Services HERDC Research category C1 Refereed article in a scholarly journal Free to Read? Yes Persistent URL http://hdl.handle.net/10536/DRO/DU:30158621 Document type: Journal Article Collections: Faculty of Arts and Education School of Education Open Access Collection Related Links Link Description Link to full-text (open access)   Connect to published version Go to link with your DU access privileges   Connect to Elements publication management system Go to link with your DU access privileges     Unless expressly stated otherwise, the copyright for items in DRO is owned by the author, with all rights reserved. Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au. Versions Version Filter Type Thu, 18 Nov 2021, 07:50:03 EST Thu, 18 Nov 2021, 16:02:16 EST Fri, 19 Nov 2021, 07:13:59 EST Sat, 01 Jan 2022, 01:30:57 EST Tue, 18 Jan 2022, 16:39:59 EST Mon, 11 Apr 2022, 16:30:10 EST Mon, 11 Apr 2022, 16:54:38 EST Wed, 20 Apr 2022, 13:21:00 EST Wed, 20 Apr 2022, 13:40:36 EST Thu, 05 May 2022, 08:36:14 EST Filtered Full Citation counts:   Cited 0 times in TR Web of Science Cited 0 times in Scopus Search Google Scholar Access Statistics: 37 Abstract Views  -  Detailed Statistics Created: Thu, 18 Nov 2021, 07:50:03 EST