13.3.3.3 Step 3: Applying the Recommended Optimism Bias Factor

Practitioners should then apply the appropriate value for Optimism Bias relevant to the project category and stage of development. These are presented in Table 13.4. Practitioners are also required to apply Optimism Bias uplifts at other stages of project development other than those listed below. No formal guidance exists on these uplifts and practitioners are requested to use suitable judgement and provide supporting evidence in the written documentation. However, it is expected that the appropriate uplift factor should generally be higher for stages prior to those in Table 13.4 and lower for those after.

Where a project includes significant elements of the different project types identified above, it might be considered a combined project, with the differing elements representing sub-projects. The relative size of each sub-project should be determined and the appropriate uplifts should be identified and applied to that part of the project. After this has been done, the adjusted costs for each sub-project should be aggregated to establish the total cost for the overall project.

Table 13.4: Recommended Optimism Bias Uplifts

Sources: Flyvbjerg (2004) and Mott MacDonald (2002)*