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    Homo Heuristicus: From Risk Management to Managing Uncertainty in Large-Scale Infrastructure Projects

    Access Status
    Fulltext not available
    Embargo Lift Date
    2024-05-14
    Authors
    Love, Peter
    Ika, L.A.
    Pinto, J.K.
    Date
    2022
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Love, P.E.D. and Ika, L.A. and Pinto, J.K. 2022. Homo Heuristicus: From Risk Management to Managing Uncertainty in Large-Scale Infrastructure Projects. IEEE Transactions on Engineering Management.
    Source Title
    IEEE Transactions on Engineering Management
    DOI
    10.1109/TEM.2022.3170474
    ISSN
    0018-9391
    Faculty
    Faculty of Science and Engineering
    School
    School of Civil and Mechanical Engineering
    URI
    http://hdl.handle.net/20.500.11937/90147
    Collection
    • Curtin Research Publications
    Abstract

    Large-scale infrastructure projects tend to experience variances between estimated and final costs. Governments, in response, have been using statistical methods (including probabilistic approaches) such as reference class forecasting to try and mitigate cost overruns. While helpful in accommodating risk, such statistical methods often fail to account for a project's cost uncertainty. To reduce cost variance under uncertainty, it is necessary to use heuristics when formulating an infrastructure project's cost contingency. This article argues a need to adopt a vision of human nature described as Homo heuristicus (heuristics-using-person). We provide awareness and rationale for developing an “adaptive toolbox” of heuristics for ecologically rational and contextually aligned cost contingency decision-making. However, the selection, recognition, and evaluation heuristics for determining cost uncertainty have yet to be examined. Thus, future research is required to cultivate the heuristics needed to address the uncertainty that surrounds the determination of a cost contingency.

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