Opening book details…
Can I read Hidden inefficiency: Strategic inflation of project schedules on EtoBox?
Hidden inefficiency: Strategic inflation of project schedules by Matej Lorko; Maroš Servátka; Le Zhang is a Economics, Econometrics and Finance article available to read on EtoBox.
What is Hidden inefficiency: Strategic inflation of project schedules about?
Establishing realistic project plans and completing the resulting business projects on schedule is crucial for organizations striving to effectively utilize their resources. However, incentivizing on-time project delivery may result in moral hazard, as people could respond to estimation accuracy incentives by strategically inflating duration estimates and subsequently prolonging project execution. While the project is delivered on time, the resources are underutilized. We conjecture that the possibility of moral hazard can be mitigated by introducing speed incentives in addition to the schedule accuracy incentives. We conduct a diagnostic test of the effect of accuracy and speed incentives on the process of project estimation and delivery. Our study presents direct empirical evidence that the incentive structure rewarding solely the estimation accuracy can result in hidden inefficiency due to inflated estimates and deliberately slower project execution. When speed incentives are implemented alongside estimation accuracy incentives, the estimates are significantly lower and the project is completed more quickly, without compromising the schedule accuracy or output quality. Aligning
Who reads Hidden inefficiency: Strategic inflation of project schedules?
It is typically read by researchers, students, and practitioners in Economics, Econometrics and Finance.
- Author
- Matej Lorko; Maroš Servátka; Le Zhang
- Publisher
- Elsevier BV
- Published
- 2023
- Language
- EN
- Field
- Economics, Econometrics and Finance (Social Sciences)