Using Traffic Lights to Manage Projects: Stop or Go?

Abstract

Organisations are heavily relying on project-based structures in order to stay competitive in a fast-changing environment. Nevertheless, project-based structures have some potential challenges and threats that can lead to financial overruns, delay in progress or poor quality. Awareness of the potential negative outcomes of project-based structures are beneficial and important, especially since the use of projects are increasing. A potential threat to decision-making in projects is cognitive biases, such as the averaging bias. The averaging bias was first introduced as the tendency people have to underestimate calorie content when asked to evaluate a meal containing both healthy and unhealthy food items. Previous research has recently found support for the averaging bias in project management. This thesis aims to establish a deeper understanding of the averaging bias in project management and to offer a more comprehensive insight of the mechanisms that influence decision-making. Our qualitative study has investigated how the colourcode system affects decision-making in project management, and whether there is a difference between large and small projects. The data has been gathered through an in-depth case study of two projects in a large Norwegian organisation within the building sector. Based on our findings, we offer six propositions, which also serve as suggestions for future research on the topic. Keywords: Project Management, Averaging Bias, Colour-Code System, Reporting System, Decision-making, Information Overload, Categorical Thinking