The performance effects of optimistic and pessimistic project status reporting behavior

Abstract

Project managers often provide project status reviews in an aggregate overall status to convey central project status information to project steering committees. While the simplicity of this reporting form is potentially helpful for decision-makers, it is also prone to biases because the assessment is subjective, and project managers might intentionally misreport the current status. We investigate the impact of this optimistic and pessimistic reporting behavior on projects’ future performance using a sample of 46,474 project status reports from 1,229 projects. Surprisingly, and in contrast to previous research, the results suggest that optimistic reporting behavior is positively related to future project success and pessimistic behavior negatively. We further find that the positive and negative effects of reporting behavior diminish throughout a project and that reinforced behavior over time negatively affects the impact of both behavior types. This study is highly relevant to managers as it reveals that project managers’ subjective presentation of their project's status has a significant relationship with their project's future performance. Furthermore, the study's results surprisingly show that—depending on a project's current phase and its managers’ prior reporting behavior—optimistic and pessimistic reporting can have negative and positive consequences for projects’ future performance.