Forecasting biases and their consequences for the assessment of investments

Economic assessments of investments require good forecasts. The purpose of this research is to analyze the causes and consequences of systematic deviations between forecast and outcome. Which types of projects are affected more often by deviations than others? How can the presence of systematic deviations be explained and possibly handled? What are the consequences of escalating cost for companies and the economy, costing and the assessment of investments? To underestimate the true costs and problems of new investments can have both negative and positive effects. Many investments would never had been implemented, and many new firms never started if all future problems would have been anticipated.