Winner’s Curse in Project Management

Quality Risk Management Scheduling

George Lewis Program/Project Manager| DXC Technology Company Heredia, Costa Rica

Winner’s Curse in Project Management: In an auction, the winner will tend to overpay.

I can surely find several similarities of this in project management, especially when dealing with stakeholders (also sponsors) when trying to find the best option NOT only in terms of cost, but in terms of time and also when negotiating the scope.

Posted: Aug 10, 2016 8:17 AM

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George Lewis Program/Project Manager| DXC Technology Company Heredia, Costa Rica

What is the 'Winner's Curse'

The winner's curse is a tendency for the winning bid in an auction to exceed the intrinsic value of the item purchased. Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

from Investopedia http://www.investopedia.com/terms/w/winner...p#ixzz4Gw1AIRm1

Posted: Aug 10, 2016 9:13 AM

Samuel Vaddi Avon, In, United States

George, I think most of the examples you stated are about Negotiation. I am not sure that 'Winner's Curse' applies to this situation as it is not an Auction but a Negotiation.

I do see some applicability of 'Winner's Curse', however, in Procurement Management if a firm is somehow involved in bidding/auction

Posted: Aug 10, 2016 2:08 PM

Rami Kaibni

Community Champion

Senior Projects Manager | Field & Marten Associates New Westminster, British Columbia, Canada

I tend to agree with Samuel on his opinion - It is more of a negotiation.

Posted: Aug 10, 2016 4:36 PM

Suresh Kumar Assistant Vice President| Infinite Computers India Ltd Chennai, Tamilnadu, India

It applies in bidding by sales team in the opposite sense. To get the contract quote low and pass the consequences to PMO

Posted: Aug 11, 2016 1:23 AM

Marcelo Guerra Director of Engineering| SoundCommerce Kirkland, Wa, United States

I have seen this happening when a project delivers something that is more than the customers actually needed/wanted/used. This is common especially in IT projects where we strive for perfection and more features are usually associated with being a better product.

Posted: Sep 3, 2016 2:28 PM

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Winner’s Curse in Project Management

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