Enhancing project funding decision quality

Successfully implementing projects accelerate organizational growth. Given the limited organizational resources available, project funding is a critical strategic decision to ensure the most appropriate projects are selected. Recent research suggests that a proposed project’s target benefits—those anticipated to be realized at project completion—are important to consider when making decisions for project funding. Yet, the literature provides few measures to appraise the quality of target benefits. Consequently, sub-optimal projects are funded due to estimations errors, optimism bias about the future (“planning fallacy”) and strategic misrepresentation of target benefits. This paper presents three studies to develop and validate a new “Quality of Target Benefits” (QTB) scale consisting of three dimensions: specificity, attainability, and comprehensiveness. This scale can be used practically—that is, to objectively appraise a proposed project’s target benefits and to support an informed funding decision. It can also be used theoretically—as an instrument to facilitate theory development in areas of decision making, organizational strategy implementation, and project performance.