Why do organizations keep funding projects in the face of repeated failure?

Although most studies agree that most projects fail, proposals for new projects continue to attract funds. In order to resolve the apparent "investment-in-failure" paradox, this paper questions the methodology used in the literature to judge project failure and describes a model that both expands and extends traditional approaches. Implications of the proposed model for the management environment in organizations are also discussed. The model, which is anchored in existing theories of regret and contingency, was tested using a field study, and controlled experiment. We conclude that, despite the apparently small proportions of initiatives completed on time, within budget and to specifications, organizations keep funding projects because an acceptable number of them still represent satisfactory investments to the funding organization.