There is a natural tendency towards mitigating threats over the pursuit of opportunities. This is a consequence of ‘loss aversion,’ which is recognised in Daniel Kahneman and Amos Tversky’s ‘Prospect Theory’ of human decision-making psychology. Loss aversion helps us survive life or death situations, but we can allow this survival instinct to undermine project delivery. Kahneman reminds us that in many modern society situations, gains compensate for losses in equal measure. When this is the case, he advises us to ‘think like a trader’ to avoid the economic impact of our loss aversion.

Working with contractors and clients across the construction industry, we have seen how loss averse cultures reward threat management ata the expense of opportunity management, which hijacks decision-making, and harms projects’ chances of success. Yes, we must consider the non-financial consequences and indirect costs of threats, and yes, we must recognise the investment cost of opportunity management, but we must also recognise that projects are long-term endeavours where gains compensated losses. Measured risk taking is valuable, worth investing in and worth rewarding.

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