A heuristic procedure for project inspection to curb overruns

One way to curb planning failures of R&D projects is to subject them to inspection and control. In practice, inspection decisions are often made dependent on just one project characteristic. Furthermore, a yes/no-rule is applied that tends to exclude certain types of projects from inspection, while it subjects others to inspection with certainty. This procedure is not based explicitly on economic reasoning, and it leads to manipulations of the variable that determines the inspection decision. A procedure that circumvents this difficulty is suggested. Results are demonstrated and policy implications are drawn from a simulation study.