The regeneration of Perry Barr cost the council £325 million, in addition to £171 million in government grants. At the beginning of August, the council agreed to sell 755 homes to a private developer. However, the amount received won’t be enough to cover the entire cost of the project, with the council still expected to repay between £142 million and £152 million, possibly over a 40-year period, at an annual cost of £8-9 million.
Is it something similar at play in Ladywood?
In a 2017 report[1], the Behavioural Insights Team, a UK-based global social purpose organisation that generates and applies behavioural insights to inform policy and improve public service, defined the optimism bias in the context of project management:
“In the context of project management this leads to consistent over-estimation of success and benefit realisation, and under-estimation of cost and time resources. Much of the miscalculation leading to project over-runs and over-spends occurs during the project planning phase, and so in this context the bias is commonly termed the planning fallacy. (5)”
The report states that “a review of large public procurement over the 20 years to 2002 in the United Kingdom demonstrated that there is a historic tendency for project estimates to be highly optimistic” (6).
Since its inception in 2019, the plans for the regeneration of Ladywood have lacked any independent assessment of the council’s evaluation of potential risks and impacts. Serious questions arise regarding how the council has addressed its own optimism bias.
BCC’s failure to consult while making difficult funding decisions, as required by the 2015 Best Value Statutory Guidance, along with the lack of transparency in its methodology and human rights considerations, the circularity of the scheme’s Equality Assessment, give legitimate grounds to question the validity of BCC’s evaluation of short-term impacts versus long-term benefits.
An underlying optimism bias has significantly undermined the validity of BCC’s judgment regarding the balance between public interest, human rights, and the trade-off between negative socioeconomic impacts and proposed benefits.Had BCC fulfilled its duty to consult and conducted a more thorough and open-ended equality assessment, it might have resulted in a more nuanced understanding of the socio-economic implications of the project, identified more sustainable options, and entailed more involvement from the existing community of Ladywood.
More so, the lack of an appropriate approach to counter optimism bias also affected the ability of BCC to calculate the financial risks of the scheme.
This section of the Full Business Case (E3 Approach to optimism bias and provision of contingency) reads:
“There are no direct development costs for Birmingham City Council. The development partner will make its own assumptions about costs and income which will feed into the development appraisal (and to be agreed by both parties).”
First of all, we observe that while there are indeed no direct development costs for BCC, the council is currently liable for CPO costs in the event of the termination of the Development Agreement. Section C3 of the Full Business Case states:
• “The Council can only suspend the agreement where substantial commencement of the phases has not occurred (which are defined in the development agreement) in relation to phases 1 or 2 or importantly at all in relation to phases 3 & 4.”
• “The Council under these circumstances, would be required to reimburse any remaining CPO costs, not covered by development revenue already committed, within 12 months of the date of termination of the legal agreement”
The recent history and ongoing reality of regeneration and redevelopment projects in Birmingham, such as Perry Barr, the twenty-year timeline of the Ladywood Regeneration Scheme, and the severe financial challenges faced by the council should serve as a warning that BCC is not effectively addressing.
[1] Behavioural Insights Team 2017. A review of optimism bias, planning fallacy, sunk cost bias and groupthink in project delivery and organisational decision making
Ladywood Unite 
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