The way i always seen the sunk cost fallacy is that if the evaluation of the value of completed work is unreliable, and the value is re-evaluated multiple times through the project lifetime, some of those times it can be grossly under-estimated. The first underestimate may result in dropping the project and no further re-evaluations will take place. There is definitely a need not to drop the project the first time the evaluation function fails.

Furthermore, in the competitive environment the unexpected difficulties you encounter are usually also the difficulties that your competitors encounter, and the project that turns out to be harder to do than expected can also have higher than expected value.