The Planning Fallacy and Ways to Deal with It

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“Before anything else, preparation is the key to success.”

The above statement is made by a famous scientist and inventor Alexander Graham Bell. As the creator of the first working telephone, he surely knew a lot about preparation and planning – the development of an innovative device that would drastically change the face of long-distance communication involved a multitude of engineering works, complex experiments and tests that must had been arranged in an orderly way to:

  • Systemize the process,
  • Avoid costly mistakes,
  • Perfect interim results
  • And, eventually, achieve the desired goal.

In the same fashion, project managers need to plan even those projects that aim to attain something much less significant than the design of a previously unseen communication novelty.

The risk of project failure is high without proper planning and estimation.

Accurate time estimates are necessary to establish realistic deadlines, avoid schedule overruns and minimize delay-induced costs.

However, it isn’t so easy to forecast the duration of projects in advance. Even if you have all the data necessary to get a credible estimate, a mistake may happen – your own mind can play tricks on you and incline you towards making an erroneous decision.

Such an unconscious inclination to make wrong time estimates is called the planning fallacy, which turns out to be the primary reason why we fail to meet objectives by the target date ever so often.

Luckily, there are means to deal with the planning fallacy effectively. One of them is by observing your own thought process and raising awareness of how cognitive biases alter your perspective.

With all that said, this article will help you explore the concept of the planning fallacy and learn about some other kinds of cognitive biases. We’ve thoroughly described how they distort our thinking and explained what can be done to avoid the problems they entail.

Reasoning process concept

The Planning Fallacy Defined

The planning fallacy is an erroneous prediction of future task duration, despite the knowledge of how many hours were used to accomplish similar tasks in the past.

The root mechanism in this phenomenon is optimism bias, which makes us irrationally believe that chances to fail are much lower than opportunities to succeed. In the context of the planning fallacy, excessive optimism means:

  • Failure to take into account a possibility of delays due to various external factors;
  • Overestimation of own capabilities and strengths, which makes one underestimate the time needed to complete the planned work.

How Does It Happen?

Here’s one good example of the planning fallacy in project management.

Assume you’re developing estimates for a construction project with a goal to build a three-story house and imagine that, not so long ago, you’ve already constructed an exactly same house in another part of the city. Now, you are going to use historical data as a reference to forecast the new project’s duration.

When analyzing past performance figures, you see that it took 2 months to complete each floor and that works were delayed for a week due to heavy snowfall. In this way, the data is showing that the total estimate for your new project must be AT LEAST 6 months and a week.

However, instead of agreeing with evidence, you’re thinking of setting a deadline in 5 months. You’re reasoning that no snowfalls are expected during the summer, and, moreover, your team has already acquired enough experience while building the same house before. Hence, you will definitely be able to complete the project much quicker this time.

This example illustrates 3 core behaviors involved in the planning fallacy:

  • Disregard of historical data,
  • Disregard of risks and uncertainties,
  • Overly optimistic judgment about own skills and capabilities.

Logically, your team would have much better chances to deliver the project on time within 6 months and a week. By following your irrational instinct, your beliefs and hopes to build the house within 5 months, you’re falling victim to the planning fallacy and increasing the risk of missing the deadline.

High pressure under unrealistic deadlines

The Worst Consequences of the Planning Fallacy

In general, unrealistic deadlines mean either overtime work or project delays, and neither of these outcomes is good for your business.

Overworking doesn’t result in burnout only in unusually resilient individuals. For all others, the effects of long-term work stress include:

  • Emotional exhaustion;
  • Negative attitudes towards their jobs, employers and clients;
  • Decreased productivity and perceived self-efficacy;
  • Poor psychological and physical health.

Thus, by pressuring your team members to work overtime in order to meet an infeasible deadline, you deliberately lower the quality of performance and employee satisfaction. A likely consequence of such measures is reduced morale and an elevated rate of staff turnover.

As for project delays, they often result in all sorts of misfortunes:

  • Cost overruns,
  • Unhappy clients,
  • Enraged sponsors,
  • Ruined reputation,
  • Financial failure,
  • Total abandonment of work on the project.

Overall, if a project delay affects you just to a small degree, you are a very fortunate person. But count the odds more carefully, and you’ll see that it’s impossible to be successful in dodging the severe aftereffects of missed deadlines all the time.

If you suffer due schedule overruns frequently, you need to rethink your approach to project estimation and become more aware of many imperfections within your thinking.

Other Types of Cognitive Biases that May Lead You to Wrong Estimates

The planning fallacy and optimism bias aren’t the only kinds of cognitive biases that may interfere with your reasoning and prevent you from making accurate and objective project time estimates. Some other most common types are as follows:

  • Availability heuristic – A false attribution of greater importance to pieces of information that come to mind immediately than to those that we retrieve from the memory more slowly. We tend to forget that immediate examples aren’t always trustworthy, and that even the most vivid of our memories don’t usually reflect the true colors of the world. Relying on them too much, we’re bound to evaluate things and events wrongly.
  • Attentional bias – A tendency to draw attention to factors selectively, which means that while focusing on certain things, we frequently ignore others. For instance, when estimating time for the project, you may pay more attention to the factor of workload volume and forget that task complexity can largely define project duration as well. You may also overvalue risks by focusing on negatives and somehow overlook the fact that you actually have everything needed to complete works in the short term. In this way, attentional bias prevents you from taking all possible alternatives into account and estimating time correctly.
  • Anchoring bias – An inclination to ascribe superior value to a piece of information that was found first and use it as a reference point for consequent judgment. For example, you hire an employee who completes an assignment in 3 hours and then another one who does the same job in 4 hours. Since the work span of 3 hours was the first one you’ve encountered, you tend to think that the second employee works too slow. However, if the initially hired worker fulfilled the task in 4 hours instead of 3, the 4-hour work period would become an anchor in your perception and would drive you to think that 3 hours aren’t enough to accomplish the assignment properly.
  • Confirmation bias – A tendency to collect information that supports our beliefs and to disregard evidence that doesn’t conform with them. In other words, we often intentionally seek out facts that align with our previous ideas, especially when we are strongly attached to them emotionally. Thus, we frequently fail to make objective judgments about the world around us.
Four types of cognitive bias

Why Are We Prone to Cognitive Biasing?

Cognitive biases are universal and deeply-seated in our very nature.

Although they often direct us in the wrong direction, these biases are not entirely bad. They serve to simplify decision making – it is most likely that without these cognitive mechanisms, we would spend hours in contemplation and doubts before settling down with even the most trivial choice.

However, the problem arises if we blindly trust our biased thinking when managing complex issues that require objectivity (such as project planning). In situations like that, we need to avoid mental shortcuts, deliberately slow down the thinking process and evaluate the quality of our final decisions.

But before learning how to minimize the adverse effects of cognitive biases, let’s briefly look at some general factors that contribute to distorted thinking and reduce the accuracy of time estimation:

  • Emotions – If you’re very enthusiastic about your new project idea and eager to bring it to life at any cost, you may tend to be overly optimistic and lose sight of potential risks.
  • Naivety – When you lack experience and competence, it’s hard to develop a holistic picture of the problem and assess it deeply, from multiple perspectives.
  • Social pressure – When partnering with others or seeking approval from managers and sponsors, you may feel compelled to present your new ideas as more viable than they really are. However, it doesn’t necessarily mean that you would engage in a calculated deception – you may unintentionally persuade yourself in the correctness of your wrong estimates first and only then commence persuading others.

How Can You Deal with the Planning Fallacy and Other Cognitive Bias?

To minimize the negative impacts of cognitive biases and increase time estimation accuracy, follow these steps:

  • Don’t rely on intuition too much. Scrutinize historical data, do extensive research and be careful with placing your gut feelings above hard evidence and statistical figures.
  • Evaluate risks thoroughly. ALWAYS assume that problems will arise and some things won’t go as planned initially.
  • Involve other specialists in the estimation process. Though collective decision making is prone to such biases as groupthink as well, when you invite others to participate in project time estimation, you gain an opportunity to take into account a diversity of issues and alternatives that you wouldn’t be able to locate on your own.
  • Apply reliable estimation techniques that can produce accurate results (and implement them the right way)
  • Utilize credible and high-quality data to make forecasts.
  • Don’t rush the estimation process. Remember that cognitive biases are shortcuts meant to guide us towards quick and easy decisions. Thus, instead of letting them drive your thoughts, take time to analyze your interim conclusions against background information. Assess how accurate your estimation results are and make corrections, if necessary.

Finally, be mindful of cognitive biases and try to detect any weaknesses in your reasoning on the spot. With all that, you’ll be able to refine your critical thinking and planning skills and get more precise project estimates.

As promised by Alexander Graham Bell, better preparation will rid you of many troubles on the way to success. By investing more effort and care into planning, you will make the path to desired project outcomes much simpler.

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