How to NOT suck at project planning

Embarking on a new project is often an exhilarating experience, brimming with promises of success and achievement. Yet, all too frequently, these ambitious endeavors succumb to a common and insidious pitfall: the planning fallacy. Despite our best intentions and meticulous efforts, project planning failure continues to plague organizations worldwide. But what exactly is the planning fallacy, and why does it derail even the most well-thought-out plans? In this blog post, we delve deep into the intricacies of this cognitive bias, uncovering its underlying mechanisms, exploring its ramifications, and equipping you with valuable insights to conquer its grasp and steer your projects toward triumph.

The planning fallacy is a cognitive bias first proposed by Daniel Kahneman and Amos Tversky in 1977 [1]. The planning fallacy refers to the tendency to underestimate the amount of time needed to complete a future task, due in part to relying on overly optimistic performance scenarios.

What are the causes

Let’s first examine the factors that can contribute to inaccurate estimates for a project.

Underestimation

We tend to underestimate the time, costs, and risks of future actions and at the same time overestimate the benefits of the same actions. That’s because when envisioning the outcome of future actions we use mental simulation which doesn’t provide the thorough and comprehensive representation of how things would go. Our mental simulations are idealized and oversimplified.

Optimism bias

The optimism bias refers to our tendency to overestimate likelihood of experiencing positive events and underestimate likelihood of experiencing negative events. This bias leads individuals to have an unwarranted and overly optimistic belief in their own abilities and the outcomes of their projects. It distorts their judgment and causes them to underestimate risks, overlook potential challenges, and disregard past failures. This inflated sense of optimism often leads to inadequate resource allocation, unrealistic timelines, and insufficient contingency planning.

Additionally, we often fail to take into account external and internal obstacles, such as being stuck in a rut or navigating through bureaucratic processes.

Attribution Error

We often make attribution errors when considering our successes and failures. Whereas we tend to ascribe positive outcomes to our talents and hard work, we attribute negative outcomes to factors beyond our control. Thus we downplay the elements of risk and luck; instead, we focus only on our own abilities — and probably an overly optimistic assessment of our abilities at that.

Ignoring coordination time

It is a common tendency for individuals to underestimate the amount of time required to effectively coordinate tasks and activities. Whether it’s organizing a team, orchestrating a project, or managing multiple stakeholders, the intricate process of coordination demands more time than initially anticipated.

Anchoring to the original plan

Anchoring, a cognitive bias in the planning fallacy, involves relying heavily on initial information when making decisions. Coined by Sherif, Taub, and Hovland, anchoring leads us to stick to the initial values set during project planning, such as deadlines and budgets [2]. Consequently, we often make minor tweaks rather than necessary major changes as the project progresses, hindering effective adaptation and increasing the risk of project planning failures.

Strategic misrepresentation

In many cases people are actually incentivized to misrepresent the business cases for the projects in their benefit-cost analysis [3]. They want their projects to look good on paper, to increase their chances of getting funded and getting approval for their projects. This is done by underestimating the cost and overestimating the benefits, because that gives the project a nice high benefit-cost ratio so that it actually gets chosen.

Organisational pressure

This factor is closely linked to strategic misrepresentation. Competitive workplace cultures often discourage individuals from expressing less enthusiastic opinions or suggesting longer timelines, as there may be costs associated with doing so. Moreover, executives may prefer overly optimistic predictions, incentivizing individuals to engage in inaccurate, intuition-based planning. This combination of factors exacerbates the planning fallacy and its negative consequences.

What to do about it

Now that we have identified the issues that contribute to the planning fallacy and project planning failures, let’s explore a few strategies to avoid these pitfalls.

Reference class forecasting

First and foremost is reference class forecasting. Reference class forecasting involves looking back at all the projects you’ve completed, as well as projects similar to the new project X, and analyzing their historical performance in relation to their initial plans. By assessing the accuracy of past projects, you can make adjustments or uplifts to your new project’s plan. It is crucial to start collecting data on your previous projects and utilize algorithms and data for forecasting, rather than relying solely on human judgment.

Remove distractions

Mastering impulse control and avoiding distractions are crucial for maintaining focus on a project. Research from UC Irvine reveals that every time you get interrupted, it takes approximately 23 minutes to regain full concentration. To mitigate this, it is essential to reduce your workload. Learn to comfortably say ‘no’ more often and delegate or automate tasks that are not worth your time. Often, it is the accumulation of these seemingly insignificant tasks that causes significant delays in the end. Prioritize your lists to ensure that you are dedicating your time and energy to what truly needs to be done.

Split your big projects into smaller components

When tackling large projects, it is beneficial to break them down into smaller, manageable subtasks and focus on planning for their completion individually rather than approaching the project as a whole. While we may struggle to estimate the time required for substantial tasks, we exhibit greater accuracy when it comes to planning for smaller ones. In fact, our estimates for these smaller subtasks are often surprisingly precise, and even when they deviate, they tend to lean towards overestimation.

Set realistic deadlines

Consider implementing the following steps when establishing deadlines for the project and its sub-projects:

1. Emphasize urgency by setting deadlines as close to the present as feasible. By prioritizing proximity, you encourage a focused and efficient approach to task completion.
2. Remain adaptable and responsive to challenges. If unexpected obstacles or delays arise, promptly revise your deadlines and communicate the adjusted expectations to stakeholders. This ensures transparency and enables appropriate planning and resource allocation.
3. Incorporate buffer time into your estimates. It is advisable to allocate an additional 20 percent of the estimated time as a cushion for unforeseen circumstances. Begin with this initial estimate and readjust it as necessary based on the project’s evolving requirements and progress.

Accountability

To ensure accountability and meet deadlines, it’s important to establish a system that holds you responsible for your actions. Consider implementing a reward system to incentivize meeting deadlines, such as treating yourself to something special upon successful completion. Conversely, to keep yourself in check, enlist the support of a trusted individual who can call you out if you fail to meet your commitments. Having someone hold you accountable adds an extra layer of motivation and helps maintain focus on timely project delivery.

Remember Murphy’s Law

Murphy’s Law reminds us that “anything that can go wrong, will go wrong.” Embracing a hint of pessimism can be useful, as it enables us to anticipate and address potential pitfalls. While it’s impossible to plan for every scenario, here are two key strategies for effective planning:

1. Identify potential challenges and develop corresponding response plans. If the task seems daunting, learn from past experiences and examine obstacles that you and your competitors have previously encountered.
2. Create estimates for best-case, worst-case, and most-likely scenarios. This approach allows you to consider potential setbacks and provides a range of estimates to work with.

Ask for objective third-party criticism:

Gaining an objective perspective can be challenging for project participants. Thus, seeking input from a neutral third party on the feasibility of your implementation intentions can prove valuable. Embrace constructive criticism as it can provide valuable insights for long-term success.

Remember, merely being aware of the planning fallacy is not enough to stop it from happening. Even if we have this knowledge, we still risk falling into the trap of believing that this time, the rules won’t apply to us. Even the researchers who study this phenomenon are not immune to planning fallacy.

If you have ever experienced the frustration of project planning failure due to this cognitive bias, we invite you to share your insights and techniques in the comments below.

Reference

1. Kahneman, Daniel, and Amos Tversky. Intuitive prediction: Biases and corrective procedures. Decisions and Designs Inc Mclean Va, 1977. https://apps.dtic.mil/sti/pdfs/ADA047747.pdf
2. Tversky, A., & Kahneman, D. (1982). Judgment under uncertainty: Heuristics and biases. Judgment under Uncertainty, 3–20. https://doi.org/10.1017/cbo9780511809477.002
3. “What You Should Know About Megaprojects, and Why: An Overview,” by Bent Flyvbjerg (Project Management Journal, 2014).

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