The Planning Fallacy
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The Sydney Opera house sits majestically on the Sydney Harbor, and as the most popular tourist spot in Australia, it is visited by millions of people every year. The construction began for the project in March 1959, with an expected completion date in 1963. But 1963 came and went, and the project was nowhere near completion, and only a scaled-down version was finally completed in 1973. The project’s total cost ended up being $102 million instead of the initial planned $7 million.
Have you been in a similar situation or seen a project that gets way over-extended? I have had numerous examples at work where people would propose projects and predict it would take a few weeks or quarters, only for it to have taken much longer — months or even more than a year.
All of these are instances of the planning fallacy. The planning fallacy is a cognitive bias wherein people underestimate the time and resources required to finish a project.
While it not only affects individuals, this cognitive bias can also affect a group of people or society at large.
Let’s see why we fall for the planning fallacy and how to become better planners.
Bias towards the positive
When it comes to project planning, we tend to think more about the positives than the negatives. We, therefore, fail to recognize the various problems and setbacks that may occur and block/hinder the progress.
To overcome this bias towards the positive, we can learn from others. If you are planning to write a book, don’t just think you will do it in six months — learn how long it typically takes for others.
Try to actively think of ways in which the project could go wrong and find out ways that caused slowdowns for others.
We are overconfident about our abilities. Don’t we all believe that we are better drivers than the rest? In the same vein, we think we are overconfident about our abilities. This applies to organizations as well. We believe we are better than the competition, or “this time it is different.” Again, the best solution is to identify this bias towards overconfidence and be objective in our abilities. Less Concrete The more abstract your project is regarding its implementation details, the more you will be off in planning. If you can map out the different stages of the project and make each of them very concrete, you will start to see how long everything will take. This is why software engineers write out a “design document” that goes into the details as much as possible.
Skunk Works: a case study
While projects getting delayed sounds more like the norm, Skunk Works, the famed advanced division of Lockheed Martin, has had a trail record of finishing projects on time. How did they do it?
It appears that Clarence “Kelly” Johnson, the chief of Skunk Works during some of its golden years, was a master of detail. He seemed to have possessed this incredible power of understanding every minor component in the aircraft they were building. This should have made the planning process a lot more concrete and thus a lot less volatile. It was also helpful that Clarence Kelly Johnson took pride in delivering on time and pushed people to be their best and go on overdrive when necessary (like working long hours and during weekends).
They also seemed to have minimized dependence on external factors, and even other parts of the company. They even built their own tools.
The planning fallacy affects us more than we realize. Knowing its causes and reducing its impact can improve our project execution and reduce frustration.