The Planning Fallacy: It’s a Real Cognitive Bias | Quay Consulting (2024)

Making estimations and assumptions is a necessary part of planning a project, but did you know that we all have a cognitive bias that affects our ability to accurately predict how long a task or project will take? Understanding this psychological phenomenon can help you better plan and manage expectations.

Hands up if you’ve ever found yourself thinking that took longer than I expected, or you look back at what you or your teams have planned and realised you’ve only scratched the surface of your project goals.

If you or your project teams have fallen short of expectations when it comes to timelines and costs, it may be surprising to learn that there may be a cognitive bias at play – the planning fallacy. Daniel Kahneman and Amos Tversky first coined the idea of the planning fallacy in 1979 to describe the tendency we have to underestimate how much time is needed to complete future tasks.

The planning fallacy is a well-documented phenomenon, and it’s very common among those of us leading teams into projects (among people in general, actually). It’s estimated that almost 85% of initiatives fail due to misjudging their feasibility within allocated timeframes and resources.

At its core, it’s a cognitive bias that means we, as humans, can create an overly optimistic perspective about how long a task or project will take because there is a tendency toward focusing on the best-case scenario without factoring in time for errors or obstacles we don’t expect. We also tend to dismiss data or evidence that tells us how long it’s taken to do those same activities in the past.

You’d be forgiven for thinking no, I wouldn’t ignore data – that would be irresponsible. However, it’s not always that simple.

Not me, I wouldn’t do that

Ever had anyone tell you that they think something is complex and that they need x months to do it, but you disagree, push on and discover actually it was pretty complex and took longer than you thought it would?

The truth is we all do it to some degree. We need our mental shortcuts to make quick judgements and decisions because it’s not always practical or possible to consider all of the information that might be available. And while our cognitive bias may be helpful in some situations, it can lead to errors and poor decisions.

Let’s look at some examples of how three cognitive biases interplay with the planning fallacy.

Optimism bias

The ideas of planning fallacy and optimism bias are closely related. Both involve being overly simplistic about what lies ahead and assuming that tasks or activities will go better than they actually will. An overly optimistic perspective can cause us to overestimate the likelihood of positive outcomes, and the planning fallacy can lead us to underestimate the time and resources that are required to deliver. That is a recipe for getting off track early in a project.

Confirmation bias

Confirmation bias is the tendency to seek out information that confirms what we already believe and ignore or downplay what contradicts that belief. When we or our teams start making plans for projects, we – or they – may seek out information that supports the plan based on what has worked in the past, even though it may not be applicable directly to what we’re aiming to deliver. This can lead decision-making in the wrong direction as we or our teams ignore information that suggests a different approach will deliver better outcomes.

Anchoring bias

Anchoring bias is the tendency to rely too heavily on the first piece of information we receive, which has a disproportionate influence over the perception we form and subsequently influences decision-making. In project terms, it’s possible that people attach too much meaning or importance to the first estimate provided or a high-level milestone and pay less attention to other evidence and information that is available as work progresses and the project learns.

How to make better decisions despite these biases

Most of us in the project delivery space have experienced the pain of poor planning. The project (and teams) start to come under pressure, quality can be reduced, people can burn out, delays become somewhat inevitable, and cost, time, and scope changes can put enormous pressure on dependencies.

It’s in everyone’s interest to avoid these challenges. So what are the strategies we and our teams can use to mitigate the negative effects of cognitive biases? Here are five considerations:

• Gather as much information and evidence as possible about the project – including past experience and similarly sized and scoped projects – to help make realistic projections and predictions. Avoid relying on gut instinct and previous experience as the measure of what an estimate should look like.
• Break the project down into smaller tasks for estimations. It’s too easy to make broad and potentially inaccurate estimations at a high level, and breaking down the project into smaller parts allows you to properly consider and estimate sufficient time and resources for each deliverable.
• Consider the potential for obstacles and challenges that might arise during the project during each phase of delivery and have a method or way to identify and factor those into your estimates and contingency planning.
• Involve a diverse group of stakeholders in the planning process. This enables project managers to include subject matter experts and other team members and gain a better understanding of the project and the likely challenges that may occur. Open discussion of the points of difference can ensure that one opinion doesn’t overrule the plan and can also help to identify potential roadblocks and provide more realistic estimates of the time and resources that are going to be required to successfully complete the project.
• Look around the project for constraints and factor them into estimates. The project doesn’t occur in a vacuum; it may be required to align with release windows, use shared resources and teams that support multiple projects, understand what those projects are, and when they are occupying resources. These are critical junction points that intersect with your project needs; thus, you must factor in contingency and strategies for managing around constraints.

Be prepared to identify cognitive biases outside your project

There is one additional point to remember: the people who will review and perhaps approve or endorse your project plans are not immune to cognitive bias and the planning fallacy. It’s in all of us to varying degrees.

Stakeholder engagement may be important to explain why your project plans and estimates are what they are. This can be challenging for some stakeholders who are wondering why your project is asking for so much or how long it’s taking (in their opinion) to plan. It is perfectly reasonable to consider that they may also be applying an overly optimistic view of what is achievable.

Countering that bias is possible. Openly identifying and discussing bias can be a powerful way to align expectations about what is truly achievable and frame the way for a more detailed and meaningful conversation about the risks and constraints a project is facing. It may also avoid the cost and pain that goes with delays from under-cooked estimates, unidentified obstacles and blinkered analysis that can derail a project before it has even started.

As project specialists, we deliver and resource fit-for-purpose project management. Contact us hereto find out more about how we can support successful delivery.

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