Planning Fallacy: Here’s Why All Your Projects End Up Late
Last updated on March 2nd, 2021
Have you ever had a project that you finished way later than the time you planned to finish? Or no matter how many times you’ve done a task following a certain schedule in the past, you always plan optimistically that you’ll finish ahead of schedule this time around, but you never do?
We’ve all been there, and some may even commend you for attempting to finish the project earlier than expected. But if you work in a fast-paced, competitive environment where deadlines need to be strictly met, going beyond schedule can have severe consequences for your business.
This tendency of being terrible at planning has been studied, and it has been called the planning fallacy. Let’s see what the planning fallacy actually is, why it happens and why it’s so common, and what you can do to not fall victim to the planning fallacy.
What is the planning fallacy?
The planning fallacy is a common phenomenon of people tending to underestimate the time needed to complete a task and disregard any possible obstacles that may affect the schedule. Interestingly, any past experiences are not considered during planning, so even if the person is fully aware that similar projects have taken longer in the past, they still tend to underestimate schedule-wise. It’s a cognitive bias where people plan their projects with only the best-case scenario in mind.
The planning fallacy concept was first proposed in 1979 by cognitive psychologists Daniel Kahneman and Amos Tversky. The concept has since evolved to include the tendency to not only underestimate the time, but as well as the costs and the risks of the project. For any business or endeavor, planning fallacy can lead to undesired time overruns, budget overruns, and unpreparedness in times of crisis.
What are some examples of the planning fallacy?
No matter how great or small a project is, whether it’s a million-dollar business venture or a simple system restructuring project, it can fall victim to the planning fallacy. Once you know what the planning fallacy is, you can easily recognize it in the project planning of your work environments.
As a project manager or project team member, you may start noticing some signs of the planning fallacy when planning a project with your team. When discussing the project timeline with your members and project stakeholders, you may recognize that you’re scheduling your tasks too optimistically, much earlier than the schedules of your previously completed projects.
You may not be considering any elbow room to take into account any possible internal and external obstacles that will hinder your operations. When planning based on the best-case scenario, some problems that your team may leave unaccounted for during scheduling include miscommunications within the team and with project stakeholders, delays with operations, and other unforeseen risks.
Why does it happen, even to the best of us?
Falling victim to the planning fallacy is not unique to a certain personality type, nor is it rarely seen in real-life situations. The planning fallacy is a common cognitive bias that is wired into our minds due to the following different factors.
Over-optimism. A big driving factor of planning fallacy is wishful thinking. You always want the project to be finished as early and as cheaply as possible, so you plan your schedules according to a best-case scenario where everything goes exactly as planned. Optimism bias often entails disregarding or not preparing enough for possible impediments along the way, leading to an underestimation of how long it will take to finish the project.
Overconfidence. Another factor is believing (or willing ourselves to believe) that we can perform much better than we actually will. Overconfidence leads to overestimating how quickly and efficiently we can finish the task at hand. While confidence is an important trait to ensure that the members of the team are motivated throughout the project, it can be counterproductive if it leads to unrealistic projections.
Coordination neglect. Especially in larger teams, it is often overlooked how difficult it is to coordinate multiple people towards a single goal. The tasks that are delegated to each team member are often interconnected, such that specific areas of the project cannot progress without the output of another. The number of entities working on a project compounds the time it takes to finish, but this is usually not factored in when scheduling.
Procrastination. Let’s not forget about the good, old-fashioned reason for project delays. No matter how streamlined and planned out your project is, it will not be finished earlier or on time if it keeps getting pushed back due to procrastination. Our failures to control our basic impulses and to just get the job done is one of the main culprits that fuel the planning fallacy.
How do you avoid the planning fallacy?
Overcoming the planning fallacy is necessary to ensure the success of the project and to avoid any preventable time and budget overruns.
Present your project timeline clearly to your team members.
It is essential that all members of your team are well informed about the project timeline so that everyone is on the same page and coordinated to perform their tasks on schedule, avoiding coordination neglect. It’s also helpful to have a well-presented timeline so that any signs of the planning fallacy can be easily spotted by you and your team.
You can use our free project timeline Powerpoint templates to present your timeline to your team members and stakeholders. You can also use different online timeline-making tools to further enhance your presentation.
Look at the historical data.
There’s no better standard to pattern your project than successful projects in the past. In what is called reference-class forecasting, you look towards the project charter and timeline of a successful project that is similar to your own, and you analyze how you can apply some of their processes to your own venture. It can be your team’s previous projects or an industry benchmark.
Be a pessimist.
This is not to say that you have to approach your project with a negative mindset. Rather, plan out your project conservatively and by considering all possible risks. Remember Murphy’s Law: Anything that can go wrong will go wrong. It’s better to be prepared than sorry.
Ask for an unbiased opinion to cross-check your plan.
The planning fallacy affects the team inwardly, so it is helpful if a credible party outside of your team can give feedback regarding the feasibility of your project’s timeline, among others. Invite someone who is realistic and critical to go over your plan.
The planning fallacy is one of the major pitfalls of planning that prevents you and your team from executing successful projects that are within cost and schedule. It is a common bias that is always looming during every project planning, but it can be avoided. By making sure to plan your projects with caution and consideration of all risks and rewards, you can avoid being a victim of the planning fallacy.