Over-budget and behind schedule (the Planning Fallacy)

The Planning Fallacy: I once saw a leader at Company X admit that 90% of his company’s strategic projects were behind schedule or not living up to the original expectations.  Even though these were the top focus areas of company, they still weren’t delivering.  When I came back to the leader a year later, his projects were still not delivering.  One thing surprised me.  How did this leader still have his job?

Of course, Company X had many excuses.   Teams underestimated the amount of time and resources needed.  Leaders pushed the teams to achieve greater results in shorter and shorter timelines.  People saw the project teams as the place where careers die, so the best talent avoided joining the projects.  The project teams didn’t have “project management’ certification training.

Planning Fallacy

The real problem is our ability to plan

In a way, each of these excuses are partially true. Leader fear their teams are being cautious or sandbagging project timelines, so they push harder.  A project team is only as good as the talent levels in it.  A crappy team will most likely lead to a crappy project.  Project management training can help teams follow standard processes that are proven best in class.  Each of those excuses is something that can be easily solved, but there is 1 thing that is human nature.

People suck at planning.  It’s not because we don’t fully understand the tasks or the project.  The problem lies with the fact that our brains are hard wired to remember things easier than they actually were.  Our memories are not security camera videos that capture every single detail no matter how boring.  Our memories are more like highlight reels.

We remember that it took a couple of days to build the proposal, but we fail to remember that we worked through lunch, read a few articles prior to starting the proposal, and had our colleagues review 2 different rough drafts.  While it may have taken only a few days to write the proposal, the amount of work was significantly more.

Planning Fallacy

The Planning Fallacy

This failure to plan correctly is called the Planning Fallacy, and was originally discovered by the Daniel Kahneman and Amos Tversky.  They found that most people underestimate the time, costs, and risks of completing certain actions, and at the same time they overestimate the benefits those actions will deliver.

So what can we do about it?  As with any cognitive bias, you need to accept this affects you too.  While you may have never missed a deadline in your life, you are just as susceptible to this biased thinking.

One rule of thumb I practice to mitigate the planning fallacy is to automatically double my estimate when it comes to time and effort.  Then I go back and analyze my past projects to get an accurate picture of how long tasks took.

When dealing with companies / leaders who are falling under the planning fallacy, I give them a choice: “Time, Cost, or Quality… Pick 2”.  If the leader wants the program delivered sooner than we think possible, then they need to be willing to allocate more resources or be willing to accept a less effective deliverable.

Finally, I remind myself that no one gets in trouble for coming in under time, under budget, and with higher than expected outcomes.  On the other hand, if you fall into the planning fallacy trap too often, then your next big project will be finding a new job… Unless you are lucky enough to work for Company X.

Planning Fallacy

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We are all subject to the planning fallacy.  Basically we will underestimate the time, costs, and risks of completing certain actions, and at the same time overestimate the benefits those actions will deliver.  Gotta love our human nature.  #Cavemansuit  #Breakingbiases # Much Easier

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Cary Bailey–Findley has built High Performance Cultures within three Fortune 500 companies, and was awarded the ranking of #1 development organization in the world by the Association of Talent Development. He is currently the Talent Manager for SimCorp, but spends his free time helping startups scale up the the talent they need to succeed.

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