The Planning Fallacy

Have you ever wondered why projects consistently take longer than originally planned? I touched on the topic in my Master’s dissertation and found that the answer may lie in a cognitive bias known as the planning fallacy, and I recently stumbled upon a fantastic article by Dave Stewart, “The work is never just ‘the work’” where he discusses his personal experience on why projects always take longer than planned. It’s a fantastic read, I highly recommend checking it out.

The planning fallacy is a cognitive bias that leads individuals to underestimate the time, costs, and risks associated with completing a task while simultaneously overestimating the likelihood of positive outcomes. First proposed by Kahneman and Tversky (1979), this bias is a form of optimism bias that affects decision-making in various contexts, including project management.

There are several psychological mechanisms and cognitive biases that contribute to the planning fallacy:

• Overconfidence. Planners tend to overestimate their own abilities and the accuracy of their judgments, leading to overly optimistic projections.
• Anchoring. Initial, often optimistic, time estimates serve as an “anchor,” influencing subsequent assessments and leading to an underestimation of task durations.
• Confirmation bias. Planners may selectively focus on information that supports their optimistic estimates while downplaying evidence that suggests a longer timeframe is needed.

Additionally, in a paper exploring the causes of delays and poor performance in megaprojects in the AEC industry, Denicol et al. (2020) suggest that optimism bias could be influenced by “strategic misrepresentation,” where political or organisational pressures lead to intentional underestimation of time and cost to win work and secure project approval or resources.

Coming back to Dave Stewart’s article, he discusses the complexities of project estimation, highlighting the multitude of “invisible” tasks and challenges that contribute to projects taking longer than anticipated. He illustrates this concept with a graphic that breaks down the various components of work:

While Dave speaks from his experience as a web developer, it would be remiss to suggest that the situation is any different in the AEC industry. By recognising the often overlooked aspects of project work, Stewart emphasises the importance of a comprehensive approach to project estimation that goes beyond simply estimating “the work” itself.

To combat the planning fallacy and improve project estimation accuracy, consider the following strategies:

• Use historical data from similar past projects to make more realistic predictions.
• Identify and assess potential challenges and uncertainties that could impact project timelines.
• Consider multiple scenarios, including best-case, worst-case, and most likely outcomes, to develop more robust estimates.
• Conduct post-project reviews to capture lessons learned and improve future estimation processes.

Or, for a more personalised approach, start with Dave’s illustration and take a moment to reflect on your own work. Step back and objectively assess the time you feel is needed at each stage of your projects. Consider how the various types of work, such as preparation, execution, support and so on, apply to your daily tasks. By honestly evaluating the time required for each aspect of your work, you can develop a more accurate understanding of your own estimation process and identify areas for improvement.

The planning fallacy is a pervasive cognitive bias that contributes to the chronic underestimation of project timelines. Project teams can develop more accurate and comprehensive estimates by understanding the causes of this bias and recognising the work that extends beyond the core tasks. Embracing strategies such as reference class forecasting, risk assessment, and continuous learning can help mitigate the impact of the planning fallacy and lead to more successful project outcomes, whether in web development, the AEC industry, or any other field.