The Sydney Opera house is one of the most iconic buildings in the world. I had the pleasure of living there for a while, and it always took my breath away.
But did you know that it is one of the best examples of a project going over time and budget?
Construction was originally planned to only cost $7 million and be finished in 1963. It ended up taking more than 10 years longer, and costing over $102 million, around 1,357% over budget.
Unfortunately, this is a common occurrence. Large-scale and important projects often take longer to complete and more money than originally planned.
In fact, analysis of projects planned to cost over $1 billion showed that around 90% of them also go over budget.
However, it is not only large scale projects which end up taking longer than expected.
In fact, most things which we try to accomplish end up taking longer than we initially plan.
Whether this is writing an essay, starting a business, editing a manuscript or drafting an email.
The reason for this is that most of us suffer from a cognitive bias known as the planning fallacy.
The planning fallacy is a form of optimism bias where we end up underestimating how much time it will take to complete a piece of work, and as a result also the cost of the work or reduced benefits.
Ironically, this may even be the case if we have experience doing a similar piece of work previously, where we also ended up taking longer than expected.
Like many of the most widespread biases, it was first introduced by Amos Tversky and Daniel Kahneman in the 1970s, where they found numerous repeated examples of where knowledgeable people would regularly underestimate how long it would take to complete tasks and projects.
In a famous 1994 research study, 37 students were asked how long they predicted it would take them to write their final thesis. The average duration the students thought it would take them was 33.9 days. When asked how long they thought it would take if everything went as well as it could, they estimated 27.4 days, and if everything went badly, it would take 48.6 days.
In reality, on average it took the students over 55.5 days, and only 30% of students completed their thesis in the time they planned.
Another study from 1995 showed that only 45% of students could complete a project by the date they originally were 99% sure they could complete it.
There is also an indicating that while everyone can suffer from the planning fallacy, research from 2006 indicates that people who are prone to “live in the moment” and focus less are more likely to be overly optimistic with their timeline planning.
It is not just individuals who suffer from the planning fallacy though. Other research from 2005 has shown that groups are also susceptible to underestimating how long they will take to complete a task.
This research reinforces another well-known bias, known as Parkinson’s law, which states that work will expand to fit the time available. If we estimate that we could complete a project in a week, but the deadline is in reality a month away, then it becomes more likely that we will work up until the actual deadline and spend more time working than was initially planned.
How can you reduce the planning fallacy?
As this bias can lead to costly overruns in project time and expenses, there has been research to look into how the impact of the bias may be reduced.
Fortunately, this had led to a number of potential activities which individuals and teams can complete which may reduce their susceptibility to the planning fallacy:
- Put yourself in the position of someone else: Interestingly, this bias appears to only affect our ability to plan and estimate our own tasks. Other research has shown that when estimating how long it would take someone else to complete a task, we are more likely to be pessimistic and overestimate the required duration. Therefore, instead of asking yourself how long it would take YOU or your team to complete the task, estimate how long it would take someone else and use that as the basis.
- Make an implementation intention: Instead of just planning what you want to achieve, research from 2000 has shown that by thinking through how and when you are going to tackle the challenge can significantly increase the likelihood of completing the activity in the planned amount of time. We have talked about the power of implementation intentions before, showing how they are more 2.6x more effective than just motivation to helping individuals complete challenging tasks.
- Unpack the task into subcomponents: Finally, research from 2004 has shown that if you “unpack” the project or task you are planning into more detailed sub-components while planning it, then you are more likely to take the time required for each sub-component into consideration, resulting is a more realistic overall time plan.
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