January is a time for reflection and planning. It seems that we have a new sheet, a new year and a blank canvas. We can in a sense leave the past behind us. This year will be new and different – definitely much better than last year. We can have a notion to make this year our best year yet. That is certainly my own intention as I start on my annual journey and as our planet continues on it’s journey around the sun. When planning our year ahead however it is important to be aware of a judgement bias called the planning fallacy.
“The planning fallacy is a phenomenon in which predictions about how much time will be needed to complete a future task display an optimism bias and underestimate the time needed.”
-Daniel Kahneman and Amos Tversky, 1979
This phenomenon occurs regardless of the individual’s knowledge that past tasks of a similar nature have taken longer to complete than generally planned. The bias only affects predictions about one’s own tasks; when outside observers predict task completion times, they show a pessimistic bias, overestimating the time needed.
Management books even recognize the highly pervasive effects of time underestimation: the “laws of project management” state, “A carelessly planned project will take three times longer to complete than expected; a carefully planned project will take only twice as long (Pfleeger, 1991, p. 41).
One famous example of the planning fallacy is the construction of the Sydney Opera House, where construction lasted 6 years longer than predicted, at a cost almost $100 million over budget (Hall, 1980). Another example is the construction of the channel tunnel (Chunnel) to connect London and Paris which was finally completed in May of 1994, even though initial estimates planned on it being completed in June 1993. The cost rose to over 10 million pounds, immensely more than the estimated 4.9 million pounds.
I have come across the Planning Fallacy many times in my own life. Completing my PhD is an example. At the start I expected it to take three years, when in fact it took me six years to complete, and was much much harder than I expected. I even wrote a book about my experiences of doing my PhD to help others following after me. A study by Buehler, Griffin, and Ross (1994) shows that I am not the only one who gets it wrong when predicting academic completion dates. In this study, a class of students was asked to estimate the date at which they would finish their thesis. They actually completed their thesis, on average, in 56 days. However, they predicted they would complete their thesis in 34 days. Indeed, even when asked when they might complete their thesis if “everything went as well as it possibly could”, the mean response was still 49 days.
Another example which I have from my own life is buying a new home and moving house. It took me two years longer than I had expected at the outset of the project. I simply could not predict all the challenges that would occur ahead of time which slowed me down immensely. Another example of the planning fallacy comes from Daniel Kahneman’s recent book, Thinking, Fast and Slow. The study found that the typical homeowner expected their home improvement projects to cost about $19,000. The average actual cost? $39,000.
Effects of the Planning Fallacy
The biggest consequence of the planning fallacy is that we do not set ourselves enough time to complete key tasks, exacerbating pressure and stress. We can feel despondent and perhaps even want to give up on our goals due to what we may believe is a lack of progress. When you become discouraged your work rate can go down and this makes it even harder to achieve your goal. I know this is how I felt when I was doing my PhD and partly explains why it took twice as long to complete.
What to do about the Planning Fallacy
I think awareness of the planning fallacy is really important. Knowing that we are subject to this cognitive bias when planning is very helpful. We can take a more detached look at our goals. Can we really achieve this goal in this time frame? What does past experience tell me? Have I completed a similar project in the past, how long did it take and what obstacles did I have to overcome? You could share your goals with an uninvolved outsider and ask for feedback on how long they expect your goal to take. Doing this we may get a more realistic (if somewhat negatively biased) projection.
An important question to ask yourself is what do I have to do or change in my schedule if I really want to make this goal happen by this particular date? What increase in the amount of resources (time, focus and money) do I need to make in order to complete the goals I have set on time? I think that three goals are defiantly enough at any one time. Focus on three key goals only and maintain your focus on them.
Today when I reflect on my first quarter 2017 goals I have probably fallen again for the planning fallacy. It seems now that the completion dates I have set on two of my three goals are overoptimistic and need to be adjusted to allow more time. Life gets in the way of goal achievement and distractions abound.
In the light of the planning fallacy how realistic are your 2017 goals? What do you need to change in your schedule, your daily routines or resources allocated to goal achievement to make sure your goals happen by the deadline you have planned for?
Buehler, R., Griffin, D., & Ross M. (1994). Exploring the “planning fallacy”: Why people underestimate their task completion times. Journal of Personality and Social Psychology, 67, 366-381.
Hall, P. (1980). Great planning disasters. London: Weidenfeld & Nicolson.
Kahneman, D., & Tversky, A. (1979). Intuitive prediction: Biases and corrective procedures. TIMS Studies in Management Science, 12, 313-327.
Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux.
Pfleeger, S. L. (1991). Software engineering: The production of quality software (2nd ed.). New York: Macmillan.
Did you find this article helpful? If you have found it useful please do me a big favour and share it with others. Thank you Tom Carroll, January 2017.