Planning Fallacy and Optimism Bias in Project Plans

We often tend to underestimate how much time and effort a task will take, whether it's something as basic as walking the dog or as involved as finishing a project. It's natural to be optimistic about things turning out well, which is generally a positive trait. However, when you're in charge of managing a project, being overly optimistic during the planning stage can be a drawback. This is where the concept of the planning fallacy comes in.

The planning fallacy is a concept introduced in a 1977 paper by Daniel Kahneman and Amos Tversky, who are important figures in the field of behavioral economics. It explains our tendency to underestimate how much time, costs, and risks are involved in completing a task because of our natural optimism; often referred as optimism bias.

Optimism bias is when you believe that you will not face problems or delays which is really good when it is realistic.

Imagine planning to walk your dog between meetings. You might believe you can do it quickly because you're optimistic about your dog or your abilities to walk your dog. However, if you don't consider factors like the weather, the chance of your dog wanting to play with another dog, or their behavioral traits to get distracted while sniffing around, you might end up being late or even miss your next meeting.

The planning fallacy highlights how our optimistic outlook can lead us to overlook potential challenges in our plans.

Whether you're walking your dog for the first or hundredth time, it's easy to underestimate how long it will take; the same goes for managing projects.

It's important to be aware of the planning fallacy, where we tend to underestimate how much time tasks will take. As a project manager, balance optimism with realistic planning. Aim for the best outcomes while considering the time each task might actually need.

Imagine you're in charge of a big project, like planning a party. If you're too optimistic and plan everything thinking it will go smoothly, that's called the planning fallacy. This could mess things up because you might not give your team enough time, leading to rushed work, mistakes, and missed chances to make the project better.

It's like trying to throw a great party but not giving yourself enough time to get the enough things done right.

Time estimation vs Effort estimation

Time estimation is a prediction of the total amount of time required to complete a task.

Effort estimation is a prediction of amount and difficulty of active work required to complete a task.

Here's an example, the effort required to paint a wall might be 30 minutes but time estimation might be 24 hours. Painting the wall in 30 minutes is a prediction of active work to complete a task whereas leaving the paint to dry on the wall for another 23.5 hours is a prediction of time required to complete this task.

30 minutes is effort estimation and 24 hours is time estimation. I'll write to explain about this more here after few days. If you got the idea then you're already awesome.

Here are some general steps on how to avoid planning fallacy and the common pitfalls of unrealistic optimism bias to prevent adverse effects on your project:

1. Remove unnecessary tasks
   Eliminate tasks that are not truly essential. Sometimes, the team might have done tasks that were not really needed. They could have finished the project without doing these extra unnecessary tasks. It is possible that all of the tasks initially listed do not need to be completed. Reevaluate the initial task list to identify tasks that may not be necessary.
2. Increase team size
   Increase the number of team members when needed. Ask for more help at the beginning of the project. This helps avoid problems with the schedule. Having enough resources early on in the project is better than attempting to proceed without the necessary support.
3. Do certain tasks in parallel
   Do some tasks more efficiently in a parallel order. If two tasks are related and can be done concurrently then do it, this helps the project go faster and smoother. Identify tasks that can be done simultaneously or don't necessarily have to follow a strict sequential order.
4. Add Task Buffers and Time Buffers
   Introduce task buffers and time buffers to accommodate uncertainties. Adding a bit of extra time and tasks as a safety net can help manage unexpected challenges and fluctuations in the project timeline. This way, if anything unexpected comes up, your project can still stay on course without causing too much stress. It's like having a little extra breathing space to handle surprises and keep things running smoothly. Think of it like adding extra cushions to your project plan.

Think about "what-if" scenarios in project management. This means considering situations that could impact whether your project finishes on time. This helps you avoid the planning fallacy that can happen when you have unrealistic optimism bias.

Don't forget, you have a project team to support you, so make sure to tap into their knowledge and expertise to identify possible risks in the future. Aim for the best results, but also be realistic about the time needed for each task.

In the end, it all boils down to a simple idea that estimations are guesses, you do not treat them as deadlines.

And being optimistic is good in project, you should treat your bias with cognitive timelines, set specific realistic goals.