Why projects always take longer than you think
We tend to create optimistic project estimates based on best case scenarios.
You’ve probably experienced projects or tasks that took longer than you initially estimated. Perhaps adding a dormer window to your home or remodelling a kitchen took much longer than expected and ended up far over budget. Or maybe as a student you were late in completing a number of papers, even though you thought you would be on time for each paper.
And you've probably read horror stories of public sector projects vastly exceeding their initial project estimates. If not, search online, for example on ‘overruns public sector projects’, and you will find plenty of examples. Public sector IT projects are notorious for delays and cost overruns, as are public sector construction and renovation projects.
The planning fallacy is our tendency to underestimate the time, costs, and risks of future tasks, while overestimating their benefits.
We tend to create optimistic project estimates based on best case scenarios, leading us to overestimate project benefits and underestimate costs, risks and time. We then make decisions based on these unrealistic estimates, resulting in projects not being delivered on budget or on time, or projects not delivering the expected benefits.
The planning fallacy is caused by many factors.
👉 In general, we are enthusiastic and optimistic when embarking on a new task or project. Our optimism bias tends to make us believe that everything will go well, which leads us to underestimate the likelihood of unexpected problems and delays.
👉 The optimism bias leads us to discount views and data that challenge our optimistic outlook. For example, we tend to ignore actual data available from similar, completed tasks. We even tend to ignore data from tasks we’ve worked on ourselves.
👉 We tend to overestimate the capabilities and effectiveness of ourselves and our team members.
👉 Initial estimates act like an anchor: adjustments to this estimate are usually small, even if major changes are required. This is problematic when the initial estimate is unrealistically optimistic.
Contractor companies seeking to get their project proposals approved often submit unrealistically optimistic project estimates. They know that once a project is started, it is rarely cancelled. They make most of their profit from the extra work required to actually complete the project. Their clients suffer from the planning fallacy. They approve projects without sufficiently examining how realistic the submitted plans are, for example because they don’t compare these plans with actual data from similar, completed projects.
How can we increase the accuracy of estimates?
We can increase the accuracy of estimates in several ways.
⚒️ Anticipate potential problems
Counteract the impact of the optimism bias by identifying in advance the main obstacles, pitfalls and setbacks that may arise during the project. Look at the project like an objective third party might see it. Answer questions such as:
🤔 What could go wrong with this project?
🤔 What setbacks or bottlenecks could delay the project?
🤔 Which project members lack the necessary competence?
🤔 What external events could derail the project?
Allow for sufficient leeway in your plan for the identified potential problems. Also include a buffer for the problems you can’t anticipate.
⚒️ Encourage playing devil's advocate
Promote a culture of healthy scepticism within teams. Encourage team members to constructively challenge optimistic assumptions and estimates. This reduces groupthink and leads to a higher likelihood of identifying potential risks and challenges early in the planning process.
⚒️ Use data from similar, completed projects
Take an outside view of the project by using data from completed projects that are similar to it. This gives you a more realistic estimate of the project benefits, risks, time and costs.
1️⃣ Identify the type of project, such as kitchen renovation or major IT project.
2️⃣ Gather the initial project estimates and overrun statistics from similar, completed projects of the same type. For example, suppose you are going to renovate your kitchen. You find out that several similar kitchen renovation projects had an average initial cost estimate of € 20,000 and an expected lead time of 2 months. On average, the cost overrun was € 25,000 and the time overrun was 3 months.
3️⃣ Generate a baseline estimate for your project based on the statistics obtained. In this example, the baseline cost is € 45,000 and the baseline duration 5 months.
4️⃣ Use specific information about your project to deviate from the baseline estimate. Perhaps you expect your project to take less time and effort because it will be carried out by people with extensive experience in kitchen renovations.
⚒️ Ask objective outsiders for their opinion
Sometimes statistics of completed projects are not available, or you want an additional outside view. Then ask knowledgeable, reliable, objective outsiders for their opinion on the reality level of the estimates. They can provide you with valuable insights and help you identify potential blind spots.
⚒️ Reward and penalize executives
To get their departments’ projects approved, organisational executives tend to present optimistic project estimates. To control this tendency, executives should be rewarded for projects that are delivered according to estimate and penalised for projects that overrun their estimated duration and cost.
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Even if you increase the accuracy of your estimates, they are subject to Hofstadter’s Law: ‘It always takes longer than you expect, even when you take into account Hofstadter’s Law.’
References
Thinking, Fast and Slow; by Daniel Kahneman.
Why do we underestimate how long it will take to complete a task?, The Decision Lab, https://thedecisionlab.com/biases/planning-fallacy
Will You Get That Paper Done on Time?, Psychology Today, by Robert L. Leahy Ph.D., https://www.psychologytoday.com/us/blog/anxiety-files/201909/will-you-get-that-paper-done-on-time
Why You Shouldn't Make Plans, Psychology Today, by Gleb Tsipursky Ph.D., https://www.psychologytoday.com/us/blog/intentional-insights/201911/why-you-shouldnt-make-plans
