• Jeff Lee

Why are our well-laid plans don't work most of the time?

To start, lets illustrate with an example that most of us can relate to, you are taking up a familiar project with a self-established deadline in mind/calendar (e.g. cleaning up the yard, painting the gate, fertilizing the plants, compile monthly business data, preparing an annual marketing plan, editing a birthday video, completing the scrapbook for a vacation, etc. the list goes on...), and you are very motivated and determined.

You've been plugging away at it all day, progress was not as far along as you have hoped, then fatigue kicks in. You looked into your calendar and think: Hmm, I have some time tomorrow morning, lets wake up an hour earlier and complete the project before getting into the daily routine, it'll be a fun morning!

The next morning, you are tired, you hit the snooze button a few times and still manage to wake up and getting on with it. It was all great, but before you know it, you are going to be late for what is planned next in your calendar, and the progress was no where near to how it was planned out yesterday... To your despair, the project will need to wait, as reality had kicked in hard for you, so, you looked into your calendar again for the best next available time to complete what's left, which happens to be the evening. You are determined and very sure that this new plan will definitely work and you will complete the task/project.

Towards the evening, you left early, so that you can spend time on the task/project, complete is once and for all, then check that box in the annual resolution. But then, bad traffic, needed to send the kids for badminton practice, a leak in the house.... you get the picture.

How did this happen? Why are our well-laid plans don't work most of the time?

Humans are optimistic beings

We humans tend to be overly optimistic about the time, energy, effort and costs that is needed to complete a task or a project. We tend to ignore the unforeseen circumstances, and are not taken them into consideration as part of the aspects of a project.

College students consistently underestimate how long it will take to finish an assignment. Adults will always underestimate how long it will take to finish a LEGO model. Contractors and interior designers often underestimate how long a renovation will take. Projects in businesses have overshot deadlines and budgets all the time.

A famous example that illustrates the planning fallacy is the construction of the Sydney Opera House. It was first planned to be completed in 1963 for $7 million but the completion was delayed for 10 years that led to a cost of $102 million!

The Planning Fallacy

The planning fallacy, first proposed by Daniel Kahneman and Amos Tversky in 1979, 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.

In 2003, Lovallo and Kahneman proposed an expanded definition as the tendency to underestimate the time, costs, and risks of future actions and at the same time overestimate the benefits of the same actions. According to this definition, the planning fallacy results in not only time overruns, but also cost overruns and benefit shortfalls.

What can we do to avoid the costly planning fallacy?

Here are some of the tips and tricks that we have learned over the years as well as from experienced individuals that had generously taught us their way:

The classic solution: Breaking down projects into smaller tasks

This will not only help us understand the complexity of a task or a project, it might (or might not) provide a realistic view on what we are actually dealing with.

Past experience: worst case scenario, what are the odds?

Comparing it with similar tasks and projects in the past will help too. The trick here is, that the experience of the worst case scenario needs to be retrieved, not the best case scenario. This is not limited to your own experience, asking help from others and tap into their experience will help you avoid expensive planning fallacies!

The devil's advocate: The what-ifs and pessimist-ism.

We know that it is very frustrating to have a pessimistic team member, friend or family, but these devils will help us think and plan thoroughly with real foreseen challenges, why not listen and not brush them off too quickly. Take note and avoid, as we all hate the: "Meh! Told You So!" to the bones.

A Pre-mortem: if the project fails, what had caused it?

Of all the books that we have read, there is none that provide such an advise: Think failure at the beginning. This method had been proven to be a very very effective way to avoid the planning fallacy, as humans are obsessed with finding flaws (of others). Tapping into this not-so-cool ability, we will get great insights to how bad things might go before it even started, avoiding sunken cost fallacy at the same time!

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