Fallacies of Thinking No.4 - 'The Planning Fallacy'
“The planning fallacy is that you make a plan, which is usually a best-case scenario. Then you assume that the outcome will follow your plan, even when you should know better.”
The Sydney Opera House is one of the world's most recognisable and iconic buildings.
It’s the jewel in the crown of the stunning harbour city.
With a design inspired by the segments of a cut orange, it attracts millions of tourists each year.
Scheduled for completion in 1963 at a cost of $7 million (AUD), it was only completed in 1973 for $102 million (AUD).
Whoops.
Clearly, those responsible for planning its construction needed to do their job properly.
And they’re not alone.
The building of the Scottish Parliament in Edinburgh was delayed by three years and cost nearly ten times its original budget. The development of the Eurofighter Typhoon was also delayed by many years and cost taxpayers 75% more than initially planned.
What’s going on here?
The simple answer is that humans are notoriously bad at predicting how long a given task will take.
This is known as the planning fallacy a term which was first coined by Daniel Kahneman & Amos Tversky, two foundational figures in the field of behavioural economics.
We tend to be overly optimistic about the time it takes to do something - this is because many factors are outside our control as well as factors that we might not be aware of at the time of planning.
This explains why it is almost impossible for any large scale project to be delivered on time and budget.
So what can you do about it?
When planning anything, triple the amount of time you instinctively allotted to completing the task. This is most likely the amount of time it will take in reality.
This is a particularly helpful 'rule of thumb' if you are doing work on behalf of clients.
Under promise. Over deliver.
