A full guide on the planning fallacy with tips and tricks

Having an optimistic outlook in your personal and professional life is not a bad thing. But being realistic is important too. Studies have shown that whether you ask for the best-case, worst-case, or the most likely scenario, humans tend to always reply optimistically with the best-case scenario. This is where the planning fallacy comes into play.

Whether you’re part of an organization leading a major project or an individual trying to progress in your career, you’ll probably be hopeful of plain sailing. Unexpected illness, design issues, your laptop dying, or Murphy’s Law,  essentially “anything that can go wrong, will go wrong,” are all factors that could rock the boat and land you in the depths of the planning fallacy.

In this article, we’ll provide a full guide to the planning fallacy, along with some tips and tricks to help you ensure effective career planning, including:

• What is the planning fallacy?

• Why are people frequently subject to the planning fallacy?

• 3 examples of the planning fallacy

• Strategy to overcoming the planning fallacy

What is the planning fallacy?

The planning fallacy is the tendency to underestimate the length of time it will take to complete a task, thus incurring additional risks and costs. The concept is based on a cognitive bias where people tend to have optimistic expectations on the completion of future tasks, despite being aware that similar tasks in the past have typically taken much longer. 

Whether you're working solo or in a group, completing small or complex tasks, the planning fallacy can apply. In the workplace, this could involve underestimating the time it takes to complete a project and missing a deadline so your client is understandably upset. This can negatively impact your reputation and prevent you from moving forward in your career.

Why does the planning fallacy happen?

The planning fallacy frequently occurs due to a combination of factors. Here’s a breakdown of the four factors: 

1. Optimism bias 

People tend to align themselves with positivity and can often be overconfident in their abilities. When we think about our personal and professional lives as well as the world we live in, we focus more on positive events rather than negative events. For example, if you start a project, you’ll be more likely to have a positive outlook that things will go well from the onset in order to remain motivated.

2. Self-serving bias 

As humans, we like to take credit for our wins but are more likely to blame others or circumstances for our shortcomings. If you aced a math test, that was because of your preparation and intelligence. But if you performed poorly, it was because the test was too tricky and had irrelevant questions.

3. Inside view 

When we’re planning a project, it can be easy to focus on the finer details (inside view) of the project rather than think about the bigger picture (outside view). For example, you may look at project tasks and estimate you can get 15% of these tasks completed per day, meaning you can finish the project in seven days (inside view). Or, you may consider a similar project you completed last year that took 14 days, so that is a more realistic timeframe (outside view). 

4. Social pressure 

Individuals often have a desire to impress others, meet their expectations, and provide overly optimistic estimates. This is particularly true in fast-paced, competitive work environments, such as business development, where enthusiasm is valued over being critical.

3 Examples of the planning fallacy

One of the most famous examples of the planning fallacy is the Sydney Opera House, which was originally planned to take four years at a budget of $7M but took 14 years and cost $102M. Rushing to start the project without properly finalizing project plans led to endless reworks, incurring significantly more time and cost.

The planning fallacy can also impact your career development. Here’s three scenarios of this in action:

1. Job interviews

Optimism bias can come into play during a job interview. You may be asked questions such as, “What do you expect to achieve in three months?” or perhaps you’re given a scenario and asked how you would ensure an urgent project’s success. It’s tempting to overpromise as you want to make a great impression. While this might land you the job, it could become a problem if you don’t deliver on your promises.

2. Project bids

When you’re bidding for a project and up against the competition, including a rapid completion date is one way to win the bid. While you may have the best intentions, if you’re unable to deliver by the confirmed deadline, it won’t look good. The client will likely be disappointed and not keen to rehire or recommend you for other projects. 

3. Team leadership

If you’re awarded responsibility to manage a team, then this can be your opportunity to move up the career ladder. Creating accurate project plans, schedules, forecasts, and targets will be critical to delivering your project on time, in budget, and to high quality standards. If you fall into the planning fallacy, then this could be problematic.

What is a strategy to overcome the planning fallacy?

Overcoming the planning fallacy can be tricky, but it is possible to mitigate its effects on your career development. Here’s a three-step plan of attack:

1. Take the outside view

Instead of getting absorbed in the finer details of the task at hand (the inside view), factor in how similar projects fared in the past. Data from comparable projects can serve as a baseline to develop a more realistic plan. Pinpoint patterns of delays and challenges in past tasks so you can factor these into your estimates. 

2. Seek objective feedback

It’s easy to get overly engaged in a project and lose sight of the bigger picture. Seeking objective feedback from a third party can help you quickly identify potential problems, then recalibrate to make realistic decisions, ensuring success. 

3. Develop contingency plans

While it’s great to have a positive outlook, it’s better to develop some contingency plans. Think about best-case (your initial estimate), worst-case (everything going wrong), and most-likely (comparative data you gathered in step one) scenarios and the strategies you would use to resolve any of these issues. You can then develop plans to help you stay on track.

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Key takeaways

1. The planning fallacy is a common cognitive bias which outlines our tendency to plan based on the best-case scenario, rather than on similar projects/tasks already delivered.

2. Focus on looking at the bigger picture, being realistic, and avoiding any social pressure when preparing to tackle a project or leadership opportunity.

3. Being aware of the planning fallacy will help you overcome the pitfalls and take measures to mitigate its effects on you and your career.