The Planning Fallacy; What it is and How to Counter it

Most often, we find ourselves racing to finish something at the last minute – it could be a project or getting to a meeting right on time. Often times it is over-budgeting or under-budgeting for something. If you are a victim like I am, it has little to do with you but more about the planning fallacy.

First proposed by Daniel Kahneman and Amos Tversky in 1979, the planning fallacy is when we make predictions about how much is needed to complete a future task display an optimism bias, and underestimate the time needed.

This phenomenon sometimes occurs regardless of our knowledge that past projects of a similar nature have taken longer to complete than generally planned. As humans, it is a tendency we all have to overestimate our abilities and underestimate the time it will take us to complete something whilst knowing full well that similar tasks have taken longer in the past.

When it comes to time management, most of us are caught in the trap of our own planning fallacy which is what psychologists call our tendency to underestimate how long it will take to realistically complete a task – thereby making us give false promises and end up defaulting on our word. Other times it is underestimating a client’s project costs leading to losses or under-delivery.

Most often, we fall prey to the planning fallacy by fixing a deadline without any analysis, which makes our predictions unrealistically close to the best-case scenario. We assume that we and every other person involved in a project will perform at their optimal capacity – failing to take into account the possibility of unexpected problems and roadblocks.

Another reason we do this is being overconfident and optimistic about our skills. This one makes us think we might have the necessary talent, skills, and abilities, thereby making an illusion that some work will take a lesser time to complete than it is actually required.

While the above two may not be the only reasons we fall victim to the planning fallacy, they are the main ones. Others include discomfort and fear of taking too long to complete a project which means incurring more expenses, a delayed launch, and a waiting period for revenue, and miscalculating travel times to your destination thinking you will beat your app’s estimate to thinking you can leave a presentation to the last minute. These misjudgments convince us about finishing something in the shortest possible time to make us feel better.

To counter the planning fallacy, good time management is required. Once an objective estimate of the time it will take to complete a project is set, the next thing is to block time in our calendar, and make sure the resources needed are available. To do this, we need to break down big tasks into smaller, manageable chunks and ensure what needs to be done is done when it needs to be done by whoever is responsible.

Another important thing in countering the planning fallacy is defining priorities. It is easy to get excited about a new project and to add a thousand tasks to your to-do list. Projects that get finished on time need to be self-contained. You won’t be able to evaluate how much work and how long the project will take if you have an ever-expanding list of tasks. Use the Eisenhower matrix or prioritization to differentiate between tasks that are urgent and important, important but not urgent, urgent but not important, neither urgent nor important.