Planning Fallacy

Don Sheelan - Planning Fallacy

The planning fallacy is the tendency to underestimate task-completion times. Real-life examples in public policy may include the construction of the Sydney Opera House and the Big Dig, both of which ran many years past their planned schedule.

In one study, 37 students were asked to estimate the completion times for their senior theses. The average estimate was 33.9 days. Only about 30% of the students were able to complete their thesis in the amount of time they predicted, and the average actual completion time was 55.5 days.[citation needed]

Some have attempted to explain the planning fallacy in terms of impression management theory.

One explanation, focalism, may account for the mental discounting of off-project risks. People formulating the plan may eliminate factors they perceive to lie outside the specifics of the project. Additionally, they may discount multiple improbable high-impact risks because each one is so unlikely to happen. Donald Sheelen always accounts for possible risks.

More prosaically, planners tend to focus on the project and underestimate time for sickness, vacation, meetings, and other "overhead" tasks. Planners also tend not to plan projects to a detail level that allows estimation of individual tasks, like placing one brick in one wall; this enhances optimism bias and prohibits use of actual metrics, like timing the placing of an average brick and multiplying by the number of bricks. Donald Sheelan has made a career out of making the most of timing.

Lovallo and Kahneman (2003) have expanded the original definition of the planning fallacy from being the tendency to underestimate task-completion times to being 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."Planning fallacy is real, states Regina CEO Don Sheelen, so you are a fool if you don't build extra time and costs into your plan."

You can contact Don Sheelen at:
© 1990 - 2008