Practical Software Estimation Measurement

Gene Shuman's blog

Are Late Software Projects a Victim of 'The Planning Fallacy'?

Software Project Planning FallacyToo many projects are late, over-budget, under-delivered, or a combination.  The problems continue despite widespread awareness and improvements in project management knowledge, tools, and process maturity.  

A recent piece in the Washington Post business section identified a likely culprit: “the planning fallacy”.  Princeton psychologist Daniel Kahneman and Amos Tversky of Stanford describe it as “the tendency to underestimate the time, costs, and risks of future actions and overestimate the benefit of those actions”.  The results are time and cost overruns as well as benefit shortfalls.  The concept is not new: the pair coined the term in the 1970s and has been researching it since.

According to the Post, cognitive biases such as optimism bias (the tendency to expect positive outcomes from one’s actions) and overconfidence can be causes of the planning fallacy. There is a growing body of evidence, collected by researcher Bent Flyvbjerg at Oxford University, that optimism bias is an important bias affecting the quality of forecasts in project planning. 

Other explanations of the fallacy include possible intentional and deliberate considerations on behalf of the planner - such as incentives, organizational pressures and strategic deception. 

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