An oldie but a goodie.
The author points out how, when planning people are generally more accurate when they take an outsider view of the project, namely, one that doesn't account for the minutae, granular details, but instead looks at and compares theirs with broadly similar projects in the past.
The Denver International Airport opened 16 months late, at a cost overrun of $2 billion.
The Eurofighter Typhoon, a joint defense project of several European countries, was delivered 54 months late at a cost of $19 billion instead of $7 billion.
The Sydney Opera House may be the most legendary construction overrun of all time, originally estimated to be completed in 1963 for $7 million, and finally completed in 1973 for $102 million.
Are these isolated disasters brought to our attention by selective availability? Are they symptoms of bureaucracy or government incentive failures? Yes, very probably. But there’s also a corresponding cognitive bias, replicated in experiments with individual planners.
[...] More generally, this phenomenon is known as the “planning fallacy.” The planning fallacy is that people think they can plan, ha ha.
A clue to the underlying problem with the planning algorithm was uncovered by Newby-Clark et al., who found that
- Asking subjects for their predictions based on realistic “best guess” scenarios; and
- Asking subjects for their hoped-for “best case” scenarios . . .
. . . produced indistinguishable results.