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Joe Ballou's avatar

Daniel Kahneman breaks down why this happens and how to respond in Thinking Fast and Slow (chapter 23). We are all prone to "The Planning Fallacy" and this is because we lack "The Outside View."

He writes: "The treatment for the planning fallacy has now acquired a technical name, REFERENCE CLASS FORECASTING" and "the renowned Danish planning expert Bent Flyvbjerg... has applied it to transportation projects in several countries."

The process has 3 steps which boils down to getting data on a representative group and setting a baseline, and then evaluating how well your case compares to the baseline so you can adjust.

At a personal management and project management level, we will always have practical difficulty dedicating any time to gathering baseline data if we don't already have it. I've found that, to your point Wes, we are best off taking our initial assumption and padding it with a substantial contingency that grows with the uncertainty and complexity of the task.

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Michal Berman's avatar

I love the reminder about the frustration factor. Generally when approaching something new we are optimistic and naive. We can’t help but be these things so remembering and maybe simply multiplying the estimate by 3 can help with the “less positive” self talk that follows. Thanks!

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