The planning fallacy is the tendency to underestimate the time, costs and risks involved in completing a future task, even when a person has direct experience of similar tasks in the past taking longer than planned. It was first described and named by the psychologists Daniel Kahneman and Amos Tversky in 1979, who argued that people tend to base their predictions on an overly optimistic best-case scenario for the specific task at hand rather than on the broader statistical record of how similar tasks have actually gone in the past. The fallacy is frequently cited to explain cost and schedule overruns in major projects such as construction, infrastructure and software development, and one proposed corrective is reference class forecasting, which bases estimates on the outcomes of a class of comparable past projects rather than on the specific plan alone.
Facts
Core ClaimA frequently cited real-world instance of the planning fallacy is the Sydney Opera House, which was expected to be completed in 1963 but only opened, in scaled-down form, a decade later in 1973, with costs rising from an estimated 7 million dollars to 102 million dollars. 1 First Described Year Classification
Type of Phenomenon Connections
Associated With
First described and named the planning fallacy with Daniel Kahneman in 1979.
First described and named the planning fallacy with Amos Tversky in 1979.
Sources
1. Wikipedia: Planning fallacy
Wikimedia Foundationreal-world examples subsection, Sydney Opera House
The Sydney Opera House was expected to be completed in 1963. A scaled-down version opened in 1973, a decade later. The original cost was estimated at $7 million, but its delayed completion led to a cost of $102 million.
lead section, attribution sentence
The planning fallacy was first proposed by Daniel Kahneman and Amos Tversky in 1979.
lead section, phenomenon-kind classification
The planning fallacy is a phenomenon in which predictions about how much time will be needed to complete a future task display an optimism bias and underestimate the time needed.
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