How I Overcome Planning Fallacy

The planning fallacy that could cost your business millions

Photo by Alvaro Reyes on Unsplash

The planning fallacy poses a significant challenge, often causing even the most experienced executives to make mistakes.

This specific cognitive bias causes us to underestimate the time, costs, and risks associated with future actions, while simultaneously overestimating the benefits. This often leads to missed deadlines, exceeded budgets, and unmet expectations.

Successfully overcoming this challenge requires leaders to adopt a strategic approach that integrates empirical evidence and diligent risk management.

Acknowledgement

Recognizing the planning fallacy is the initial step in addressing it. Leaders need to grasp that this bias is not rare, but a typical trap.

The Denver International Airport project serves as an example, originally scheduled to be finished in 1993 with a budget of $1.7 billion. However, the project faced several setbacks, leading to delays and an increase in its budget. It finally opened in 1995, with a price tag of nearly $5 billion.

This example highlights the importance of leaders recognizing their vulnerability to overly optimistic planning.