In 1979, Daniel Kahneman and Amos Tversky named a phenomenon familiar to any project manager: people systematically underestimate the time, money, and effort required for a task. The strange thing lies elsewhere. The mistake is repeated even by those who remember perfectly well that they didn't make the deadline last time either.
In 1994, Roger Buehler, Dale Griffin, and Michael Ross tested this on students writing graduation theses. They were asked when they would finish. On average, students named about 34 days. Then they were asked for a forecast in case everything went as badly as possible—this came out to around 49 days. The real average turnaround turned out to be around 55 days. Even the pessimistic estimate was exceeded.
The most famous real-life example is the Sydney Opera House. It was planned to be built by 1963 for 7 million Australian dollars. It was opened in 1973, and the final cost was about 102 million.
Kahneman explained the mechanism through the difference between the inside and outside views. When we plan, we look from the inside: we imagine specific steps, understandable tasks, and a logical sequence. In such a scenario, everything adds up. But reality almost never follows the script: someone falls ill, approvals drag on, a supplier lets you down, requirements change. Each such event individually is unlikely, so we don't take it into account. But the probability that none of them will happen is even lower.
The outside view asks a different question. Not "how long will this project take," but "how long do projects similar to this one usually take." The answer to the second question is almost always more unpleasant, but also more accurate.
In HR, the planning fallacy is found everywhere. The time to fill a vacancy is set based on an ideal scenario, not on how long similar positions usually took to close. The implementation of an evaluation or grading system is planned for a quarter, even though analogous projects within the company and among colleagues took a year. A newcomer's probationary period is calculated as if onboarding will proceed without a single hitch. And then, a missed deadline is perceived as someone's mistake, even though the mistake was already embedded in the plan itself.
What helps
Before setting a deadline, find several similar completed projects and see how long they actually took. Use precisely this number as a baseline, and only then adjust it considering specific nuances.
Record the actual timelines for each project so that in a year the company has its own database for such estimates.
Distinguish in plans between time estimation and deadline commitment: the first is an honest forecast, the second is a management decision with a clear safety buffer.
Do not penalize realistic estimates; otherwise, people will just state the deadlines you want to hear.
A plan describes how everything will go if nothing happens. But something will definitely happen