The planning fallacy, or why your estimations suck

by | Jan 11, 2024 | Blog | 0 comments

What’s the planning fallacy?

The planning fallacy is a common bias in which people tend to underestimate the time required to complete a project. This happens because they are too optimistic about how things will turn out, making two main mistakes: overestimating positive outcomes and underestimating time, costs, or risks of future actions.

The planning fallacy can affect individuals as well as organizations, can lead to poor decision-making, and prevent teams from achieving their objectives as planned. It doesn’t matter if you are a small indie team or a AAA studio, you probably know dozens of projects that have been delayed, rushed or suffered from crunch to meet deadlines. It happens all the time.

Do you want to learn to identify and avoid the planning fallacy? Keep reading!

Why does the planning fallacy happen?

The planning fallacy arises from a mix of factors:

  • People tend to focus on positive events and underestimate the likelihood of negative ones. This is just our nature. When it comes to planning, this tendency towards optimism can lead us to imagine successful outcomes rather than potential failures. As a result, we may overestimate our abilities (and those of our team members) to meet certain goals. While enthusiasm is important, it can be problematic if it comes at the expense of being realistic. In general, we are oriented towards positivity and favor positive information in our decision-making processes.
  • We tend to ignore negative information and discount pessimistic views, even when we consider outside information. When we reflect on our past failures, we tend to blame external circumstances rather than personal factors. On the other hand, when we think about our successes, we believe we are solely responsible. This leads us to focus on our successes and ignore our failures when estimating how long future tasks will take. We convince ourselves that previous failures were not our fault and that the external factors that caused us to fail will not reoccur.
  • When we are making decisions, we often rely too much on the initial information we receive. This is because of a cognitive bias called anchoring effect. It means that we become anchored to our original plan and tend to stick to the initial values we set for a project, such as deadlines and budgets. This can be a problem if our initial plans were overly optimistic, as we may be reluctant to make major changes even if they are necessary. Instead, we may only make minor adjustments, which can lead to insufficient adjustments to our plans as we go along.
  • We often face social and organizational pressure to finish projects quickly and without any complications, and this can be a major reason why the planning fallacy can be so harmful. Workplace cultures can be highly competitive, and individuals may face consequences if they express less enthusiastic opinions about a project or insist on a longer timeline than others. Additionally, executives may favor overly optimistic predictions, which can incentivize employees to engage in inaccurate, intuition-based planning. Organizations often strive to project a positive image externally, which can create a culture of unrealistic optimism that leads to missed deadlines and budget overruns.

Avoiding the planning fallacy

Overcoming the planning fallacy is not easy. Simply being aware of intuitive prediction biases and corrective procedures to counteract them can help you avoid the planning fallacy. To help you complete your game on time and within budget, we have put together these tips:

  • Consider past projects. Instead of getting absorbed in the details of the task at hand, consider how similar projects fared in the past. Data from comparable projects can serve as a base rate that you can use to make a more realistic plan. For example, you can pinpoint patterns of delays and challenges and adjust your estimates accordingly.
  • Create contingency plans. Rather than assuming that everything will go smoothly, it’s better to identify potential issues and develop strategies to deal with them if they occur. You increase the chances of staying on track by considering possible obstacles and delays and making room for them.
  • Be realistic and not afraid to consider negative outcomes. You don’t need to bring the whole project down, simply ask realistic questions like, “Is there anything that could hold the project up?” or “Are there any unforeseen costs that we need to consider?” This will help you make more informed decisions and prevent any potential setbacks.
  • Use agile methodologies, like Scrum or similar. They put the focus on breaking down the project into smaller iterations that are easier to estimate and accomplish, learning from the process, and being able to estimate the next iterations better, giving room for adapting to changes and inconveniences.
  • Use a project management tool. With the help of a tool like HacknPlan, you can break down your project into smaller, more manageable milestones and tasks. By breaking things down into smaller parts, you can then create timelines for each milestone, which will allow you to get into the granular details of the project. This level of detail will help you to estimate the overall project duration more accurately, and will also enable you to identify potential issues early on so that you can address them before they become bigger problems. Also, you can look at metrics and statistics, analyze the behavior and performance of your team and make decisions based on real data.

Conclusion

Creating and releasing a game is a huge and complex process, so you should be realistic and assume you’re not going to be able to plan and execute it to perfection. Teams can be hard to manage, technical difficulties may arise, or some tasks may simply be too complex or uncertain to estimate, not to mention external factors. That’s the reality of developing a game.

However, by understanding how the planning fallacy affects your brain and learning how to identify and address your bias, you have the tools to improve the planning of your project and make sure it’s released on time and within budget. Because being able to play your game is all that we want. You can do it!

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