Ever planned a project… and then watched it take twice as long?
You’re not alone. That’s the planning fallacy at work — a common bias that leads us to underestimate time, cost, and complexity.
In this video, I’ll explain what the planning fallacy really is, why it happens (there are some surprisingly human reasons), and the most common traps project managers fall into. More importantly, I’ll give you practical strategies you can use straight away to make better estimates, plan more realistically, and avoid those painful overruns.
If you want your plans to be taken seriously — and actually stand up to reality — this is essential viewing.
This video is safe for viewing in the workplace.
This is learning, so, sit back and enjoy
What is the Planning Fallacy?
Planning fallacy is the tendency for people and teams to underestimate the time, cost, and effort required to complete a task or project.
We do this, even when we have past experience showing that similar work took longer. It’s a form of optimism bias.
The term was introduced by psychologists Daniel Kahneman and Amos Tversky in 1979, and classic symptoms include:
- Projects are taking longer than planned
- Budgets being exceeded
- Teams believing “this time will be different” despite past overruns
In short, the planning fallacy is systematic optimism in planning.
Glossary definition of Planning Fallacy
Planning fallacy: A cognitive bias in which individuals or teams underestimate the time, cost, and effort required to complete work, despite evidence from similar past activities.
Why the Planning Fallacy Arises
Planning fallacy isn’t just bad guessing. It’s a hard-wired cognitive bias that primarily stems from psychological traps and organisational pressures.
1. The Inside View
People plan by focusing on the specific details of the current project and imagining how it will unfold.
They ask:
- What steps are required?
- How long will each step take?
This encourages best-case thinking, because the team imagines the work going smoothly.
They fail to ask: How long have similar projects actually taken?
2. Optimism Bias
Humans naturally expect positive outcomes and assume problems will be manageable.
In projects, this leads to assumptions like:
- Risks probably won’t happen
- Stakeholders will cooperate
- Technology will work as intended
This produces systematically optimistic estimates.
3. Social Pressure
In a corporate setting, PMs often feel pressure to provide “aggressive” timelines to please stakeholders, leading them to subconsciously filter out potential risks during the planning phase.
This occurs particularly in:
- large infrastructure projects
- competitive funding environments
- organisational initiatives seeking executive backing
4. Ignoring Complexity and Uncertainty
Early plans often assume linear progress, but real projects involve:
- rework
- decision delays
- integration problems
- changing requirements
Planners underestimate the compound effect of small uncertainties.
5. Memory Bias
People remember successful projects more clearly than troubled ones.
Lessons from difficult past projects are often forgotten, rationalised, or dismissed.
Strategies to Minimise the Planning Fallacy
Experienced project managers use several practical techniques.
Use the ‘Outside View’, or ‘Reference Class Forecasting’
Instead of estimating from scratch, examine actual outcomes from comparable projects.
Questions to ask:
- How long did similar projects really take?
- What did they actually cost?
- What problems did they encounter?
Base initial estimates on the distributions of actual costs and schedules.
This technique is often called reference class forecasting.
Build Contingency and Schedule Buffers
Recognise uncertainty explicitly by adding:
- time contingency
- cost contingency
- risk reserves
These should be based on risk exposure, not arbitrary percentages.
Break Work Down Properly
Large tasks hide uncertainty. Use a work breakdown structure (WBS) or similar method to:
- decompose work into manageable tasks
- estimate at a lower level and build models bottom-up
- expose hidden complexity.
Involve Diverse Perspectives
Estimates produced by a single expert or a small group are more prone to optimism.
Involve:
- delivery teams
- technical specialists
- operational stakeholders
- people who worked on similar projects.
Different viewpoints help expose blind spots.
Conduct Pre-Mortems
A useful exercise is to imagine the project has already failed and ask:
“Imagine it’s a year from now and the project has failed badly—what went wrong?”
Explicitly consider pessimistic and most‑likely scenarios for time, cost, and benefits, not just the optimistic one. This encourages people to identify risks they might otherwise ignore.
Independent challenge and governance
Have estimates challenged by people who are not invested in “selling” the project, like PMO, peers, or an external ‘Red Team Review’.
Require that business cases show both track‑record data and assumptions, and document why this project should perform differently.
Track Estimation Accuracy
Organisations can improve forecasting by:
- tracking planned vs actual outcomes
- maintaining historical project data
- reviewing estimation errors.
Over time, this builds evidence-based planning.
A Simple Rule for Project Managers
A practical mental check is this:
If your plan assumes everything goes right, it is not a plan — it is a hope.
Good planning recognises that uncertainty is inevitable and designs resilience into the schedule and budget.
So, use the ‘Multiplier Rule’. Multiply your budget and time estimates by 1.5x or 2x before presenting them to your boss or client. It’s not being cynical—it’s being a professional.
Recommended Videos and Articles to Help with Planning and Bias
Carefully curated video recommendations for you:
- What is Sunk Cost? …and the Sunk Cost Fallacy? | Video
- Avoid Sunflower Bias: Critical PM Priority | Video
- Project Multi-tasking: The Multi-tasking Fallacy
- It’ll Never Fly: Beat Confirmation Bias | Video
- Project Planning Process: Navigate the Many Steps You Need
- Project Planning Process – How to Build Effective Project Plans | Video
- Scenario Planning: 5-Step Process to See the Future
- Project Planning Mistakes and How to Avoid the 12 Most Scary Ones
- Contingency Planning: How to Create a Contingency Plan
What Kit does a Project Manager Need?
I asked Project Managers in a couple of forums what material things you need to have, to do your job as a Project Manager. They responded magnificently. I compiled their answers into a Kit list. I added my own.
Check out the Kit a Project Manager needs
Note that the links are affiliated.
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