How Human Biases Influence Project Overruns

You see it all around you; projects slip to the right, rarely to the left. It is so common that we accept it with a fatalistic shrug.

Your bathroom or kitchen renovation ran long and over budget. The latest major Government program doubled or tripled in cost and took years longer than estimated to deliver less than planned. Your corporate strategic plan was initially printed on a device that is no longer supported, but the outcomes are elusive, or perhaps you have adapted your expectations accordingly.

Why does this happen and what can we do about it?

Are we naturally physiologically inclined towards optimism?

This article tackles these questions.  We explore human behaviours and biases as they relate to project planning and execution and we provide some prescriptions for breaking the damaging cycle of program overruns.

A follow-on article will addresses our persistent failure to launch and complete complex projects. You can also learn more about this topic and others by contacting us. We are constantly updating our “Strategist’s Cookbook”, a compendium of over 100 strategy related tools and processes, including an extensive treatment of this subject.

Part 1 – It’s All Your Fault

One key downside to human intelligence is bias and rationalization.

Our highly capable and interwoven cerebral cortex presents us with a classic case of greatest strength = greatest weakness. Our ability to plan, strategize, conceptualize and cooperate comes at a cost. All of the intellectual horsepower needed to execute complex tasks and visualize potential futures is accompanied by a range of behaviours and perceptions that protect us from reality. Despite the varied life paths that we all take, we quite reliably build up a common set of biases.

We are generally unaware that these psychological slights of hand are operating. They tend to remain in the background, and we don’t consciously set out to apply biases to business and program issues.

Perversely, we carry a bias about biases: we believe that we are more immune to them than others around us – that we are more in control – physiological circles within circles.

The old adage “know thyself” is absolutely critical in business. This extends to “know thy team” in a project environment or corporate setting. In this article, we will briefly explore some of the more common biases that we carry around, and in Part 2 we try to answer the question “why do projects overrun and what can we do about it?” from the perspective of human behaviour.

Spoiler alert: it’s all your fault.

Common Human Biases

Research by psychologists, including the Nobel Prize-winner Daniel Kahneman, has identified a number of areas in which we fairly dependably fail. They call such tendencies “cognitive biases” and there are many of them – a lot of ways in which our minds trip us up.

For example, we suffer from an optimism bias, that is we tend to think that however likely a bad thing is going to happen to most people in our situation, it’s less likely to happen to us. We don’t need facts, statistics or any other reason for our beliefs, we are simply irrationally optimistic about our own situation and chances. There is a great TED talk by Tali Sharot on this topic that we encourage you to watch.

Because of our present bias, we procrastinate.  The present is comfortable and change is messy and requires energy. We even fail to make small changes, changes that clearly are for the better, not because we have decided it’s a bad idea, but because … we procrastinate. Similarly we suffer from a status quo bias, which makes us value what we’ve already got over the alternatives, just because we already have it. This complicates change initiatives that fall out of strategies.

Our confirmation bias is our tendency to search for, or interpret, information in a way that confirms our preconceptions. As the world becomes more hectic and complex, we attempt to reduce inconsistency by searching for information which re-confirms our views. The Internet and narrowly focused cable news programs are examples of channels that conspire to create echo chambers that serve to confirm our beliefs. Reading and understanding contrary beliefs and positions is hard, and today we can easily insulate ourselves from these painful alternative perspectives.

Self-serving bias is the tendency to claim more responsibility for successes than failures. We all do this. We suppress our role in painful situations – it is a classic defense mechanism. When things go well, we all want to take credit and we deceive ourselves about the magnitude and significance of the role we played. When it all goes wrong, there is a lot of conscious and subconscious finger pointing. Even in the quite private center of our minds, we convince ourselves that there are mitigating circumstances, external forces and unknowable or uncontrollable events that led to the failure. We reassure ourselves that we are good, and we minimize our culpability.

Hindsight bias is the inclination to see past events as being predictable. We knew that the program was coming off the rails. As we retell the story, we insist that we tried, but were powerless to pull it back into line. This bias can also get in the way of objective analysis of experimental results, costing and pricing practices, program plans, etc.

The curse of knowledge is a cognitive bias whereby better-informed people (experts) find it extremely difficult to think about problems from the perspective of lesser-informed people. There are two by-products of this: one is difficulty communicating and explaining and the other is blindness to alternatives. The closer you are to an idea, the harder it can be to see past it. This provides a vector for disruptive market strategies that are used against us. It also explains why well considered strategies can fall flat with people who are not intimately involved in the details of the strategic process and thinking.

And finally, the planning fallacy is a tendency for people and organizations to underestimate how long they will need to complete a task, even when they have experience of similar tasks over-running. This is so common that every one of us can cite examples.

There are many more human biases. When you undertake something as complex and risky as strategic planning or a large project or bid, you are going to stimulate all of these to varying degrees in you, your team and the overall company. Our research says that these are real, not psycho-babble. Knowing that we are susceptible to these, that we are typical when it comes to the application of bias, that we are not unusually resistant to these forces, is a critical first step to understanding how our latent behaviours influence our ability to plan and execute. Having taken this step, we are free to develop strategies to counter our natural individual and group tendencies.

Group Think

If we accept that individuals carry biases and view the world thru personal prisms, then what about entire corporations and cultures?  Do these large collections of humans balance out? Do we naturally police each other towards rational behaviour?  The answer is both yes and no.

Our differences do create a degree of balance.  If you take any of the standardized personality profile tests (Myers Brigs or DISC/DISCUS for example) you will note that there is an entire landscape of overarching behavious and predispositions.

To the extent that we are all self-aware and understand of the value of diversity, we can leverage these differences to create stronger teams. While we find these other personalities sometimes challenging to work with and relate to, deep down we know that we are good for each other.

Frequently we marry opposing personality types, likely subconsciously looking to fill a hole in our own personality profiles.

Cultures and corporations are not, however, fully diverse. In fact, despite efforts to engage in multiculturalism and acceptance of diversity, we tend to clump around similar outlooks and behaviors. We are tribal. It seems that it is natural for us to congregate in this way, both nationally and within organizations. A degree of “group think” is an inevitable by-product.

Aggravating this tendency is the fact that most corporations have fairly narrow functions, values and missions.  All companies have assumptions, some explicit, some hidden from view, about the competitive arena — competitors, customers, suppliers, regulators, technology. They have corporate myths about the company’s own strengths and the validity of its practices and traditions. And, all companies have corporate taboos associated with predispositions and beliefs that flow from the top. How often have you heard “you can’t ask that question”?

Strong leaders impose their core beliefs and behaviours downward into the organization, intentionally or not. If you are a persistent outsider or contrary voice, you will probably eventually either leave or be ejected. The white blood cells of organizations relentlessly push the team towards a degree of homogeneity. While this makes it easier to marshal forces to move in a common direction, and manifests itself as “efficiency” and a “strong corporate culture”, this mono-behavioural winnowing creates weaknesses and blind spots that can be effectively attacked by competitors and disruptors.

The white blood cells of organizations relentlessly push the team towards a degree of homogeneity.

Truly inspired leaders and HR departments fight these trends, pushing for a celebration of diversity and encouraging independent thought and behaviours. Unfortunately, you can only tolerable so much anarchy and chaos.  We advocate that learning to enjoy and value the disruptive interjections of your resident “square pegs” is a sign of organizational and management maturity.

The Optimistic Ape

In our research on base human behaviours and biases, it has become clear that some are fundamental, and others act more as manifestations of these fundamental behaviours. We have also noted that the biases that seem most related to project planning and execution seem to logically group together.

We believe that Optimism is a base or fundamental behaviour. In her TED talk, Tali Sharot shows how our tendency to display optimism can be experimentally altered by stimulating certain brain regions with electromagnetic pulses. This is a physiological, real, measurable behaviour.

As noted at the outset, from an evolutionary standpoint, you can see how optimism has value.  It has been demonstrated that optimists have less stress, thus better overall health, due to their positive outlook and ability to suppress negative realities. They are also more likely to try and try again.  Optimistic apes are more likely climb down out of the trees and try to make tools despite previous failed attempts or the inherent risks associated with walking in tall grass full of predators.

The Planning fallacy appears to be a by-product of the Optimism bias.  We are inherently optimistic about what we can achieve, despite objective evidence from the past. Suffering from the self-serving bias, we fail to take responsibility for the past and the hindsight bias allows us to believe that it was not us, as we were right all along.  We can do better than “they” did.

In any event, we want the program to be approved and “it is easier to ask to forgiveness than it is to ask to permission”, particularly if we can rationalize and insulate ourselves and our actions from the train wreck that eventually occurs.

Summary – Human Behaviour on the Job

The human brain is amazing. Three pounds of chemistry and electrical impulses give us language, art, science, introspection, cooperation, philosophy and more. This powerful organ enables us to stand apart in the animal kingdom.

However, all of that processing power comes with embedded behaviours that enable us to remain stable and secure. Individually and collectively, we fail in predictable ways.  We carry biases and we rationalize. We repeat errors because we don’t think that they relate to us. We behave in ways that serve ourselves at the expense of the group. We are wired to be optimists and we often look for short term gains at the expense of overall longer term performance.

Individually and collectively, we fail in predictable ways.  Perversely, it transpires that some of this is essential to evolution, and to making progress as a species.

All is not lost. We do make progress, and we do learn. Most of us plan and execute programs with the best of intentions. But projects still overrun and our psychological underpinnings are a large part of the problem. At Synappsys, we contend that progress need not be as painful as it seems to be and that we can develop ways to blunt dysfunctional behaviours and our natural tendencies.

If we understand what drives us to create faulty plans and fail to execute strategies, then we can develop safeguards and processes to mitigate these behaviours. This will be the focus of Part 2.

Please weigh in

The human dimension and classic human behaviors are a central and important program management issue. We are interested in engaging in a discussion about human behavior. We believe that programs are all about people. If you have insights and experiences, or supportive or contradictory positions and knowledge, please contact us – if for no other reason than to connect and collaborate – we would love to engage with you.