Why We Underestimate Time and Effort & How to Mitigate It

Underestimating the time and effort required to deliver changes regularly appears as organizations embark on digital strategy and transformation projects. At its core, this is a cognitive bias called the planning fallacy, which also touches on underestimating risk and overestimating benefits.

There are plenty of reasons for why the planning fallacy occurs, and the handful that that appear most often are:

1. Optimism bias as people expect that a project will go smoothly or follow the "happy path"

2. Anchoring to an estimate or statement that may have lacked more context about the initiative's scope or complexity

3. Underestimating complexity of tasks within the project or the entire project itself

4. Agreeability on the behalf of an outside firm to try meeting a client's timeline to please them or win the deal

5. Lack of familiarity with an approach, solution, or specific tasks that are novel to the organization and its resources

While a project is underway, there are methods to evaluate progress to estimates and adjust as needed. However, how do you ensure those estimates are more precise reflections of what reality will be?

These techniques tend to be easy to adopt and have the largest impact:

1. Decompose the work into smaller parts to assign durations and efforts, which is especially helpful if you have unknown or unfamiliar tasks, as these can be estimated more precisely by using the other techniques or by building a prototype

2. Use buffers for time and scope to ensure that there is sufficient leeway to absorb issues that appear in the natural execution of projects; if your timeline can't move, reduce your scope, and if your scope can't change, move your timeline... it's really that simple

3. Ask for an outside perspective within your network of industry peers or by talking to a consultant, especially if you know they have done similar work

Another technique is using historical data from prior projects, including tasks within those projects, as the basis for your estimations. Be careful with that approach, as we also have a bias to assume that one thing is like another, even though the associated effort is entirely different.

TLDR: We often underestimate time due to optimism, complexity, or unfamiliarity. Break tasks down, add buffers, and get outside input.

By way of example, this happened to me yesterday, as my family had a party in the backyard and I wanted to hang string lights to cover a span where our friends would be gathering; you've likely seen those lights at an outdoor restaurant or hotel courtyard.

The associated work involves:

• Drilling and installing eye screws

• Cutting and looping cables with ferrules

• Unboxing and attaching string lights to cables

I estimated that it would take 75 minutes.

75 minutes to hang three sections of cable and lights, each set of lights is 48 feet long with 24 bulbs (thus 24 points to attach it to the cable).

You probably can already tell that was a wildly optimistic estimate.

It ended up taking 3 hours.

My suggestion (that I ignored in this case) is to double or triple how long you think something will take the first time you do it.