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Business Horizons (2013) 56, 643653

Available online at www.sciencedirect.com

www.elsevier.com/locate/bushor

Lies, damned lies, and project plans: Recurring


human errors that can ruin the project planning
process
Jeffrey K. Pinto

Black School of Business, Penn Statethe Behrend College, 282 Burke Building, Erie, PA 16563, U.S.A.

KEYWORDS Abstract Project-based work has become a critical component of global industrial
Project management; activity. Among other functions, projects are used to develop new products and
New product services, improve operations flows, implement innovative information technologies,
development; and conduct primary R&D. At the same time, project management is a core skill
Planning errors requirement for numerous corporations worldwide hoping to harness a means of
improving both the efficiency and effectiveness of their operations. Unfortunately,
the track record for project development has not been strong. Data suggest that
within various industrial components, such as IT, failure rates for projects are high;
even successful examples typically run well over budget and behind schedule. This
article addresses some of the reasons why projects and project management have
failed to live up to lofty expectations, arguing that the seeds of failure are often sown
from the outset through flawed project planning. Citing the more common errors in
human judgment and drawing on numerous examples, we offer guidelines by which
project planning can begin to work as it was intended: on behalf of the project rather
than at cross-purposes with the projects goals.
# 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All
rights reserved.

1. Project development: Whats the A bloody mess: Britains health information


problem? network.
(Chin, 2006)
A rail project shut down by court order will
NASA fights to save James Webb telescope
cost Honolulu more than $114 million.
from the axe as costs soar to $6.5 billion.
(Rail Project Shutdown, 2012)
(McKie, 2011)

It seems, as the old expression goes, that the hits


just keep coming. Project-based work has become
E-mail address: jkp4@psu.edu a critical component of global industrial activity.

0007-6813/$ see front matter # 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.bushor.2013.05.006
644 J.K. Pinto

Projects are usedamong other functionsto de- canceled, with 42% terminated due to misman-
velop new products and services, improve opera- agement or shoddy construction (Kelley, 2008).
tions flows, implement innovative information
technologies, and conduct primary research and The question must be asked: Why, given the height-
development (R&D). They are touted as the cure ened awareness of value in projects and the use of
for business malaise, to solve unemployment prob- projectmanagementtechniques,doestheactual track
lems, to bring consumers the newest and fastest record continue to be so mediocre? Phrased another
electronic gadgets, to solve infrastructure prob- way: Why is it that interest in project management is
lems; in short, to exert positive changes on the at an all-time high, professional project managers
world in which we live. Accordingly, project man- are being developed within numerous corporations,
agement is a core skill requirement for numerous and project management training and educational
corporations worldwide. With an increasing interest opportunities abound, yet numerous projects them-
in and use of project management practices and selves are still consistently failing to deliver promised
project-based work, organizations have hoped to value? While it is true that any number of external
harness a means of improving both the efficiency events (e.g., withdrawal of funding support, changes
and effectiveness of their operations. This height- in strategic priorities midstream) can derail a proj-
ened interest in the use of project management is ects progress once it is in motion, one commonality
reflected in the rapid growth of professional orga- of many project failures is that the seeds for poor
nizations. For example, the Project Management performance are sown quite early, often during the
Institute is the largest professional project manage- initial planning phase. Failure, as I define it, pertains
ment organization in the world, with membership not just to the discontinuation or cancellation of a
approaching 500,000. An industrial climate ripe for project. It also includes projects that failed to deliver
exploitation, coupled with a large professional cad- on critical specifications, were completed with sig-
re of trained project managers, would seem to nificant cost and time overruns, and provided poor
positively indicate the use of projects toward fur- return on investment (ROI). We will see that it is
thering organizational goals. precisely during the early stages of the project life
Unfortunately, while project management techni- cycleconceptualization and planningthat most
ques continue to be increasingly employed in the projects and project teams find themselves con-
private and public sectors, the track record of suc- demned to an unhappy fate: trying to salvage value
cessfully implementing them in organizations has not and profitability from a project assignment that
been strong. Data suggest that within various indus- seems designed to fail.
trial components, such as information technology (IT) What are the causes of this disconnect between
and infrastructure construction, failure rates for original goals and project plans? How do project
projects are high; even successful examples typi- teams, managers, and executives continually mis-
cally run well over budget and behind schedule. manage projects from the outset, leading to serious
Consider the following supportive evidence: complications or outright failure downstream? Here-
in, we will explore seven deadly sins of project
 The META Group reports that more than half of planning: ways in which critical project stakehold-
all [information technology] projects become ers err at the outset, with seriousand often fatal
runawaysovershooting their budgets and time- negative consequences for the project. As the arti-
tables while failing to deliver fully on their goals cle will demonstrate, many of these errors are the
(Kapur, 1998). result of often willful and systematic mistakes proj-
ect team members continuously make as they pre-
 Joe Harley, then-Chief Information Officer (CIO) pare the plan. Errors of optimism bias, artificial plan
at the Department for Work and Pensions for the manipulation, poor change control, and inadequate
UK government, stated that only 30% of technology- risk management are among the blunders that
based projects and programs are a successat a plague our ability to execute viable project plans.
time when taxes are funding an annual budget of Next, we will analyze these errors in turn.
14 billion (over $22 billion) on public sector IT,
equivalent to building 7,000 new primary schools
or 75 hospitals a year (Ritter, 2007). 2. Seven deadly sins
 The Special Inspector General for Iraq Recon-
struction (SIGIR) reported that the Pentagon I would rather tell seven lies than make one
spent about $600 million on more than 1,200 Iraqi explanation.
reconstruction projects that were eventually Mark Twain
Lies, damned lies, and project plans 645

2.1. Optimism bias the ability to manage projects on-time, on-budget,


and to-specification. Buehler, Griffin, and Ross
I frequently speak to project management groups and (1994) offer some interesting implications when
ask them a tongue-in-cheek question: What do you applied to project scheduling, including:
get when you let the sales staff negotiate critical
project parameters (e.g., delivery date, functionali-  People tend to underestimate their own, but not
ty, cost) with the customer? The responses are others, completion times. We call this optimis-
consistently negative: A doomed project! Pre- tic prediction bias. The direct implication is that
packaged failure! A looming disaster! These com- planners commonly underestimate how long ac-
ments reflect an experience shared by many project tivities on a project are likely to take, using rosy
teams when they are presented with a plan over assumptions to set a project schedule.
which they had no input, one that adopts the rosiest
of expectations for specifications, delivery sched-  People focus on plan-based scenarios rather
ules, and costs. This state is extremely discouraging than on relevant past experiences when generat-
for project team members, many of whom are expe- ing estimates. This effect suggests an over-
rienced in working on projects and who quickly rec- dependence on projected expectations and im-
ognize when project parameters are completely plies that project team members are prone to
unachievable in relation to these preset expecta- adopt the assumptions generated in a newly-
tions. What we are talking about here is the damage developed project plan and discount relevant
that optimism bias can cause to a project plan. past experiences, even if they are nearly identi-
Optimism bias refers to an individuals or orga- cal to the current project being considered.
nizations belief that they are less at risk than anyone
else for experiencing a negative consequence (Shep-  Peoples attributions diminish the relevance of
perd, Carroll, Grace, & Terry, 2002). They may feel past experiences. They are quick to dismiss poor
this way due to several reasons, including: their past project track records as being the product of
desired end state, their cognitive mechanisms, the external or unstable causes. Somehow, it is as-
information they have about themselves versus sumed that the past does not factor into current
others, and overall mood. The net result of optimism estimates because previous problems were
bias is to routinely minimize or discount negative caused by others and therefore cannot be seri-
information and identify with the most optimistic ously considered for current assignments.
estimates for project performance. This term is
sometimes also referred to as delusional optimism Our understanding of the causes and implications
and the planning fallacy. The result of optimism bias of optimism bias in projects has been immensely
is that stakeholders make highly positive assumptions helped by the work of Bent Flyvbjerg and his col-
about a projects performance, even in the face of leagues. For over a decade, Flyvbjerg has examined
historical evidence to the contrary. The FBIs notori- the causes of failures in project planning and con-
ous Virtual Case File (VCF) project offers an example cluded that a large number of projects suffer from
of optimism bias. Originally started in 2000, the VCF the joint and combined effects of delusion and
project was intended to automate the FBIs paper- deception on the part of the project organization
based work environment. The primary contractor and its principal stakeholders. That is, delusion is
delivered such a bug-riddled and off-target product often the result of adopting an inside view of the
that the project was scrapped in 2005 at the cost of project: focusing only on the plan itself, the ob-
$170 million. Amazingly, convinced they had learned stacles that have to be overcome, the scenarios to
the hard lessons from their first attempt, the FBIs consider, and current trends to uncover. The inside
project, renamed Sentinel, was restarted and re- view is a bottom-up decision making process that
budgeted for an additional $450 million. By late discounts the wealth of historical data, past expe-
2010, the project, having fired its primary contractor, riences, and environmental factors that are likely to
was so far behind schedule and over budget that the affect the project (Flyvbjerg, Garbulio, & Lovallo,
U.S. Department of Justices Office of the Inspector 2009). This delusion is best represented through the
General issued a scathing report on its progress to joint effects of the planning fallacy we have dis-
date. An independent assessment estimated that at cussed above and the use of artificial estimating
its current management progress, Sentinel will come techniques such as anchoring and adjustment.
on line at least 6 years late and $351 million over Anchoring and adjustment is a second effect that
budget. confounds our ability to develop accurate plans
When we explore the planning fallacy in more through the use of artificial (and harmful) scheduling
detail, we find several effects that directly impact heuristics. A great deal of research has demonstrated
646 J.K. Pinto

Table 1. London Olympic cost estimates request or mandate of a senior executive. For ex-
Year Estimated Cost Source ample, a project manager may perform a good faith
effort to produce a realistic and workable project
2002 1.8 billion Arup schedule only to be told by a senior manager: Its
2003 3.14 billion PwC
too long. Shorten it! In fact, there may be several
2004 4.21 billion Candidate File
iterations of this exchange until the project man-
2007 9.3 billion NAO Estimate
2012 11+ billion Official Budget Estimate ager, in frustration, simply asks for specific guid-
ance: Okay, then. How long do you want it to be?
This dynamic leads to a number of pathologies.
First, it implicitly suggests that the senior execu-
that anchoring is a powerful bias when applied to tive: (1) knows more about the project than the
estimates because it acts as the original stake driven actual project leader; (2) does not trust the plan as
into the ground, around which all future adjustments prepared by the project manager; and/or (3) as-
must be made. In other words, the first estimate for a sumes that the plan has been heavily padded with
project becomes the anchor and subsequent modifi- extra slack time to take pressure off the project
cations are made in relation to this original, often team. Any of these reasons may prompt the exec-
artificially-derived number. Even if the anchor is too utives directive but they all point to a similar
high or too low, modifications of it are incremental problem: the carefully prepared plan is discounted
and always linked to that first estimate. Thus, the and the project manager is sent back to the drawing
starting point for an estimate becomes a critical board to reconstruct it.
limiter on our ability to make proper modifications Besides simple desire to shrink the plan, other
to the plan. For example, the recently-completed motives may be at work. One oft-cited reason for
Olympics in London developed an initial cost anchor of low-balling initial estimates is embedded in Flyvb-
1.8 billion despite Beijing 2008 costing 9.8 billion. jergs (2005) strategic misrepresentation princi-
In fairness, the original anchoring for the London ple: Decision-makers and politicians are well aware
games occurred well in advance of the final bill for that full disclosure estimates will frequently doom
the Beijing Olympics coming due; however, there projects even before they are started. In short,
was clear data showing that Barcelonas 1992 games there are often political motives for underestimat-
cost 8.06 billion. Thus, project planners for the ing project costs and schedules. Bostons Central
London games did have viable historical data on Tunnel/Artery projectknown popularly as the
which to develop their estimates, but chose instead Big Digwas originally estimated at $2.54 billion
to adopt a much smaller number. The resulting and ultimately cost nearly $15 billion. The question
cost increases were relentless and predictable, as has to be asked: Was this the result of poor initial
Table 1 shows. estimates, or were planners simply tuned to a de-
How would the results have been different gree key stakeholders knew would be needed to get
through more accurate anchoring? First, the original the project approved?
baseline would have more closely approximated a It is instructive to consider a recently proposed
reasonable set of cost parameters, leading to better and highly controversial project in light of the ef-
knowledge of the real costs of the games. Second, fects of massaging project plans. Californias High-
adjustments would have occurred for more prag- Speed Rail project, initially designed to build a rail
matic reasons; that is, if the Olympic Committee link between Los Angeles and San Francisco, is
was forced to revise the budget upward, it would currently in the early planning phases. Official es-
have been due to well-understood external causes timates have steadily been climbing. The first esti-
(e.g., unexpected difficulties in building venues, mate placed the rail system at $34 billion, with
higher construction material costs) that would not an estimated completion date of 2018. In 2012,
have had the same negative effects on public per- a revised official estimate projected a cost of
ceptions of project management. In effect, estab- $98 billion and completion date of 2033. Unofficial-
lishing a reasonable anchor is an important ly, experts have suggested a potential cost as high
demonstration of the accuracy of initial estimates as $218 billion when all is finished. At a time when
and the care with which the project organization has Californias overall state budget is in considerable
begun developing its plan. arrears, it is perhaps not surprising that estimates
for the project have been adjusted and readjusted
2.2. Massaging the plan to make them politically palatable.
There are two important implications that result
The act of massaging a project plan usually refers from top managements desire to massage the plan.
to ex post adjustments being made at the specific The first is that projects that have been honestly
Lies, damned lies, and project plans 647

estimated are likely to closely follow the original why do they continue to occur, even within world-
schedule, regardless of how much it was com- class organizations that should know better? Several
pressed after the fact. In other words, we see possible reasons can be suggested, including:
example after example of projects coming in near
their original deadline, but now they are considered  Nave promises made by marketing or inexperi-
late. The lesson here is obvious: Absent some ma- enced project managers. Inexperience can result
terial help from top management, the message to in making rash promises that cannot be fulfilled.
shrink the plan will not materially change final
project delivery. The second implication of massag-  The Marine Corps mentality: real programmers
ing the plan is behavioral and highly predictable. dont need sleep. This attitude emphasizes bra-
Project teams and their leaders are quick to grasp vado at the expense of evaluation. Hyper-
the difficulties that emerge from artificially-short- optimistic schedules are not an accident; they
ened project plans and take defensive action ac- are a manifestation of this aggressive attitude.
cordingly. Thus, when a team anticipates that its
plan is destined to take a 15% cut in duration and/or  The nave optimism of youth. Technical hotshots
budget once it goes to the executive committee, it who are feeling particularly cocky can land the
learns to pad the project with additional slack to entire project team in trouble by getting in over
account for the cuts. But, a senior executive their heads.
once asked me, doesnt this just prove that we
were right to cut their project in the first place?  Intense pressure brought on by global competition,
Actually, no. It is important to remember the order new technologies, or government regulation. A
of events here. Project teams develop this defense crisis mentality can shift the team, and their
mechanism because of past history of artificial project, into death march mode.
schedule compression. As a project manager once
put it to me: If they dont take our estimates Although Yourdons (2004) work was done with IT
seriously, were not going to give them serious projects, the starting conditions found in these
estimates! circumstances can easily apply across many differ-
ent classes of projects. The end result is the same:
2.3. Creating project death marches Massively wasted efforts are being spent on projects
that have been set up to fail by the very conditions
Coined by Yourdon (2004), the term death march under which they are expected to operate.
refers to projects that are typically set up to fail
under company-placed demands, leaving the expec- 2.4. End date-driven schedules
tation that the project team will pull off a miracle. A
death march invokes imagery of a project team A common error made by many organizations entails
wearily trudging along, mile after mile, with no imposing Be done by. . . directives on their project
possibility of successful conclusion or end in sight. teams. That is, rather than create a viable time-
Death marches are defined as projects whose frame moving forward, managers actually start
parameters exceed the norm by at least 50%. In scheduling by working back from some future date
practical terms, that means: (1) the schedule has considered to be a non-negotiable deadline. This
been compressed to less than half the amount desire is understandable. Many organizations devel-
determined by a rational estimating process; oping new products talk about launch windows, at
(2) project team staffing has been reduced to half which time the product must be ready. For instance,
the number that would normally be assigned to a new toys must be on shelves in time for Christmas
project of this size and scope; or (3) the budget and shopping and new model-year automobiles have to
other necessary resources are cut in half. External be on car lots every fall. Other projects may involve
pressures can lead to any of these conditions influ- restrictive contracts that specify large penalties in
encing the project. For example, perhaps compet- the form of liquidated damages for late delivery. As
itive bidding to win the contract was so intense a result, there are many cases where the launch
that when the deal was signed, the firm had to window is a legitimate concern and should shape the
perform at such a cut-rate price that it could not project delivery schedule. However, it is important
hire enough people or support the project team to understand how end date-driven schedules can
sufficiently. affect projectsparticularly when insufficient ad-
The result of these starting conditions is a virtual vance warning, lead time, or resources have been
guarantee that the project will fail, which begs the contributed to actually make the target date rea-
question: Why are death marches so common and sonable. First, these end date-driven schedules
648 J.K. Pinto

serve as another form of death march mentality for Institute, has grown dramatically in recent decades;
the project team. If a date is proposed without today, over 500,000 million project management
sufficient resources supporting the team, the mes- professionals hold Project Management Profes-
sages from top management are actually working at sional (PMP) certification. As an indicator of the
cross-purposes with each other. On one hand, the emphasis corporations are placing on project
alarm has been sounded to complete a project by an management expertise, these are positive and en-
absolute must have date; on the other, without couraging steps. Further, organizations such as
actual resources to bolster this desirethat is, the NASA, Rolls-Royce, BP, Fluor Daniel, and Boeing
company putting its money where its mouth isthe are heavily invested in training and development
result can prove demotivating rather than challeng- of project management skills for employees.
ing. Teams quickly draw a distinction between goals Consider NASAs Academy of Program/Project &
that motivate and those that are perceived as im- Engineering Leadership (APPEL) program, which is
possible to attain. Too often, Be done by. . . committed to creating a second-to-none project
doesnt work. Second, end date-driven scheduling management workforce.
immediately negates the value of comprehensive Much more needs to be done, however, to pursue
planning, risk assessment, scope development, and project management expertise beyond its current
numerous other critical elements that are neces- levels. Even within many organizations that encour-
sary in putting together viable project plans. The age project management, experience suggests pro-
unspoken message in a deadline announcement is cedures are far from standardized, while skill sets
that crisis looms; therefore, steps can be cut, plans are unevenly distributed across departments,
must be shortened, and risks waved off. Myriad groups, and even individuals. A study of Federal
examples exist of software projects that, in a rush Aviation Administration (FAA) personnel, for exam-
to get them done by the launch window, were ple, revealed that 89% of people assigned to manage
introduced with so many bugs that they had to a projects schedule lacked formal project manage-
be quicklyand expensivelywithdrawn from the ment or software tools training (Eigbe, Sauser, &
market, ultimately costing companies both money Boardman, 2010). This finding is not unique and
and serious goodwill. points to an underlying lack of systematic training
Savvy project organizations understand the na- and education in project management techniques.
ture of dollar/day tradeoffs; there is usually a sim- In short, project delivery is routinely trusted to
ple relationship between days saved on a project personnel who possess only rudimentary skills in
schedule and resources committed to get it done. managing projects.
The project team can speed up the development Another form of this problem becomes apparent
process if senior executives show support by provid- when we examine a phenomenon known as knowl-
ing additional resources to get the job done. The edge management. Knowledge management entails
bottom line is simple: End date-driven schedules the explicit recognition that aging, successful project
must be shored up by a commitment, on the part of managers take their expertise with them when they
the firms decision makers, to pay the necessary retire and leave the company. As long as techniques
costs. Otherwise, this practice leads to increas- for successful project management remain idiosyn-
ingly cynical team decisions and dispirited team cratic and embedded within individuals rather than
members. becoming part of the organizations operating pro-
cedures, other employees must learn and relearn
2.5. Lack of relevant project these principles on their own, often through expen-
management training sive trial and error. Knowledge management seeks to
codify and retain an organizations critical skills and
There is a wealth of data suggesting the degree to expertise by capturing and passing on (Reich, 2007):
which project management practices have been
emphasized in modern corporations. Former indus-  Cultural knowledgehow the organization
tries that were considered hotbeds of project-based views the world, operates, and emphasizes key
work (e.g., R&D, pharmaceuticals, automotive, attitudes;
aerospace, construction) have now been subsumed
under a much broader canopy of diverse organiza-  Domain knowledgeinformation about the indus-
tions (e.g., banking and financial, insurance, legal, try, technology, or processes the organization uses
manufacturing) that are all heavily invested in using to develop projects;
projects as a primary means of enhancing corporate
value. Membership in professional project manage-  Institutional knowledgeintellectual capital a
ment organizations, such as the Project Management project team member has about the organization,
Lies, damned lies, and project plans 649

including reporting structure and rules and pro- eliminate all the causes of rework. Rework may occur
cedures; and because of:

 Process knowledgefacts about the project  Changing requirementsbetter to get the spec-
plans, goals, and processes for development. ifications right before the project is completed;

 Engineering gold plating,the desire to contin-


2.6. Poor change control uously add features outside of the initial scope in
order to give the project a bigger wow factor; or
Change control is often labeled configuration man-
agement and refers to a tool that defines the prod-  Poor initial planning and scopingwhen engaging
uct, then controls changes to that definition (Kidd & in bad planning, critical steps or activities are
Burgess, 2004). It is the careful management of neglected, which always come back to haunt the
necessary changes made to the project as it is being project.
developed. This occurs in response to environmental
shifts that necessitate major product modifications It is important to remember that sometimes rework
sometimes due to faulty technology that must be is desirable, as teams use the results of iterative
modified and corrected; sometimes as a result of development cycles to debug systems or software.
initial customer response to prototypes that demand Nevertheless, to help us understand the over-
alteration. In short, change control recognizes the whelming rework problem, it is helpful to apply
simple fact that few projects survive, intact, their Coopers (1994) distinction between known and
first contact with the customer. Recent examples of undiscovered rework. Known rework results from
failed configuration management, along with the testing or top management demands that changes
resulting impacts, are evidenced by the Eurofighter be made to the current project configuration.
and Airbus A-380 projects. These programs experi- For instance, when Boeing originally redesigned
enced huge mid-stream changes that were not effec- the cockpits of its 767 aircraft from 3-person to
tively accounted for or managed through change 2-person configurations, those changes required a
control, resulting in billions of dollars in cost over- massive amount of rework to alter the way the
runs. cockpit and all controls were positioned. The ad-
Another common result of poor change control is vantage of known rework is that it can be factored
rework. Rework is a dirty word in most project into the estimated costs for rescoping a project.
circles, as it implies that the project team failed to Undiscovered rework, on the other hand, plays a
adequately account for all technical, commercial, or much more insidious role in projects. Because it is
developmental issues. This necessitates that the still waiting to be identified, usually through down-
project be recycled back to some earlier stage in stream testing, it may be months or even years
its development, in order to get things right through before the discovery is made. During this time,
repeating iterations. In some industries (e.g., IT, dependent work will have incorporated errors or
software development) rework is so prevalent that technical distortions. Thus, the more dependent
it is the number one cause of late or cancelled elements, deliverables, or activities there are in
projects, and contributes approximately 60% to the a project, the greater the potential not just for
final project cost (Twentyman, 2005). Further, and costly rework to occur, but for undiscovered rework
perhaps more depressing, a Computerworld survey to have corrupted other parallel or supporting
of 160 IT professionals revealed that 80% of the activities during the projects development. Changes
respondents reported requirements creep always at this stage are very costly.
or frequently, leading to the need for extensive
rework in projects. Worse, when asked by Peat 2.7. Superficial risk management
Marwick about failure rates of 65% for their software
or hardware development projects, over half the Risk management is becoming more widely prac-
managers surveyed indicated that these results ticed in many project organizations, but there is
were normal (Pinto, 2013). typically no agreed-upon methodology that is rou-
In some organizations, there exists the belief that tinely adopted. Although we often think of project
it is possible to eliminate all rework. Based on my risks, the manner in which risks are carefully con-
experience, I have found this to be a dangerous and sidered, threats evaluated and classified, and miti-
flawed view. For a number of reasons, confirmed gation strategies prepared is highly idiosyncratic;
time and again through research studies of projects this varies from firm to firm, and often from project
across myriad industries, it is virtually impossible to to project even in the same organization. Regarding
650 J.K. Pinto

projects, risk is usually defined as an uncertain threatening events, they do little toward improving
event or condition thatif it occurshas a negative the process from project to project over time.
impact on the project. Conceptually, we can think of Effective, proactive risk management recognizes
most project risks as the product of two dimensions: that learning can occur both in terms of response to
likelihood and consequence. As such, project risks actual events and using these events to better
must first be identified and classified in terms of the anticipate future states. Most organizations do
likelihood of their occurring. Receiving requests for not adequately plan, through learning loops, for
project specification changes from the customer in what might happen in the future; that is, using risk
mid-stream is a likely event; the project manager management as a critical component of overall
being hit by a bus is, happily, not as common. project planning. Getting risk management half
Coupled with this dimension is the assessment of right is not an acceptable response.
consequence. Some risks are judged to have low
consequence if they are to occur. These can usually
be ignored or entail relatively simple mitigation 3. Whats to be done?
strategies. Others are more severe and require
the project team to thoroughly analyze the poten- Thus far, I have made the case that project planning
tial impact of the event and develop appropriate is laden with systematic and recurring errors that
response strategies. often render it a nearly useless process. Clearly, not
A useful way to view risk and response can be every organization suffers from all these pathologies
found in Figure 1. This portrays a timeline of uncer- when it comes to project planning; this is a cumula-
tainty during the projects development, particular- tive list based on my own research and consulting
ly as it relates to risks (Winch, 2010). Note that experiences with a number of both national and
uncertainty offers the project team opportunities to international corporations. However, it is evident
be both proactive and reactive in the face of events. that when we examine these different planning
What is critical and often missed in our understand- errors, they point to some underlying causes and
ing of project risks are the feedback/learning loops implications, including the following:
shown in Figure 1. Most project risk management
focuses on the learning loops on the right side of the  Errors in judgment are often systematic and pre-
figure; in other words, teams learn whether their dictable, not random. We know much about the
responses to actual events were useful and con- ways in which people arrive at estimates. Opti-
structive. However, the problem with this form of mism bias, anchoring and adjustment, and other
risk management is that it is inherently reactive. errors of the planning fallacy are deep-rooted in
Events have occurred that necessitate remedial both organizational cultures and personal psyches
response. While this form of organizational risk (Flyvbjerg et al., 2009). In fact, in many orga-
management may help teams limit the damage from nizations, individuals are motivated to provide

Figure 1. Timeline of uncertainty


Lies, damned lies, and project plans 651

misleading data (the idea of strategic misrepre- of systematic project overruns within classes of
sentation) knowing full well that being honest projects, and further, to use it as a means of remov-
about project challenges, real schedules, and ing the subjective and predictably over-optimistic
quality expectations will lead to an unwillingness human element from the estimation problem. Ref-
by top management to fund the project. The old erence class forecasting relies on historical data
chestnut, It is easier to beg forgiveness than ask from past projects of a similar type to make more
permission, could be seen in this instance as an reasonable predictions of budget and schedule
example of the predictable nature of judgment parameters for new projects. Using our earlier ex-
errors. ample of the London Olympic Games, reference
class forecasting could have immediately raised
 Experts are just as prone to these problems as red flags in the face of preliminary cost projections
everyone else. It is often assumed that well- of a mere 1.8 billion.
trained project personnel are capable of operat- As Table 2 demonstrates, overruns in certain
ing without bias or other planning errors. In fact, classes of projects are not only severe, but also
research and practical experience usually dem- have been shown to be remarkably consistent. By
onstrate that this is not the case. In his landmark relying on reference class forecasting as an alterna-
book, The Black Swan, Nassim Taleb (2010) used tive to current approaches that, as we have seen,
the 1990s financial markets meltdown as an ex- are subject to delusional optimism and strategic
ample to demolish the perception that experts misrepresentation, the project organization and
are somehow operating with different informa- stakeholders are working to normalize project esti-
tion, disinterested motives, and keener insight. In mates. Thus, for example, in the case of an IT
fact, Taleb and Bent Flyvbjerg (2011) have re- operating system upgrade, the organization first
peatedly shown that these experts operate with a pulls all relevant historical information on schedule
set of biases every bit as pronounced as the rest estimates, actual completion dates, projected and
of us. concrete budgetary numbers, and so forth. All
estimates should begin with these numbers as a
With these points in mind, I would like to offer some point of reference. While it is true that the human
suggestions as starting points for correcting blatant element can never be taken out of project estimat-
project planning errors. While readers of the previ- ing, using reference class forecasting places the
ously listed seven deadly sins can draw appropriate burden of proof back on the project organization
conclusions from simply noting and resolving to to justify their numbers and identify any obvious
avoid these pitfalls, additional options exist that over-optimistic projections in the face of actual
project organizations may call upon as they begin historical information.
fixing systematic planning errors.
3.1.2. Factoring in necessary rework cycles
3.1. Suggestions to start fixing the The notion of acknowledging and allowing necessary
problems rework is controversial, to say the least. When
rework is defined as correcting errors arising from
3.1.1. Reference class forecasting unanticipated events, the question can be asked:
Reference class forecasting represents an attempt How do we anticipate rework when, by definition,
to bypass human bias. In his analysis of systematic its occurrence is unanticipated? Most organizations
bias in project planning, Flyvbjerg (2007) compiled have enough historic data, usually across types of
data from a number of years in relation to certain projects undertaken, to observe that rework is typi-
classes of infrastructure projects. His findings are cally not the result of poor development, but a
shown in Table 2. Flyvbjerg coined the term refer- function of the projects themselves (Cooper,
ence class forecasting to acknowledge the nature 1994). That is to say, rework in certain classes of
projects occurs frequently and naturally (Love,
2002; Love & Li, 2000). As an example, initial spec-
Table 2. Estimation errors by project class ifications for many IT projects may suggest a certain
development cycle length; however, it is not until
Type of Project Average Inaccuracy
actual end-users are permitted to navigate the
Rail 44.7%
system that corrections can be most effectively
Bridge and Tunnel 33.8%
Road 20.4%
made. Rework here is necessary to hone the func-
All 27.0% tionality of the system, ensuring that the scope is
what the users expect. Thus, in many cases, rework
Source: Flyvbjerg (2007)
can be seen not as an unfortunate byproduct of poor
652 J.K. Pinto

planning, but rather a necessary element in success- specifications; the project team does not trust
ful project implementation. the project manager to create accurate schedules
and budgets; and so forth. Employing authenticity in
3.1.3. Authenticity the process avoids the conflict-laden dynamic that
Authenticity is deceptively obvious in concept, but so often claims as its victim the project itself.
frustratingly difficult in practice. It refers to the Authenticity also plays a critical role in managing
need for all stakeholders in the projectparticular- contractor-client relationships. A common dynamic
ly within the organizationto modify a number of that arises between the project developer and the
self-preservation behaviors in the interest of im- client (for external projects) is to promise much, bid
proving overall performance. In his book, Critical low, and then renegotiate. In other words, in many
Chain, Eli Goldratt (1997) observed that efforts contracted relationships with clients, the project
to fix project delivery were usually hamstrung by organization deliberately low-balls initial bids and
self-interest. That is, it was in the self-interest of then tries to find creative ways of extending profit
project team members to protect themselves from margins through add-ons and change orders. Cus-
aggressive bosses by padding project estimates; it tomers expect this behavior and the atmosphere is
was in the self-interest of managers to protect often poisoned early via mutual distrust. When
themselves from anticipated top management cuts customers are given a reason to alter the relational
by further padding duration estimates; and so forth. dynamic, it is often surprising how well the recre-
As noted previously, one of the seven deadly sins of ated relationship can work. For example, during the
project planning consists of precisely this sort of ex building of Heathrows Terminal Five (T5), all project
post adjustment to protect against behaviors by top stakeholdersincluding the customersentered
management. Thus, self-interest continues to drive into relational contracts that specified cooperation
project estimates. over conflict, mandating steps to resolve disputes
Authenticity is a conscious decision made by proj- in an integrative win-win manner (Gil, Pinto, &
ect team members and their managers to stop playing Smyth, 2012). While the results were not perfect,
the game of self-protection. Goldratts (1997) solu- relational contracting represented an important
tion was to suggest that, prior to the schedule being step in moving toward an atmosphere of authen-
finalized, all project duration estimates be reas- ticity, even between project organizations and
sessed as 50/50 probabilities. His research suggested their customers.
that padding increased reasonable estimates by near-
ly 200% in most cases, leading to seriously flawed 3.1.4. Planning in segments, not just wholes
project plans. Giving the project manager control of Large projects can be incredibly complex, involving
project safety while withholding punishment when sizeable and highly complicated plans, comprehen-
activities overrunafter all, they were based on 50% sive schedules, and numerous interdependencies. In
likelihoodis the key to accomplishing two things: light of these complexities, new methodologies
improving the actual project delivery process (e.g., cascade scheduling, agile methodology) are
and positively altering the previously adversarial being developed and successfully used in a number
relationship between managers and their teams. of industries. While it is beyond the scope of this
Self-protection gives way to collective behaviors. article to go into great detail regarding these new
Although a simple option, authenticity requires cul- planning methods, they emphasize incrementalism,
tural changes, new ways of viewing the project and constant client contact, iterative development
team members, and support from top management. cycles, working in sprints, and so forth. Their main
World-class organizations such as BEA Systems and efforts are predicated on breaking projects down
Eli Lilly Pharmaceuticals have adopted Goldratts into smaller segments and addressing these incre-
authenticity principles embedded in the critical ments one at a time. Planning projects in an itera-
chain methodology and experienced considerable tive, segmented manner reduces the complexity of
success in faster time to market and much improved an enormous challenge into the relative simplicity
project development processes. of viable stages. As the plan gets less complicated,
Authenticity serves as one of the best tools to the negative effects of deadly planning sins also
defend against the rival camps mentality that is so become less intrusive.
prevalent in many of the errors we have discussed.
Rival camps imply systematic differences, coupled
with mistrust of motives, among critical project 4. Summary
stakeholders. Top management does not trust the
team to give honest estimates; the customer does Project management is a difficult, complex, time-
not trust the organization to be truthful about consuming undertaking. Project managers jobs
Lies, damned lies, and project plans 653

have been characterized by role overload, frenetic Gil, N., Pinto, J. K., & Smyth, H. (2012). Trust in relational
activity, and superficiality (Slevin & Pinto, 1987, p. contracting and as a critical organizational attribute. In
P. W. G. Morris, J. K. Pinto, & J. Soderlund (Eds.), The Oxford
33), and the environment in which project-based handbook of project management (pp. 438460). Oxford, UK:
organizations operate remains fast-paced and highly Oxford University Press.
competitive. Within the context of the myriad chal- Goldratt, E. (1997). Critical chain. Great Barrington, MA: North
lenges project managers and their teams face, it is River Press.
ironic that professionals have often worked against Kapur, G. K. (1998, May). Dont look back to create the future.
Address given at the Frontiers of Project Management Annual
their own best interests through employing a variety Conference, Boston, MA.
of planning processes that seem designed to actually Kelley, M. (2008, November 18). $600 million spent on canceled
make successful project delivery increasingly diffi- projects. USA Today, p. 1.
cult. This article has identified a number of planning Kidd, C., & Burgess, T. F. (2004). Managing configurations and
data for effective project management. In P. W. G. Morris
pathologies (the seven deadly sins) to highlight their
& J. K. Pinto (Eds.), The Wiley guide to managing projects
role in project failure, and encourage project man- (pp. 498513). Hoboken, NJ: John Wiley & Sons.
agers and team members to take a hard look at how Love, P. E. D. (2002). Influence of project type and procurement
they are running their projects. When mistake fol- method on rework costs in building construction projects.
lows mistake, is it any wonder that project after Journal of Construction Engineering and Management,
project comes in late, over budget, or suffering 128(1), 1829.
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