Why Your Estimates Are Always Wrongposted by Anna Mar, February 16, 2013
If your estimates are as accurate as a baby throwing darts, you're not alone.
Project and task estimates tend to be off. In fact, bad estimates are one of the most persistent and destructive problems facing managers everywhere.
Bad estimates can destroy your plans, schedules, budget and credibility. Many managers try to get around the problem by padding estimates. However, a bad estimate that's been padded is still a bad estimate. High estimates can lead to low productivity and low stakeholder confidence. Low estimates lead to cost and schedule overruns.
So why do estimates tend to be so inaccurate?
The answer lies in social psychology. The following 22 behavioral factors contribute to bad estimates.
One of the important differences between a mediocre manager and a great manager is a working knowledge of behavioral psychology and how it applies to business scenarios.
By understanding the behavioral basis for bad estimates, you can dramatically improve your accuracy.
1. Planning fallacyThe tendency to underestimate tasks.
2. SuggestibilityPeople change their answers based on how a question is asked. Managers can inadvertently influence estimates with questions such as "this is an easy task right?".
3. ReactanceThe tendency to do the opposite of what someone wants you to do if they are trying to restrict your freedom. If you push a team to provide a low estimate it may backfire.
4. Bandwagon EffectIf the entire team is providing low estimates, an individual who is estimating a massive task may feel compelled to do the same.
5. Illusory SuperiorityIndividuals tend to overestimate their own abilities and underestimate the abilities of others.
6. Worse-than-average EffectIndividuals tend to underestimate their own abilities in areas that society ranks as important (e.g. leadership, diplomacy).
7. Dunning–Kruger EffectIncompetent individuals tend to be overconfident, competent individuals tend to be under-confident.
8. Zero-risk BiasA desire to completely eliminate risk no matter what the cost.
9. Well Traveled Road EffectUnderestimating tasks you've done before and overestimating tasks that are new to you.
10. Hard-easy EffectUnderestimating easy tasks, overestimating hard tasks.
11. Time-saving BiasTeams that are working slowly and conservatively tend to underestimate the impact of going faster. Teams that are moving fast tend to overestimate the impact of going faster.
12. Risk CompensationIndividuals take more risks when they feel safe.
13. Pseudocertainty EffectThe tendency to be willing to take on high risk to win something (e.g. gambling) but to accept low risks of something bad happening (insuring your home).
14. Pro-innovation BiasThe tendency to under-estimate innovative approaches out of optimism.
15. Ostrich EffectThe ability to ignore negative information even when it should be obvious. For example, a manager may ignore the fact that an estimate is obviously flawed.
16. Wishful ThinkingA tendency to believe that things that you intensely desire are easier to achieve than they really are.
17. Nonsense Math EffectThe tendency to trust complex math even if it's nonsense. People will trust estimates based on a complex mathematical model. Even if that model is nonsense.
18. Illusory CorrelationA tendency to see dependencies that don't exist.
19. Illusion of ControlBelieving you can influence things that are out of your control.
20. Hasty GeneralizationsEstimating tasks based on generalizations while ignoring significant differences.
21. Unit BiasThe tendency to want to finish one thing before beginning the next. Individuals may identify task dependencies out of a preference to finish one thing at a time.
22. Illusion of TransparencyA tendency to overestimate how well people understand you (e.g. you may believe the requirements are clear when they aren't).
So What?If you accept that psychological factors play a big role in estimates — how do you manage these factors?
These 7 techniques are designed to manage the psychological factors in estimating tasks.
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