Biases in Project Management and How to Remove Them

There is always much complaining about the biases?introduced?into managing?projects and making the estimates needed to make project decisions. In Kahnemann's?Thinking Fast and Slow, there are three biases. ?

• Cognitive bias is a mistake in reasoning, evaluating, remembering, or other cognitive processes, often resulting from holding onto one's preferences and beliefs regardless of contrary information.
• Optimism bias is a cognitive bias that causes a person to believe they are at a lesser risk of experiencing a negative event than others.
• Ingroup bias is a pattern of favoring members of one's in-group over out-group members. This can be expressed in evaluating others, in allocating resources, and other ways.

These reasoning, evaluating, or recalling errors produce results different from rational judgment. Cognitive bias results from a systematic pattern of people making rapid decisions. Cognitive biases?are part of our?automatic system of how we think. Because?of that, we don't separate?the thinking processes into a dual system...

• System One - automatic
• System Two - deliberative?

System One is an unconscious system that is automatic, fast, and efficient at using the data or experience it already knows. Or - and this is a critical point -?it thinks it knows. System One requires very little energy or attention. System One is what we operate?in. Most of the time, we make decisions. Research shows that we are in System One 95% of the time.

System One is prone to errors, with little awareness of how the decisions are made. System One is?gut feel or?intuition. When System One works, it is because memories?and past experiences?inform the decision. This lays the foundation?for errors since our memories and past experiences are filtered through?what we believe?the situation to be. And, of course, those are biased, filtered, and fed back into System One later, creating more bias in the decision-making process in the future.

Research shows [1] that optimism bias is a primary source of project failure. There is no one fix for optimism bias or any of the other biases on projects. But there are specific, actionable steps that can be taken to expose these biases and prevent or correct the undesirable outcomes [2].

• Start with an awareness that the bias exists. Train the people working on the project about?optimism bias and how that bias is exhibited?in their behavior and decision-making. This training includes recognizing?and applying the?Principles of decision-making in the presence of uncertainty. This means understanding the principles of probability?and statistics and how these principles are applied to those decisions.
• When decisions are required in the presence of uncertainty, provide sufficient time to make the decision. This means putting a formal process in place for making that decision. A process based?on?tangible evidentiary?materials.?

How Can We Improve the Probability of Project Success??

The first step is to recognize that there are immutable principles of managing in the presence of uncertainty.

These principles originate in the following:?

• Managerial Finance - the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique.?
• Probabilistic Decision Making - a fundamental statistical approach to the problem of pattern classification. Quantifies the tradeoffs between various classifications using probability and the costs that accompany such classifications. The decision problem is posed in probabilistic terms.
• Microeconomics of Decision Making?- a process by which businesses make decisions is as complex as the processes that characterize consumer decision-making. The business draws upon microeconomic data to make various critical choices – any one of which could mean the success or failure of their enterprise.

With these business principles of software development and projects in general, we can ask and answer five principles of project success.

• What does Done look like in units of measure meaningful to the decision makers?
• What is the Plan to reach done at the needed time for the needed budget, with the needed outcomes?
• What Resources will be needed to reach Done?
• What Impediments will be encountered along the way to Done and what are the?handling strategies for each impediment?
• What are the measures of?physical percent complete needed to inform the decision makers of progress to plan to take corrective or preventive actions to stay on plan?

A Final Thought??

Software engineering economics is about making decisions related to software engineering in a business context. The success of a software product, service, and solution depends on good business, financial, and risk management. Yet, in many companies and organizations, software business relationships to software development and engineering remain vague. [6]

? This post was inspired by "De-biasing project management," Joshua Ramirez

[1] "What Causes Cost Overrun in Transport Infrastructure Projects?" B. Flyvbjerg,? H. Skamris & S. Buhl,?Transport Reviews,?24,?1, 3-18.

[2] "The effect of fast and slow decisions on risk-taking," M. Kirchler, D. Andersson, C. Bonn, M. Johannesson, D. V?stfj?ll, E. O. Sorensen, M. Stefan, G. Tinghog, and?D. Andersson,?Journal of Risk and Uncertainty, 54(1), June 2017.

[3] The Microeconomics of Decision Making in the Presence of Uncertainty

[4]?Microeconomics and Risk Management in Decision-Making for Software Development

[5] "Decisions in software development projects management. An exploratory study,"?Ricardo Colomo?Palacios, Cristina Casado?Lumbreras, Pedro Soto?Acosta, and Angel Garcia Crespo, Behavior and Information Technology, 32(11):1?9, January 2011.

[6] "Chapter 12: Software Engineering Economics,"?Software Engineering Body of Knowledge,?