Projects are delivered by people, and people have biases and behaviors that make them predictable. You may or may not know them, but those who know, either choose to ignore or change the status-quo. Those who choose to do smth about it and embrace change, always enjoy great outcomes. It may be convenient to ignore, but the one should remember that by consciously addressing biases you are very likely to produce superior outcomes than your competitors and consistently deliver higher ROI. The cherry on the cake – the strategy and implementation to reduce the effect of the biases and irrational behaviors is hard to replicate.
While several common and well-known causes of poor project performance exist (e.g. scope modifications, price fluctuations, complexity, geology, and so on), human behavior in project delivery is very often underestimated (or disregarded as a result of strategic misinterpretation). Fortunately, scientists discovered numerous behavioral and cognitive biases that help to make sense and deep dive into better understanding how to increase certainty of desired outcomes for a project.
What is worthwhile to note is that the business world rarely looks into “real” reasons as to why things go wrong in projects. For instance, according to this study, underestimation of complexity and changes in scope result in cost overruns. Most often you hear people blaming external factors or a change in scope is perceived as a reason of cost escalation, as an example. However, underlying root causes are ignored and generally is a result of being biased, be it overconfidence, strategic misrepresentation, or optimism.
Here we go with the some of them, which I think are most obvious and can significantly move the needle:
- Strategic misrepresentation. This is the process of intentionally misrepresentating information for strategic purposes to be able to influence group decision, aka the Machiavelli factor. There is a school of thought that it is a necessary “instrument” to start a project, otherwise, if a business case does not look good on paper, a project would not be sanctioned at the first place. Perhaps we could justify this saying that “we have good intentions” and lets be optimistic. People are likely to be subject to this bias at any stage of a project. I reckon it is up to the project owners how to deal with it.
- Optimism bias. Very straight forward, we like to be too optimistic that things will go as planned and underestimate the probability and frequency of negative events. Unlike the strategic misrepresentation bias, the optimism bias is more likely to be unintentional. Pragmatic expert’s intuition (super valuable and it works) backed by industry benchmarking can help to significantly reduce the impact of the optimism bias. Finding the right balance is very important, as you need people on the project who are optimistic and have “can-do” attitude.
- Escalation of commitment. This is when we justify more investment (be it money or resources) into what we are doing already, because we’ve invested a lot and not willing to let it go, even if economically it is more prudent not to continue. Logic is very simple: we want to be seeing competent and completely avoid anything that may hint to the fact that the previous course of actions was not correct and do we don’t lose our face. Sounds familiar? Recognising this bias early enough is not easy and it is a very sensitive area that may lead to conflicts. There are various ways to deal with this bias, ranging from simple visibility of information at all stages, all the way to change in leadership.
- Uncertainty. Instead of trying to manage the uncertainty and learn to be comfortable with it, risk transfer (most often ineffective) is a default choice. What many are not aware (or choose to ignore) is the effect of the Boyle's law: if you squeeze a balloon from one end, it will always pop out from the other end. Most of the capital projects are delivered on a Lump Sum basis (or versions of it) which implies one basic thing - transfer all risks to the other party. One may argue that this delivery method gives certainty of cost and time, yet there is a plethora of evidence to confirm that this is an illusion and wishful thinking. This is amplified in the environment whereby project financiers (or investors) have the controlling say, as all they are looking for is how to make the financial models look perfect. I don’t blame for that; this is a natural human behavior – we all want certainty.
- Time and Schedule / Programme management?-?when it comes to managing time and schedule, in the field of project management it is all about activities, tasks and milestones. There are laws and concepts that explain a lot and it is so basic and simple:?a)?Parkinson Law?says that work expands so as to fill the time available for its completion. Sounds familiar? How many times you've delivered your task in the time prescribed for it? Almost always. Did you try to deliver it faster? Why bother.?b)?Student Syndrome?is a tendency to leave the work till the last moment and build up execution efforts closer to the deadline. Recall when you started a task last minute and worked hard on it to complete on time? What stopped you to start it earlier??c)?No Early Work Transfer.?If you finish your task earlier, you cannot pass it on for the next step, because the person next in the line is not ready to accept it. Happens a lot, isn't??d)?Multitasking.?Although multitasking might sound a productive tool, it works the opposite. When people have to multitask, they lose focus and struggle to complete those tasks effectively and on time.
- Illusion of removing risk via good planning.?Although the concept of influence curve suggests that projects outcome is best influenced at the beginning / planning stage, there is a danger of falling into the trap of spending most of the time to ensure that the front-end loading is good and losing the focus on the actual execution of the project, which might have risks with similar of higher probability and impact. Being aware of this and have the project unique KPIs that would serve as an early warning sign is always useful and can help to avoid very costly mistakes.
Does this sound familiar? Remember that most of the so-called reasons for unsatisfactory performance of your project, are most likely to be as a result of the root causes that are not on the surface.
