Why we tend to underestimate the time we will need to complete a task when planning for it


Planning Fallacy

, explained.

What is the Planning Fallacy?

The underestimation of time, costs and risks.

How does it happen?

When we take on a project and try to estimate how much time will be needed to complete it, an optimism bias seems to get in the way of our best judgment and these estimations often fall short of the time needed in practice. The term “planning fallacy” was first introduced in 1979 by Daniel Kahneman and Amos Tversky and was then redefined by Kahneman in a 2003 paper as describing not only the underestimation of time but also of costs and risks. This fallacy can be observed in all the fields where projects are undertaken, whether it be a student estimating the time for the realisation of her thesis or a country planning for the construction of channel tunnels. Many reasons can explain this fallacy including focal biases, anchoring effects, motivations, etc. To avoid it, people suggest multiplying the estimated time by a factor of two or more, according to the project.


A famous example that illustrates this fallacy is the construction of the Sydney Opera House. It was first estimated to be completed in 1963 for $7 million but the project ended up being finished 10 years after the expected date and for a cost of $102 million.