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How’s it going? | Project Research Institute

How’s it going?

One of my favourite Dilbert cartoons shows a conversation between Dilbert and Wally.  Wally asks “How’s your project coming along?” Dilbert replies, “It’s a steaming pile of failure.  It’s like 15 drunken monkeys with a jigsaw puzzle.”  The boss then asks the same question.  “Fine” says Dilbert. 

Optimism bias is a well-known phenomenon in gaining support for projects.  The recipe for project approval is: underestimated costs + overestimated revenues + undervalued environmental impacts + overvalued economic development effects = project approval (Flyvjberg, 2006).  This blog discusses what we found when we were able to investigate this further under controlled conditions.  Our study

 showed how optimism bias continued way beyond project approval, into execution and the reporting of progress.  This may be of little surprise to most practitioners (as in Dilbert, so in life) and academics (who, of course are not susceptible to such biases…).  Interestingly, it is not documented in the PM literature.  

The subjects in this study were students who took part in a PM simulation.  Each group of 5-6 was given a fixed-price contract to build a warehouse.  There is variability in task durations and they had to plan their schedule.  At the end of each ‘week’, they were given a report on how their tasks had performed, and asked to order materials, labour and other items to allow their project to progress, as well as to provide a revised forecast of how much money they will make on the contract.  It is in the forecasting for final profits where the behaviours became most interesting, dividing groups between four clusters.  

One cluster (around 20% of groups) correctly predicted their final profit – the ‘Performers.’  The rest were overly optimistic at the outset.  Another cluster, the ‘Trackers, didn’t hit their initial profit predictions, but reported their progress accurately.  Their end result was no surprise.  Initial optimism, yes, but no evidence of ongoing optimism.  The two remaining clusters are dangerous in the projects business.  They demonstrated sustained false optimism – optimism that went beyond project approval.

The third cluster was ‘The Lost.’  Their highly variable future profit predictions, were rarely troubled by the reality of their actual performance to date.  The fourth cluster was the ‘Lemmings.’  These groups reported consistently that they were on target to hit their initial profit predictions.  At a late stage in the project, they would suddenly start reporting major losses.  They reflected the mythical property of lemmings by their performance ‘falling off a cliff.’  

In addition to the controlled environment, we recently investigated performance data from 300 projects in one firm.  All were showing that they were completely on-track. When we looked into this unlikely scenario, one PM noted, “You don’t want to show you are off-track, otherwise it’s like the Spanish Inquisition.”   Not only does sustained false optimism exist, it is compounded by organisational behaviours.  

Organisations need to better ‘sense’ this sustained false optimism in project teams, because it is so dangerous.  One programme manager described this recently as ‘being able to smell when something isn’t right.’  Project managers’ performance reporting clearly isn’t the objective data it is supposed to be, where lemming or lost behaviours exist.  We can look for indications that a team may be susceptible to sustained false optimism, for instance if they show collective dispositional optimism (relatively easy to assess).  Also, it has been shown to be effective to remove the negative connotation of ‘behind schedule.’  

So, how’s it going?  Fine? Pardon me if I don’t believe you…

References

Flyvjberg, 2006  "Five Misunderstandings About Case Study ResearchQualitative Inquiry, vol. 12, no. 2, April, pp. 219-245.

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