Published here September 2010


Musings Index

Why is Good Project Decision-Making So Difficult?

Most of us probably believe that we are pretty good at making decisions - especially project decisions. But are we really? Since project management involves a complex sequence of decision-making, and our batting average at successful projects, whatever that means, is not very high, then it follows that the answer is that we are probably not very good at making decisions.

So why is that so? Again, the answer is probably not all that straight forward, but one thing is clear. Most of our decisions are made "on the fly" with or without team input who also respond "on the fly" - that is, without a supporting structured decision-making process. But even a structured decision analysis of the problem is influenced by the human condition. The problem is that we are all subject to personal biases based on our background and experiences and we use heuristics that may or may not be reliable.

Heuristics, by the way, are the simplified mental strategies or rules of thumb people rely on to come up with judgments. In the psychology of judgment and decision-making in project work, heuristics do lead to rational solutions in many cases. But they can also result in inconsistencies and predictably biased conclusions.

What "biases" are we talking about? Well, according to Lev Virine and Michael Trumper,[1] there are apparently a very large number that might cause us to waver from the straight and narrow. Here is our list of the top fifty in alphabetical order:[2]

  1. Ambiguity Effect: The tendency to prefer options with known probabilities and to avoid options in which missing information makes the probability seem unknown.
  2. Availability Heuristic: The tendency to make judgments about the probability of events occurring by how easily these events are brought to mind.
  3. Bandwagon Effect (Groupthink): The tendency to do (or believe) things because many other people do (or believe) the same. In-group bias is an important factor related to communication within project teams.
  4. Bias Blind Spot: The tendency not to see your own cognitive biases.
  5. Choice Supportive Bias: The tendency to remember positive attributes as having been part of the chosen option rather than of the rejected option.
  6. Congruence Bias: A bias that occurs due to a decision maker's reliance on direct testing of a given hypothesis while neglecting indirect testing.
  7. Disconfirmation Bias: The tendency for decision makers to extend critical scrutiny to information that contradicts their prior beliefs.
  8. Egocentric Bias: The tendency of people to claim more responsibility for the results of a joint action than an outside observer would.
  9. Elimination by Aspect Heuristic: A heuristic in which people eliminate a potential choice from a plurality of choices if it does not satisfy certain conditions.
  10. Endowment Effect: The tendency of decision makers to place a higher value on objects they own than on objects they do not.
  11. Escalating Commitment: The tendency to invest resources in failing projects with a very small chance of recovery.
  12. Experiential Limitations: Inability or unwillingness to look beyond the scope of past experiences or rejection of the unfamiliar. This bias serves as a creativity block when project managers may discard good ideas because they do not fit into a familiar pattern.
  13. Exposure Effect: People can express an undue liking for things merely because they are familiar with them.
  14. Failure to Consider Alternatives: A tendency to evaluate and consider only a single course of action. It occurs when project managers attempt to reduce efforts during the evaluation of alternatives. This bias is related to the congruence bias.
  15. False Consensus Effect: If members of a group reach a consensus and it is not disputed, they tend to believe that everybody thinks the same way.
  16. Focusing Effect: A bias that occurs when decision makers place too much importance on one aspect of an event or process.
  17. Gambler's Fallacy: The belief that a successful outcome is due after a run of bad luck.
  18. Hindsight Bias (the "I Knew It All Along" effect): The tendency to see past events as being more predictable than they actually were.
  19. Hyperbolic Discounting: The tendency to prefer smaller payoffs to larger payoffs when the smaller payoffs come sooner in time than the larger.
  20. Illusion of Control: The tendency of decision makers to believe they can control or influence outcomes over which they have no influence.
  21. Impact Bias: The tendency of a decision maker to believe that if a negative event occurs, it takes longer to recover emotionally from the event than it actually does.
  22. Inconsistency: The inability or unwillingness to apply the same decision criteria in similar situations. Consistency is one of the fundamental principles of the project decision analysis process.
  23. Inertia: An unwillingness to change thought patterns that we have used in the past in the face of new circumstances.
  24. Information Bias: The tendency to seek information even when it cannot affect a decision.
  25. Insufficient adjustment: The tendency of decision-makers to "anchor" on a current value and make insufficient adjustments for future effects.
  26. Loss Aversion: The tendency of decision makers to prefer avoiding losses versus acquiring gains.
  27. Misinformation Effect: A memory bias that occurs when misinformation affects people's reports of their own memory.
  28. Omission Bias: The tendency to judge potentially harmful actions as worse than equally harmful inactions (omissions).
  29. Optimism Bias: The tendency to be overly optimistic about the outcome of planned actions.
  30. Outcome Bias: The tendency to evaluate a decision by its final outcome instead of the quality of the decision at the time it was made.
  31. Overconfidence in Estimation of Probabilities: A tendency to provide overly optimistic estimates of uncertain events.
  32. Overestimating the Probability of Conjunctive Events: If an event is composed of a number of elementary events, the probability of the elementary events should be multiplied to come up with the probability of a main event.
  33. Picture Superiority Effect: Concepts and ideas are more likely to be remembered if they are presented as pictures rather than as words.
  34. Planning Fallacy: The tendency to underestimate the duration of project activities.
  35. Polarization Effect: The tendency for group discussions to lead to amplified preferences or inclinations of group members.
  36. Post Purchase Rationalization: A bias that occurs when people have invested a lot of time, money, or effort in something and try to convince themselves that the expenditure must have been worth it.
  37. Premature Termination of Search for Evidence: The tendency to accept the first alternative that looks like it might work.
  38. Professional Viewpoint Effect: The tendency to look at things according to the conventions of a decision maker's profession.
  39. Pseudo certainty Effect: The inclination to make risk averse choices if the expected outcome is positive, but make risk seeking choices to avoid negative outcomes.
  40. Recognition Heuristic: When making a judgment between two items when only one of the items is recognized, the recognized item will be considered to have a higher criterion value.
  41. Repetition Bias: A willingness to believe what we have been told most often and by the greatest number of different sources.
  42. Selective Perception: The tendency for expectations to affect perception "We see is what I want to see" - such as the tendency of decision makers to seek out and assign more weight to evidence that confirms a hypothesis, and to ignore or give less weight to evidence that could discount the hypothesis.
  43. Self-Fulfilling Prophecy: A prediction that, once made, actually causes itself to become true.
  44. Self-Serving Bias: The tendency to claim responsibility for successes rather than failures.
  45. Source Credibility Bias: The tendency to reject information if there is a bias against the person, organization, or group that is the source of the information.
  46. Status Quo Bias: The inclination of decision makers to like things to stay relatively the same.
  47. Student Syndrome: The tendency of people to wait until a deadline is near to start to fully apply themselves to a task.
  48. Sunk Cost Effect: The tendency to make a choice considering the cost that has already been incurred and cannot be recovered (sunk cost).
  49. Wishful Thinking: The formation of beliefs and decision making according to what might be pleasing to imagine instead of by appealing to evidence or applying rationality.
  50. Zero Risk Bias: (related to the certainty effect) The preference to prefer small benefits that are certain to large ones that are uncertain.

With all those biases in our project management decision-making, is it any wonder that the success of our projects is highly problematic?

1. For more on this see my book review this month on "Project Decisions: The Art and Science".
2. Extracted from, Project Decisions - The Art and Science, by Lev Verine, & Michael Trumper, Management Concepts, Vienna, VA, 2008, Appendix B.
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