Outsmart the Planning Fallacy (2026 update)

We fool ourselves when we plan

Things rarely go as planned; we know that. A project estimated at three months takes six, a two-day task consumes the whole week, a budget that looked reasonable blows up, and a project member we counted on goes missing in action. We’ve been there, done that. Yet when we sit down to plan the next initiative, we somehow convince ourselves that this time it will be different.

It is not because we lack experience. The problem is that the way we plan is built into how we think and into how organizations approve work, pushing us toward clean, confident plans that underweight uncertainty, interruption, and past experience.

The answer is not to stop planning. It is to become more aware of how we fool ourselves, and start planning differently.

Planning feels like a rational exercise, but we are not only calculating time and resources; we are imagining a future. When we do that, several predictable biases shape what we see and what we leave out:

• Optimism bias: When we plan, we picture the best-case path, where each step follows the last without interruption. Sick days, late approvals, changing requirements, rework, interruptions, and competing priorities are harder to picture, so they tend not to make it into the estimate.
• Inside view: Kahneman and Lovallo (1993) described our tendency to treat the problem in front of us as unique (the “inside view”) and build a relatively neat, linear plan, scoped to what we can see and control. We tend not to consider the “outside view”: that our problem may not be entirely unique, and there may be things we can learn from similar situations in the past and elsewhere.
• Illusion of progress: Planning itself feels productive. A clean timeline, a color-coded chart, or a well-structured deck creates comfort through order and control, and can give us a sense of accomplishment before the real work has begun.
• Present bias and hyperbolic discounting: The effort of the work sits in the future when we plan it, so it feels lighter than it will be when the moment arrives. When that moment comes, the effort feels heavier, and the work gets pushed back (ref: Present Bias and Hyperbolic Discounting).
• Strategic misrepresentation: Sometimes estimates are shaped not only by what we believe will happen, but by what will help a proposal win approval, funding, or support. In a 2002 study of large transport infrastructure projects, Flyvbjerg, Holm, and Buhl found that some cost underestimation is better explained by strategic misrepresentation than by forecasting error alone.

Consequences of bad planning

In organizations, bad planning is often not an occasional lapse but a recurring vicious cycle.

It starts with planning. Risks and costs are downplayed to win approval, everyone assumes the plan can be revised later, and what gets signed off looks clean and confident while resting on optimism rather than evidence.

Then execution begins, reality hits, and the assumptions start to break. Dependencies emerge, priorities compete, work takes longer, and costs rise.

By then, the organization is already committed. Time, money, effort, and reputation have been invested, so changing course becomes harder. Rather than recalibrate, the team pushes on, because what has already been spent feels more important than the value of what remains ahead (ref: Sunk Cost Fallacy).

Finally, when things become unmanageable, the project is replanned. Scope is reduced, budgets increased, deadlines moved, all without anyone asking why the first plan was so far off.

The problem is not replanning itself, but that little is learned from the failed first plan, so the next initiative begins in much the same way: another clean plan, another optimistic estimate, another cycle.

This vicious cycle does more than waste time and money. Over time, people stop taking planning seriously. Everyone knows the numbers are an opening position rather than a forecast. Replanning becomes part of the plan, and deadlines become negotiable. As a consequence, people stop pushing back, and apathy and a sense of powerlessness settle in: plans never work here anyway, so why bother? And because no one is held accountable for a plan that was wrong from the start, nothing in the system asks the next team to plan any differently.

My hypothesis is that bad planning tends to be tolerated because its cost, while likely staggering, is very hard to surface. An obvious budget overrun or missed deadline is visible, but much of the real loss is scattered across the organization: extra meetings, rework, firefighting, delayed decisions, competing work pushed aside, people stretched across priorities, and opportunities that were never pursued. The costs appear across different budgets, teams, and periods, while replanning resets the baseline and makes the original miss easier to forget. We can see what happened, but it is much harder to see the counterfactual: what the organization could have achieved with a more realistic plan.

Much of the cost is not absorbed by the organization at all, but by individuals. The gap between the plan and the work gets closed by people staying late, working weekends, and taking on more than was ever agreed: hours that are never counted as overtime, effort that no one else sees, and the strain of being permanently behind on something that was never achievable in the first place. The work may somehow get delivered, but at the expense of the people who make up the difference, with little or no recognition for it.

We still need planning

Despite its pitfalls, we still need planning. Planning provides direction, creates shared understanding, helps allocate resources, surfaces dependencies, and coordinates effort across people. Without planning, we cannot get organized.

We just need to get better at it. The useful shift is to treat a plan as a model to learn from rather than a prediction to defend. A good plan does not have to predict the future perfectly. Its purpose is to help us make better decisions, expose important assumptions, and recognize early when reality is moving away from what we expected.

How to plan better

Breaking the cycle starts with changing how we approach planning itself. The aim is not to remove uncertainty from the plan, but to build a plan grounded in evidence, make uncertainty visible, and create ways to respond when our assumptions prove wrong.

• Adopt a value-oriented, objective lens. Treat the plan as a means to create value, not an output to protect. Anchor it on the outcome it needs to deliver and on evidence of what it will take. When the evidence changes, ask whether continuing still creates enough value to justify the remaining cost, time, and opportunities forgone.
• Take the “outside view”. Before trusting your own estimate, find comparable situations that you can learn from and look at what actually happened. Instead of immediately building a plan for how this project should unfold (the “inside view”), step back and ask what similar projects can tell you. This helps counter the myopia of treating the problem in front of us as entirely unique, and avoids the waste of reinventing the wheel, since others may already have paid for lessons we can learn from for free.
• Run a premortem. Before the project starts, imagine that it has already failed and ask people independently to explain what went wrong. Psychologist Gary Klein (2007) proposed the premortem as a way of making it easier for people to voice reservations and identify weaknesses during planning, rather than discovering them after things go wrong.
• Measure and make progress transparent. Compare the plan with what actually happens. Notice where estimates repeatedly miss, which dependencies keep appearing, and which assumptions fail. Regular measurement lets teams course-correct early and, just as importantly, creates evidence that can improve the next plan.

Four patterns of good planning

Good planning also means choosing the right approach for the situation. For simple work, a task list is enough. As work becomes larger, more interconnected, complex, and uncertain, a detailed end-to-end plan becomes progressively less reliable. The planning approach should change with the nature of the work.

• Task-based planning: For relatively simple work with limited scope, a straightforward task list is often enough. A useful guide is the “one hand” rule: if the main steps can be counted on one hand, write them down and get them done.
• Plan in chunks: When the work gets larger, break it into manageable pieces rather than trying to specify everything upfront. Complete one chunk, learn from it, then move to the next. This reduces cognitive overload and keeps the next milestone within reach (ref: Chunking).
• Adaptive planning: After each chunk, inspect and adapt. Based on what you have learned, decide whether to continue, adjust, or pivot, rather than holding on to the original plan. Planning then becomes an ongoing process rather than a one-time prediction.
• Game planning: For complex situations where an end-to-end plan is unlikely to survive, think in terms of an opening game, mid-game, and end-game. Be relatively specific about the opening moves because they are closest and best understood. In the mid-game, identify plausible scenarios and how you might respond. Keep the end-game focused on the outcome you are trying to achieve, rather than pretending to know exactly how you will get there (ref: User Story Mapping, Jeff Patton).

The progression is important. Good planning is not about making every plan more detailed. Sometimes good planning means less detail, more evidence, shorter horizons, and greater capacity to adapt.

Plan differently, whatever you call it

The deeper lesson is that better planning is not mainly about becoming better at predicting the future. It is about becoming more aware of how easily our biases can misguide us, grounding our plans in evidence, making uncertainty visible, and building in ways to learn and adjust as reality unfolds. The planning fallacy, the inside view, strategic misrepresentation, and sunk-cost thinking all remind us that planning is not a purely rational exercise. How we think, how organizations make decisions, and how we respond when plans go wrong all shape the quality of the plan.

If you are an Agile practitioner, much of this may sound familiar. Indeed, practices such as working in smaller increments, making progress visible, inspecting what happened, and adapting the next step are embedded in approaches such as Scrum. Agile is not one thing or one technique; many of its practices reflect lessons we have learned about how to plan and work under uncertainty.

By 2026, however, the Agile wave has largely passed its peak, and it no longer occupies the same center-stage position in corporate learning and development that it once did. I was already asking “Is Agile a fad?” in my 2020 Agile 101 article. My conclusion then was that the label ultimately matters less than the underlying spirit and practices.

That still holds. With or without the Agile label, we still need to decide where we are going, what to do next, how much to commit, what evidence to trust, and when to change course. Behavioral science gives us a deeper explanation for why we repeatedly get these things wrong; decades of practice give us useful ways to do them better.

Planning matters. The challenge is not to make plans that never change. It is to make plans that are realistic enough to guide us, flexible enough to learn from reality, and useful enough to help us act differently when reality proves us wrong.

Behavioral Science for Emotional Intelligence, Part 3 of 4

In 2026, I am running a four-part “Behavioral Science for Emotional Intelligence” series through our free Mental Model Dōjō.

This article was prepared as a pre-read for the third session in the series, “Use Time and Tradeoffs to Your Advantage”, on September 22, 2026.

The session features four behavioral science concepts: present bias & hyperbolic discounting, planning fallacy, sunk cost fallacy & opportunity cost neglect, and goal-gradient effect. Pre-reads for the other three concepts are available through the session information and sign-up link below.

Session Info & Sign-Up

Part 3: Use Time and Tradeoffs to Your Advantage

• Session A: 22 Sep 2026 (Tue) 18:00 SGT, UK 11:00, CEST 12:00, Dubai 14:00
• Session B: 22 Sep 2026 (Tue) 22:00 SGT, US 10:00 ET / 09:00 CT / 07:00 PT, UK 15:00, CEST 16:00