Planning Fallacy

We underestimate the time, costs, and risks of our own projects while simultaneously overestimating the benefits — and we do this repeatedly, despite experience.

• The Scottish Parliament building was initially budgeted at £40 million and delivered at £431 million — over ten times the estimate.
• A study of home renovations found the average project cost 40% more and took twice as long as homeowners predicted.
• The cure: Kahneman recommends 'outside view' thinking — look at the base rate of how long similar projects actually take, rather than constructing a detailed plan from scratch.