Moving Beyond the Planning Fallacy: The Emergence of a New Principle of Project Behavior

Lavagnon A. Ika, Peter E.D. Love, Jeffrey K. Pinto

Research output: Contribution to journalArticlepeer-review

Abstract

The question—what explains cost overruns and benefit shortfalls—remains an important conversation in project management. Two theoretical principles, the Planning Fallacy and the Hiding Hand, shed light on project behavior, that is how projects take different and complex out-turns. The Planning Fallacy denotes the tendency for forecasts of project schedules, costs, and benefits to be unrealistically close to best-case scenarios. The Hiding Hand, however, suggests that it is not always bad to overrate benefits and underrate costs and difficulties of the proposed projects as creativity may help succeed in unforeseen ways. This article focuses on the Planning Fallacy versus Hiding Hand or the Planning Fallacy debate. The bone of contention is whether the Planning Fallacy trumps the Hiding Hand and thus best explains project behavior and performance. We unravel the ontological, epistemological, theoretical, and methodological assumptions behind the debate. Then, considering these contrasting assumptions and the uncertainties and complexities that surround large-scale projects, we complexify the debate in line with the tradition of complexity thinking. In the face of the either/or framing that prevails, we propose a balanced theoretical approach that would accommodate both the Planning Fallacy and the Hiding Hand explanations of project behavior, to understand why projects experience cost overruns and benefit shortfalls. In so doing, we lay the foundations for the emergence of a new project behavior principle—The Fifth Hand. We conclude with a research agenda that highlights the key methodological challenges that need to be addressed to determine the presence of the Fifth Hand.

Original languageEnglish (US)
JournalIEEE Transactions on Engineering Management
DOIs
StateAccepted/In press - 2020

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Electrical and Electronic Engineering

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