Is Your Project Being Affected by Systematic Bias?

The Irrational Project Manager

This article is based on research by Barry Shore, PhD who published a paper called Project Culture and Systematic Biases in Project Failures in the Project Management Journal (December 2008).

Despite having a multitude of processes and methodologies, not all projects succeed. Evidence suggests that managers in the project lifecycle sometimes act irrationally and can succumb to systematic biases. Simon (1955) and Tversky and Kahneman (1974) (1981) called this the “Behavioral” view of PM. It highlights what project stakeholder “actually” do, how managers make decisions involving values and risk preferences (Bazerman, 1994).

By understanding systematic biases, you can improve your ability to make correct decisions. You can also use some examples of the most common systematic biases as a diagnostic tool for projects that are not going according to plan.

Types of Systematic Bias

Available Data: Sometimes project managers make decisions based on limited data, even when they know that the data is not sufficient to make the decision. Project managers aren’t the only professionals who can be affected by this bias. For example, user experience designers may choose to take a critical design decision based on a limited survey.

Conservatism: As a project is executed, feedback is received and the project objectives may need to be revisited or the deliverables may need significant change. However, many project leaders may continue the project based on the original information, instead of taking the new feedback into consideration.

Escalation of Commitment: This is a bias that essentially leads to expending more project resources on resolving an issue. For example, throwing more money at a problem believing it will fix the issue, when really what you may need to do is reexamine the project altogether, or increase a different resource in order to meet the challenge.

Group Think: This bias is shown when people on the same team all have the same opinion on an issue. This is not always healthy for the outcome of your project as no one will be pointing out errors or coming up with creative ideas.

Illusion of Control: Even after an objective evaluation finds some problems, the illusion of control makes you believe your project will have a high likelihood of success, simply because you are in control of it.

Overconfidence: Anyone can succumb to overconfidence. You know you are an expert at estimating timelines, so you believe they are perfect without needing revision. This article on making realistic software project estimations may help with your estimation skills.

The Recency Effect: Decisions are often based on the most recent data, without taking into account previous information. For example, when a manager conducts a performance appraisal based on recent events as opposed to events spanning through the entire appraisal period.

Selective Perception: This is also known as Frame Blindness. People have a way of looking at the world that fits into their preselected frameworks. They often fail to take into account data which contradicts their previously-chosen framework. One example of this, according to Dearborn and Simon, is when managers get promoted, their decisions they make may still be influenced by their previous roles. They have not adjusted their perception to their new roles.

Sunk Cost: This is when managers and other key stakeholders do not realize that non-recoverable expenditures should not be considered for future decisions.

Systematic biases exist in every team or person. Being aware of this behavior enables you to gain a better understanding of project success and failure. The nine types of systematic biases can also be triggered by corporate and project cultures. For example, if the organizational culture reduces the fear of failing, the chances of systematic biases, such as Sunk Cost, could be avoided. Systematic biases can also be triggered by personal value systems.

References

• Barry Shore, PhD (2008). Project Culture and Systematic Biases in Project Failures.  Project Management Journal.