The Sydney Opera House
Perhaps the most famous example of the planning fallacy is the Sydney Opera House.
Located on Bennelong Point on the banks of Sydney Harbour in New South Wales, the Opera House was designed by the Danish architect Jørn Utzon and opened to the public in 1973. It is one of the world’s most recognisable buildings.
Every year the Opera House hosts over 1,500 performances, and more than 1.2 million people visit. In 2007 it was declared a UNESCO World Heritage site, putting it in the same league as the Taj Mahal, the Acropolis and the Great Pyramids. The building is regarded as a masterpiece of 20th-century architecture and culture.
Unmitigated Disaster
Planning began in the late 1940s as the Sydney town hall was too small for large theatrical productions. The New South Wales Government held an international design competition in 1955. Two years later, after sifting through 233 entries awarded the prize to Utzon. Construction started in 1959. Initially, the government expected the project to take four years and cost three and a half million pounds. The opening day was scheduled for 26 January (Australia Day) 1963.
The project to build it didn’t go well. There were several issues that the planners didn’t foresee.
The government had pushed for work to begin early; they were worried that public opinion would turn against them and funding would dry up. However, the architect hadn’t finished the final designs.
By early 1961 the project was already running a year late. The weather was awful, and there had been problems with stormwater. The forced early start and lack of finalised plans resulted in endless rework. The columns weren’t strong enough to support the roof structure, and the contractors had to rebuild them. Between 1957 and 1963, the design team went through twelve different iterations of the roof shells (or sails), trying to find an acceptably priced solution. Even the tiles on the roof caused problems. It took a Swedish company three years to develop a solution before the architect was happy.
The interior of the building was equally fraught. Only 2,000 seats were put in the main hall, 1,000 short of the original plan. The extra people and seating ruined the acoustics. Architects changed the interior layout, and stage machinery was removed and largely scrapped because the initial design brief was inadequate.
Notwithstanding the technical challenges, there were political problems as well. In 1965 the government of New South Wales changed, and their criticism of progress resulted in the architect’s resignation.
Whilst they were on the home straight, in 1972, site managers dismissed one of the construction workers, and the building crews went on strike.
The project was completed ten years late and (in real terms) 1,357% over budget.
The Planning Fallacy
Big projects invariably take longer, cost more and have smaller benefits than initially planned. It isn’t just the Sydney Opera House that has fallen foul of the phenomenon.
- Planners initially scheduled the Berlin Brandenburg Airport to open in 2011. Commercial traffic started in 2020 (right in the middle of the pandemic).
- A plan to centralise UK patient records was shelved in 2013 after the NHS had spent £10 billion on it.
- The Scottish Police Authority scrapped its i6 project. It should have replaced 130 electronic and paper-based systems. Accenture, who was building the system, paid the SPA £24 million so that they could shut the programme down.
The reason behind these failures is the planning fallacy (Kahneman). Managers and executives overestimate benefits and underestimate costs in bouts of delusional optimism on nearly every project. The planning fallacy is alive and well and may appear in your work life soon.
Causes of the Planning Fallacy
There are several reasons why misconceived projects are so frequent.
Personal Judgement
People overestimate their talents; most of us believe we are better than average drivers. The same is true when it comes to running large projects.
We suffer from attribution bias. If something goes wrong, we believe it is due to external circumstances, yet if things go well, it is down to our skill and judgement.
We become anchored to our original views. Even if our initial predictions were hugely inaccurate, we stick with them, even if new information shows that we were wrong.
Environmental Issues
We live in a complex world and cannot hope to understand everything. Consequently, there is always a raft of unforeseen issues that will put a project back. The things we don’t know, we don’t know.
Organisational Problems
Managers want to look good in front of their bosses, so they tend to overpromise. There are often personal costs for people who are less enthusiastic about a project.
Senior managers love to push stretch goals. They believe it will improve performance; in return, they get unrealistic promises.
We live in a world of constrained resources. If a manager wants a slice of the pie, it isn’t in his interest to provide sensible estimates. Getting more funding when your project is in mid-flight is always easier than asking for it upfront.
Avoiding the Planning Fallacy
Academics have found ways to give more accurate project cost and benefit assessments.
- Ask others to do the estimation. Other people are far less confident in your ability than you are so a peer review is more likely to be pragmatic.
- Segment the plan. The more detailed a plan you pull together, the more likely you will have considered different aspects and added it all together.
- Run a premortem to identify the things that could go wrong before they do.
The Silver Lining
The planning fallacy isn’t all bad. If the Australian politicians had known the Sydney Opera House would take ten years longer than planned and be thirteen times the cost, they wouldn’t have started.
There is much to be said for ignorance and bloody-mindedness when applied in appropriate quantities. We have a lot to learn from Australian culture.
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Photo by Mudassir Ali
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