Project Management

Driving Overoptimism - Part 1 of 2

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Richard Maltzman
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One of the most important lessons that is threaded through several of my graduate project management classes is the bias that we have as humans for optimism, often showing up in underestimating cost and time.  And graduate student or practicing, pragmatic project manager, clearly that over-optimism is deadly to our projects if we want them to come in under budget and on time.

In fact, I estimate that 10% of projects have this optimism bias, and that estimate is probably overoptimistic by at least 110%.

(pause for ironic chuckle)

In fact, I’m writing this blog post as I wait for service on my vehicle.  They told me “about an hour or less”.  Let’s see how that works out! (UPDATE: it took 92 minutes, so.... mic drop).

Keeping the automotive theme, I’d like to post today about a Comment article in Nature magazine from 23-April-2020.  In this article by Mark A. Andor, Andreas, Gerster, Kenneth T. Gillingham an Marco Horvath, the tagline is:

Car owners underestimate total vehicle costs.  Giving consumers this information could encourage the switch to cleaner transport and reduce emissions.

So the points are these:

  • Private cars cause about 11% of the world’s CO2 emissions
  • That’s the largest single slice of the transport sector
  • Getting cars off the road would have a big impact not only in CO2 but in other costs such as road maintenance (which has a CO2 impact of its own), but in reduced injuries and deaths due to traffic accidents (that last bullet mostly my own)

Some countries realize this and are taking stringent actions to control behavior and the mechanics of the emissions.  For example, the UK, starting in 2035 will make the sale of new gasoline, diesel, and hybrid cars unlawful.  Cities are taking action, too, by electrifying their buses.  Still, almost all passenger cars still rely on fossil fuels, and, vehicle ownership continues to rise.

Electric vehicles are expensive in upfront cost, although they are much cheaper to operate.  Another bias we have as humans is to look only at the short term (and envision the upfront cost only and not the operating costs).

So really, this is about decision making.  Decisions – at least good ones – are based on data, or preferably, information, knowledge, and wisdom (see the DIKW pyramid – an excellent framework on this topic).

What if, as this article, and my courses assert, what if the information we get – or the way we process it into wisdom – is incomplete or incorrect?  Stands to reason: bad decisions, right?


And that’s the point of this article:

Consumers decide whether to own a vehicle on the basis of considerations such as where they live and the vehicle’s upfront and lifetime costs.  If they systematically underestimate total costs, this could increase car ownership and its associated emissions.  It could also make alternative forms of transport – car sharing, alternative-fuel vehicles, public transport, biking or waking – seem less attractive.

So the question now becomes: would individuals gasp the idea of a broader “total cost of ownership” ?  And, armed with this better-quality information and knowledge, would they make a different choice?

Turns out that the authors did some detailed work in this area,surveying over 6000 decision makers in Germany to see, and produced significant data on this.

That data analysis – and a conclusion – will be Part II of this blog post.


Posted by Richard Maltzman on: July 27, 2020 12:26 PM | Permalink

Comments (3)

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Very interesting thanks for sharing

Interesting post Richard.

On short term vision. I think that humans also struggle to see anything much beyond their own life span.

The over optimism also leads to thinking "we've survived this far, we're a resourceful species we'll find a way through anything", with no appreciation of 1 million years or so vs, 100's of millions of years.

Outstanding point, @Ashleigh. We can't even process "millions of years" as a species. And as Project Managers (a slightly different species of human) we are particularly focused on 'git'r'done' and thus often even more short-sighted! But we can evolve!

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