6 huge planning tips to make your next project come in on time and under budget.
Great ideas from How Big Things Get Done by Bent Flyvbjerg and Dan Gardner
(Scroll down for a short review of the book & my detailed notes)
Most projects are either over budget, over time, or under perform. Often all three. Even worse than this is what 'over budget' and 'over time' look like in reality - when a major project goes astray they often go real bad. Projects that end up costing twice as much as intended or taking twice as long as projected are sadly common.
Brent Flyvberg has spent his career studying megaprojects, but a big project is relative. An addition to a subway system is a big project for a city, a new movie is a big project for a company, and a remodel is a big project for a family. Any person or organization thinking about taking on a big project wants it to go well and would like to avoid massive overruns in cost and time. How can they ensure that?
'Think slow and act fast'
Most people see planning as the opposite of working on a project, but to Flyvberg it's the most important part of working on a project. Taking your time with planning and getting it right is the most important part of ensuring a good end-result. Not all planning is good planning, more on what good planning is below, but good planning takes time, and is worth it.
Not only should you spend plenty of time on planning, but the implementation stage should be done as quickly as possible. Why? Because the longer the project takes the more chances it has to be caught up in some serious issue. Weather events, recessions, changes in technology and fashion can all derail a project - best to get the thing done with as quickly as possible to avoid such an event. And if one of those events hits while you are planning, you're in a position to take it into account and continue forward.
Have your planning be as close to the real thing as possible.
Pixar movies often get remade 5 or 6 times. But not the fully computer animated movie, that would be prohibitively expensive (even with their immense render-farms, hundreds of computers that work together to 'animate' a movie, it took 2 years to render Monster University). Instead the 5 or 6 rough drafts are hundreds of line drawings stitched together and voiced by people in the office. These rough drafts are then watched by an audience of Pixar employees who can dissect what is working and what isn't. This is the kind of planning Flyvberg suggest for a project. Figure out how you can create a simulation as close to reality as possible and use that.
In a recent home remodel job we did on our house, the 3d design programs that the designer used allowed us to see details and make tweaks in ways a stack of line drawing never could. This is as close to reality as we can get and it made a huge difference.
Start with the end in mind
You want to know the real goal behind your project and keep that in mind at all times. Flyvberg calls this 'planning right to left' since most plans start on the left with the first task to complete and the end goal is on the right.
Your real goal is not always immediately apparent. A family might think they want a new kitchen, but if their end goal is really to be able to entertain friends more, then maybe they really want a new deck and grill. If a government thinks it wants to build a new bridge but the real goal is to connect a community on an island, maybe a ferry or a high speed internet connection is really the best way to create that connection.
Even after you think you have your goal, it's important to ask 'why' so that you can uncover your real motives and create the correct project to accomplish that actual goal.
Hire the best
If you can hire someone who is an accomplished expert in the field, do so. They will often cost more in the short run, but can save you big in the long run. These people have seen enough and have the experience to foresee problems that a novice never would. Even if they can't plan around a problem, they will usually have a toolkit of solutions for most of the problems that do arise.
These masters also often come with their own team, who also have expertise in their sub-area. Like a fractal of expertise, a great team will avoid more problems, solve ones that come up faster, and bring more quality to your project than an average one will - saving time and money. Many teams are hired based on being the lowest bidder, but any project manager worth their salt knows that a low price often comes at a high cost.
Use modularity
Experience and experimentation are keys to Flyvberg's thinking. Modularity in design and execution can enable both. If a project can be broken down into constituent, complete parts then you can build one part, learn from it and incorporate the learning into the next iteration. A wind farm is a bunch of modular wind turbines, which can be built separately and the team can learn from each build.
Building modularly can also save money because each part should be a complete unit unto itself, so when it is done it can start making money (or providing whatever benefit you aiming for). One wind turbine alone can start producing energy; one road can start taking traffic; one classroom can house a teacher and their class.
Forecast better
If a project is forecasted to take one year, but takes two to actually finish, what's at fault - the forecast or the execution? Flyvberg says that too often the implementation is blamed for faults that lie with the forecasting. Most forecasts come from cutting up the project into individual tasks, estimating how long each task will take and how much it will cost, then adding up those numbers. But this type of estimation leaves out the possibility of problems or obstacles that could arise. A better way of forecasting the time and cost of a project is what Flyvberg calls 'reference class forecasting', which means finding the average for your type of project and making an adjustment from there.
If the average kitchen remodel costs 20% of the house's value, use that as the basis for your forecast and adjust up or down from there (bespoke cabinets and marble counters, adjust up. IKEA cabinets, adjust down). Most people are focused on how their project is unique and won't think about how it.
Proper planning can be the difference between a meaningful success and a complete debacle.
Short Review
How Big Things Get Done has been on a lot of 'best business book' lists, and for good reason. It's very readable, with lots of insights. Flyvberg is a known expert on megaprojects and distills down decades of experience and learning. There are other experts who disagree with some of his stances (for example - Flyvberg says that most public projects are consciously low-balled on cost and time because that is what is seen as necessary to get a large project started. Other researchers don't think that public servants are that Machiavellian), but this books seems to be a good snapshot of the megaproject research field as it currently stands. I recommend it to anyone who deals with projects.
Notes
1: Think Slow, Act Fast
With megaprojects there are so many numbers created that finding the correct ones is very hard. 'Even trained scholars get it wrong'
Most megaprojects are over budget, over time and under benefits. Flyvbjerg calls this the 'Iron Law of Megaprojects'
91.5 of projects in Flyvbjerg's database go over budget, over schedule or both. 99.5 are over budget or over time or under benefits
Project cost overruns have 'fat-tails' Some projects that are over-budget are WAY over budget, meaning it's hard to account for overruns at the beginning because they could be way over the average.
Projects that fail & cost a ton tend to be those that take a long time to finish. Bad stuff can happen to derail a project so getting it done as quickly as possible lessens the window when an unexpected, bad event can happen.
Take a long time planning, when costs are low, and act fast in the actual implementation, when the cost of a mistake or misstep is high (Think slow, act fast)
2: The Commitment Fallacy
Shallow analysis is the rule for big projects - not detailed planning that really considers goals & obstacles
Instead people 'lock-in' to the first generally feasible idea they have - Flyvberg calls this the 'commitment fallacy'
Unchecked optimism leads to bad planning & therefore bad projects. Most projects don't go wrong, they start wrong
System 1 thinking: fast, intuitive. System 2 thinking: slow, deliberate. We tend to go with system 1 if it 'feels' right. People will run their first thought through a quick mental simulation and if there are obvious problems will thinking of something new, but tend to go with the first thing that is not obviously wrong.
People tend to think of 'best-case' scenarios when they are trying to come up with 'likely-case' scenarios, which leads to a consistent under-estimation of how long things will take. We don't dig into possible problems because of laziness (or resource conservation) or bc we think this time will be different to past problems.
Most big projects' time-lines are based off of breaking it down into constituent tasks and estimating the time for each task, but this still causes an under-estimation of time bc each of these estimations is unconsciously made under a 'best-case' mind-set.
There is a bias against planning, it is seen as 'not the real work'. But planning is working on the project and is often the most cost-effective means of working on the project.
Heuristic to get to work & fast-fail only makes sense for things that are easily reversible - which is rarely the case in mega-projects.
Politically, time estimates & budgets are often low bc it is known that accurate estimates would be a political deterant. Many know that they are under-estimating, but are okay with that because it helps the project get started.
Once a project is started, then 'sunk-cost' fallacies (and other factors) make it hard not to throw more money at the project to try and see it through.
In the majority of big projects, psychological and political forces work together against good estimates.
3: Thinking from Right to Left
Planning means lots of detail, analysis, tests and iterations. It's slow. Good planning starts with questions
Start with the goal in mind. There may be multiple ways to accomplish your goal that didn't originally occur. It's too easy to come up with one solution & think that's the only path possible (WYSIATI fallacy - What you see is all there is).
Much project planning uses a flow chart starting with the beginning on the left and the goal on the right. Flyvberg thinks you should start with the right side, the goal (this is why he calls it thinking right to left).
4: Pixar Planning
Planning has a bad name because so much of it is bad - bureaucratic and rote.
Good planning uses as many tests and experiments as possible.
Good planning uses a simulation of the project so that what works can be kept and what isn't working can be trashed. A simulation can be iterated on, should be rigorous and detailed.
Pixar uses storyboards of thousands of pictures and team members doing voices to make rough draft movies. Frank Gehry uses design software that was originally created to design jets.
A good plan uses experimentation (in the simulation) and experience (incorporate knowledge from people and tech that has experience in the field).
Good planning, which uses simulations, can be expensive, but is a lot cheaper than the final product & can save a lot of money in the long run - they can be iterated on, they can ensure every part of the plan is tested, they show people what they don't know (the "illusion of explanatory depth"), and planning is cheap, relatively speaking (relative to the final product & to mistakes).
A lean startup that creates a minimum viable product is using this advice - the MVP is a plan for the larger, full product. This testing in front of your audience can only be done with a limited range of products (can't build a skyscraper and see how people like it).
When an MVP isn't feasible, the best planning is a 'maximum virtual product' - as close as possible to the real thing as possible. If that's not available to you bc of the cost of technology (or because the tech doesn't exist), look to less sophisticated tools, even extremely simple tools (many architects use wooden blocks or cardboard models to design and model buildings).
5: Are You Experienced?
Experience matters. If someone has done something before, or multiple times, they will have learned a lot & will be able to avoid a lot of problems.
People consistently underestimate how useful experience is. Politics can also be a major hinderance to using experience, as can the desire to be the first (or biggest or tallest).
If a foreign company has the most experience in an area, they will rarely be used for a project bc it is not politically tenable to deny a job to a local firm.
Being the first means you can't learn from others, but it can be a good headline, so people will see it as a benefit (being a fast-follower - the second or third to a certain market - has the best outcomes for tech companies).
The experience embedded in technology is often overlooked & discounted. A tool that has been around for a long time has usually been tweaked and improved - a form of experience embedded in a tool.
6: So you think your project is unique?
When making a forecast, people 'anchor and adjust'. Example: Robert Caro was a journalist & estimated he could write a biography in one year based off of how many words he would write a week as a journalist - that was his anchor. He was way wrong, it took him closer to 7 years.
Finding a good anchor is hard. Caro chose the wrong anchor
Basically every project encounters delays and cost overruns. A lot of the time the problem isn't some new obstacle, but that the forecast is wrong - too optimistic because of the wrong anchor.
A lot of projects forecast by breaking the job into constituent tasks, estimating the time and expense of each task and adding them up. This is a bad anchor because it doesn't take into account the problems that invariably arise.
A good anchor is an average of other similar projects. Flyvberg calls this 'reference class forecasting'
Getting the data for reference class forecasting can be very hard
For project types with 'fat-tails' it's better to forecast a probability (it's Y percent likely that the project will cost X).
Look to similar types of projects & see what problems they come against, then plan to mitigate those issues (transportation projects in Europe often get delayed because they dig up ruins that have to be checked out by archeologists - mitigation: have a bunch of archeologists on retainer so that the checking out can be done as quickly as possible).
Uniqueness bias will make people think that their project is unlike others, so they won't think to learn from other projects, which is a big mistake.
7: Can Ignorance be Your Friend?
Some have argued that too much planning will stifle creativity, that if you know how hard something will be before you start, you will often not take on the project. They say that, instead, you should trust that you will come up with creative solutions to problems.
The data does not prove this out. Most of the time costs are higher than forecasted & benefits are fewer than forecasted (if costs & benefits were higher than forecasted, this would support the creativity hypothesis - sure costs are high, but look at all the creative solutions. Alas, this is not the case).
A lot of costs are never added to a project's data. Opportunity cost (you could have done something else with your time and money) is a big one.
Stress hinders creativity. The best time to be creative is not after a problem is discovered, but before it is encountered - in planning.
8: A single, determined organism
'The value of experienced teams cannot be overstated, yet it is routinely disregarded.'
The best thing to do is to hire a master builder who has his/her own great team. If that isn't possible, you must build a team
The first step to building a team is creating a single identity for everyone. Adjust contracts so that incentives align for everyone to get the most when they do their best for the project as a whole.
Step 2, create purpose, show that the project matters
Too often in trying to create identity and purpose for a team, there is a lot of PR & not much reality - posters that say we're a team, but management nickel & dimes workers.
9: What's your Lego?
Building something bespoke, as opposed to something that's been done before, hurts you in two big ways, 1) it's harder to learn from previous experiences & 2) no one will have experience building that exact thing
Modularizing your project (figuring out small complete chunks that can be finished independently) means that you can start getting experience and money (or whatever benefit you're aiming at) from your project as soon as possible.
It also creates room for a lot of experimentation - something didn't work on the first module? Fix it in the next.
Modularized projects means many small windows of action, so less time for something bad to happen & derail it - like too often happens with really big projects.
Modularity is a matter of degrees. Some things can be easily modularized, some take more ingenuity.
Flyvberg is bullish that modularity can help with climate change - wind and solar plants are already modularized.
Governments have a big hand in helping fledgling industries, but modularization can be a big part too. The wind power industry in Denmark is huge now, and was helped along at it's beginning by the Danish government & by modularization in design.