How Big Things Get Done

In total, only 8.5 percent of projects hit the mark on both cost and time. And a minuscule 0.5 percent nail cost, time, and benefits. Or to put that another way, 91.5 percent of projects go over budget, over schedule, or both. And 99.5 percent of projects go over budget, over schedule, under benefits, or some combination of these.

“a little neglect may breed great mischief.” The key word is may. Most nails can be lost without anything bad happening at all. A few such losses will have consequences, but they will be minor, like the loss of one horse or one rider. But sometimes a lost nail may cause something truly terrible. From the dramatic to the mundane to the trivial, change can rattle or ruin a project—if it occurs during the window of time when the project is ongoing. Solution? Close the window. Of course, a project can’t be completed instantly, so we can’t close the window entirely. But we can make the opening radically smaller by speeding up the project and bringing it to a conclusion faster. That is a main means of reducing risk on any project. In sum, keep it short!

One is what I call “strategic misrepresentation,” the tendency to deliberately and systematically distort or misstate information for strategic purposes.[5] If you want to win a contract or get a project approved, superficial planning is handy because it glosses over major challenges, which keeps the estimated cost and time down, which wins contracts and gets projects approved.

Moreover, careful analysis like that done by David’s architect can be laborious and take ages, but if it is too narrowly focused, it won’t reveal fundamental flaws in the plan or gaps, much less correct them. And by its impressive detail, it may give the false idea that the overall plan is stronger than it is, like a beautiful facade with no structure behind it.

In contrast, good planning explores, imagines, analyzes, tests, and iterates. That takes time. Thus, slow is a consequence of doing planning right, not a cause. The cause of good planning is the range and depth of the questions it asks and the imagination and the rigor of the answers it delivers. Notice that I put “questions” before “answers.” It’s self-evident that questions come before answers. Or rather, it should be self-evident. Unfortunately, it’s not. Projects routinely start with answers, not questions.

they would focus first on the ends and only then shift to discussing the means for achieving those ends, which would be the right order of things.

People are terrible at getting things right the first time. But we’re great at tinkering.

When delivery fails, efforts to figure out why tend to focus exclusively on delivery. That’s understandable, but it’s a mistake, because the root cause of why delivery fails often lies outside delivery, in forecasting, years before delivery was even begun.

You just need to start over with a different perspective: See your project as one in a class of similar projects already done, as “one of those.” Use data from that class—about cost, time, benefits, or whatever else you want to forecast—as your anchor. Then adjust up or down, if necessary, to reflect how your specific project differs from the mean in the class. That’s it. It couldn’t be simpler.

But then you come across my research and discover that the actual mean cost overrun of a major building project is 62 percent.

18 percent of IT projects have cost overruns above 50 percent in real terms. And for those projects the average overrun is 447 percent!

Planning is a safe harbor. Delivery is venturing across the storm-tossed seas.

But “the costs of iterations are relatively low.”[28] And all that good work produces a rich, detailed, tested, and proven plan.

People say that projects “go wrong,” which they all too often do. But phrasing it that way is misleading; projects don’t go wrong so much as they start wrong.

This is a budget that was made because it could be accepted politically. The real price comes later. The politicians make the real price public where they want and when they want.”[24] That’s a long way of saying that estimates aren’t intended to be accurate; they are intended to sell the project. In a word, they are lies—or spin, to use more polite language.

At first, commit to having an open mind; that is, commit to not committing.

The whole conversation starts with a simple question: “Why are you doing this project?” Few projects start this way. All should.

Bilbao. But the building was fundamentally shaped by the project’s goal.

Projects are not goals in themselves. Projects are how goals are achieved.

Developing a clear, informed understanding of what the goal is and why—and never losing sight of it from beginning to end—is the foundation of a successful project.

To pitch a new project at Amazon, you must first write a PR and FAQ, putting the goal smack in the opening sentences of the press release.

That brings us to the fourth reason why iterative processes work, which I touched on in chapter 1: Planning is cheap.

Kahneman and Tversky dubbed these two perspectives the “inside view” (looking at the individual project in its singularity) and the “outside view” (looking at a project as part of a class of projects, as “one of those”). Both are valuable. But they’re very different. Although there’s little danger that a forecaster will ignore the inside view, overlooking the outside view is routine. That’s a fatal error.

The third reason RCF is still not as widely used as it should be is the simplest. It’s the data. Calculating an average is easy, but only once you have the numbers in hand. That is the hard part.

Think of the duration of a project as an open window. The longer the duration, the more open the window. The more open the window, the more opportunity for something to crash through and cause trouble, including a big, bad black swan.

Events such as these may be extremely unlikely on any given day, month, or year. But the more time that passes from the decision to do a project to its delivery, the greater their probability.

To understand the right way to get a project done quickly, it’s useful to think of a project as being divided into two phases. This is a simplification, but it works: first, planning; second, delivery.

the basic idea is the same everywhere: Think first, then do.

Planning is pushing the vision to the point where it is sufficiently researched, analyzed, tested, and detailed that we can be confident we have a reliable road map of the way forward. Most planning is done with computers, paper, and physical models, meaning that planning is relatively cheap and safe.

Abraham Lincoln is reputed to have said that if he had five minutes to chop down a tree, he’d spend the first three sharpening the ax.[29] That’s exactly the right approach for big projects: Put enormous care and effort into planning to ensure that delivery is smooth and swift. Think slow, act fast: That’s the secret of success.

Instead, shallow analysis is followed by quick lock-in to a decision that sweeps aside all the other forms the project could take. “Lock-in,” as scholars refer to it, is the notion that although there may be alternatives, most people and organizations behave as if they have no choice but to push on, even past the point where they put themselves at more cost or risk than they would have accepted at the start.

But as projects get bigger and decisions more consequential, the influence of money and power grows. Powerful individuals and organizations make the decisions, the number of stakeholders increases, they lobby for their specific interests, and the name of the game is politics. And the balance shifts from psychology to strategic misrepresentation.[8]

Planning, as I see it, is not merely sitting and thinking, much less a rule-based bureaucratic exercise of programming. It is an active process. Planning is doing: Try something, see if it works, and try something else in light of what you’ve learned. Planning is iteration and learning before you deliver at full scale, with careful, demanding, extensive testing producing a plan that increases the odds of the delivery going smoothly and swiftly.

So now we can put reference-class forecasting and risk management into the toolbox, along with experience, Pixar planning, and thinking from right to left. These are the essential tools for thinking slow in planning before acting fast in delivery.

Getting to that point of no return is the real goal of strategic misrepresentation. It is politics, resulting in failure by design.

“You want the flight attendant, not the pilot, to be an optimist.” What you need from your pilot, and must insist on, is hard-nosed analysis that sees reality as clearly as possible. The same holds for optimism about budgets and schedules on big projects, which are their “fuel readings.” Unchecked, optimism leads to unrealistic forecasts, poorly defined goals, better options ignored, problems not spotted and dealt with, and no contingencies to counteract the inevitable surprises.

That said, the common denominator of any project is that people are making the decisions about it. And wherever there are people, there are psychology and power.

At the beginning of a project, we need to disrupt the psychology-driven dash to a premature conclusion by disentangling means and ends and thinking carefully about what exactly we want to accomplish. Frank Gehry’s question, “Why are you doing this project?,” does that.

Third, an iterative process such as Pixar’s corrects for a basic cognitive bias that psychologists call the “illusion of explanatory depth.”

“People feel they understand complex phenomena with far greater precision, coherence, and depth than they really do,” researchers concluded. For planners, the illusion of explanatory depth is obviously dangerous. But researchers also discovered that, unlike many other biases, there is a relatively easy fix: When people try and fail to explain what they mistakenly think they understand, the illusion dissolves. By requiring Pixar film directors to walk through every step from the big to the small and show exactly what they will do, Pixar’s process forces them to explain. Illusions evaporate long before production begins, which is when they would become dangerous and expensive.[24]

But basing forecasting on anchoring and adjustment is tricky. As psychologists have shown in countless experiments, final estimates made this way are biased toward the anchor, so a low anchor produces a lower estimate than a high anchor does. That means the quality of the anchor is critical. Use a good anchor, and you greatly improve your chance of making a good forecast; use a bad anchor, get a bad forecast.

What makes the reference class the right anchor is what I emphasized in the previous chapter: relevant real-world experience. One person did a kitchen renovation using basic fixtures and appliances; with no surprises and a smooth delivery, it cost $20,000 and took two weeks. Another went with granite countertops and lots of stainless steel, then discovered that the house’s wiring wasn’t up to code; the project wound up costing $40,000, and thanks to an electrician who was overbooked, it took two months to finish. Collect lots of these numbers, and you may find that the average kitchen renovation cost $30,000 and took four weeks to complete. These are experience-based, real-world outcomes, not estimates, so they’re not distorted by psychology and strategic misrepresentation. Use them to anchor your forecast, and you will create an estimate that is rooted in reality, undistorted by behavioral biases, making it a better estimate.

“This time is different” is the motto of uniqueness bias.

“When we surveyed participants in our executive education classes, we found that managers feel more productive executing tasks than planning them,” observed business professors Francesca Gino and Bradley Staats. “Especially when under time pressure, they perceive planning to be wasted effort.”[22]

Planning is working on the project. Progress in planning is progress on the project, often the most cost-effective progress you can achieve.

And that’s a problem because it’s a serious mistake to treat planning as an exercise in abstract, bureaucratic thought and calculation. What sets good planning apart from the rest is something completely different. It is captured by a Latin verb, experiri. Experiri means “to try,” “to test,” or “to prove.” It is the origin of two wonderful words in English: experiment and experience.

A good plan is one that meticulously applies experimentation or experience. A great plan is one that rigorously applies both.

First, iteration frees people to experiment, as Edison did with such success. “I need the freedom to just try a bunch of crap out. And a lot of times it doesn’t work,” Docter told me. With this process, that’s fine. He can try again. And again. Until he gets something that burns bright and clear, like Edison’s lightbulb. “If I knew I have to do this only once and get it right, I’d probably hew to the things that I know work.” And for a studio built on creativity, that would be a slow death.

Don’t assume you know all there is to know. If you’re a project leader and people on your team make this assumption—which is common—educate them or shift them out of the team. Don’t let yourself or them draw what appear to be obvious conclusions. That sort of premature commitment puts you at risk of missing not only glaring flaws but also opportunities that could make your project much better than what you have in mind now.

The first, small step is an outline of roughly twelve pages explaining how the idea can be the basis of a story. “It’s mostly a description of what happens. Where are we? What’s going on? What happens in the story?,” said Docter. That is given to a group of Pixar employees—directors, writers, artists, and executives. “People read it and come back with criticisms, questions, concerns. And then typically the person [the director] will go back and redo the outline again.” After which there may be another round of comments and redrafting.