The Parks and Recreation department of New York City is responsible for the upkeep of more than 29,000 acres of land. Approximately 150 capital construction projects a year for its 1,700 parks and recreational facilities require extensive logistics from the staff tasked with the planning and execution of projects. A 2013 audit on the department’s 2011 fiscal year showed that 47 percent of projects were not completed in their scheduled time frames, and 10 percent exceeded their original budgets — which amounted to millions of dollars in increased project costs.
Many organizations struggle with meeting project budgets, schedules and goals. Frequently this may be due to cognitive biases, including overconfidence and optimism bias. While many project-planning techniques use an inside view to forecasting, setting project goals by focusing on the specifics of a project, an outside view may mitigate what Daniel Kahneman and Amos Tversky dubbed “the planning fallacy.” An outside view focuses on the outcomes of similar projects in the past, looking at the numbers behind previous planning errors to form more accurate forecasts.
Read about how the New York City Department of Parks and Recreation analyzed data to create a reference class for projects in Darden Professor Yael Grushka-Cockayne’s article “‘The Planning Fallacy’ Can Derail a Project’s Best Intentions,” in the Darden School of Business/Washington Post “Case in Point” series.