Bent Flyvbjerg Quotes

We’re good at learning by tinkering—which is fortunate, because we’re terrible at getting things right the first time.

YOU WANT THE FLIGHT ATTENDANT, NOT THE PILOT, TO BE AN OPTIMIST

Small is good. For one thing, small projects can be simple.

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.

Infrastructure is the great space shrinker, and power, wealth and status increasingly belong to those who know how to shrink space, or know how to benefit from space being shrunk.

Communicative and deliberative approaches work well as ideals and evaluative yardsticks for decision making, but they are quite defenceless in the face of power.

Megaproject development today is not a field of what has been called ‘honest numbers’.14 It is a field where you will see one group of professionals calling the work of another not only ‘biased’ and ‘seriously flawed’ but a ‘grave embarrassment’ to the profession.

Modularity is a clunky word for the elegant idea of big things made from small things. A block of Lego is a small thing, but by assembling more than nine thousand of them, you can build one of the biggest sets Lego makes, a scale model of the Colosseum in Rome. That’s modularity.

Also, the technologically high-risk Apollo aerospace programme is considered a classic success story of megaproject planning and implementation. The cost overrun on this US$21 billion project was only 5 per cent. Few know, however, that the original budget estimate included US$8 billion of contingencies.18 By allowing for risk with foresight, the programme avoided ending up in the type of large cost overrun that destabilises many major projects during implementation. The Apollo approach, with its realistic view of risks, costs and contingencies, should be adopted in more major projects.

I call such premature lock-in the “commitment fallacy.” It is a behavioral bias on a par with the other biases identified by behavioral science.

Uncertainty in estimating viability is related in this way not only to the innate difficulty of predicting the future but also to power and interests.

Projects are not goals in themselves. Projects are how goals are achieved. People don’t build skyscrapers,

For want of a nail, the shoe was lost. For want of a shoe, the horse was lost. For want of a horse, the rider was lost. For want of a rider, the battle was lost. For want of a battle, the kingdom was lost.

Wealth, for example, is fat-tailed. At the time of writing, the wealthiest person in the world is 3,134,707 times wealthier than the average person. If human height followed the same distribution as human wealth, the tallest person in the world would not be 1.6 times taller than the average person; he would be 3,311 miles (5,329 kilometers) tall, meaning that his head would be thirteen times farther into outer space than the International Space Station.

Again, the more time that passes from decision to delivery, the greater the probability of one or more of these events happening. It’s even possible that trivial events, in just the wrong circumstances, can have devastating consequences.

But the cost of that haste was terrible, and not only in terms of cost overruns. Larsen was so appalled by the completed building that he wrote a whole book to clear his reputation and explain the confused structure, which he called a “mausoleum.” Haste makes waste.

Cost underestimation and overrun have not decreased over the past seventy years. No learning seems to take place; • Cost underestimation and overrun cannot be explained by error and seem to be best explained by strategic misrepresentation, namely lying, with a view to getting projects started.

strong incentives and weak disincentives for cost underestimation and thus for cost overrun may have taught project promoters what there is to learn, namely that cost underestimation and overrun pay off. If this is the case, cost overrun must be expected and it must be expected to be intentional.

We have documented in this book that: • Cost overruns of 50 per cent to 100 per cent in real terms are common in megaprojects; overruns above 100 per cent are not uncommon; • Demand forecasts that are wrong by 20 per cent to 70 per cent compared with actual developments are common; • The extent and magnitude of actual environmental impacts of projects are often very different from forecast impacts. Post-auditing is neglected;

On project after project, rushed, superficial planning is followed by a quick start that makes everybody happy because shovels are in the ground. But inevitably, the project crashes into problems that were overlooked or not seriously analyzed and dealt with in planning. People run around trying to fix things. More stuff breaks. There is more running around. I call this the “break-fix cycle.” A project that enters it is like a mammoth stuck in a tar pit.

The Power Broker: Robert Moses and the Fall of New York

Bent Flyvbjerg (do capítulo 18) mostrou, em seu Black Swan Management [Gerenciamento do Cisne Negro], a

However, for people such as CEOs and venture capitalists—and even governments—what matters isn’t the performance of any one project but how a whole portfolio of projects performs. For them, it may be fine to take big losses on 80 percent of projects as long as the gains from the 20 percent of projects that deliver Hirschman’s happy ending are so big that they more than compensate for the losses. So I checked the data and found that the results were equally clear: Losses far exceeded gains. Whether it’s the average project or a portfolio of projects, Hirschman’s argument just doesn’t hold up.

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 terminology varies by industry—in movies, it’s “development and production”; in architecture, “design and construction”—but the basic idea is the same everywhere: Think first, then do.

This is typical of the planning of big projects. It’s just not suitable for the sort of quick-and-intuitive decision making that comes naturally to us. But all too often we apply it anyway—because it comes naturally to us. If we are routinely biased toward snap judgments and unrealistic optimism and these methods fail to deliver, we will suffer. Shouldn’t we learn from those painful experiences? We should indeed. But to do that, we must pay attention to experience. And unfortunately, too often we do not.

It is also inapplicable to many decisions on big projects because they are so difficult or expensive to reverse that they are effectively irreversible: You can’t build the Pentagon, then knock it down and build it elsewhere after you discover that it ruins the view. When this bias for action is generalized into the culture of an organization, the reversibility caveat is usually lost. What’s left is a slogan—“Just do it!”—that is seemingly applicable in all situations. “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.

Somervell was little concerned with cost overruns,” as Steve Vogel noted.[36] And like Willie Brown, Somervell was determined to “start digging a hole,” knowing that the existence of a big enough hole would ensure his project’s future. Somervell was also steeped in a “can-do” army engineering culture that prized System One decisiveness and getting stuff done above all else.

Growing complexity and interdependency may make such outcomes more likely in today’s world, but they are hardly a new phenomenon. A proverb that originated in the Middle Ages and comes in many forms tells us, “For want of a nail, the shoe was lost. For want of a shoe, the horse was lost. For want of a horse, the rider was lost. For want of a rider, the battle was lost. For want of a battle, the kingdom was lost.” This version was published by Benjamin Franklin in 1758, and he introduced it with the warning that “a little neglect may breed great mischief.

Except they did. Less than a mile south of the Arlington Farm site and just outside Arlington Cemetery’s spectacular vista lay the “Quartermaster Depot” site. It met all the technical requirements. Somervell’s critics identified the site and fought to move the project there. Eventually, they won. That’s where the Pentagon is today. Not only did that site leave the view from Arlington Cemetery unsullied; the size of the site allowed the architects to even up the sides of the building and make it symmetrical. That made the building more functional, cheaper to build, and a lot less ugly.

The closer a project is to that situation, the more individual psychology will dominate, which is what Kahneman, Amos Tversky, and other behavioral scientists have found. 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

Get the work rolling, involve actors contractually, build sets, collect props and costumes, expose negative, and so get the studio in deep. Once money in some significant amount had been spent, it would be difficult for Harry [Cohn, president of Columbia Pictures] to do anything except scream and holler. If he suspended a film that had been shooting for weeks, he’d be in for an irretrievable loss, not only of money but of ‘face.’ The thing to do was to get the film going.

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.

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

You’re being curious,” he says. That’s the opposite of the natural inclination to think that What You See Is All There Is (WYSIATI), the fallacy we saw in the previous chapter. In contrast, Gehry assumes that there must be more to learn. By making that assumption, he avoids the trap of the fallacy.

I call this “thinking from right to left.” But many other people working in different fields have identified similar notions and used different language to describe what is fundamentally the same idea. “Backcasting” is used in urban and environmental planning. Originally developed by University of Toronto professor John B. Robinson to deal with energy problems, backcasting starts by developing a detailed description of a desirable future state; then you work backwards to tease out what needs to happen for that imagined future to become reality.[7] One backcasting exercise that looked at California’s water needs started by imagining an ideal California twenty-five years in the future, then asked what would have to happen—to supply, consumption rates, conservation, and so on—to make that happy outcome real.[8] “Theory of change” is a similar process often used by government agencies and nongovernmental organizations (NGOs) that seek social change, such as boosting literacy rates, improving sanitation, or better protecting human rights. Again, it starts by defining the goal and only then considers courses of action that could produce that outcome. Silicon Valley is far removed from these worlds, yet the same basic idea is widely used in technology circles. “You’ve got to start with the customer experience and work backwards to the technology,” Steve Jobs told the audience at Apple’s 1997 Worldwide Developers Conference. “You can’t start with the technology and try to figure out how you’re going to try to sell it. I made this mistake probably more than anybody in this room, and I’ve got the scar tissue to prove it.”[9] Today, “work backwards” is a mantra in Silicon Valley.

Projects are pitched in a one-hour meeting with top executives. Amazon forbids PowerPoint presentations and all the usual tools of the corporate world, so copies of the PR/FAQ are handed around the table and everyone reads it, slowly and carefully, in silence. Then they share their initial thoughts, with the most senior people speaking last to avoid prematurely influencing others. Finally, the writer goes through the documents line by line, with anyone free to speak up at any time. “This discussion of the details is the critical part of the meeting,” wrote Colin Bryar and Bill Carr, two former Amazon executives. “People ask hard questions. They engage in intense debate and discussion of the key ideas and the way they are expressed.

People are terrible at getting things right the first time. But we’re great at tinkering. Wise planners make the most of this basic insight into human nature. They try, learn, and do it again. They plan like Pixar and Frank Gehry do.

EXPERIRI “Planning” is a concept with baggage. For many, it calls to mind a passive activity: sitting, thinking, staring into space, abstracting what you’re going to do. In its more institutional form, planning is a bureaucratic exercise in which the planner writes reports, colors maps and charts, programs activities, and fills in boxes on flowcharts. Such plans often look like train schedules, but they’re even less interesting.

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 bad plan is one that applies neither experimentation nor experience.

It has haunted me,” he explained to a TV interviewer. “People who’ve seen The Simpsons believe it.”[17] Frank Gehry is indeed a genius, but everything else about that image of how he works is wrong. In fact, it’s the opposite of the truth.

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. Second, the process ensures that literally every part of the plan, from the broad strokes to the fine details, is scrutinized and tested. Nothing is left to be figured out when the project goes into delivery. This is a basic difference between good and bad planning. In bad planning, it is routine to leave problems, challenges, and unknowns to be figured out later. That’s how the Sydney Opera House got into trouble. In that case, Jørn Utzon did eventually solve the problem, but it was too late. The budget had exploded, construction was years behind schedule, and Utzon was ousted with his reputation in tatters. In many projects, the problem is never solved.

Third, an iterative process such as Pixar’s corrects for a basic cognitive bias that psychologists call the “illusion of explanatory depth.” Do you know how a bicycle works? Most people are sure they do, yet they are unable to complete a simple line drawing that shows how a bicycle works. Even when much of the bicycle is already drawn for them, they can’t do it. “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]

That brings us to the fourth reason why iterative processes work, which I touched on in chapter 1: Planning is cheap. Not in absolute terms, perhaps. The rough videos Pixar produces require a director leading a small team of writers and artists. Keeping them all working for years is a significant cost.

Semantics aside, the only real difference is the method of testing. If there were no other considerations involved, such as money, safety, and time, the ideal testing method would be to simply do whatever it is you are thinking of doing in the real world with real people, and see what happens.

How does experience make people better at their jobs? Ask someone that question, and you’ll likely hear that with experience people know more. That’s true as far as it goes. People who work with a tool learn how to use it, so they gain knowledge such as “The safety lock must be turned off before the tool can start.” You don’t actually need experience to get that sort of knowledge. Someone can just tell you, or you can find it in a manual; it is “explicit knowledge.” But as the scientist and philosopher Michael Polanyi showed, much of the most valuable knowledge we can possess and use isn’t like that; it is “tacit knowledge.” We feel tacit knowledge. And when we try to put it into words, the words never fully capture it. As Polanyi wrote, “We can know more than we can tell.”[21]

say why they felt the way they did.[22] This is “skilled intuition,” not garden-variety gut feelings, which are unreliable. It is a powerful tool available only to genuine experts—that is, people with long experience working in their domain of expertise.[23]

That should be obvious. But when things go wrong and people get desperate, the obvious is often overlooked, and it’s assumed that if delivery fails, the problem must lie with delivery, when in fact it lies with forecasting.

In psychology, the process Caro used to create his forecast is known as “anchoring and adjustment.”[6] Your estimate starts with some fixed point, twelve chapters of three weeks each in Caro’s case. That’s the “anchor.” Then you slide the figure up or down as seems reasonable, to one year for Caro. That’s “adjustment.” Caro was exactly right to call his thinking “naïve but perhaps not unnatural” because, as abundant research shows, anchoring and adjustment, particularly when immediate experience is used as the anchor, is a natural way of thinking. It’s likely that most people in Caro’s position, with his specific experience, would have made a forecast the same way and come up with a similar result. 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.

But there’s a way around them. 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.

This is all uniqueness bias talking, wanting to be reintroduced into your decisions when you’re trying to eliminate it. Don’t listen to it. Keep the process simple: Define the class broadly. Err on the side of inclusion. And adjust the average only when there are compelling reasons to do so, which means that data exist that support the adjustment. When in doubt, skip adjustment altogether. The class mean is the anchor, and the anchor is your forecast. That’s very simple, yes. But simple is good; it keeps out bias.

Some tails are simple to cut. Tsunamis are fat-tailed, but if you build well inland or erect a high enough seawall, you eliminate the threat. Earthquakes are also fat-tailed, but build to an earthquake-proof standard, as we did with the schools in Nepal, and you are covered. Other tails require a combination of measures; for a pandemic, for instance, a blend of masks, tests, vaccines, quarantines, and lockdowns to prevent infections from running wild.[25] That’s black swan management. For

The later a delay comes, the less remaining work there is and the less the risk and impact of a chain reaction. President Franklin Roosevelt got it right when he said, “Lost ground can always be regained—lost time never.”[28] Knowing this, we advised measures that would cut the probability of early delays and chain reactions.

What went wrong? Lasko and his team spent ages thinking about risk, but they never shifted their perspective from thinking of the Great Chicago Fire Festival as a unique project to seeing it as “one of those”; that is, part of a wider class of projects. If they had, they would have spent time thinking about live events. How do they fail? One common way is equipment failure. Mics don’t work. Computers crash. How is that risk mitigated? Simple: Identify essential equipment, get backups, and make contingency plans. That kind of analysis is dead easy—but only after you have shifted to the outside view. Notice that risk mitigation does not require predicting the exact circumstances that lead to disaster. Jim Lasko didn’t need to identify when and how the ignition system would fail, only recognize that it could. And have a Plan B if it did. Recall what Benjamin Franklin wrote in 1758: “A little neglect may breed great mischief.” This is why high safety standards are an excellent form of risk mitigation and a must on all projects. They’re not just good for workers; they prevent little things from combining in unpredictable ways into project-smashing black swans.

There’s a reason for that. The government here mismanaged the planning and construction of the Sydney Opera House so badly that the costs and schedule exploded. Little of that was Utzon’s fault. But he was the architect, so he was blamed and fired midconstruction. He left Australia in secret and in disgrace. His reputation was ruined. Instead of being showered with commissions to build more masterpieces, Utzon was marginalized and forgotten. He became what no masterbuilder wants to be or deserves to be. He became a one-building architect.[16] “What you call the costs are not the full costs,” I continued. “Yes, the Sydney Opera House cost a large amount of money, far more than it should have. But the full cost of that building includes all the other architectural treasures that Jørn Utzon never built. Sydney got its masterpiece, but cities around the world were robbed of theirs.” More silence. There are always other costs—costs that never appear on any spreadsheet—when a project spirals out of control. The simplest are what economists call “opportunity costs”: the money unnecessarily burned by bad planning that could have been used to fund something else, including other projects.

The word deadline comes from the American Civil War, when prison camps set boundaries and any prisoner who crossed a line was shot.[5] For BAA, the metaphor fit uncomfortably well.

But when you work on a joint project with people from many companies, which squad are you playing for? Who are your teammates? Teams are identities. To truly be on one, people must know it. So BAA gave everyone working on T5, including its own employees, a clear and emphatic answer: Forget how things are usually done on big projects. Your team is not your company. Here, your team is T5. We are one team. Wolstenholme is an engineer with decades of experience in construction, but he started his career in the British military, where the squad you play for is literally on your forehead—in the form of your unit’s “cap badge.” When people came to T5, Wolstenholme says, they were told, “Take off your cap badge and throw it away, because you work for T5.” That message was explicit, blunt, and repeated. “We had posters on the walls of people with lightbulbs going on, and they were saying, you know, ‘I get it. I work for T5.’ ” MAKING HISTORY Identity was the first step.

Once the standards for finished work were agreed upon, skilled workers developed their own system of benchmarks to establish the quality of workmanship required for both themselves and everyone else to follow. Some 1,400 of these samples were photographed, cataloged, and put on display at the worksite. Because the benchmarks came from the workers, the workers took ownership of them, increasing the effectiveness of implementation.

Repetition also generates experience, making your performance better. This is called “positive learning,” as we saw earlier. Repetition rockets you up the learning curve, making each new iteration better, easier, cheaper, and faster. As the old Latin saying goes, “Repetitio est mater studiorum”—“Repetition is the mother of learning.” Yes, I wrote that in chapter 4. But repetition is the mother of learning.

Think slow, act fast” may not be a new idea. It was on grand display back in 1931, after all, when the Empire State Building raced to the sky. You could even say that the idea goes at least as far back as Rome’s first emperor, the mighty Caesar Augustus, whose personal motto was “Festina lente,” or “Make haste slowly.

That is, sadly, typical. On project after project, rushed, superficial planning is followed by a quick start that makes everybody happy because shovels are in the ground. But inevitably, the project crashes into problems that were overlooked or not seriously analyzed and dealt with in planning. People run around trying to fix things. More stuff breaks. There is more running around. I call this the “break-fix cycle.” A project that enters it is like a mammoth stuck in a tar pit.

Marketers often make use of this phenomenon. When you encounter a “limit six per customer” sign at the grocery store, there’s a good chance that the sign is there to expose you to the number six, making it the anchor when you decide how many items to buy.

so realism was seen as pessimism and ignored. Such behavior is as common as bad anchoring and reinforces it.

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.

Silicon Valley is far removed from these worlds, yet the same basic idea is widely used in technology circles. “You’ve got to start with the customer experience and work backwards to the technology,” Steve Jobs told the audience at Apple’s 1997 Worldwide Developers Conference. “You can’t start with the technology and try to figure out how you’re going to try to sell it. I made this mistake probably more than anybody in this room, and I’ve got the scar tissue to prove it.”9 Today, “work backwards” is a mantra in Silicon Valley.

By carefully working through what must be done to get to their goal, the logic that surfaced midconstruction and convinced David and Deborah to make piecemeal expansions of the project will instead surface up front in a conversation about what other renovations they might consider. And if major work is under way and they would have to move out anyway, would it not make sense to also consider other work they might want to do in the future? To get it all over with at once. Plus it’s cheaper to have workers come on-site once and do many jobs rather than come back multiple times.

BEING FIRST The ambition to be the first with something is another way experience gets sidelined.

The only upside to the misery was that those who went second, third, and fourth could study our experience and do better. But did they? Probably not. Similar large-scale IT projects continue to be deeply troubled. Planners don’t value experience to the extent they should because they commonly suffer yet another behavioral bias, “uniqueness bias,” which means they tend to see their projects as unique, one-off ventures that have little or nothing to learn from earlier projects.5 And so they commonly don’t.

But the first-mover advantage is greatly overstated. In a watershed study, researchers compared the fates of “pioneer” companies that had been the first to exploit a market and “settlers” that had followed the pioneers into the market. Drawing on data from five hundred brands in fifty product categories, they found that almost half of pioneers failed, compared to 8 percent of settlers. The surviving pioneers took 10 percent of their market, on average, compared to 28 percent for settlers. Getting into the market early was indeed important—“early market leaders have much greater long-term success,” the researchers noted—but those “early” market leaders “enter an average of 13 years after pioneers.”7 The consensus of researchers today is that, yes, being first to market can confer advantages in certain specific circumstances, but it comes at the terrible cost of an inability to learn from the experience of others.

If we see technology this way, it is clear that, other things being equal, project planners should prefer highly experienced technology for the same reason house builders should prefer highly experienced carpenters. But we often don’t see technology this way. Too often, we assume that newer is better. Or worse, we assume the same of something that is custom designed, which we praise as “unique,”“bespoke,” or “original.” If decision makers valued experience properly, they would be wary of a technology that is new, because it is inexperienced technology

later. As previously mentioned, that practical wisdom is what Aristotle called “phronesis.” He held it in higher regard than any other virtue, “for the possession of the single virtue of phronesis will carry with it the possession of them all [i.e., all the relevant virtues],” as he emphasized.25 In short, if you have phronesis, you’ve got it all. Therefore, a project leader with abundant phronesis is the single greatest asset a project can have. If you have a project, hire a leader like that.

As simple as it should be in theory to judge projects, in practice it’s anything but. In every big project, there are blizzards of numbers generated at different stages by different parties. Finding the right ones—those that are valid and reliable—takes skill and work. Even trained scholars get it wrong.[4] And it doesn’t help that big projects involve money, reputations, and politics. Those who have much to lose will spin the numbers, so you cannot trust them. That’s not fraud. Or rather, it’s not usually fraud; it’s human nature. And with so many numbers to choose from, spinning is a lot easier than finding the truth.

phronesis

Drawing on data from five hundred brands in fifty product categories, they found that almost half of pioneers failed, compared to 8 percent of settlers. The surviving pioneers took 10 percent of their market, on average, compared to 28 percent for settlers. Getting into the market early was indeed important—“early market leaders have much greater long-term success,” the researchers noted—but those “early” market leaders “enter an average of 13 years after pioneers.

The consensus of researchers today is that, yes, being first to market can confer advantages in certain specific circumstances, but it comes at the terrible cost of an inability to learn from the experience of others. Better to be—like Apple following Blackberry into smartphones—a “fast follower” and learn from the first mover.

either keeping ventures with classic government agencies, instead of with state-owned firms, or by placing ventures in fully privatised companies with full market exposure, whichever best suits the activities in question. A bit of each is not enough, but instead creates a grey zone with grey results, which is what we see for state-owned firms. Bent Flyvbjerg Said Business School University of Oxford

The cost estimate of the prospectus turned out to be a best possible outcome based on the unlikely assumption that everything would go according to plan with no delays, no changes in performance specifications, no management problems, no problems with contractual arrangements or new technologies or geology, no major conflicts, no political promises not kept, and so on.

Exhaustive planning that enables swift delivery, narrowing the time window that black swans can crash through, is an effective means of mitigating this risk. Finishing is the ultimate form of black swan prevention; after a project is done, it can’t blow up, at least not as regards delivery.

The critical next step is to stop thinking of black swans the way most people do. They are not bolt-from-the-blue freak accidents that are impossible to understand or prevent. They can be studied. And mitigated.

We also found that early delays in procurement and political decisions correlated with black swan blowouts in the HS2 reference class. Interestingly, early delays are not seen as a big deal by most project leaders. They figure they have time to catch up, precisely because the delays happen early. That sounds reasonable. But it’s dead wrong. Early delays cause chain reactions throughout the delivery process. The later a delay comes, the less remaining work there is and the less the risk and impact of a chain reaction.

As with reference-class forecasting, the big hurdle to black swan management is overcoming uniqueness bias. If you imagine that your project is so different from other projects that you have nothing to learn from them, you will overlook risks that you would catch and mitigate if you instead switched to the outside view.

If the data are detailed enough, as ours were, it’s possible to forecast not only a whole project but sections of a project, using the same reference-class forecasting technique. Doing this, we set milestones, the well-known management tool that places markers for the project to pass by specified dates. But if a project is falling behind, managers don’t want to wait until the next milestone arrives before they are alerted to the delay. They need to know and act as quickly as possible. Our data were so detailed that we could make a further set of subforecasts, so we invented “inchstones.” And we specified in detail beforehand who would be responsible for what.

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.

But when things go wrong and people get desperate, the obvious is often overlooked, and it’s assumed that if delivery fails, the problem must lie with delivery, when in fact it lies with forecasting.

In psychology, the process Caro used to create his forecast is known as “anchoring and adjustment.”[6] Your estimate starts with some fixed point, twelve chapters of three weeks each in Caro’s case. That’s the “anchor.” Then you slide the figure up or down as seems reasonable, to one year for Caro. That’s “adjustment.” Caro was exactly right to call his thinking “naïve but perhaps not unnatural” because, as abundant research shows, anchoring and adjustment, particularly when immediate experience is used as the anchor, is a natural way of thinking.

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. Unfortunately, it is easy to settle on a bad anchor.

Much subsequent research revealed that people will anchor in almost any number they happen to be exposed to prior to making their forecast.

Are the benchmarks reasonable? Logically, that should be the first question that is asked, but it rarely comes up at all. Once we frame the problem as one of time and money overruns, it may never occur to us to consider that the real source of the problem is not overruns at all; it is underestimation. This project was doomed by a large underestimate. And the underestimate was caused by a bad anchor. To create a successful project estimate, you must get the anchor right.

We know what’s good: climate mitigation, for instance, by electrifying everything—homes, cars, offices, factories, shops—and making sure that the electricity comes from abundant renewable sources. We have the ability to do this.

Scale and speed”; those are the key words. To win the fight against climate change, we must build at a scale and speed that put to shame the long, sorry record of the giant projects of the past. We can no longer afford bloated budgets and deadlines that keep sliding into the future. And we absolutely cannot have projects that never deliver what they promise.

In 2017, with oil and gas vanishing from its business, Ørsted took its new name in honor of the Danish physicist Hans Christian Ørsted, who discovered electromagnetism. Two years later, Anders Eldrup’s “impossible” 85/15 plan was achieved. It hadn’t taken a generation; it had taken ten years.[42] Again that was better than expected and a full fifteen years ahead of schedule, unheard of for conventional Big Energy projects. Over the same ten years, the percentage of Denmark’s electricity generated by fossil fuels fell from 72 percent to 24 percent, while the share contributed by wind power soared from 18 percent to 56 percent.[43] Some days, Danish wind turbines produce more electricity than the country can consume. The surplus is exported to neighboring nations.

Henrik Poulsen, who now advises an investment company, described how his firm recently bought a Danish company that makes control systems for wind farms: “Now we want to expand this company and we’re looking for companies that we could merge into this platform.” Naturally, they’re looking around the world. But the prospects they’ve found “are all located within a few hundred kilometers” of each other in Jutland. “Which is a bit crazy,” said Poulsen. Economic geographers like myself call this “clustering” or “economies of agglomeration.” It’s what happened for film in Hollywood in the 1920s and for tech in Silicon Valley in the mid–twentieth century. Jutland is now the Silicon Valley of wind energy—which is striking for a country whose population is just over half that of Los Angeles County.

Heuristics are fast and frugal rules of thumb used to simplify complex decisions. The word has its origin in the ancient Greek word Eureka!, the cry of joy and satisfaction when one finds or discovers something.

HIRE A MASTERBUILDER I sometimes say that this is my only heuristic because the masterbuilder—named after the skilled masons who built Europe’s medieval cathedrals—possesses all the phronesis needed to make your project happen. You want someone with deep domain experience and a proven track record of success in whatever you’re doing,

GET YOUR TEAM RIGHT This is the only heuristic cited by every project leader I’ve ever met.

But who should pick the team? Ideally, that’s the job of a masterbuilder. In fact, it’s the masterbuilder’s main job. This is why the role of masterbuilder is not as solitary as it sounds; projects are delivered by teams. So to amend my advice above: When possible, hire a masterbuilder. And the masterbuilder’s team.

ASK “WHY?” Asking why you’re doing your project will focus you on what matters, your ultimate purpose, and your result. This goes into the box on the right of your project chart.

BUILD WITH LEGO Big is best built from small. Bake one small cake. Bake another. And another. Then stack them.

What’s the worst that can happen during planning? Maybe your whiteboard is accidentally erased. What’s the worst that can happen during delivery? Your drill breaks through the ocean floor, flooding the tunnel.

Almost any nightmare you can imagine can happen—and has happened—during delivery. You want to limit your exposure to this. You do it by taking all the time necessary to create a detailed, tested plan. Planning is relatively cheap and safe; delivering is expensive and dangerous. Good planning boosts the odds of a quick, effective delivery, keeping the window on risk small and closing it as soon as possible.

TAKE THE OUTSIDE VIEW

Think of your project as “one of those,” gather data, and learn from all the experience those numbers represent by making reference-class forecasts. Use the same focus to spot and mitigate risks. Switching the focus from your project to the class your project belongs to will lead, paradoxically, to a more accurate understanding of your project.

WATCH YOUR DOWNSIDE It’s often said that opportunity is as important as risk. That’s false. Risk can kill you or your project. No upside can compensate for that. For fat-tailed risk, which is present in most projects, forget about forecasting risk; go directly to mitigation by spotting and eliminating dangers.

SAY NO AND WALK AWAY Staying focused is essential for getting projects done. Saying no is essential for staying focused. At the outset, will the project have the people and funds, including contingencies, needed to succeed? If not, walk away. Does an action contribute to achieving the goal in the box on the right? If not, skip it. Say no to monuments. No to untested technology. No to lawsuits. And so on. This can be difficult, particularly if your organization embraces a bias for action.

MAKE FRIENDS AND KEEP THEM FRIENDLY

If something goes wrong, the project’s fate depends on the strength of those relationships. And when something goes wrong, it’s too late to start developing and cultivating them. Build your bridges before you need them.

BUILD CLIMATE MITIGATION INTO YOUR PROJECT No task is more urgent today than mitigating the climate crisis—not only for the common good but for your organization, yourself, and your family.

KNOW THAT YOUR BIGGEST RISK IS YOU It’s tempting to think that projects fail because the world throws surprises at us: price and scope changes, accidents, weather, new management—the list goes on. But this is shallow thinking.

Bezos noted that when a project is successfully completed and it’s ready to be publicly announced, the conventional last step is to have the communications department write two documents. One is a very short press release (PR) that summarizes what the new product or service is and why it is valuable for customers. The other is a “frequently asked questions” (FAQ) document with more details about costs, functionality, and other concerns. Bezos’s brainstorm was to make that last step in a conventional project the first step in Amazon projects.

an iterative process such as Pixar’s corrects for a basic cognitive bias that psychologists call the “illusion of explanatory depth.” Do you know how a bicycle works? Most people are sure they do, yet they are unable to complete a simple line drawing that shows how a bicycle works. Even when much of the bicycle is already drawn for them, they can’t do it. “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.

As previously mentioned, that practical wisdom is what Aristotle called “phronesis.” He held it in higher regard than any other virtue, “for the possession of the single virtue of phronesis will carry with it the possession of them all [i.e., all the relevant virtues],” as he emphasized.[25] In short, if you have phronesis, you’ve got it all. Therefore, a project leader with abundant phronesis is the single greatest asset a project can have. If you have a project, hire a leader like that.

To go back to where I started in the previous chapter: When planning, remember the Latin word experiri, the origin of the English words experiment and experience. Whenever possible, planning should maximize experience, both frozen and unfrozen.

A good plan, as I said, is one that maximizes experience or experimentation; a great plan is one that does both. And the best plan? That’s one that maximizes experience and experimentation—and is drafted and delivered by a project leader and team with phronesis.

The cultural anthropologist Margaret Mead supposedly told her students, “You’re absolutely unique, just like everyone else.” Projects are like that. Whatever sets a project apart, it shares other characteristics with projects in its class.

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. To produce a reliable forecast, you need the outside view.

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.

I know from experience that people sometimes struggle with this, not because it’s complicated but because it’s simple. It’s too simple. Their project is special, after all, or so they think, and this process doesn’t emphasize that, so they complicate the process.

The same can happen with adjustments. These should be made only if there are clear, compelling reasons to think that your project will be well above or below the mean. But the more you adjust, the more your project is different from the average project. And your project is special! So it feels right to adjust, adjust, and adjust some more, even if the adjustments are based on little more than vague feelings. That, too, is a mistake. This is all uniqueness bias talking, wanting to be reintroduced into your decisions when you’re trying to eliminate it. Don’t listen to it. Keep the process simple: Define the class broadly. Err on the side of inclusion. And adjust the average only when there are compelling reasons to do so, which means that data exist that support the adjustment. When in doubt, skip adjustment altogether. The class mean is the anchor, and the anchor is your forecast. That’s very simple, yes. But simple is good; it keeps out bias. I came to call this process “reference-class forecasting” (RCF).

The gap between a conventional forecast and one that uses RCF varies by project type, but for over half the projects for which we have data, RCF is better by 30 percentage points or more. That’s on average. A 50 percent increase in accuracy is common. Improvements of more than 100 percent are not uncommon. Most gratifyingly, given the method’s intellectual roots, Daniel Kahneman wrote in Thinking, Fast and Slow that using reference-class forecasting is “the single most important piece of advice regarding how to increase accuracy in forecasting through improved methods.

Most people think that unknown unknowns cannot be forecasted, and that sounds reasonable. But the data for the projects in the reference class reflect everything that happened to those projects, including any unknown unknown surprises. We may not know precisely what those events were. And we may not know how big or how damaging they were. But we don’t need to know any of that. All we need to know is that the numbers for the reference class do reflect how common and how big the unknown unknowns really were for those projects, which means that your forecast will reflect those facts, too.

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

In the social sciences, “survivorship bias” is the common mistake of noting only those things that made it through some selection process while overlooking those that didn’t.

Good planning that sweeps away ignorance will indeed reveal difficulties ahead, but that is no reason to quit and walk away.

We do not have to be desperate to be creative. Indeed, there’s reason to think that desperation may actually hinder the imaginative moments that elevate a project to glory.

After the goal of the project has been decided and placed in the box on the right. After the plan has been developed using experiments, simulations, and experience. After accurate forecasts have been made, and risks mitigated, based on real-world performance of past projects. After all that, you have done your slow thinking and you have a plan worthy of the name. Now it’s time to act fast and deliver. A strong plan greatly increases the probability of a swift and successful delivery. But it’s not enough. As any experienced project manager will tell you, you also need a capable, determined delivery team. The success of any project depends on getting the team right—“getting the right people on the bus,” as one colleague metaphorically put it, “and placing them in the right seats,” as another added.

The value of experienced teams cannot be overstated, yet it is routinely disregarded.

The word deadline comes from the American Civil War, when prison camps set boundaries and any prisoner who crossed a line was shot.

Digital simulation enabled the second strategy: a radically different approach to construction. Instead of sending materials to a worksite to be measured, cut, shaped, and welded into buildings—the conventional way since the building of the pyramids—the materials were sent to factories, which used the detailed, precise digital specifications sent to them to manufacture components. Then the components were sent to the worksite to be assembled. To the untrained eye, T5 would have looked like a conventional construction site, but it wasn’t; it was an assembly site.[6] The importance of this difference cannot be overstated, and every large construction site will need to follow suit if construction is going to make it into the twenty-first century. This process, called “design for manufacture and assembly,” is how the hyperefficient car industry operates.

We perform at our best when we feel united, empowered, and mutually committed to accomplishing something worthwhile.

There’s a word to describe a group of people who feel that way: they are a team.

BAA intervened. It changed its contract with Harper’s company to a cost-reimbursable arrangement with a percentage profit on top when milestones were met. With that revised incentive structure BAA defused the conflict. No longer required to protect their separate self-interests, Harper’s company and the principal contractor stopped pointing fingers at each other and instead discussed how best to tackle the problem. The principal contractor agreed to bring in hundreds more workers. Harper’s company agreed to shuffle workers to other jobs while the principal contractor caught up. A conflict that could have turned into a meltdown quickly cooled, and the project rolled along.

BAA understood, as so many others do not, that “lowest bid” does not necessarily mean “lowest cost,” so rather than follow the common practice of hiring the lowest bidders, BAA stuck with companies it had worked with for years and that had proven their ability to deliver what BAA needed.

If you’re going to win a football game, you need to play with the same squad every season,” Andrew Wolstenholme said, using an impeccably British metaphor. “We’d built up trust. We understood each other.” But when you work on a joint project with people from many companies, which squad are you playing for? Who are your teammates? Teams are identities. To truly be on one, people must know it. So BAA gave everyone working on T5, including its own employees, a clear and emphatic answer: Forget how things are usually done on big projects. Your team is not your company. Here, your team is T5. We are one team.

Identity was the first step. Purpose was the second. It had to matter that you worked for T5.

Harvard professor Amy Edmondson dubbed this sense of being free to speak your mind “psychological safety.” It’s hard to overstate its value. Psychological safety boosts morale, fosters improvements, and ensures that, in Andrew Wolstenholme’s words, “bad news travels fast”—so problems can be tackled quickly.

There are five project types that are not fat-tailed. That means they may come in somewhat late or over budget but it’s very unlikely that they will go disastrously wrong. The fortunate five? They are solar power, wind power, fossil thermal power (power plants that generate electricity by burning fossil fuels), electricity transmission, and roads. In fact, the best-performing project types in my entire database, by a comfortable margin, are wind and solar power.

And why are wind and solar power the most reliable projects of all, more likely than any other project type to be delivered successfully?

Get a small thing, a basic building block. Combine it with another and another until you have what you need. That’s how a single solar cell becomes a solar panel, which becomes a solar array, which becomes a massive megawatt-churning solar farm. Modularity delivers faster, cheaper, and better, making it valuable for all project types and sizes. But for building at a truly huge scale—the scale that transforms cities, countries, even the world—modularity is not just valuable, it’s indispensable.

One way to design and deliver a project on an enormous scale is to build one thing. One huge thing.

If you build like this, you build only one thing. By definition, that thing is one of a kind. To put that in the language of tailors, it is bespoke:

And that translates into slow and complex. Nuclear power plants, for one, are the products of a staggering number of bespoke parts and systems that must all work, and work together, for the plant as a whole to work.

First, you can’t build a nuclear power plant quickly, run it for a while, see what works and what doesn’t, then change the design to incorporate the lessons learned.

Second, there’s a problem with experience—the other half of experiri. If you are building a nuclear power plant, chances are that you haven’t done much of that before for the simple reason that few have been built and each takes many years to complete, so opportunities to develop experience are scarce.

Third, there’s the financial strain. A nuclear power plant must be completely finished before it can generate any electricity. Even nine-tenths done, it’s useless.

Finally, don’t forget black swans. All projects are vulnerable to unpredictable shocks, with their vulnerability growing as time passes. So the fact that the delivery of your one huge thing will take a very long time means that it is at high risk of being walloped by something you cannot possibly anticipate.

It’s relatively easy to build something small and simple.

Look for it in the world, and you’ll see it everywhere. A brick wall is made of hundreds of bricks. A flock of starlings, which moves as if it were a unitary organism, may be composed of hundreds or thousands of birds. Even our bodies are modular, composed of trillions of cells that are themselves modular. There’s an evolutionary reason for this ubiquity: In survival of the fittest, the “fittest” is often a module that is particularly successful in reproducing itself.

Solar power is the king of modularity. It is also the lowest-risk project type of any I’ve tested in terms of cost and schedule. That’s no coincidence. Wind power? Also extremely modular. Modern windmills consist of four basic factory-built elements assembled on-site: a base, a tower, the “head” (nacelle) that houses the generator, and the blades that spin. Snap them together, and you have one windmill. Repeat this process again and again, and you have a wind farm. Fossil thermal power? Look inside a coal-burning power plant, say, and you’ll find that they’re pretty simple, consisting of a few basic factory-built elements assembled to make a big pot of water boil and run a turbine. They’re modular, much as a modern truck is modular. The same goes for oil- and gas-fired plants. Electricity transmission? Parts made in a factory are assembled into a tower, and factory-made wires are strung along them. Repeat. Or manufactured cables are dug into the ground, section by section. Repeat again.

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. Everything that happens subsequently is working backwards from the PR/FAQ, as it is called at Amazon. Critically, the language of both documents must be plain. “I called it ‘Oprah-speak,’ ” says Ian McAllister, a former Amazon executive

Asking “Why?” can work only where people feel free to speak their minds and the decision makers really listen. “Many employees who worked on the Fire Phone had serious doubts about it,” concluded the journalist and author Brad Stone, who has written definitive histories of Amazon, “but no one, it seemed, had been brave or clever enough to take a stand and win an argument with their obstinate leader.

and experience. Think of how people typically learn: We tinker. We try this. We try that. We see what works and what doesn’t. We iterate. We learn. This is experimentation creating experience.

Think of how people typically learn: We tinker. We try this. We try that. We see what works and what doesn’t. We iterate. We learn. This is experimentation creating experience.

As the old Latin saying goes, “Repetitio est mater studiorum”—“Repetition is the mother of learning.” A good plan is one that meticulously applies experimentation or experience. A great plan is one that rigorously applies both.

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.

Projects are often started by jumping straight to a solution, even a specific technology. That’s the wrong place to begin. You want to start by asking questions and considering alternatives. At the outset, always assume that there is more to learn. Start with the most basic question of all: Why?

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. Governments and bureaucratic corporations are good at churning out this sort of analysis.

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.

What Gehry means by questioning isn’t doubting or criticizing, much less attacking or tearing down. He means asking questions with an open-minded desire to learn. It is, in a word, exploration. “You’re being curious,” he says. That’s the opposite of the natural inclination to think that What You See Is All There Is (WYSIATI), the fallacy we saw in the previous chapter. In contrast, Gehry assumes that there must be more to learn. By making that assumption, he avoids the trap of the fallacy.

The officials told Gehry that they wanted a building that could do for Bilbao and the Basque Country what the Sydney Opera House had done for Sydney and Australia: put them on the map and bring back growth.

Projects are not goals in themselves. Projects are how goals are achieved. People don’t build skyscrapers, hold conferences, develop products, or write books for their own sakes. They do these things in order to accomplish other things.

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.

In project planning, a standard tool is a flowchart that lays out, from left to right, what needs to be done and when, with the project concluding when the goal is achieved in the final box on the right. That simple concept is also valuable in the initial planning stages because it can help us visualize a project not as an end in itself but as a means to an end: The goal is the box on the right. That’s where project planning must begin by asking Frank Gehry’s question and thoughtfully exploring what should go in that box. Once that is settled, you can shift to considering what should go into the boxes on the left—the means that will best get you to your goal. I call this “thinking from right to left.

You’ve got to start with the customer experience and work backwards to the technology,” Steve Jobs told the audience at Apple’s 1997 Worldwide Developers Conference. “You can’t start with the technology and try to figure out how you’re going to try to sell it. I made this mistake probably more than anybody in this room, and I’ve got the scar tissue to prove it.”[9] Today, “work backwards” is a mantra in Silicon Valley.

the lean startup model squares well with my advice. The contradiction arises only if you take a narrow view of the nature of planning. 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.

Ries wrote that startups operate in an environment of “extreme uncertainty” in which it is impossible to know whether the product they have developed is one that consumers will value. “We must learn what customers really want,” he advised, “not what they say they want or what we think they should want.” The only way to do that is to “experiment.” Create a “minimum viable product,” put it in front of consumers, and see what happens. With lessons learned, change the product, ship again, and repeat the cycle. Ries called this the building phase, as multiple iterations gradually build the final product. I would call it the planning phase, as the design of the product evolves following the dictum “Try, learn, again.” Semantics aside, the only real difference is the method of testing.

one reason Theranos got into trouble was that it used a Silicon Valley model commonly applied to software, which can afford to have initial glitches and failures, for medical testing, which cannot.

The fact is that a wide array of projects—events, products, books, home renovations, you name it—can be simulated, tested, and iterated even by amateurs at home. Lack of technology isn’t the real barrier to adopting this approach; the barrier is thinking of planning as a static, abstract, bureaucratic exercise. Once you make the conceptual shift to planning as an active, iterative process of trying, learning, and trying again, all sorts of ways to “play” with ideas, as Gehry and Pixar do, will suggest themselves.

judgment and improve project planning and leadership. Aristotle said that experience is “the fruit of years” and argued that it is the source of what he called “phronesis”—the “practical wisdom” that allows us to see what is good for people and to make it happen, which Aristotle saw as the highest “intellectual virtue.”[1] Modern science suggests that he was quite right.

although I hadn’t yet studied IT, the plan made me nervous. We didn’t know of anyone who had done something like what we were planning. And if my studies had shown anything, it was that going first is dangerous. So I suggested that a team from the Court Administration visit other countries to investigate. If we found that others had done such a thing already, we could learn from them. If we didn’t, we could wait. Except that wasn’t what happened. The team duly traveled to various countries and reported back in a board meeting. Had anyone else done this? “No!” was the excited reply. “We will be the first in the world!” I had mistakenly thought that my fellow board members would see being first as a strong argument against going ahead. In fact, they took it as a reason to charge onward. The desire to do what has never been done before can be admirable, for sure. But it can also be deeply problematic.

Drawing on data from five hundred brands in fifty product categories, they found that almost half of pioneers failed, compared to 8 percent of settlers. The surviving pioneers took 10 percent of their market, on average, compared to 28 percent for settlers.

Technology is “frozen experience.” If we see technology this way, it is clear that, other things being equal, project planners should prefer highly experienced technology for the same reason house builders should prefer highly experienced carpenters. But we often don’t see technology this way. Too often, we assume that newer is better. Or worse, we assume the same of something that is custom designed, which we praise as “unique,” “bespoke,” or “original.” If decision makers valued experience properly, they would be wary of a technology that is new, because it is inexperienced technology. And anything that is truly “one of a kind” would set off alarm bells. But all too often, “new” or “unique” is treated as a selling point, not something to avoid. This is a big mistake. Planners and decision makers make it all the time. It’s a main reason that projects underperform.

the scientist and philosopher Michael Polanyi showed, much of the most valuable knowledge we can possess and use isn’t like that; it is “tacit knowledge.” We feel tacit knowledge. And when we try to put it into words, the words never fully capture it. As Polanyi wrote, “We can know more than we can tell.

Markets are complex systems. Energy production and distribution are complex systems. Manufacturing and transportation are complex systems. Debt is a complex system. So are viruses. And climate change. And globalization. On and on the list goes. If your project is ambitious and depends on other people and many parts, it is all but certain that your project is embedded in complex systems.

By now you know the solution to the puzzle I discussed at the end of the previous chapter: Only five project types—solar power, wind power, fossil thermal power, electricity transmission, and roads—are not fat-tailed, meaning that they, unlike all the rest, do not have a considerable risk of going disastrously wrong. So what sets the fortunate five apart? They are all modular to a considerable degree, some extremely so.

We would add to this that regarding cost overruns there is no indication that the calamity identified by the Major Projects Association is limited to the public sector. Private sector cost overruns are also common.

We therefore conclude that cost overrun has not decreased over time. Cost overrun today is in the same order of magnitude as it was ten, thirty or seventy years ago. If techniques and skills for estimating costs and avoiding cost overrun in transport infrastructure projects have improved over time, this does not show in the data. No learning seems to take place in this important and highly costly sector of public and private decision making.

Nevertheless, with respect to cost development, there is a striking similarity between these and other major projects: there is a tendency towards a significant underestimation of costs during project appraisal. This is also the conclusion we draw when we review data from a large number of major transport infrastructure projects, and from other types of project as well.

Most big projects are not the first, tallest, biggest, or anything else too remarkable. They are relatively ordinary highways and rail lines, office buildings, software, hardware, change programs, infrastructure, houses, products, movies, events, books, or home renovations. People don’t expect them to be grand cultural landmarks and legacies. Nor do they demand that they be wildly creative and unusual. But they do want them to be excellent. They want them to finish on budget and on time, do what they’re supposed to, do it well and reliably, and do it for a long time. For such projects, experience can help enormously. If there is a design—or a system, process, or technique—that has delivered many times before, use it, or tweak it, or mix-and-match it with similarly proven designs. Use off-the-shelf technologies. Hire experienced people. Rely on the reliable. Don’t gamble if you can avoid it. Don’t be the first. Remove the words custom and bespoke from your vocabulary. They’re a desirable option for Italian tailoring if you can afford it, not for big projects.

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

tacit knowledge.

Whatever the relevant mechanisms of testing, from simple trial and error to sketches, woodand-cardboard models, crude videos, simulations, minimum viable products, and maximum virtual products, test everything from the big ideas down to the small details. With good testing mechanisms that make failure relatively safe, take calculated risks and try new ideas.

Use off-the-shelf technologies. Hire experienced people. Rely on the reliable. Don't gamble if you can avoid it. Don't be the first. Remove the words custom and bespoke from your vocabulary. They're a desirable option for Italian tailoring if you can afford it, not for big projects.

Imaginative leaps belong in planning, not delivery. When stakes and stress are low, we are freer to wonder, try and experiment. Planning is creativity's natural habitat.

It seems hard to fathom. But fathom it we must, because although the details of this story may be extreme -- particularly the speed -- it is fundamentally typical of how big projects come together. Purposes and goals are not carefully considered. Alternatives are not explored. Difficulties and risks are not investigated. Solutions are not found. Instead, shallow analysis is followed by quick lock-in to a decision that sweeps aside all other forms the project could take.

Everybody wants things done yesterday, but “what I’m constantly trying to do is slow things down,” he says. Take time to develop ideas. Take time to spot and correct problems. Do it on the drafting table, not the construction site. “If you slow things down sometimes and you take a second and a third look, you end up making less mistakes,” he says. “And that means [the project gets done] faster.

They figure they have time to catch up, precisely because the delays happen early. That sounds reasonable. But it’s dead wrong. Early delays cause chain reactions throughout the delivery process. The later a delay comes, the less remaining work there is and the less the risk and impact of a chain reaction. President Franklin Roosevelt got it right when he said, “Lost ground can always be regained—lost time never.”[28] Knowing this, we advised measures that would cut the probability of early delays and chain reactions.

Recall what Benjamin Franklin wrote in 1758: “A little neglect may breed great mischief.” This is why high safety standards are an excellent form of risk mitigation and a must on all projects. They’re not just good for workers; they prevent little things from combining in unpredictable ways into project-smashing black swans.

The third strategy was all about people. We perform at our best when we feel united, empowered, and mutually committed to accomplishing something worthwhile. Much psychological and organizational research tells us so.[8] It’s also common sense. There’s a word to describe a group of people who feel that way: they are a team.

You set a man to work in the morning and you’ve put the things there that he wants, then you get a good day’s work. You start them off in a bad way, and you know the next eight to ten hours, it’s going to be very difficult.” Multiply that by thousands of workers and thousands of days, and you do indeed get something massive.

Lacking experimentation and experience, what you learn as you proceed is that the project is more difficult and costly than you expected—and not just the single project you’re doing but the project type as such. Obstacles that were unknown are encountered. Solutions thought to work don’t. And you cannot make up for it by tinkering or starting over with revised plans. Operations experts call this “negative learning”: The more you learn, the more difficult and costly it gets.

The problem isn’t nuclear power; many other project types have track records only somewhat less bad. The problem lies in the way huge projects like Monju are typically designed and delivered. When we understand that problem, we will find a solution to building big that is, paradoxically, small. In fact, it is tiny, like a single block of Lego. But it’s remarkable what you can do with blocks of Lego, as we will see.

Perhaps most important, management started celebrating progress against inchstones and milestones. The spiral of negativity was replaced by an updraft of accomplishment that everyone could feel. The whole turnaround process took ninety very intense days and nights.

But if a project is falling behind, managers don’t want to wait until the next milestone arrives before they are alerted to the delay. They need to know and act as quickly as possible. Our data were so detailed that we could make a further set of subforecasts, so we invented “inchstones.” And we specified in detail beforehand who would be responsible for what. If MTR started falling behind under the new schedule, managers would know immediately, and they would know who must act, so no time would be wasted.

A proverb that originated in the Middle Ages and comes in many forms tells us, “For want of a nail, the shoe was lost. For want of a shoe, the horse was lost. For want of a horse, the rider was lost. For want of a rider, the battle was lost. For want of a battle, the kingdom was lost.” This version was published by Benjamin Franklin in 1758, and he introduced it with the warning that “a little neglect may breed great mischief.

But fathom it we must, because although the details of this story may be extreme—particularly the speed—it is fundamentally typical of how big projects come together. Purposes and goals are not carefully considered. Alternatives are not explored. Difficulties and risks are not investigated. Solutions are not found. Instead, shallow analysis is followed by quick lock-in to a decision that sweeps aside all the other forms the project could take.

In Kahneman’s laboratory experiments, the stakes are low. There is typically no jockeying for position, no competition for scarce resources, no powerful individuals or organizations, no politics of any kind. The closer a project is to that situation, the more individual psychology will dominate, which is what Kahneman, Amos Tversky, and other behavioral scientists have found. 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.[

Thinking from right to left is demanding because it’s not natural. What’s natural is WYSIATI—What You See Is All There Is—and focusing exclusively on what is in front of you. And when you are obsessed with a cool idea or you are deep into designing the project or buried in a thousand and one details, the box on the right is nowhere to be seen. That’s when trouble starts.

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.

But “work backwards” also fails when planners aren’t compelled to nail down what’s in that final flowchart box on the right and forced to think from right to left. Without that, it’s easy to get consumed by the blizzard of details and difficulties that arise during the planning of any project, while the goal, which was only vaguely understood to begin with, fades from view. Then the project can veer off in unpredictable directions, as David and Deborah’s kitchen renovation did so spectacularly.

And because it’s a participatory process with the relevant people deeply involved from the beginning, it ensures that the concept that finally emerges is seen with equal clarity in the minds of everyone from the person proposing the project to the CEO. Everyone is on the same page from the start.