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Planning is a basic management function that involves the identification of objectives, the formulation of strategies to achieve a set of objectives, and the definition of means to meet objectives in an efficient and effective manner. Nevertheless, the process of planning tends to be carried out in a mindless manner, leading to a ‘straightjacket’ approach that constrains managers in dealing with the unexpected.

Key Facts

The planning process in organisations may suffer under the following three constraints:

• Technical constraints: Forecasting inaccuracies are suggested by some studies to be caused by technical errors. ‘Technical error’ refers to unreliable or inaccurate data, the absence of data or the use of imperfect forecasting techniques. The lack of reliable or accurate data (e.g. from previous projects) may be due to the context in which forecasting is applied. Meyer et al. (2002), for example, compare new product development projects in four industries in terms of four dimensions – the level of chaos (unpredictability in the initial and underlying conditions), unforeseen uncertainty (the level of unpredictable emergence during the project), foreseen uncertainty (the level of predictable emergence during the project) and the level of variation (the difference between this and previous projects).

• Political: Some researchers have stated that there are systemic problems in providing accurate plans, even to the point where purposeful underestimation of costs and overestimation of scope and time are common to gain approval and funding. For example, pre-sales teams, eager to get their ‘projects’ funded, resort to a form of deception, over-promising what their project will do and understating how much it will cost and when it will be completed.

• Psychological: Political ‘deception’ of project forecasts is an intentional behavioural strategy; conscious bias is introduced to increase the probability of gaining project acceptance. In contrast, psychological bias subconsciously introduces optimism into the planning process. Yates (1990) confirmed the presence of two factors that are relevant here: over-optimism in estimates, and overconfidence in the reliability of those estimates. The causes behind these two factors have been studied extensively. For instance, when considering future events, people generally have an overly positive view of themselves, seeing their outcomes as being more positive than those of other people. They see themselves as less likely to experience negative events and more likely to experience positive events.