I would venture to say anyone out there that has ever sat in a programme or schedule review has been asked by their management team, “How does it compare to our benchmarking?”
In the construction planning world, benchmarking of completed projects remains one of the most used tools in the project team’s toolbox, but as my title suggests, is benchmarking the important tool we make it out to be, or is it a heuristic, a mental shortcut we take to avoid having to answer the substantially more complex question of “Can the Project be built in this time frame?" Maybe it is both.
History is littered with projects that have had significant time overruns, usually associated with a large cost overrun. It is likely that at some point, if not multiple points, through the tender process the project was benchmarked as achievable (typically even factoring in the known risks). I often find that instead of questioning our benchmarking, we focus on all the other factors that can contribute to a project's failure. One of the factors I don’t believe receives sufficient attention is the effects of anchoring.
So, what is anchoring or the anchoring effect? It is a cognitive bias that can affect our decisions when they are influenced by a particular reference point or “anchor”, and these effects are not restrained to mundane situations.
In an experiment conducted by Gregory B. Northcraft and Margaret A. Neale, real estate agents were asked to assess the value of a house that was on the market. In the experiment, the real estate agents were given a book of information that included an asking price. Half of the real estate agents were given an asking price 12% above the actual listing price, and the other half were given an asking price 12% below the actual listing price. In the end, the real estate agents were found to have an anchoring effect of 41%, while a group of business school students, who admitted to being influenced by the anchor, had an anchoring effect of 48%.
“But Mike, what does any of this have to do with project benchmarking?” I hear you say.
Well, benchmarking is anchoring and, as numerous experiments have shown, even as project professionals we aren’t immune from the cognitive bias it may impart on our decision making.
Now, of course, not every delayed project is caused by benchmarking, and in many cases optimism bias that a project could be completed faster than available benchmarking could be the culprit.
However, it is critical that we remember our susceptibility to the priming effects of benchmarking, and anchoring in general, when reviewing whether a project’s overall duration is achievable or not.
Here at Zancon, we can help to combat cognitive bias through expert review of all the critical ingredients that an achievable construction programme is made from. So, reach out to our team to see how we can help on your next project.
- Mike Young