Overcoming Estimating Bias and Group Think


Preparing proposals to land contracts these days can be challenging especially if your company operates in a highly competitive market.   Compiling a solid plan, a project budget, and marketing materials should be easy for any pro, right?  Yet, tight deadlines seem to be the norm these days. This condition alone is enough to create an atmosphere ripe for costly glitches or errors.   So, what’s a good strategy for avoiding errors?

Before offering a solution, let’s look at where problems may lie.  In my experience, there are two glaring points along the way where there is high potential for a gaffe:

1) Lack of proper review –  Failure to establish a consistent process to screen out costing or plan errors can lead to a tarnished reputation, margin erosion, or even “buying” the project.  Also, a limited or nonexistent review is a missed opportunity to gain team buy-in.

2) Unbridled optimism –  Not only is there a tendency for project estimators to be optimistic, this bias can carry through to the final review stage.   Once managers collectively begin reviewing a final proposal, the rosy outlook can gain momentum.  Overconfidence in capabilities or taking unnecessary risks can damage credibility down the road.

Wait a minute?!  I need to rely on a review team, but that same team could be biased?  Yes and yes!  Yet, it all can be easily managed.  Check this out: Gary Klein is a psychologist who has been a guest of the podcast, Freakonomics.  He came up with a concept known as a pre-mortem.  Simply, it is a process of analyzing what could go wrong before it actually does.   It’s an easy way to keep overconfidence in check.

So, the next time you have a proposal due, gather a great team.   Make it a priority to welcome their expertise and creativity, but try mixing it up with a pre-mortem.   Overcome natural group think tendencies by asking one easy question: “If this project were to fail, where and when would it happen?”  It just might save your team from future grief in the more typical post-mortem.

Please drop a note in the reply section below. I’d love to hear about your successes and best practices when preparing proposals!

It’s your move.  Make it a great one!





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