Construction projects, or any project for that matter, and winning in the stock market have one thing in common-rarely do both go as planned. One reason for this is a quirk of human behavior called Conjunctive Events Bias.
Conjunctive events are a series of activities that lead to an expected result. For example, when performing construction work on a house, we need foundation people, carpenters, plumbers, electricians, and painters to all work in a logical sequence in order to get the job done. Unfortunately, the project frequently takes longer than expected because we tend to overestimate the likelihood that all these subcontractors will arrive and perform their work on time.
For example: If there is a 90% chance that each of these five different subcontractors will arrive and finish their work on time, the overall probability of the full job being finished on time is only 59%. (.9 x .9 x .9 x .9 x.9 = 59%)
Essentially, when confronted with large amounts of data regarding the management of any project, (no matter what industry or profession you’re in), we tend to create “mental shortcuts” that help us make decisions. These “mental shortcuts” lead you towards how long you want that project to take vs. how long the project will actually take.
Conjunctive Events Bias could be the main reason why project management is so challenging – and also why Lean Project Management is so successful!
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