The rebuilding of the World Trade Center (WTC) is behind schedule and over budget. According to the executive director of the Port Authority, Christopher Ward "The schedule and cost estimates for the rebuilding effort that have been communicated to the public are not realistic," (from AP article). I can only say "Duh!"

All decisions are based on estimates of the murky future. In most public works projects honest estimates would never get them funded. It is much easier to get something approved with optimistic time and cost estimates and then, once its started ask for more. However, even if you are not playing politics, making estimates is hard work that is not well recognized for its impact of organizations

Let's get this straight. Even if you are trying to be as accurate and honest as possible, making an estimate is a highly uncertain undertaking. And, most decisions are based on many, interdependent estimates. In a simple experiment, I asked hundreds of people to estimate the length of time needed to clean some dishes. I gave them a detailed list of the dishes, and a photo of them, the sink, and cleaning materials. I asked them to estimate how long to clean the dishes. Depending on how I worded the question, the average time estimated was anywhere from 17 to 32 minutes and standard deviation was as high 10 minutes. In other words, asking for an estimate for this simple, daily task isn't a whole lot better than using a random number generator set to give an estimate in the range of 10 -40 min.

If this simple estimate is so bad, think of what happens with complexity, or for tasks that have not been done before.

What is to be done then. The only solution I know is to use methods that account for uncertainty. For planning , the old PERT system made an effort at this (much improved method is Critical Chain). For decision making, I have been pushing people for years to include uncertainty in their decisions making process.

In decision making, it is not only the estimates that are uncertain, it is the targets that you are trying to achieve that are uncertain. More on this in a later blog.

Back to the World Trade Center, I believe that if there had been a non-political effort at making decisions, and uncertainty had been included in the estimates, the plan would have been far less grandiose. However, the WTC should be grandiose, shouldn't it? This leads me to believe that honest estimates may not be the bast for all situations. I would hate to run or work for a business with that in mind.