CBR Briefing #13

Feb 23, 2018

How rethinking deadlines could save managers time and money
Managers may be overestimating the time it takes to complete a task—and overpaying contractors in the process

A long deadline makes managers think a task is more involved.
  • Managers work under deadlines to complete projects. They plan tasks for employees and budget for the amount of time each one will take. But managers could be suffering from a bias when estimating the time a worker needs to perform a task, according to Chicago Booth’s Oleg Urminsky and PhD student Indranil Goswami.
  • Managers are heavily influenced by deadlines, say the researchers. A long deadline makes managers think a task is more involved, so they tend to allow more time than necessary.
  • To simulate a corporate environment, the researchers asked some participants in a series of studies to assume the role of workers while others acted as managers.
  • In one study, workers given more time to complete a puzzle took only slightly more time to do so than those given less time (see chart). However, a longer deadline made most managers expect that workers would take much longer than they actually needed.
  • This bias can lead managers to overpay contractors. In another study, most managers chose a flat-fee contract over a time-based one for tasks with a longer deadline. But managers could have saved money by opting for a time-based contract instead, because a project with a longer time limit may not take as much time as its deadline suggests.