How to avoid expensive mistakes
Imagine this scenario: Julie’s doctor is accustomed to self-pay patients. A large proportion of the practice is made up of patients who don’t have traditional insurance. Her doctor wants to order an expensive test. The staff let her know they’ve negotiated a discount with the test provider. If she pays through the doctor’s office, she’ll pay only 10 to 20 percent of what the company would bill her directly.
Jan goes to a different doctor, who has few self-pay patients. Her doctor orders the same test, but Jan gets billed by the test provider. It’s several thousand dollars. When Jan calls the test provider, she learns there is a discounted self-pay rate, but it’s only available if you select that option before the services are rendered. That’s news to her.
We’ve all been blindsided by expensive errors where a way to prevent them existed, but we didn’t know that. Perhaps you take your first cruise only to end up with a room above the nightclub. Maybe the cost of a kitchen renovation or round of fertility treatment blows out. Perhaps you missed an application deadline for an excellent free preschool and have to pay for an alternative.
We can’t avoid all mistakes. If we tried, we would never move forward with anything new. However, some self-management principles can help us foresee and sidestep certain errors.
1. Work With People Who Are Optimizing for the Same Thing You Are
Back to Jan and Julie: One doctor’s office was focused on helping self-pay patients keep their costs down. The other wasn’t. This isn’t unusual. A similar situation could happen with a mechanic who mostly works with insurance companies and doesn’t put much energy into serving cash-paying customers.
In other cases, cost might not be what you care about most. For example, if you’re doing a renovation and have to stay in an Airbnb while it’s completed, you’ll probably want to work with a contractor who values speed.
Whatever your priority, it’ll be hard to get people to care about it unless they do already.
2. “Be in Front of the Airplane”
In aviation, there’s a concept of staying in front of the airplane. This means getting ahead on tasks during unstressful phases of flight. For example, you pre-program the radio frequency you’ll need to change to next.
We can take this approach to many projects. When able, we can get the tasks done in advance, during quieter phases, so that rushing or task saturation during busy crunch points doesn’t cause errors.
This requires thinking through future decisions and actions. Think of it as looking at a restaurant’s menu online before you go, rather than when you’re ravenous, it’s loud, and the server is standing there. For example, if you’re renovating your house, you might imagine the decisions your contractors are going to ask you to make next week.
3. Use Resources to Be Better Prepared for High-Value Opportunities
Another type of costly mistake is messing up an important opportunity. Imagine you’re submitting an internship or job application to your dream company, or you’re preparing for an interview with them.
There might be resume or interview prep services that can help you anticipate and practice for their process. They’ve been through it many times, but you haven’t.
Where there isn’t an industry of people who provide this preparation, consider how you could replicate it.
Use all your resources to be as prepared as you possibly can. Insiders are often surprisingly generous in sharing their experiences and tips when someone diligent reaches out.
4. Learn About Common Errors and Make Concrete Plans to Avoid Those
Here’s another example from air pilots. A checkride is the practical test at the end of a phase of training. Before you can take a checkride, you need to meet particular experience requirements, have specific endorsements in your logbook from your instructor, and show up with an airworthy airplane.
Pilot examiners may be booked months ahead, but many checkrides get cancelled the day of. They can’t even be started because, on reviewing the applicant’s paperwork, the examiner discovers they’re not eligible for one of the three reasons mentioned.
This can be very expensive. You might forfeit the exam fee (entirely or partially). You might waste the plane rental cost if you flew to the examiner’s airport to take the checkride only to learn you can’t. And you might need to keep paying for lessons for weeks or months to keep your flying skills sharp until you can get another test.
Any applicant who does a little searching can dig out that these are three big categories of errors, and learn the clear ways to avoid them. Yet applicants still show up with logged flights that are .1 of a mile too short to meet the strict experience requirements.
5. Search Out Data and Don’t Expect to Be the Exception
A common cognitive bias is that we expect to be the exception. We might know that time or budgets running over by 5o percent is an industry or provider norm, but expect our experience to only be a 5 or 10 percent overrun.
Search out data about reality versus the best-case scenario. Plan for what’s typical rather than what’s ideal. When we assume what usually happens will happen to us, we can often handle those scenarios more smartly (see Point 2 about being in front of the airplane).
Adopt General Procedures That Work Across Diverse Scenarios
Almost by definition, an expensive project is important to you. We shouldn’t become so obsessed with avoiding mistakes that we don’t pursue what’s important to us. We can’t avoid all errors when undertaking an endeavour that’s new to us.
That said, while we can’t plan for every specific scenario, we can develop some good general self-management procedures for avoiding expensive mistakes that apply across many diverse scenarios. The five here are a good start.