Project Failure and Rescue

by on 20/09/2009

mountain of paperwork and help sign

Latest research shows that only a third of all IT projects are delivered on time, on budget and with all required features and functions.  This article looks at the research into project failure, how to measure project success and what can be done if a project is failing.

FITM’s IT review process includes a project review which measures the state of current projects to highlight problems and potential issues and looks at project management tools and methodologies.  FITM partners with a specialist project rescue company who are experts at finding and implementing solutions for failing IT projects.  Please contact FITM for further information.

Introduction

Are you worried about the state of your IT projects?  About whether they will complete on time and on budget?

The latest research shows that you are right to be worried: a quarter of all IT projects end up more than 50% over budget and this costs the UK £256m per year.

These stark headlines come from research by CA which was published in September 2007. (1)  The research also reveals that a third of all projects end up over budget and that typical over-spend is between 10 and 20%.  This despite the fact that IT Directors are still principally being judged on whether they deliver within budget rather than delivering strategic value to the business.

Other research on this subject is thin on the ground.  The Standish Group annual CHAOS Report looks specifically at application development projects and so is not as appropriate.  The 2009 report shows only 32% of these projects to be successful, with the remaining 68% either “challenged” (late, over budget and / or less than promised functionality) or failed (cancelled or never used). (2)  This is an increased failure rate over previous years.  Jim Crear, Standish Group CIO says “this year’s results represent the highest failure rate in over a decade”.

Galorath analysis shows that about 21% of a large company’s IT budget is wasted due to these issues. (3)

This article looks at current research into the causes of project failure, how to measure project success and what can be done if a project is failing.

Causes of Project Failures

The CA research reveals the three primary causes of project budget over-spend in IT projects, although the same applies to any project:

  • inaccurate scoping and forecasting (50%)
  • “scope creep” – project scope increasing during implementation (39%)
  • issues with interdependencies and conflicts between projects (36%)

Key to each of these causes is the skill of project resources.  The combination of inexperienced or inadequately trained project managers together with poor leadership at all levels means that the issues that a project inevitably experiences are not detected quickly and are not resolved efficiently.  An experienced project manager, working with a strong project sponsor, will set and manage realistic project expectations.  They will track project progress and highlight and resolve issues as they occur.

In my opinion, some project management methodologies are overkill, especially for SMEs.  However, it is essential that there is a formal approach to selection, management, tracking and reporting of projects.  CA found that half of all companies are still using spreadsheets to manage IT initiatives and that 40% of IT directors do not have complete visibility over the initiatives that they are running and so cannot see when projects are threatening to run over budget.

Measurement of Project Success

Are You Doing The Right Projects?

A fascinating paper by Forrester discusses what metrics IT departments should use to report to business executives. (4)  The first of their five metrics discusses the alignment of IT investment to business strategy.  I.e. whether a company is doing the right projects – those that are strategic and will really make a difference to your business.  CA finds that for 60% of companies, less than half of their projects are considered strategic.  Half of all companies use delivery on budget as the key measure for evaluating project success and only a third measure success in terms of alignment with business objectives.

The second Forrester metric looks at the cumulative business value of IT investment.  Here they sort all IT projects by their net present value to show, among other things, which projects have a positive return.  CA findings are that only a quarter of companies carry out an ROI calculation based on business value delivered.

How Should You Measure The Success of a Project?

The most common measures of project success are whether the project completed on time, whether it completed on budget and whether it delivered all requirements.  These measures however do not consider the quality of the finished product and it frequently happens that a project will compromise quality in order to deliver on time or to budget.

Time, budget and requirement measures are used by most project managers, but in fact do not represent the criteria by which stakeholders (project managers, their teams, project sponsors, top management and users) measure success.  This wider group are far more concerned about product, use and value, in that order.

Measurement of use and value is complex, and cannot really be done until the project is complete.  Successful measurement of project success requires ongoing measurement of progress against timescale, budget and requirement while the project is active and shortly after the completion of the project.  This should be followed by measurement of benefit realisation later, once the value to the business can be measured.

What Can Be Done?

The good news is that most failing projects can be salvaged.

Forrester Research recommends concentrating on the worst flaw. (5)  This tactic works because the worst problem is usually at the root of the other challenges.  Their report also notes that stakeholders usually support efforts to resuscitate failing projects because the business gets no return on investment if the project is abandoned.  A project rescuer firstly needs to “know the project’s business case and ensure the stakeholders see the real value in pushing the project to completion”.  Often salvage efforts begin by calling a halt to work to alert stakeholders, buy time for planning and “paint a target” on the root cause of the problem.

Next Forrester suggests that companies assign a “fixer” to the core problem and add clarity to fuzzy requirements.  This “fixer” should not be part of the project team, so that he or she is not burdened by prior decisions.  The project rescuer needs to be highly skilled in project management as well as having the right people skills to deal with the project team and stakeholders.  External project rescue companies have emerged in the last few years, and are an excellent way to bring projects back on track.  This is not a cheap process, but is the most cost-effective way to ensure that projects recover and achieve their business objectives.

FITM

FITM’s IT review process provides a review of your entire IT environment, costs and strategy.  It consists of eight topics, one of which is a thorough review of IT projects.  As well as looking at the current status of any ongoing projects and results of past projects, this will look at what project management tools and methodologies are used in a company and make appropriate recommendations.

FITM partners with a specialist project rescue company who are experts at finding and implementing solutions for struggling and failing IT projects.  They provide a neutral assessment of the underlying issues in a project and place skilled resources in key positions to turn projects around effectively.

Bibliography

  1. CA. Over budget IT projects costing UK Plc £256m* per year. 2007.
  2. Standish. CHAOS Summary 2009. 2009.
  3. Galorath. 2008.
  4. Forrester Research, Inc. The Five Essential Metrics For Managing IT. 2008.
  5. —. Rescuing Train Wrecks: Putting Derailed Software Projects Back on Track. 2007.

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