Why Projects Fail

The same reasons for the epidemic of project failures occur with alarming frequency.

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Common Causes of Failed Projects

Only one out of three projects is completed successfully. Nearly half are either late, over budget or did not deliver on all of the key outputs. Almost one in four are either cancelled or left to gather dust after delivery.1 This dismal track record is only growing worse as budgets tighten and expectations rise.

What can a manager do to beat the odds? The answer is to learn from the mistakes of the past. Though no two projects are alike, the reasons for failure are remarkably consistent.

Loose sponsorship and executive leadership

Many studies show that top management support is a key reason projects succeed. Conversely, the absence of clear direction from the top is also a major cause of failure. Nearly seven in ten companies run some projects without effective sponsorship.2 Sponsors and senior executives not only need to provide vision and resources, they must also be willing to exercise their authority on behalf of the project when necessary.

Project manager inexperience

Many projects are run by people who have no previous project management experience and, after failure, never manage another project again. The result is no one learns from past mistakes, which tend to be repeated. Project managers must have tools, training and experience, as well as the ability to apply that knowledge to specific issues that arise during the course of the project.

Poorly defined organizational objectives

It may sound absurd to begin a project without clearly defined goals, but this is a leading cause of project failure. Research reveals that almost 60% of companies fail to consistently align their projects with corporate strategy.2 A danger here is the complexity of project charters and other initiation documents that can obscure unclear organizational objectives. On closer reading, many such goals turn out to be neither objective nor measurable. This problem is then compounded at the other end of the project. After project delivery, nearly 60% of organizations do not formally evaluate whether the project delivered the expected business benefits.2

Scope creep

It's hard for a project to succeed when its boundaries are constantly changing. Yet studies show poor scope management contributes to some 40% of project failures. Without effective change control in place, the inevitable requests for new features without any change in the budget will result in an overwhelmed team, missed deadlines and resource shortages.2

Poorly defined requirements

As many as 80% of project failures are tied to poor requirements gathering and business analysis.3 All work on the project should be built on a firm foundation of understood and agreed business requirements. Project teams are doomed to fail unless they have a solid understanding of how the business operates and will be changing with the implementation of the project.

Lack of stakeholder consultation

Stakeholders are people with an interest in the outcome of the project or its processes. Major stakeholders play an essential role in defining requirements and scoping out the work at the beginning and in providing feedback as the work is proceeding. Communicating and consulting with stakeholders throughout the entire project is a time consuming task and is often neglected. The inevitable result is project deliverables that bear little resemblance to what was in the minds of the key stakeholders.

No risk management plan

Understanding risk and compiling plans for dealing with it are critical components of project management. Poor risk management is a leading cause of project failure, with more than three in four project managers not dealing with risk consistently.2 Understandably, failing to assess what might happen and planning for the mitigation of negative impacts causes missed deadlines, budget overruns and, ultimately, failed projects.

Unrealistic project estimates

For anything larger that a small project, specific costs, schedules and deliverables are always difficult to discern when a project is conceived. In organizations where the only projects that get rejected are the ones with accurate estimates, realistic projections are deliberately hidden. Where accuracy is the goal, breaking the project into phases and applying a structured analysis will help determine reasonable projections.

Experienced project managers appreciate the importance of understanding how the project deliverables will be applied to generate the expected business benefits. In addition, they recognize the points of potential project failure; all of the snags that can lead to incomplete results or even a catastrophic crash. Are you adequately skilled to take on the job of a long or difficult project? What measures have you taken to give your project the best chance of success?

(For a summary of project management studies encompassing the last decade and more, see Dan Galorath.4)

End Notes:

  1. "New Standish Group report shows more projects failing and less successful projects" (2009). The Standish Group,
    http://www.standishgroup.com/newsroom/chaos_2009.php
  2. "KPMG New Zealand Project Management Survey 2010" (2010). KPMG,
    http://www.kpmg.com/NZ/en/IssuesAndInsights/ArticlesPublications/Documents/Project-Management-Survey-report.pdf
  3. "Flawed Requirements Trigger 70% of Project Failures" (2006). Info-Tech Research Group,
    http://www.infotech.com/research/flawed-requirements-trigger-70-of-project-failures
  4. Galorath, Dan (2008). "Software Project Failure Costs Billions – Better Estimation & Planning Can Help",
    http://www.galorath.com/wp/software-project-failure-costs-billions-better-estimation-planning-can-help.php

Expert View Author: AIMM MAITD

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