Overrun in big IT projects leads to one in three failures

One-third of big IT projects are likely to get derailed after they have been running for two years, according to research.

One-third of big technology projects such as the National Programme for IT are likely to get derailed after they have been running for two years, according to research.

Contracts that are short are more likely to succeed than low-budget projects that last a long time, found the study from the University of Oxford’s Said Business School

The research looked at around 2,200 projects worth a total $260bn in the US and Europe, split 35% across the private sector, with the rest the public sector.

Of the projects documented the average cost overrun for ICT was 27%.

In reality 15% of IT and infrastructure projects go out of control. In engineering it is half that, said Alexander Budzier author of the Black Swan Management report.

Speaking at the IT Directors Forum he said every extra year projects run over schedule increases the overall risk by around 5%.

“A lot of it has to do with complexities of projects. The indicators that flare up at the post mortem tend to be that this was seen as a ‘unique project’, it faced organisational resistance, there weren’t effective structures in place, or good team communication. Those social factors are hard to forecast.”

Budzier said the UK public sector wasn’t  uniquely bad in the way it does IT, despite its reputation, and that the private sector was as prone to failure in this area.

The establishment of the government’s Major Project Authority, designed to flag up when big projects were in trouble was an effective way of managing risk, he said.

“We collected data on two private sector organisations that did something on a smaller scale by also building project management capabilities and a talent pool. Once those two organisations had installed a project management office to screen project proposals and create transparency, cost overruns went down so much that they were under spending on average by 30%. Transparency of [how the projects were developing] was directly tied to performance. That process took up to five years.

“There is a high level of ambition and speed in what the MPA is doing, the fact it has got highly skilled people in there and drawing from people internally is a good sign it is to be taken seriously. For example, it achieved the review of mega projects in a short time frame. 

More than half of major government projects worth £376bn are behind schedule, according to the head of Whitehall's MPA.

But Budzier said the figure of 50% of projects not running to time and budget was not surprising and aligned with industry averages. The real issue is how many project run out of control and could become write-offs, he said.

 

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Would be interesting to know why Alexander Budzier (?) felt that "social factors are hard to forecast". My experience is that they are often screamingly obvious.

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The reality for any organisation today regardless of whether
it operates within the public or private sector is that six months is probably
the maximum time any management board can prioritise a project before they need
to turn their attention to something else.

Once a project runs on for much longer, there are all sorts
of problems that start to come into play. For example, a key element to
delivering successful outcomes is strong leadership. The longer a project
lasts, the less likely it is for the leadership team to remain in place. Yet a
change in leadership is often one of the main factors in throwing a project
off-course, because any new leader coming in will inevitably want to quickly
establish their authority by ringing the changes.

Another issue with ICT projects is that technology has a
tendency to move on quite quickly.  Over a two-year time frame, new
technology will undoubtedly come along which there will be a pressure to adopt,
hence putting timescales and costs at risk.  This is where strong change
control is essential.

Without a realistic and focused timeframe established at the
outset, project sprawl and spiraling costs are almost inevitable. But if
stakeholders and project teams fully appreciate the potential consequences of
an overrun at the start of a project, then they are more likely to accept and
adhere to more stringent delivery deadlines, meaning ultimately, the likelihood
of project success increases significantly.

Ed Haysler, Director, LOC Consulting http://www.locconsulting.co.uk...

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