Top 5 causes of IT project failures - an insurer's view

On 24 November 2009, insurer Hiscox and Computer Weekly held a round-table in London on the impact of project failure on UK IT consultants.

The delegates discussed the top five causes of IT project failure, as put together by Hiscox, which has extensive experience of the insurance claims that follow the failure of IT-based projects and programmes. On behalf of Computer Weekly, I chaired the round-table.

These are the top five causes of IT project failure and subsequent professional indemnity claims, as compiled by Hiscox, which has added some of its comments:

1. Commencing work too early

– Often, both parties are keen to begin the project before the necessary due
diligence has taken place.

– This can result in problems much further down the line and, in fact, extend, rather than shorten, the length of the project.

2. Ambiguous contract

– Many of the later problems arise because the contract does not adequately lay out roles and responsibilities, as well as the scope of work,.

– As exhaustive a contract as possible is a must for a successful IT project.

3. Inadequate initial scoping of the project  

– ‘It didn’t do what they said it would do’

– Often, the supplier and customer enter into a contract before both parties are fully aware of what needs to be delivered.

– This can mean both parties underestimate the complexity of the task and, therefore, the resource required.

4. Inadequate project and contract management

– A common issue is the failure to ensure that the contract is carefully followed during a project. Claims can be difficult to solve when the parties have both disregarded the contract or waived rights under it.

– Parties often fail to adhere to change control processes and suppliers agree to undertake extra work without making allowances for the cost and time associated with doing so.

– Parties state they are reserving their rights or believe they can rely on “non-waiver” clauses, whereas in fact their conduct has had the opposite effect.

5. Failure to involve the right people at the right time  

– Very often parties, on both sides of a project, do not work closely enough with the most important people – the ultimate users of the system and the developers of it – at an early enough stage.

– Negotiations will often principally involve the management team of the customer and the sales team of the supplier. This can lead to the customer not ordering precisely what it needs and the supplier over-promising or misrepresenting what can be delivered.

– By the time the key people are involved hundreds of thousands or millions of pounds have been spent and huge amounts of time have been invested on both sides.


Hiscox – professional indemnity insurance

Project failure – Back from Red blog

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Creating a project charter in 7 easy steps – Nirav Patel

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I am surprised that the lack of a strong sponsor is not included in the list.

Without this project creep begins, requirements are not challenged and the project manager is not seen as carrying any authority.

I agree: a strong sponsor is a must - someone who's accountable for the success or failure of the project. But what if the project goes on for years, as some public sector projects do?

One comment to me after the round-table was that the NHS IT project - the NPfIT - is not a project but a career. It can go on for more than a decade (and nearly has). You cannot have the same person see such a project through from concept to delivery.

Maybe the answer is not to have projects that last more than 2 years?

This is just scary. The blind fixing of points 1–4 is in itself a recipe for project failure.

I don't know that Hiscox considered points 1-4 to be fixed. I think it's saying that points 1-5 are factors which come up time and again in insurance claims after IT failures.


I have published an elaborate article about the subject (with proposed solution to every problem as well): Tips to Avoid Failure in IT Projects. Hope you'll get the chance to have a look.

Thanks - read it. Sound and comprehensive project management tips.

Funny how all five normally occur before most people think the project has even started.

BTW I hope that somewhere during my career there will be a time when there won’t be a monthly blog or article about constant project failures. I have some hope, new research we are publishing soon (at does seem to indicate in that direction.