Just what is causing IT project failures?

Posted by Ron Pila

Image courtesy of jurvetson

We have all become accustomed to reading in the newspapers about yet another IT project failure.  These no longer surprise us - sadly this has almost become our expectation.  The statistics of IT project blow outs, as evidenced by a number of studies, are alarming.  These studies show that:

• 65-80% of IT projects either failed to meet their objectives, ran significantly late or cost far more than planned; and
• around 30% of IT projects are cancelled prior to completion.

The business cost of this is enormous.  Billions of dollars are wasted and the opportunity cost is larger still.

There is no doubt that software development is complex, one of the most complex activities undertaken by humans.  However, does that mean that we need to accept that massive blowouts and disappointment are an inevitable feature of IT projects?  Can steps be taken to improve these results?

The first step in finding a cure is to diagnose the cause.  There are a plethora of views as to the causes of IT project failures.  Of course, there is no single cause and therefore no single remedy. 

A number of contributing factors were recently identified in a report prepared by the Victorian Ombudsman in conjunction with the Victorian Auditor-General (Own motion investigation into ICT-enabled projects released November 2011) (Ombudsman's Report).  The Ombudsman's Report was based on investigations conducted in relation to 10 Victorian Government ICT projects.  The projects that were reviewed were, on average, in excess of 100% over budget with a combined over budget cost of $1.4 billion.  One of the projects has been cancelled and others have uncertain futures.

The Ombudsman's Report identified a range of reasons and factors why these projects had become challenged.  The Ombudsman grouped these reasons under five key 'themes' being:

• leadership, accountability and governance;
• planning;
• funding;
• probity and procurement;
• project management.

None of the issues raised in the Ombudsman's Report are particularly new.  In fact, the Ombudsman's Report makes the point that these issues have been raised many times in previous reports by the Ombudsman and the Auditor-General.  In the foreword to the Ombudsman's Report, the Ombudsman and the Auditor General state that:

... despite the extensive guidance and literature available, agencies are making the same mistakes around planning, governance, project management and procurement that our offices have observed and reported on for some years.

A review of the issues raised in the Ombudsman's Report shows that projects are either set up for failure in the manner in which they are established or fail due to 'mistakes' made in the course of the project.  In either case, many of the problems are avoidable.

           

Over the coming weeks we will dive deeper into the issues raised by the Ombudsman and strategies to avoid the pitfalls so as to ensure better project outcomes.