What Troubled Projects Are Costing Us

Filed under Tools | Posted by

by are you my rik? via Flickr

by are you my rik? via Flickr

Troubled projects afflict organizations worldwide in both commercial and public sectors as they regularly experience higher than anticipated costs, unmet schedules and unfulfilled requirements.. The high rates of project failure?particularly among information technology (IT) projects?often impact an organization?s essential business strategy and operations.

Study after study details bleak project results, while government reports and company case studies offer numerous specifics of unsatisfied stakeholders from project outcomes. The added pressure from the economic downturn to do more with fewer resources makes these dismal results all the more disconcerting.? However, research and experience show that effective project management can save organizations untold millions in lost revenue.

Troubled Projects In the United States and Abroad

High rates of project failure have been well documented in recent years. Widely quoted studies from The Standish Group over a several year period show that:

  • More than half the projects are challenged, usually due to cost or schedule overruns.
  • Project failures account for 15 percent of all projects.
  • Project success rates comprise approximately 34 percent of all projects.
  • The lost dollar value for U.S. projects in 2002, for example, was estimated at $38 billion, with an additional $17 billion in cost overruns, for a total project waste of $55 billion against $255 billion in project spending.

And, as Greg Balestrero, Executive Director of the Project Management Institute (the largest association of project managers in the world) reports, the rate of failed projects has not changed in recent years.

Documentation from KPMG Information Risk Management found that in 2002, 59 percent of the organizations in the Asia-Pacific region experienced at least one project failure at an average cost of $8.9 million. Africa, Europe and the Americas followed suit with an average of 56 percent of the organizations reporting at least one project failure with an average cost of $11.6 million.

In 2007, the Economist Intelligence Unit published the results of their survey of 145 senior global executives from different industries on their current and planned IT projects which showed:

  • Twenty percent of the executives reported that over half of their IT projects started in the past two years were late or over budget.
  • Only 13 percent of the executives felt their IT projects had delivered the promised features and functions.
  • Poor project management was cited as the primary cause for IT project problems.

Why the Failure?

Details from organization-specific studies bring the reasons for troubled projects into clearer focus.? For example, an audit of the U.S. Federal Bureau of Investigation (FBI) by the U.S. Government Accountability Office (GAO) determined that the FBI failed to effectively manage its IT investments and spent hundreds of millions of dollars on projects with little assurance they would deliver their intended benefits (U.S. Department of Justice Audit Report 2002). In GAO?s study of 226 IT projects valued at $6.4 billion from 24 federal agencies, it found more than one-third (79) of the projects, deemed critical, had a performance shortfall where they did not meet one or more of the following criteria:

establishing clear baselines, maintaining cost and schedule variances within 10 percent, assigning a qualified project manager, avoiding duplication with other projects.

Examples at the state level provide additional information on why projects fail.? The state of Texas reported that, of the 48 large-scale projects reviewed, project delivery delays averaged 14 months, with cost overruns exceeding $352 million. Contributing factors included: a general lack of project-level quality control, poor project management,? nicreased levels of? project complexity (Texas State Auditor?s Office 2003).

The state of Wisconsin?s review of 184 IT projects valued at $292 million that have been started or completed since 2004 determined that troubled projects have cost the state more than $122 million. Lack of project management and oversight were cited as the main cause of troubled projects (2007).

A high IT project failure rate even led the Colorado State Legislature to take the highly unusual measure of passing a law requiring the state government to develop policies on best practices and the verification of project managers and analysts. The law affects major automation system development projects (Digest of Bills 2006).

Actionable Steps For Project Success

In response to these overwhelming project shortfalls and failures, companies and government entities have

????????? increased oversight of IT projects,

????????? established professional requirements for project managers,

????????? emphasized compliance with establishing project management procedures,

????????? implemented software tools.

While these actions are positive, the costs and outcomes associated with each remedial action indicate not all of them should be, or even need to be, implemented. Research from two unique sources, the PMAppraise? database and the Project Evaluation System? (PES?), strongly suggest that training on project management best practices is a solution organizations should consider to increase the probability of project success.

The PMAppraise? database, maintained by ESI International, a global project management learning company, contains knowledge and skill assessments of IT project management professionals working for large and mid-sized companies across all industry sectors located throughout the world. PES?, developed by Independent Project Analysis, Inc. (IPA), a project benchmarking company, is a methodology that measures the effectiveness of a company?s practices and procedures in planning, defining, engineering, constructing, and initiating projects.

The previously cited research by the Economist Intelligence Unit and reports of the states of Wisconsin and Texas revealed the lack of project management skills among the IT staff to be the primary obstacle to improving IT project management performance.

Training is one of the chief methods for improving a project manager?s ability to implement a successful project and should be viewed as an investment, not an expense.

According to Mary Ellen Yarossi, Director, IPA Institute, ?Best practices have been shown to reduce costs by 10 percent, reduce execution and implementation time by 8 percent, and improve performance by 10 percent.? These project improvements can take a 15 percent rate of return project and turn it into a 24 percent rate of return project. That translates into a 60 percent improvement.?

The PES? database reveals that not applying proper project management techniques can result in negative outcomes in terms of significantly higher costs and substantial schedule delays.? The PES? data shows, for example, that projects with a well-defined Project Execution Plan (PEP) shorten the project duration by 14 percent while decreasing cost growth by 17 percent compared to a project with a less well-defined PEP.

The PMAppraise? results show a substandard average score for each of the project management assessment areas. Not surprisingly, the lack of project practices and techniques results in high project failure rates. Increasing a project manager?s knowledge and skills base will enable him or her to apply proven project management procedures and techniques. Undertaking this proactive, cost-saving approach can lead to a higher probability of project success.


39 thoughts on “What Troubled Projects Are Costing Us

  1. Chang Krake

    Greetings! This is my first visit to your blog! We are a collection of volunteers and starting a new project in a community in the same niche. Your blog provided us beneficial information to work on. You have done a wonderful job!

  2. Stacy Kissel

    Together with every thing that appears to be building within this area, a significant percentage of opinions are generally quite refreshing. Even so, I am sorry, because I do not give credence to your whole plan, all be it exciting none the less. It seems to me that your comments are actually not totally validated and in fact you are your self not even thoroughly convinced of your argument. In any event I did enjoy reading through it.

  3. Ezequiel Brozell

    It is possible to seize a screenshot making use of your i phone. Merely media the house and Slumber buttons at the same time once you in the screen you need a picture associated with. The particular screen may flash whitened and you’ll be aware of chance.

  4. Irma Mccorey

    Aw, this was a really good post. Taking a few minutes and actual effort to produce a good article… but what can I say… I hesitate a lot and never manage to get anything done.

  5. Kirstin Noonon

    Hey there! This is my 1st comment here so I just wanted to give a quick shout out and tell you I truly enjoy reading your posts. Can you suggest any other blogs/websites/forums that go over the same subjects? Thanks for your time!

  6. Tanner Laubersheimer

    whoah this weblog is magnificent i really like studying your articles. Keep up the great paintings! You realize, lots of individuals are hunting round for this info, you can help them greatly.

  7. Pingback: Jetlife type beat

  8. Pingback: http://logintegra.com/produkty/platforma-logistyczna

  9. Sari Luga

    Hi, i think that i saw you visited my weblog thus i came to “return the favor”.I’m attempting to find things to enhance my website!I suppose its ok to use some of your ideas!!

  10. Kip Mackedanz

    This is really fascinating, You are an excessively professional blogger. I have joined your feed and look ahead to looking for extra of your magnificent post. Additionally, I have shared your website in my social networks!

  11. Nicolle Ogasawara

    I like the valuable information you provide in your articles. I will bookmark your weblog and check again here frequently. I am quite sure I will learn a lot of new stuff right here! Good luck for the next!

  12. Jesse Glos

    Heya i’m for the first time here. I found this board and I find It truly useful & it helped me out a lot. I hope to give something back and help others like you aided me.

  13. Lucien Maffei

    An impressive share! I have just forwarded this onto a colleague who had been doing a little research on this. And he in fact ordered me dinner due to the fact that I found it for him… lol. So let me reword this…. Thanks for the meal!! But yeah, thanks for spending some time to discuss this topic here on your website.

  14. Dwayne Eisenhart

    Thanks for the sensible critique. Me & my neighbor were just preparing to do a little research on this. We got a grab a book from our area library but I think I learned more from this post. I am very glad to see such excellent information being shared freely out there.

  15. Terrell Vesey

    The next time I read a blog, Hopefully it does not fail me just as much as this one. After all, Yes, it was my choice to read through, but I actually thought you would probably have something interesting to talk about. All I hear is a bunch of whining about something you can fix if you were not too busy searching for attention.

  16. Shanika Falkenthal

    I’m extremely impressed with your writing skills and also with the layout on your blog. Is this a paid theme or did you modify it yourself? Anyway keep up the nice quality writing, it is rare to see a great blog like this one these days..

  17. match

    Wow! This could be one particular of the most helpful blogs We have ever arrive across on this subject. Actually Magnificent. I’m also a specialist in this topic so I can understand your effort.

  18. Pingback: Codes

  19. Dante Pasto

    My brother suggested I might like this website. He was totally right. This post actually made my day. You cann’t imagine just how much time I had spent for this info! Thanks!

  20. Idella Hubsch

    Hi, I do believe your blog could possibly be having browser compatibility problems. Whenever I look at your site in Safari, it looks fine however when opening in I.E., it has some overlapping issues. I merely wanted to give you a quick heads up! Besides that, fantastic site!

  21. Marco Bushweller

    I think this is one of the most significant information for me. And i am glad reading your article. But should remark on some general things, The website style is ideal, the articles is really excellent : D. Good job, cheers

  22. Brad Santacruz

    After study just a few of the weblog posts in your website now, and I really like your approach of blogging. I bookmarked it to my bookmark website listing and shall be checking back soon. Pls take a look at my website as effectively and let me know what you think.

  23. Pingback: RunClick Webinars Software Review Bonus

  24. Pingback: Mountain View dance classes

  25. Pingback: demi lovato

  26. August Stadnik

    Hey There. I found your blog using msn. This is a very well written article. I’ll make sure to bookmark it and return to read more of your useful info. Thanks for the post. I’ll certainly return.

  27. Shala Tarpey

    I needed to compose you that very small word in order to say thanks over again for these beautiful guidelines you have shown on this website. It has been really pretty generous of you in giving easily precisely what a lot of folks would’ve marketed for an e-book to help make some cash for themselves, most notably given that you might well have tried it if you ever wanted. Those suggestions as well acted to be the good way to comprehend other people online have similar keenness just as my own to know the truth a good deal more around this problem. I believe there are several more fun situations ahead for individuals who looked at your blog post.

  28. Pingback: Residential Contractor

  29. check my site

    I simply want to tell you that I am beginner to weblog and absolutely loved you’re web site. Very likely I’m likely to bookmark your blog . You actually come with terrific articles. Thanks for sharing with us your blog site.


Leave a Reply

Your email address will not be published. Required fields are marked *