Over 50% of IT projects fail as a direct result of poor project management practices…
Project management is defined as the application of knowledge, skills, tools and techniques to project activities to meet project requirements. — PMBOK
It sounds simple enough, but the CHAOS Manifesto, an annual report from The Standish Group that examines trends in software project success, repeatedly reports worrying statistics for the IT project industry. The 2011 edition of the CHAOS report found that 37% of all projects succeeded in that they were delivered on time, within budget, with all required features and functions. 42% of projects were challenged in that they were delivered late, went over budget, and/or were delivered with less than the requested features and functions. The remaining 21% were considered a complete failure due to cancellation prior to delivery or were never used post completion.
The 2011 figures represent a slight improvement since the release of the first CHAOS report in 1994, when project success was reported to be just 16%; but the current statistics can still be described as fairly dismal. In real terms, the cost of project failure to the economy is staggering. The IT Complexity Crisis: Danger and Opportunity estimates that the financial burden of IT project failure in the U.S. alone amounts to over $1 trillion. On a global scale, that figure rises to an estimated yet equally astonishing $6.2 trillion.
The Standish Group are not the only organization to report similar findings. In August 2007, Dynamic Markets surveyed 800 IT managers from eight countries. They found that:
- 62% of projects overrun on time.
- 49% of projects overrun on budget.
- 47% of projects suffer from higher than expected maintenance costs.
- 28% of organization have experienced projects that do not fit requirements.
- 25% of organizations have seen business users reluctant to adopt new systems.
- 16% of organizations reported a negative effect of projects on existing systems.
- 13% of organizations say projects have not delivered expected ROI.
Statistics vary between studies depending on the individual aspects examined, but it is clear that the IT project industry is in continued crisis and repeatedly suffers negative results as a result of projects that off budget or schedule, don’t deliver requirements or don’t deliver at all.
Spectacular Software Project Failure
There have been many instances of IT project failures resulting in significant losses for the organizations involved. Computer World examined major failures before coming up with a list of the Top 10 Corporate Information Technology Failures. Notable failures included:
- Greyhound Lines Inc. who spent nearly $6 million building a new booking application only to see ridership fall by 12 % in a single month after the new system failed to handle sale prices. The cost? The company suffered a loss of over $60million over a six month period.
- Norfolk Southern Corp. lost over $113 million worth of business, incurring $80 million extra costs in the process, as a result of a failure of test customs logistic software properly during a merger with fellow rail company Conrail.
- W.W. Grainger Inc. spent an estimated $9 million on new SAP-based software and services. The ERP system routinely crashed and over counted inventory in the warehouses resulting in $19 million in lost sales and $23 million in anticipated profits.
The Reasons Why Software Projects Fail?
Global computing firm IBM investigated reasons for IT project failure and identified five key areas that influences whether a project is successful or deemed a failure:
- Project Management (54%)
- Business (21%)
- People (14%)
- Method (8%)
- Technical (3%)
While the success of IT projects can very rarely be attributed to a single individual, there is something to be said when one of the biggest computing firms in the world attributes over 50% of IT project failures as a direct result of poor project management practices. There are several tried and tested disciplines in the field of project management so it’s difficult to understand why there should still be so many project challenges directly attributed to the process of managing a project.
What Makes a Great IT Project Manager Great?
IT projects are proven to be fraught with the risk of failure. In an attempt to avoid potential pitfalls associated with this project type, it is necessary to understand what makes an IT project manager great. While possessing these qualities do not necessarily guarantee that a project will be delivered as expected, a project manager without the right skill set will be at a significant disadvantage.
Effective Project Planning and Direction
Comprehensive project planning and clear direction are key factors for successful IT projects. This requires that the project manager uses an approved methodology incorporating processes, rules and project planning tools such as a project plan and ACRI log. They should be supported by a recognized software tool. An effective project manager will devote significant time to assign suitable resources, defining goals and responsibilities clearly. They will demonstrate a willingness to adapt and adjust assigned roles as the project progresses. Business Technology Leadership firm, CIO, backs up the importance of proper planning and direction, reporting that poor system specification in the design and planning phase leads to 66% of IT project failures.
Excellent Communication Skills
An excellent project manager will stay in contact with both stakeholders and external vendors to avoid crippling their IT projects as a result of communication breakdowns. They will understand that the little details matter — details such as agendas, minutes and actions. They will also be well versed in every stakeholder need and possess a solid grasp of the project in order to present and clearly articulate pertinent information. Project Times ranks the ability of a project manager to communicate effectively as one of the top three leadership skills.
The successful IT project manager will be proactive in the change management of project objectives and goals. They will know the risks involved in such changes and effectively coordinate between the IT departments and the accounting office, while at the same time continuing to analyze and report on identified performance benchmarks. Any change management process should be straightforward and provide an effective method of estimation and approval. The impact of changing requirements can be a huge factor in IT project failure. An effective manager will understand the difference between the end of change management and the onset of project failure.
Alignment with Stakeholders
The failure of a project manager to align with stakeholders through trust and understanding will almost certainly result in project failure. Successful managers will understand this risk and make every effort to achieve greater alignment through regular client touch points such as including a project kickoff meeting, followed by regular updates and sign-offs on work completed.
Executive Management Involvement
A great project manager will also clearly understand that the involvement of the executive stakeholder is crucial and will take the necessary steps to secure their participation in key project meetings. It is not enough that the executive stakeholder attends the kickoff meeting. It is vital for them to be involved in status meetings to monitor progress and take part in critical decision-making along the way.
The qualities of an effective project manager do not end with the ability to plan and run projects. They will also possess the appropriate soft skills to ensure that the team members are sufficiently skilled and motivated to complete individual responsibilities. Business Insider states that most projects fail because the employees working on them just don’t care. This may not be the only problem though; the simple truth is many IT projects place pressure on job security due to the perception that headcount is kept to a minimum. A successful project manager gets ‘buy-in’ from all crucial team players to keep the project running smoothly.
Project Management Methodology
The most successful IT projects are often delivered as a result of the effective project management methodology or a framework that incorporates proven tools. An experienced project manager will understand that a systematic approach will increase accuracy and attain time savings through the automation of routine activities.
Project Management Trends for 2012
ESI International, a leading think tank in PMO perspectives, releases an annual report examining trends in project management. Tellingly, the top ten project management trends for 2012 include anticipation that good project managers will buck the current trends in unemployment. Despite the fact that record levels of unemployment are being faced in the majority of countries as the global financial crisis deepens, ESI acknowledges that ‘good project managers are hard to find.’ ESI estimates that the hunger for the perfect project manager will surge in 2012.
The Most Effective Project Manager will Achieve Success
Dennis Anderson PhD, writing for Microsoft Tech Corner, acknowledges that IT projects can often represent the next generation of an organization’s products and services. The statistics prove that many, if not the majority, of IT projects will come in past the deadline, be over budget or fail to deliver the expected requirements. All of these factors have a detrimental effect on ROI. Anderson points out that one of the main things that can lessen the loss is acquiring the right project manager. Organizations need someone who can not only deliver the project with demonstrable ROI, but also someone who understands the importance of reality and the bottom line.
Ultimately, the buck stops with the project manager. It is in the best interests of any organization that they find the right person for the job — one who can overcome all the odds to deliver even the most challenging of IT projects.