Why Projects Fail
What do we mean by project failure? Project failure can come in a variety of shapes, sizes, and colors. For the sake of this discussion, the typical definitions we are using are:
- Exceeds its initial budget by an unacceptable margin in the eyes of key stakeholders
- Does not meet timeline nor deliver on expected due date
- Does not deliver agreed upon scope and end state functionality
- Benefits anticipated in the business case are not realized
- Project fails to deliver in time to meet a business need resulting in a missed market opportunity for the company.
There is little controversy in stating that projects fail and that larger ones tend to fail at higher rates. There is, in fact, a lot of research and evidence that indicates businesses continue to struggle to adapt to meet the changing business environment through organized programs.
Most studies of project failure tend to focus on Information Technology (IT) projects. Whether because of visibility or ease of definition or some other reason, there are countless studies that attempt to quantify IT project failure. Gartner, for example, completed a study in 2012 which shows 20-28% of projects suffered some form of failure. McKinsey, in a study of 5,400 large IT projects, found that 45% ran over budget and 56% failed to achieve the desired business outcome.
The US Government (GAO) looked at its internal project capability and found 49% were poorly planned, performed poorly, or both.
Gallup, meanwhile in 2012, cites a Harvard Business Review study that shows average cost over-runs of 27% with 1/6 running greater than 200% over budget and 70% showing a schedule over-run.
While the numbers in the studies are varied, the trend is clear – despite immense research into the causes of failure, we still do not have the formula to solve the problem.
So, why do projects fail?
Any quick search through the internet will reveal myriad explanations of why businesses continue to struggle to push projects over the line successfully. Within the field of IT, especially, this is an area that has been studied extensively by consultants, academics, practitioners, and companies themselves.
Our position is that all of the following explanations have some merit but they only address part of the problem. Each project has a particular path and a unique set of circumstances which led to its particular issues. However, there are some categories that appear with enough frequency in the literature and in our experience that they are worth exploring.
While we categorize these for sake of discussion, many of these drivers overlap or are interconnected in some fashion.
- No clear sponsor or clear ownership at the appropriate level
- Unreasonable expectations on timing, budget, or capabilities
- Lack of prioritization across functions, programs, and projects
- Lack of visibility to all activities across the organization
- Improper resources
Project Management Effectiveness
- Changes in budget or scope without implications being planned
- Poor estimation capabilities
- Lack of adequate project discipline (scope creep, resource management issues)
- Planning starts with a fixed end date and builds backward for overall plan
- Lack of business user involvement in all phases of the project
- Requirements do not meet needed business outcomes
These explanations for failure occur in all types of projects, regardless of methodology. We recognize that there are partisans of various methods of running projects (Agile, Waterfall, Extreme, etc.) and assumptions made that some of these pitfalls can be avoided by adherence to a specific methodology. Our experience, however, is that project execution methodology is not directly correlated with overall success and moreover, applying the wrong methodology (i.e. Agile on a large ERP implementation) can have disastrous affects.
The consequences of project failure are rarely limited to just the opportunity cost of not achieving the desired business outcome and wasted expenditures. Because project failure is often systemic and almost built in from the start, companies often lose good personnel who either accept responsibility or are assigned failure, when in all likelihood, failure was inevitable regardless of the personnel involved
Mitigating project failure is a challenge when the causes are varied and not well understood. While there is no consensus on the causes of failure, the remedies typically proscribed tend to be similar across project types. The following are what we commonly see with a brief critique of why these don’t always work:
- Increase the number of people involved in the project to address work backlog or add expertise
Many times, the new resources do not have history with the project and require time to get up to speed, take time from currently allocated resources and chase solutions already attempted by the project.
- Increase hours of current project members to address work backlog
The team is often frustrated by being behind schedule. More time tends to diminish morale and reduces overall productivity. Adding hours simply does not address the underlying issues.
- Escalate to review boards (Executive, Steering Teams)
Review boards can be helpful when the project is unable or not empowered to make decisions and can bring disagreement to light and resolve it. However, they often do not have the requisite skill sets (nor the history) to solve project issues with the necessary acumen.
- Re-plan the project using estimates of remaining tasks and perform a risk analysis to study any remaining areas of concern
This is a necessary step in all project failure situations, but rarely does this adequately address causation.
- Replace people, especially leadership, currently employed on the project
At times, new leaders are needed to guide a project over its hurdles. As we will discuss, failure is often not related to personnel. Churn of project team members may lead to employees who are worried about their jobs and lose focus on the desired outcome.
All of these are reasonable efforts to address specific problems. However, they are often employed regardless of the cause. Many organizations and people involved tend to shy away from the more difficult factors of poor leadership, personnel falling short in performance, and in general ‘dealing with the hard stuff’ that more often than not, is at the root of project failure.
Dealing with the Hard Stuff
The aforementioned causal factors, while valid, may only be part of the story. Our experience from over 50 years of project management (between the two authors) and countless engagements within different industries, cultures, and disciplines – simply fail to balance the two pillars of project delivery – management and leadership.
While the administration of a project (i.e. the management part) tends to be the easier and more prevalent skill between the two, the classic mistake of most project managers is focusing on keeping to schedule, documenting the risks, tracking the action items, and extoling this as paramount to success. In doing so the project manager tends to add volumes of arcane and sometimes truly irrelevant information for the sake of ‘filling the square’ of a deliverable. The key is to be able to decipher what and how much detail and information truly helps drive the project forward and not create a 1,000 line project plan assuming ‘if it’s big, it must be good’ kind of mentality.
Organizations typically fail to empower the project manager to lead and make decisions. Often, the blame for project failure will be laid at the feet of the project manager, yet the project manager had no true authority to make decisions. Being authorized to make decisions, mitigate risks, and manage change is key to being a successful project manager. And, having the authority to truly lead gives people confidence and makes them accountable.
A good leader gets needed input, assesses situations, and gathers needed facts. Plus, effective leaders receive the support they need to carry out their important role. The distinction between what requires alignment with all parties and stakeholders versus making a decision to ensure the momentum of the project is being maintained, is a skill honed over time and requires the right individual and a supporting organization.
Not all project managers are project leaders. Many don’t come with the ‘steel’ to stand and own an initiative. Sometimes the project manager needs to say no. Sometimes the project manager needs to make hard and difficult decisions that may mean admitting and owning a mistake, replacing someone on the team, or simply communicating an underestimation that requires the reevaluation of scope, schedule, and budget. The ability to take fear of project failure head-on and the willingness to accept the consequences is a rare aspect of project leadership. It is this, along with a true passion and caring for the end result that will lead to project success.
So what does caring mean? Caring is making the sacrifices to get it done. Often projects come with long hours, complexity, unrealistic expectations, and a team or stakeholders that may not have the alignment you need. You still take it head on. You grind it out, you work hard, and yes, you make and communicate difficult and unpopular decisions. You continually look for ways to create momentum and work passed the ‘it has to be perfect notion’. No project is perfect. Understanding what your tolerance for mistakes is, while keeping your ‘foot on the gas’ will get you to a better quality end-state faster than being afraid of failing (i.e., it has to be 100% perfect or it will be labeled a disaster).
A final component of a successful project and thus a successful project manager is to know when you need to ask for help. There are many projects that could have been corrected and successful if the project manager simply raised his or her hand and said, ‘we are in trouble and I need help getting this back on track’. This is the mettle that separates the manager from the leader. Good projects have good leaders.
By Tom Toohey and Mike Kellim
Tom Toohey Senior Consultant Envision Business Consulting
Tom brings both industry and consulting experience to develop corporate and tactical initiatives, strategic planning, business transformation, change management and program management.
Tom is a recognized leader, trusted advisor and effective coach across all levels of an organization. He is a calm, rational decision maker who achieves results that balance long-term objectives with immediate corporate needs.
Mike Kellim Director Envision Business Consulting
Mike helps lead the IT Business Enablement Practice. He excels at taking strategy and delivering results in tactical based programs and projects.
His ability to articulate vision for business and IT in scope, schedule, and budget with a planned portfolio helps to maximize value for clients. Mike has a track record of successful IT process transformations and business initiatives implementations. Asked for by name at clients with repeat engagements.
About Envision Business Consulting®
Envision Business Consulting, founded in 2009, is a business consulting firm that transforms, grows and enriches people and organizations. Through a unique ecosystem for four inter-connected activities – business consulting, talent search, private equity and philanthropy – Envision works with clients, employees and communities to enact positive change. Based in Denver, Colorado with offices in the Midwest (Chicago-Milwaukee) and New York City, Envision Business Consulting is a rapidly growing consulting firm. In 2013 and 2014, Inc. Magazine named Envision as one of the fastest growing companies in America. In 2014, Envision Business Consulting was named one of 50 Colorado Companies to Watch by ColoradoBiz magazine. Visit www.envision-bc.com.