The Cost of Failed Projects

Failed projects

Failed Projects are costing companies and countries an absolute fortune every year. The cost of Failed Projects accumulated each year comes to more than the Gross National Product of some hefty sized countries.

Let me first of all give you some shocking facts related to the development of technology projects.

EU figures looking at 214 technology projects from 1998 to 2005 showed that only 1-in-8 technology projects met their time, budget and quality objectives.

Indeed the total cost of technology project overruns in the EU in 2004 was €142bn – yes, that’s billion.

They found that 23.8% of all projects don’t get finished at all.

Project Failure

A survey by KPMG in 2010 showed that  an incredible 70% of organizations had suffered one or more failed projects in the prior 12 months!

A survey by Logica in 2008 showed that 35% of organizations abandoned a major project in the last 3 years.

A survey by KPMG in 2005 showed that only 2% of organisations said that their projects that year met all of their objectives.

Fixing Faults

According to Dosani 80% of technology projects cost more than they return because the benefits are overestimated and the costs underestimated.

According to the National Institute of Standards & Technology in the USA €60bn a year is spent on fixing faults in IT systems. Indeed 80% of the cost of a system is in making fixes to it.

In January 2013 it was announced that the Ministry of Defence had overrun by £468m on 16 projects in the past year with a total slippage of 139 months in the past year.

So, they have 16 projects that have overspent by an average of £29m each and they have slipped by an average of 8.7 monthseach   in the last 12 months.

There are some astonishing figures here that show that the world has not come to terms with successfully implementing software projects on a regular basis.

Just try getting the system you are going to develop insured against failure.

Change Needed

All over the world technology projects are failing and costing companies and countries incredible amounts of money.

Something has to change.

Companies need to take another look at the way they develop software. The whole paradigm is wrong. There are just too many failed projects.

Successful Projects

At one company where we ran projects for major companies like Texaco and Exxon (Esso) we managed to get 4 out of 5 projects done on time, with one of them well ahead of budget and ahead of schedule.

The only one that failed to deliver was one that we had to outsource as we didn’t have the right skills in-house to do it.

Our people looked askance at the poor project management practices on the project as if they were looking at a backward people using backward methods and were not surprised when the project failed.

Huge Opportunity

Because there is such a huge problem there is also a huge opportunity. We intend to explain what needs to be done to get projects completed not just on time, to budget and fit-for-purpose but to be finished ahead of schedule and ahead of budget.

We change completely the way projects are run and we’ll explain how it is done in coming articles on this website.

In 2009, Roger Sessions, a well-known author on the subject, in a White Paper called The IT Complexity Crisis: Danger and Opportunity, estimated that failed projects in IT cost a staggering $6.2 trillion a year globally.

That’s more than the GDP of the UK ($2.43 trillion) and Germany ($3.57 trillion) combined.

Houston, I think we have a problem!

I think we also have a solution!

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