Why business projects fail, Lecture notes of Software Project Management

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MODULE 2 UNIT 2

Why business projects

fail

© UCT/GetSmarter

Table of contents

• 1. Introduction
• 2. Reasons why projects fail
• 3. Why use the Iron Triangle at all?
• 4. Summary
• 5. References

Figure 1: The Sydney Opera House ran significantly over budget and over schedule, but is still considered to be an important landmark today. Note: There are different variations of the Triple Constraint or Iron Triangle in practice. For example, some project managers use the Triple Constraint to refer to time, cost and scope, while others use it to mean time, cost, and quality. Neither model is better than the other. Be aware that you may come across variations in practice. This section covers why projects fail. As you read through these notes, think about failed projects that you have been involved in, and see if you can identify the probable reasons why things did not go as planned.

2. Reasons why projects fail

Unit 1 discussed the Triple Constraint (or Iron Triangle) approach. Here is a reminder of what the Triple Constraint entails:

Figure 2 : The Iron Triangle. The Chaos Reports (2001) from the Standish Group paint a pessimistic picture for project managers everywhere: Table 1: The Chaos Report findings. 1994 1996 1998 2000 2002 2004 2006 2009 2011 Succeeded 16% 27% 26% 28% 34% 28% 35% 32% 37% Impaired 31% 40% 28% 23% 15% 18% 19% 24% 21% Challenged 53% 33% 46% 49% 51% 54% 46% 44% 42% The Standish Group was formed in 1985 with the goal of focusing on project failure in order to provide project managers in the IT sector with the information they need to succeed in the future. (http://www.standishgroup.com/about/) A successful project is defined as one that:

Video 1: Reasons for project management failures according to the Chaos Reports To download this video, click here: https://s3.amazonaws.com/UCT_PG_Programmes/AdvDip+2015/Topic+1/T1+M2/AdvDip+T 1+M2+U2+V6-­‐SD.mp The top reasons cited in the Chaos Reports for project management failure are:

• Incomplete requirements
• Lack of user involvement
• Lack of resources
• Unrealistic expectations
• Lack of executive support
• Changing requirements and specifications
• Lack of planning
• Need for project ceased to exist
• Lack of IT management
• Technology illiteracy

A note on the Standish Group Chaos Reports : These reasons, although considered to be fairly generalisable, are based on IT projects only. It must also be noted that some believe that the picture the Chaos Reports paint is misleading in its negativity. The Standish Group is not the only voice trying to make sense of project management failure. According to Oracle (2011) their main reasons for project management failure are:

• Constituent alignment: This basically refers to the importance of having the commitment and buy-­‐in of all project stakeholders. Noncommittal project sponsors and resistance from key players often plague projects that fail. In addition, the project’s goals must be aligned with the goals of the organisation. A project that is trying to achieve something that runs contrary to the organisation’s purpose will be met with resistance. Finally, when project teams are created by pulling employees from a number of different departments, department managers are more likely to assign the person they can most do without, not the person who is best suited for the job.
• Proactive risk management: You would think that by now project managers would have accepted the importance of adequately identifying, analysing and mitigating risks that could affect the project. However, the lack of proactive risk management remains one of the top reasons why projects fail. Consider the construction of Heathrow Terminal 5, for example. Although the terminal eventually became operational (product success), very little risk management was performed, resulting in significant delays (project management failure).
• Performance measurement: Although the importance of adequate performance measures is stressed at every turn, many projects fail because there are no clear guidelines for this in place. In order for problem projects to be identified and dealt with in advance, there needs to be a way to compare where the project actually is to where it should be. For example, at the end of August, seven of the 23 project tasks have been completed, but according to the schedule, 12 tasks should have been completed by this time. Although these measures can become complex, they are nevertheless essential for keeping track of the real progress of the project.
• Project scope definition and management: The scope of the project must be clearly defined from the outset. Unfortunately, in many projects, the scope is defined in such vague terms that no real guidance on what the project needs to achieve is really provided. Pure management also plays a role here. If user requirements are difficult to obtain, or if the process of obtaining the requirements is badly managed, the scope will not be well defined, and the project may commence with little or no idea of what actually needs to be done. Considering that many companies insist that projects are executed at a specific time, regardless of whether or not the scope is defined, this can be disastrous. Scope management is essential to avoid project management failure.
• Critical project communication: Project management consists, in large parts, of communication. Unfortunately, communication is one of the areas in which many projects fall short. Specifically, project stakeholders must be kept up to date

5. References

Anter, V., Hansson, E., McNaught-­‐Reynolds, O., & Tessard, A. (2009). The Sydney Opera House: Stakeholder management and project success. Retrieved from http://www.iei.liu.se/fek/svp/723g18/case_material/1.111101/SydneyOperaHousePro jectStudy.pdf Müller, R., & Jugdev, K. (2012). Critical success factors in projects: Pinto, Slevin and Prescott -­‐ the elucidation of project success. International Journal of Managing Projects in Business , 5 (4), 757-­‐775. Oracle. ( 2011 ). Why projects fail: Avoiding the classic pitfalls (White Paper). Redwood Shores, CA: Oracle Corporation. Project Management Institute (PMI). (2013). Guide to the Project Manager Body of Knowledge (PMBoK Guide), (5th ed.). USA: Project Management Institute, Inc. Shenhar, A.J., Dvir, D., Levy, O., & Maltz, A.C. (2001). Project success: a multidimensional strategic concept. Long Range Planning, 34, 699–725. The Standish Group, (2001). Extreme chaos. Retrieved from www.cin.ufpe.br/~gmp/docs/papers/extreme_chaos2001 .pdf