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Why do projects ‘fail’ and more to the point what can we do about it? The case for disciplined, ‘fast and frugal’ decision-making

FEATURED PAPER

By Stephen Jenner

Brisbane, Australia

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Introduction

It’s almost an article of faith that somewhere between 50% and 70% of projects and programs fail. Studies by academics, professional bodies, consulting firms (and even Nobel Prize winners), paint a depressing picture of consistent and continuing failure. The issue appears to apply globally and to all sectors – for example, the UK National Audit Office (NAO) report that, “the evidence shows that two thirds of public sector projects are completed late, over budget or do not deliver the outcomes expected” and, “The track record of project delivery in the private sector is equally mixed.” The problem also seems to affect most categories of project or program, for example:

  • Business Change initiatives – “change remains difficult to pull off, and few companies manage the process as well as they would like…The brutal fact is that about 70 per cent of all change initiatives fail.” Beer & Nohria
  • Information Technology – “It is the remarkable ubiquity of the failure of ICT projects – particularly large ICT projects – and the large sums of money that can disappear as a result that should be of most concern.” Gauld & Goldfinch.
  • Infrastructure investments – “At the same time as many more and much larger infrastructure projects are being proposed and built around the world, it is becoming clear that many such projects have strikingly poor performance records”. Flyvbjerg et al
  • Business process reengineering – “reengineering efforts had failure rates as high as 70% and one source estimated that 85% of reengineering projects failed.” Pfeffer & Sutton.
  • Mergers and Acquisitions – “70% to 80% of acquisitions fail, meaning they create no wealth for the shareholders of the acquiring company. Most often, in fact, they destroy wealth” Seldon & Colvin.
  • Olympic games – “average cost overrun in real terms of 179% – and 324% in nominal terms” Flyvbjerg & Stewart.

Furthermore, there’s little evidence that things are improving significantly – research in Australia by Capability Management found, “The success ratio of projects has not increased in 15 years”; and the PMI’s 2014 Pulse of the Profession® report noted, “Change initiatives are time consuming and costly, significantly impacting an organization’s drive toward success. And nearly half of them fail.” With regard to megaprojects, Flyvbjerg (2014) concludes that, “overruns have stayed high and constant for the 70-year period for which comparable data exist…Similarly, benefit shortfalls of up to 50% are also common and above 50% not uncommon, again with no signs of improvements over time and geography.”

A number of questions arise from this:

  • Firstly, how accurate is the picture painted of consistent and continuing failure?
  • Secondly, what do we mean by failure?
  • Thirdly, what are the main causes of failure? and
  • Fourthly, what can we do to address the issue?

I’ll briefly address the first three, before focusing in more detail on the actions we should take, and specifically, I’ll argue for a portfolio investment management approach based on disciplined, but ‘fast and frugal’ decision-making.

More (with references) …

To read entire paper (click here)

About the Author

stephen-jennerStephen Jennerflag-australiaflag-uk

Author, Practitioner, Trainer

Brisbane Australia

Steve Jenner is author of, and chief examiner for, APMG’s ‘Managing Benefits™’ (TSO, 2nd Edition, 2014) and is also the co-author of the OGC’s (now Axelos) ‘Management of Portfolios’ (TSO, 2011). The approach to portfolio and benefits management that Steve developed in CJS IT was recognized internationally and won the 2007 Civil Service Financial Management Award. He is a regular speaker at international conferences, trainer and writer on the subjects of portfolio and benefits management – in addition to ‘Managing Benefits’ and ‘Management of Portfolios’, he is the author of, ‘Realizing Benefits from Government ICT investment – A fool’s errand?’ (2011, Academic publishing) and, ‘Transforming Government and Public Services – realizing benefits through Project Portfolio Management’ (2010, Gower). He is also one of the contributing authors of, ‘Project Portfolio Management – A View from the Management Trenches’ published by Wiley in October 2009 and sponsored by the PMI. Most recently he has contributed the benefits management chapter to ‘The Effective Change Manager’s Handbook’ (Kogan Page, 2014).

Steve is a professionally qualified management accountant and a Fellow of the Association for Project Management (APM) in the UK. Steve also holds an MBA and Masters of Studies degree from Cambridge University. Steve is currently working as a Corporate Educator at QUTs Graduate Business School in Brisbane, Australia. He can be contacted via www.stephenjenner.com.