Project Failures

In fact, the Standish Group (www.standishgroup.com) has found
that only about 17 percent of all software projects done in theUnited States meet the original PCTS targets, 50 percent must
have the targets changed—meaning they are usually late or overspent
and must have their performance requirements reduced—
and the remaining 33 percent are actually canceled. One year,
U.S. companies spent more than $250 billion on software development
nationwide, so this means that $80 billion was completely
lost on canceled projects. What is truly astonishing is that
83 percent of all software projects get into trouble!
Now, lest you think I am picking on software companies, let
me say that these statistics apply to many different kinds of proj -
ects. Product development, for example, shares similar dismal
rates of failure, waste, and cancellation. Experts on product development
estimate that about 30 percent of the cost to develop a
new product is rework. That means that one of every three engineers
assigned to a project is working full time just redoing what
two other engineers did wrong in the first place!
I also have a colleague, Bob Dudley, who has been involved
in construction projects for thirty-five years. He tells me that
these jobs also tend to have about 30 percent rework, a fact that
I found difficult to believe, because I have always thought of construction
as being fairly well defined and thus easier to control
than might be the case for research projects, for example. Nevertheless,
several colleagues of mine confirm Bob’s statistics.
The reason for these failures is consistently found to be inadequate
project planning. People adopt a ready-fire-aim approach
in an effort to get a job done really fast and end up spending far
more time than necessary by reworking errors, recovering from
diversions down “blind alleys,” and so on.
I am frequently asked how to justify formal project management
to senior managers in companies, and I always cite these statistics.
However, they want to know whether using good project
management really reduces the failures and the rework, and I can
only say you will have to try it and see for yourself. If you can
achieve levels of rework of only a few percent using a seat-of-thepants
approach to managing projects, then keep doing what you’re
doing! However, I don’t believe you will find this to be true.
The question I would ask is whether general management
makes a difference. If we locked up all the managers in a company
for a couple of months, would business
continue at the same levels of performance,
or would those levels decline? If
they decline, then we could argue that
management must have been doing
something positive, and vice versa. I
doubt that many general managers
would want to say that what they do
doesn’t matter. However, we all know
that there are effective and ineffective
general managers, and this is true of project
managers, as well.