Most Common Causes of Project Failure

Introduction

Yearly, enterprise organizations all over the world encounter extremely high rates of project failure, resulting in the waste of millions of dollars per failed project. These same organizations struggle to identify the reasons behind the failures, resort to expensive consultants to recover failing projects, and frequently abandon what were initially well-planned projects with high chances of success.

Managing projects successfully cannot be attributed to a singular methodology or organizational structure. Different organizations manage functional projects differently, with some having fragmented and decentralized groups with various titles indicating their project management roles, while others have large, centralized support organizations comprising project management professionals.

Despite these physical differences, there are common organizational needs that can be delegated to the appropriate groups to save or manage projects. Along with a clearly defined charter, the following list summarizes some of the primary project management functions that are vital to achieving project success:

  • Recruit and maintain adequate technical and non-technical resource skills.
  • Manage the allocation of scarce resources.
  • Define and collect operational metrics to support project and stakeholders’ decision-making.
  • Promote efficient and effective communications.
  • Select and utilize technology-related tools.

A significant and sometimes overwhelming task, according to many project management professionals who excel in this field, is consolidated in the list.

While managing projects has been a longstanding and widely practised achievement throughout history, exemplified by the builders of the pyramids, the skilled craftsmen behind great cathedrals and mosques, and the creators of the Great Wall of China and other man-made wonders of the world, project management as a discipline within enterprises is relatively new. For most organizations, it traces its roots back only to the latter half of the 1950s. Consequently, compared to other business disciplines such as finance, operations, or accounting, project management in organizations has not had sufficient time to develop and mature.

Numerous articles suggest that project management is not considered a successful profession by outsiders, citing high project failure rates and debates about their value within organizations. Despite this, we believe that projects are crucial to an organization’s success, and their poor management can lead to business failure, while effective management can provide a significant competitive advantage.

However, despite their value, why are projects not universally recognized as essential business functions? What is required to successfully manage projects and gain a competitive advantage? Projects are like business levers, enabling organizations to achieve more than they could without them, but they also involve challenges related to scoping functions such as cost, schedule, and purpose. How can one ensure that a project’s goals are met, particularly when it is still in progress?

Why Projects Fail

Project failure is a possibility for any organization and project, with countless reasons that could contribute to it. While some factors may be beyond the control of the project manager and team members, other reasons may be controllable. Interestingly, both failed projects and the people involved in the failure are often provided with “quick fixes” that are typically ineffective and can sometimes have disastrous consequences.

To illustrate this, one can use a medical analogy. The flu is caused by a virus and is not responsive to antibiotic drugs. Similarly, for projects, technology is often seen as the “antibiotic” solution that is prescribed. Suggestions such as upgrading software for project tracking, using the critical chain instead of the critical path, or employing a Monte Carlo simulation to calculate project risks are commonly recommended. However, these powerful interventions can fail when they are inappropriately applied.

The objective of project management is to deliver a successful product or service, but this can be impeded by mistakes of omission or commission made by management, project managers, team members, and others involved in the project. This paper aims to identify the typical reasons for project failure by utilizing surveys and questionnaires to gather data that can be used to reduce the likelihood of such failures occurring and, in some cases, rectify the damage caused to recover the project.

Projects typically fail due to inadequate attention and efforts being directed towards seven key project performance factors:

  • The focus should be on business value rather than technical details. This involves establishing a clear connection between the project and the organization’s essential strategic practices. The project plan should encompass the intended delivery, the necessary business changes, and the means of achieving benefits.
  • Ensure accountability for measured outcomes. A clear understanding of the interdependencies between the projects, benefits, and success criteria is crucial. Before proceeding with any other work, it is necessary to establish a reasonably stable requirement baseline. However, requirements may still evolve as the project progresses. Almost all projects involve some degree of “learning what the requirements really are” during the construction of the project product.
  • Maintain consistent processes for managing clear checkpoints. Successful large projects usually employ software measurement programs to capture historical data on productivity and quality. Such data can be compared against similar projects to assess the validity of schedules, costs, quality, and other project-related factors. The absence of effective quality-centered mechanisms can significantly contribute to both cost and schedule overruns.
  • To ensure project success, it is crucial to have a consistent methodology in place for planning and executing projects. A detailed plan should be created before any project release date is announced, as inadequate planning is a leading cause of project failure.
  • The involvement of the customer from the project’s outset is also critical, with continuous engagement necessary to make necessary adjustments. Successful projects have been observed to involve end-users and project members working closely together, though this is not always feasible. Informed customers providing meaningful input during all stages of requirements gathering, product definition, and implementation can significantly reduce the risk of project failure. The customer must consider the project’s long-term utilization and benefits.
  • Furthermore, managing, and motivating project team members is essential to achieve optimal performance throughout the project’s lifecycle. This includes retaining highly skilled and productive individuals, as knowledge is an invaluable asset. A project team composed of higher-paid, specialized individuals is more valuable per dollar than a group of lower-cost, untrained employees who require weeks or months of training before becoming productive.
  • To consistently deliver successful projects, it is crucial to equip project team members with the necessary tools and techniques. The team should consist of skilled and experienced individuals with clearly defined roles and responsibilities. If team members lack expertise in certain areas, access to the necessary knowledge and skills should be provided to support them in their roles.

How to protect your business from project failure?

Public liability insurance is a crucial consideration for businesses undertaking projects that involve interaction with members of the public. This type of insurance provides protection against any legal liability for injury or property damage caused to third parties because of the business’s activities. Without public liability insurance, businesses could face substantial financial loss or even bankruptcy in the event of an accident or injury occurring during the project. In addition to providing financial protection, having public liability insurance can also increase a business’s credibility and demonstrate to clients and stakeholders that they take their responsibilities seriously. It is important for businesses to carefully consider their insurance needs and ensure that they have adequate coverage in place before commencing any project involving public interaction.

Conclusion

In conclusion, successful project management requires a comprehensive approach that encompasses various factors, including planning, customer involvement, effective communication, resource management, risk mitigation, and continuous improvement. Failure to address any of these areas can lead to project failures, which can have significant financial and reputational consequences for businesses. It is therefore crucial for businesses to invest in project management expertise and resources, and to develop a culture of continuous improvement that fosters learning from past mistakes and successes. By adopting a strategic approach to project management and considering the various factors that contribute to success, businesses can achieve their objectives, gain a competitive advantage, and deliver value to their customers and stakeholders.

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