This article appeared originally in the Spring/Summer 2022 edition of SPOTSi-Schlau Magazin.

Projects are inherently risky. Even avid crypto enthusiasts, who seem to get a kick out of volatile and risky investments, will tell you that a 70% failure rate sounds like a bad deal.
That’s right, more than two out of three projects are late, over budget, or fail to deliver the desired results. It gets worse, as only 2.5% of organizations successfully complete all of their projects. Certain projects derail so badly that they even threaten the company’s very existence. [1]

According to a recent study, over 250 billion USD is lost annually in U.S. firms alone due to unsuccessful IT projects. When we extrapolate that number to all failed projects worldwide,
we’re looking at trillions of dollars being squandered. That’s a lot of money to be left with disappointment and disgruntlement. The real damage is significantly bigger than a considerably lighter wallet. Although every project is unique, many fail for the same reasons. But do not despair; there are ways to increase the odds of success, and some of them are quite easy to implement. Before we get to that, let’s have a look first at what we’re all doing so wrong when we manage projects.

Why projects fail

There are numerous reasons why a project may fail. Something as frail as a project plan can easily collapse like a house of cards, and even the slightest disruption in the force can be crippling to the project. It's similar to a toddler, who requires constant care and attention to succeed in this world. Fortunately for the children, projects are managed much worse for various reasons. The following are some of the most frequently cited reasons for project failure.

1. Unrealistic and unclear goals

One of the most significant reasons for a project's failure is a lack of understanding of the intended outcome. Approximately 37% of projects fail due to a lack of defined objectives. Setting a realistic timeline and setting realistic expectations is particularly difficult because we have a natural tendency to be overly optimistic and underestimate risks. When operating in a dynamic business environment, it's not surprising that so many projects get lost in the ether and crash spectacularly. When no one truly understands the objectives, the project manager effectively becomes the captain of a sinking ship, desperately attempting to steer the vessel in the 'correct' direction, except that nobody knows where the destination is. [2]

Failure to align stakeholders is a precursor to major issues down the road. The classic tree swing story, taught in almost every introduction to project management course, is an amusing and strangely familiar tale about how individuals and departments interpret requirements differently and how large the chasm between those interpretations can be. For example, software developers do not report to senior management, and project managers do not report to the quality assurance team. Any miscommunication between stakeholders can start a wildfire that a project manager is powerless to put out.

2. Scope creep

Ambiguity can quickly become a source of contention for the project team. Scope creep is a common consequence of ambiguous project objectives and is frequently attributed to poor planning. Scope creep is particularly easy to imagine in IT projects, where customers are known to change their minds mid-project and request new features, change priorities without notice, or, in the worst-case scenario, completely alter the course of the project. When approached directly, developers abide by the customer's and project manager's wishes. No matter how well-intentioned the efforts to maintain peace are, this has a ripple effect on the budget and schedule.

Even seemingly harmless distractions like phone calls and chit-chatting to co-workers are likely to disrupt your train of thought, and studies have shown that it can take up to half an hour to get back to the original task. You don’t need to do the math to realize how big the impact would be if a customer came by every few days to push through some changes posthaste.

Scope creep is more prevalent than ever in today's world, where agile project methodologies are the norm. While change is inevitable, scope creep is a silent project killer because it reduces the amount of time available to work on the approved scope portions, jeopardizing the project's success. Agile project methodologies are often misused, and ironically, they make ambiguity (and scope creep) worse, not better.

3. Improper resource planning

In the age of hyper-specialization, having the right people and tools available at the right time can mean the difference between success and failure on a project. Inadequate resource planning can result in project delays, while haphazard and inappropriate hiring policies and practices can jeopardize the project's quality. Burnout, for example, can happen when too many resources are used, which has a negative effect on the project's quality, while underusing resources can lead to boredom, low morale, and other negative consequences.

4. Insufficient project visibility

Regardless of how well-planned your project is, a lack of visibility and transparency can still throw a wrench in the works. According to one fascinating study, less than 30% of businesses succeed out of 50,000 projects, and 19% fail immediately. While there are numerous reasons for their failure, the most significant reason was a lack of visibility into the project. [2]

5. Scattered or poor communication

When we consider additional reasons why projects fail, we discover that many fail due to a lack of communication. On the other hand, 91% use at least two messaging services, and employees spend an average of 3.1 hours per day sending and checking emails. [3]

Communication is critical in guiding a project to success. However, this is easier said than done. It's already challenging to communicate with others when they're in the same room. Remote work introduces another complication that organizations appear unable to address. The majority employ multiple communication systems, which obstruct communication between team members and paves the way for errors due to dispersed information. [4]

6. Improper budgeting

Numerous factors contribute to projects overshooting their budgets. For example, when a project is running late a budget can be used rather quickly; for time and material projects or with contractors involved, this is almost a certainty. Estimating the budget of a complex project before it starts, isn’t easy. A few contributing factors reduce the budget more than would be deemed responsible or even sensible.

A second reason is that people tend to be optimistic in their approach to projects. Conservative budgets with a cushion to absorb unexpected delays and costs are not always popular with those funding a project. Almost always, projects will cost more and take longer than anticipated. With the knowledge that something will almost certainly go wrong, it begs the question of: why was this not reflected in the budget?

Solutions

Wouldn't we all like to have a magic formula that points us in the right direction and solves all our project management problems? Regrettably, there are simply too many variables and too much unpredictability that can derail a project. Neither a quick fix nor complex, all-inclusive frameworks can ever ensure complete success.

Because humans create projects, their problems are also unique to humans. It may appear frivolous to attempt to improve the dismal success rate, given that no single measure or an elaborate set of well-balanced efforts can ensure success. However, with some historical lessons, common sense, best practices, and help from technology, it should be
possible to improve that poor success rate.

1. Project management software

It is no longer dogs, but rather project management software that is a man's best friend. People are surprisingly inept at estimating and planning work and managing the numerous balls constantly in the air throughout a project. Fortunately, computers never miss a beat and can assist the project manager with reminders, recommendations, business rules, alerts, and other tools that help keep a project on track.

According to studies, roughly half of organizations improved their accuracy when estimating the cost of a project when they used project management software, and companies that use proper project management practices save 28 times more money than those that do not! [5]

Additionally, a good project management tool provides visibility and transparency. A visual representation of the project's status, backed up by appropriate document management and collaboration tools, can produce outstanding results. When every project team member has a complete picture of the project's status, they can assist and adjust their tasks appropriately, resulting in increased problem-solving and proactivity. A project management solution supports 77% of high-performing projects, speaking to its overall success. [6]

2. Proper resource allocation

While it is true that poor resource planning can have a significant impact on a project, the opposite is also true: better (or more effective) resource planning can help produce even better results.

Having a firm grasp on the demand and supply of an organization's resources is necessary for developing a feasible and realistic plan. With modern and intelligent technology, resource planning tools can assist in interpreting and tracking resource utilization and generating intuitive reports. For example, when a deadline approaches and specialized resources are required, a project manager will be able to see the schedules in real time and be able to allocate the right resources so that there are no unnecessary delays.

Inadequate project planning can have a cascading effect on other areas, such as resource planning. Rare resources may be fully booked months in advance. When a project deviates from its intended path, it will miss the window for utilizing that resource, resulting in additional delays and sending the project down the rabbit hole toward "destination failed." This example illustrates this article's premise: having a resource planning solution may tip the scales in your favor, but it isn't very sensible if the project manager (or any other stakeholder, for that matter) ignores the numerous other factors that may affect the project.

3. Set clear, realistic goals

Project managers are uniquely positioned to act as a bridge between stakeholders and bring them together to work toward a common goal. The project manager's primary responsibility is to educate and manage stakeholders regarding the project's processes, objectives, timeline,
and budget. Practically speaking, the team must establish protocols and practices and, of course, adhere to them.

For instance, to prevent scope creep, everyone must be aware of the potentially catastrophic consequences of seemingly innocent requests. Giving a project manager responsibility and
accountability – even superseding the chain of command, including their direct supervisor – is one way to put the project manager in charge and allow them to make decisions.

Holding someone accountable is one thing, but the team must also quantify the project's objectives and progress. Clearly defined objectives and criteria are an easy yet effective way to keep a project on track or even pivot to stay on track. This is, of course, easier said than done. Projects rarely operate in isolation and rarely take a linear, static path. Enter agile methodologies to establish a lean project approach and empower teams to pivot when unforeseen changes occur. Again, software can assist with this, but it will shine only if
the team fully embraces the agile mindset and consistently applies its practices.

4. Effective communication channels

One must ensure that the project team is entirely aware of the proper use of communication media. Maintaining a healthy balance and selecting the appropriate channels is critical. For instance, meetings, like e-mails, serve their purpose, but they are not always the best tools for the job.

Structured data, possibly backed up by software, enables easy progress tracking and can be supplemented with unstructured data such as notes, e-mails, and meeting minutes. Guidelines
should be established to ensure that the team is not constantly switching contexts and spending hours keeping up with the latest project news. There is no shortage of chat applications, document management systems, and project management tools that enable team members to communicate more effectively.

5. Flexible and accurate budgeting

When developing the project budget, it is prudent to include a contingency fund to cover unexpected costs and delays. Inaccurate estimates are a significant cause of project failure – 28% believe that inaccurate cost estimates contributed to the failure of their project – so
it's past time for organizations to take cost estimation and budgeting seriously, rather than focusing exclusively on increasing profit margins and reducing costs.

Conclusion

Years of research and thousands of failed projects have revealed a few common reasons for project failure. Numerous risks overlap and are interconnected. Innumerable incidents can be
traced back to poor planning. Spending more time and attention on planning is not the silver bullet we are all looking for, but it is a low-cost solution to a high-cost problem: a failed project. Adopting the appropriate policies, embracing an agile mindset, and focusing on well-defined goals are critical steps toward successfully completing projects.

References

[1] https://www.mavenlink.com/blog/article/21-shocking-project-management-statistics-that-cost-business-owners-millions-each-year
[2] https://hive.com/blog/project-management-statistics/
[3] https://www.replicon.com/blog/projects-fail-combating-project-overrun-visibility/#:~:text=Even%20more%20disturbing%20is%20their,lack%20thereof)%20into%20your%20projects
[4] https://proceso.pro/en/blog/why-do-projects-fail-because-of-a-lack-of-communication/#:~:text=According%20to%20the%20Project%20Management,30%20percent%20of%20the%20time
[5] https://saaslist.com/blog/project-management-statistics/
[6] https://hive.com/blog/project-management-statistics/

Graphic designs: courtesy of freepik.com.

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