Why Do Projects Fail?

(Featured Image Source: Washington State Department of Transportation)

This post on Innovation Intelligence is written by Guy Shtub, Chief Executive Officer of SandboxModel, LTD. The project management tools, Project Team Builder Analytics and Project Team Builder Training are available through the Altair Partner Alliance.

Example Project: The Alaskan Way Viaduct

The Alaskan Way Viaduct is a road tunnel project, under construction in Seattle, Washington. The tunnel, with a budget of $1.4 billion was scheduled to finish in November 2015. It is already scheduled to finish two years late. Bertha, one of the biggest tunneling machines in the world, broke down on December 2013. At the time, the machine completed only one ninth of its job. In mid-march 2015, as part of a rescue mission the machine was lifted to the ground for repairing. The first estimation for the cost of repairs is $125 Million.

Facts and Numbers:

Mega projects are defined as large scale complex ventures that typically cost more than 1 billion USD. Evidence shows that 9 out of 10 mega projects have cost overruns. According to Bent Flyvbjerg of Oxford University, the iron law of mega projects is “over budget, over time, over and over”. Mega projects consistently deliver less than half of the promised monetary benefit while finishing over budget. Overruns up to 50% in real terms are common, and over 50% are not uncommon.

According to one study, total annual project waste from information and communications technology projects in the US alone is estimated at $55 billion. In a survey of 10,640 projects by PwC of 200 companies from 30 countries in various industries, only 2.5% of the companies successfully completed 100% of their projects.

Data: Flyvbjerg 2014, "What You Should Know About Megaprojects and Why: An Overview"

Data: Flyvbjerg 2014, “What You Should Know About Megaprojects and Why: An Overview”

Reasons for Failure:

In a recent study Mr. Flyvbjerg shows how the “unfittest” alternative for executing a project is selected instead of the most adequate one.

According to the PwC Project Management Global Survey, Third Edition, the largest (32%) contributor to project failures is poor estimation during the planning phase.
Other leading contributors:

  • Unclear objectives and business goals
  • Poor planning and an unrealistic schedule
  • Unaligned team and lack of teamwork

A Light at the End of the Tunnel?

Decision makers started to acknowledge the problem. That’s a start. Great planning is a leading indicator for project success. Better methodologies are being adopted by project teams. One of the keys to more successful projects is forward thinking, evaluating different alternatives, and considering the risks associated with each alternative.

At the very early stages of the project each decision made has a huge impact on project results. However, at this stage, also known as the “fuzzy front end”, the amount of available information is low.

By creating an advanced model of the project and using advanced tools and techniques, such as the PTB Analytics, project teams can examine what-if scenarios and prepare for different risks, while assessing the impacts of unfortunate events occurring.

According to the PwC Project Management Global Survey, Third Edition, training also has a huge impact on project results. Organizations with project management training constantly deliver better results with fewer resources, compared to organizations without PM training. By using Simulation Based Training organizations improve the skills of project teams in an engaging and efficient manner.

Altair Partner Alliance

Altair Partner Alliance

The Altair Partner Alliance (APA) provides access to a broad spectrum of complementary software products, through the use of HyperWorks Units (HWUs) at no additional cost. Their continuously expanding list of partner software, across a broad range of disciplines, serves the needs of hundreds of companies ranging from automotive, aerospace, and defense to consumer products, biomedical and heavy equipment. The APA curates a diverse collection of blog posts written by its many partners to keep readers informed on a variety of trending engineering topics.
Altair Partner Alliance
Altair Partner Alliance

About Altair Partner Alliance

The Altair Partner Alliance (APA) provides access to a broad spectrum of complementary software products, through the use of HyperWorks Units (HWUs) at no additional cost. Their continuously expanding list of partner software, across a broad range of disciplines, serves the needs of hundreds of companies ranging from automotive, aerospace, and defense to consumer products, biomedical and heavy equipment. The APA curates a diverse collection of blog posts written by its many partners to keep readers informed on a variety of trending engineering topics.