6 Reasons Why Projects Fail in Enterprises

6 Reasons Why Projects Fail in Enterprises

According to a Standish group report, enterprises in United States spend more than $250 billion each year on IT development, approximately 175,000 projects. The research further shows that a staggering 31.1% of projects will get cancelled before they ever get completed and 52.7% of approved projects will cost 189% of their original estimates. According to PMI’s Pulse 2014, organizations are losing an average of US$109 million for every US$1 billion spent on projects. These are staggering numbers, ones that scream failure.

In post mortem, project failure gets defined in different ways, attributed to different reasons. In my mind, a project fails when it doesn’t fulfill the objectives that were set at the time of commissioning. It could be a budget overrun, a significant delay in delivery, a quality lapse or way too much iteration. One could argue that as long as it is complete and delivered to the stakeholders or customers, it is successful. No, I don’t buy it. There is no such thing as small or large failure. The point is a project is commissioned to achieve a certain business outcome with certain defined parameters and constraints. If they are not met it is a failure. Period!

So why do projects fail? In this blog we will look at 6 major factors that contribute to project failure.

1. Overambitious scoping

Project stakeholders from the client side often harbor an extremely grand vision of the outcome and expect the execution team to deliver beyond the expectations. The delivery leaders in turn promise to deliver the sun, moon and stars to stakeholders, without having a complete picture of resource capacity, skills, budget constraints and timeline feasibility. The entire group walks away with unrealistic expectations, ones that will probably never get met, let alone be exceeded. This is surefire way to ensure the project fails. Scoping is a critical phase and parties involved need to ensure they are setting realistic expectations that are backed by authentic data and thorough planning.

2. Wrong success metrics

The only way to know if a project is on the right track to success is to have the right metrics to determine success. Parameters such as time and budget can be tracked quantitatively and are relatively easy to measure but tracking and measuring metrics that tie to business outcomes are not that easy. Organizations tend to measure and report standard time, budget and milestone adherence, but that is not enough. Business outcomes, especially on large and complex projects depend on multiple factors such as productivity, resource utilization, resource capacity, time tracking, time on unplanned activities, just to name a few. With so many data points and metrics, organizations tend to get lost in a maze of graphs and lose sight of the big picture. They key is to chose the right metrics and weave them into a measurement system that translates into informative dashboards, giving everyone the true picture across the board at any point in time.

3. Lack of risk management

Poor risk management strategy is one of the most common reasons for project failure in enterprises. Once the project gets underway, project managers and stakeholders need to look beyond just execution, keep a close eye on risk factors and take necessary actions for course correction. Organizational culture also plays a significant role in risk management. A lot of companies discourage ‘red flags’ and tend adopt the ‘business as usual’ work philosophy. That is a potential disaster waiting to happen. Project teams need to be equipped with the right risk management strategy, tools and training to handle risk scenarios. Staffing also has a key role to play in selecting the right caliber of people in project management roles.

4. Lack of proper tools & processes

According to PMI, only 25% of enterprises are established PPM practices. Organizations are still using multiple tools, excel sheets and run of the mill processes to plan and execute large scale projects. The other issue pertaining to tools is the lack of adoption and use. That’s a sureshot recipe for failure. How can projects that involve multi location teams, complex workflows and multiple stakeholders be successful without the right processes and comprehensive PPM tools to tie the efforts together? Enterprises need to move past investing best in class multiple tools to adopting comprehensive PPM tools that provide end to end capabilities and integrate well with the business environment.

5. Skill gap

Project management methodologies have evolved significantly over the last decade and so have expectations from the project manager role. Organizations that continue to look at project managers as coordinators will have to face the consequences of failure. Business environment today demands effective communication across locations, timezones and cultures, proficiency with tools and processes, data driven decision making and leadership abilities. Those considering project management as a career will need to come to terms with the evolution and step up their game to stay relevant. (Read: Future Proof Project Manager).

6. Accountability issues

When a project starts going downhill, 9 out of 10 times, all fingers point to the project manager. Project Manager often faces the noose for bad planning, poor execution or any reason stakeholders can conveniently come up with. That is not just bad organizational behavior, it’s also extremely illogical. A project is owned and managed by large group of people, all accountable for specific aspects of the project. If all these aspects are taken care of well by those responsible, the chances of failure should be minimal minimal. Enterprises need to understand that project Management is a discipline, not just a role. Everybody in the organization is a project manager and collective accountability is the right way to go.

Let us know what you think. Leave a comment!

About Celoxis

Celoxis is a comprehensive project management tool that helps companies streamline management of projects, time sheets, expenses and business processes, specific to their organization. Over the last decade, Celoxis has specialized in delivering improved collaboration and increased efficiency for teams of all sizes, both in SMB and Enterprise segments. To know more visit www.celoxis.com

Author:  Nikhil Daddikar, Co-Founder, Celoxis Technologies

Nikhil  Daddikar - Co-Founder, Celoxis Technologies
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