Overrun in big IT projects leads to one in three failures

One-third of big technology projects such as the National Programme for IT are likely to get derailed after they have been running for two years, according to research.

Contracts that are short are more likely to succeed than low-budget projects that last a long time, found the study from the University of Oxford’s Said Business School

The research looked at around 2,200 projects worth a total $260bn in the US and Europe, split 35% across the private sector, with the rest the public sector.

Of the projects documented the average cost overrun for ICT was 27%.

In reality 15% of IT and infrastructure projects go out of control. In engineering it is half that, said Alexander Budzier author of the Black Swan Management report.

Speaking at the IT Directors Forum he said every extra year projects run over schedule increases the overall risk by around 5%.

“A lot of it has to do with complexities of projects. The indicators that flare up at the post mortem tend to be that this was seen as a ‘unique project’, it faced organisational resistance, there weren’t effective structures in place, or good team communication. Those social factors are hard to forecast.”

Budzier said the UK public sector wasn’t  uniquely bad in the way it does IT, despite its reputation, and that the private sector was as prone to failure in this area.

The establishment of the government’s Major Project Authority, designed to flag up when big projects were in trouble was an effective way of managing risk, he said.

“We collected data on two private sector organisations that did something on a smaller scale by also building project management capabilities and a talent pool. Once those two organisations had installed a project management office to screen project proposals and create transparency, cost overruns went down so much that they were under spending on average by 30%. Transparency of [how the projects were developing] was directly tied to performance. That process took up to five years.

“There is a high level of ambition and speed in what the MPA is doing, the fact it has got highly skilled people in there and drawing from people internally is a good sign it is to be taken seriously. For example, it achieved the review of mega projects in a short time frame. 

More than half of major government projects worth £376bn are behind schedule, according to the head of Whitehall's MPA.

But Budzier said the figure of 50% of projects not running to time and budget was not surprising and aligned with industry averages. The real issue is how many project run out of control and could become write-offs, he said.