Causes of project failure
a survey of professional engineers
Poor planning? Bad luck? Mismanagement? Projects fail for a variety of reasons, most of which are interrelated and can be traced back to the planning phase.
Afreeway overpass ends abruptly six stories above the ground, as though sawed in half. The freeway interchange project ran out of time and funds. Now the overpass stands as a reminder of project failure to the thousands of motorists passing by every day.
The newspaper features the story of a corporate vice president who was fired because an attempt to reorganize a company division could not meet customer demands and bridge the gap between the old organizational structure and the new.
Packing sustained winds of over 140 mph, a hurricane hits the Gulf Coast, nearly destroying a coastal community with high winds and water. Looting occurs, electricity is out, food is short, and the local hospital is overwhelmed. The community's disaster-preparedness committee discovers, much to their dismay and too late, that it is unable to meet community disaster needs during the crisis.
In each of these examples of project failure, what happened? Was there poor planning or a lack of sufficient resources allocated to the project? Was it just bad luck—or poor management?
A survey of 70 professional engineers (conducted in December 1994 by the author and sponsored by the Faculty Research Support Fund at the University of Houston Clear Lake) suggests that there are at least a dozen distinct explanations for project failure. In this survey, the engineer-respondents were presented with 70 postulated reasons for project failure. The respondents were asked to rate each prospective reason by its importance as a cause of failure, and to select the five most important reasons. An open-ended portion of the survey allowed each respondent an opportunity to provide additional reasons for project failure. After assimilating and aggregating the results, it was determined that there are at least 12 different general possible causes of project failure. Figure 1 displays an Ishikawa diagram of these possible causes.
Planning. The most important key to a project's success may be planning. While it is unlikely that project planners have knowledge of all activities and resources needed to effect successful project operations, it is imperative that they understand as much about the project goals and objectives as possible before project launch. Such planning items as project definition and scope are critical. In the survey of engineers, the No. 1 rated reason for project failure was “the project was not adequately defined at the beginning.” The third most highly rated reason was “a lack of clearly defined project goals and objectives.” The fifth most highly rated reason was “project planning was done with insufficient data.” Another reason that was rated as important was “poor work definition.” Each of these contains some aspect of project planning as a concern.
Project planning can be improved by involving key players up-front. Project team members, along with representatives from upper-level management, finance, purchasing, vendors and contractors, clients, and others should all be part of the project planning process. Many pitfalls can be avoided through the advice and insight shared by planning team members. For example, a vendor might be aware of an impending steel shortage for a bridge building project, which may bring the project to a halt for several months. In a project to remodel a hospital wing, an electrical engineer might be able to point out that some present wiring may have to be reconfigured for new computer hardware, and this information can be input before walls have been built and sealed.
Figure 1. Causes of Failure
Some survey comments on planning concerns included “failure to have regular project planning meetings,” “failure to set realistic goals for team members early,” “lack of constructibility,” “failure to define requirements properly,” “poor design review in initial planning,” and “not enough time spent building the project infrastructure.”
Change. Change is a major cause of project failure. Project specifications can be changed for several reasons: initial planning was not complete or thorough; upper-level management changed the scope of the work; the client (if not upper-level management) changed the scope of the work; unforeseen difficulties arose (acts of nature, labor shortages, environmental concerns, regulatory changes, etc.); and financial problems.
Project changes often result in cost increases and schedule modifications. Many project changes are a result of poor planning. Some project planners suggest that the cost of executing a project change increases exponentially with time. Major changes late in the project can kill the project. The newspapers are filled with examples of highway, building, airport, stadium or park projects that have had huge cost overruns because newly elected government officials change specifications on projects started by previous administrations.
Millions of extra dollars have been spent on power plant projects as a result of government regulations changing during the building stage. In this survey, two of the top ten reasons listed for project failure were “too many project changes” and “the scope of the project changed during the project.” Other reasons related to change included “too many project changes resulting in loss of project direction” and “failure to quickly absorb changes in scope.”
The Project Manager. Another possible cause of project failure, shown in the Ishikawa diagram, is the project manager. A project manager who helps steer the project in a timely fashion and provides sound, inspiring leadership can go a long way toward bringing about a successful project. In this survey of engineers, “an incompetent project manager” was the second most important reason given for project failure. This was followed by “project manager unwilling to make decisions,” which was fourth, and “project problems ignored” at number six. Three other highly rated reasons for project failure were “poor management by the project leader,” “loss of control by the project manager,” and “the failure of the project manager to delegate.”
Scheduling. Scheduling is a key variable in the success of a project. Failure to meet the project schedule can result in increased costs because of equipment and human resource downtime, inflated values of raw materials and supplies, poor morale, lack of coordination of subcontractors, and lost opportunities. In the survey, three of the top 15 reasons for project failure were related to scheduling. These included “overly optimistic deadlines,” “the project attempted to accomplish too much in too short a time frame,” and “the project schedule was not followed.” Either an unrealistically short schedule was conceived in the planning phase or the project team did not follow the schedule that was established. Stretched schedules and prolonged delays can result in an increase in the prices of goods and services. In addition, because of the coordination of activities in the scheduling network, failure to meet deadlines for one activity can result in the failure to meet schedule deadlines for many other activities, causing a domino effect of schedule slips.
One survey respondent suggested that there are some projects for which there is no intent to complete, due to infinite funding. Such a project would have little or no set schedules but rather would follow a continuously unfolding scenario.
Management Support. Another of the top reasons for project failure mentioned in the survey was the lack of support and involvement of top management. Upper-level management should make it clear within the company culture that the project is worthwhile and that they support it. Their role in the project is to select a project manager who will be most effective in leading the project and will provide the resources necessary to complete it. However, over-involvement by upper-level management undermines the project manager's authority and the respect of team members, subcontractors, customers, and others. In effect, attempts by upper-level management to over-control the project can actually result in a project that gets out of control. The role of upper-level management in a project is not to be the project manager, but to be a sponsor and facilitator of the project.
Other survey suggestions from engineers regarding upper-level management's involvement in project management are that projects sometimes fail because of the “owner meddling in the project manager's affairs” and “team members being removed from the project for long periods of time to complete other company tasks.” Borrowing project team members for other tasks after they have been assigned to a project can cause the project to stall out.
Funding. Improper funding can be a cause of project failure. Appropriate funding levels should always be determined at the planning stage of the project. Failure to provide adequate funding resources will makes it difficult to meet project objectives and satisfy the customer (internal or external). An erosion of funding support forces the project team to exert time and energy to find creative new ways to execute the project plan. Overly optimistic funding projections can be as deadly to a project's success as overly optimistic schedule deadlines. Retracting committed funds during a project's life is often the kiss of death to the project. The freeway ramp that abruptly ends in the air serves as a monument to a project that ran out of funds.
Cost Containment. Failure to contain costs can also cause project failure. Funding projections for a proposed project might be adequate, but if project costs escalate beyond initial estimations, the project can still be derailed. Failure to contain costs often occurs because of changes made in the scope of the project after it is under way. The further the project is toward completion when change is implemented, the more potential there is for cost overrun. To maximize cost containment, the project team and, in particular, the project manager need to show discipline and to focus on the original project plan as much as possible. During inflationary periods, it is imperative that the project stay on schedule so that the costs of materials, supplies, and labor do not increase beyond the project budget. The inclusion of company purchasing agents in project planning can be helpful in developing realistic goals.
Resources. A project may be doomed to failure if inadequate non-funding resources are allocated to the project. Resources—human as well as equipment and facilities—are usually determined at the project planning phase. Insufficient or ill-fitting equipment or inadequate facilities can sidetrack a project, causing a drain on the time and energy of the project team. This in turn stretches the project schedule and can result not only in a dissatisfied customer but also in increased costs. Insufficient human resources will usually slow a project down or place an inordinate burden on project team members, resulting eventually in burnout, mistakes, poor morale, or any combination thereof. A case also be argued that an over-assignment of human resources to a project can slow the project down. Perhaps a representative from human resources could be included in project planning so that there is an optimal assignment of people to tasks.
One major recommendation of this study is that all the stakeholders of the project be included in a very thorough planning process, thereby maximizing the input from the various vested interests and broadening the understanding of the project manager and team members.
Information Management. Another source of potential project failure is poor information management. Information management can consist of anything from a flow of memos to high-end project management software. The transference and communication of cost, schedule, inventory, and feedback information is vital to a project's life. The project manager and all key players should be privy to the latest information on the project's status on a regular basis so that the project can be kept on course and deviations can be recognized and corrected. Survey respondents suggested that project failure can be caused by “lack of quality feedback (audits, rework, etc.)” and “poor coordination with vendors.” Each of these could be improved through better information management.
Incentives. Some engineers in the survey felt that project failure can be traced to the failure to utilize penalties and rewards as motivation for the successful completion of tasks. If project team members, subcontractors, vendors, and other project players don't have hard incentives to complete their tasks on time and within budget, they may find other tasks and projects that are more pressing or more rewarding. Some argue that project participants, particularly vendors and contractors, should be given reward incentives for doing a good job and bringing their effort in on time and under budget and that penalties should be assessed for those who fail.
Risk Analysis. Failure to properly assess the risk of the project and evaluate the project sponsor's and project manager's propensity toward that risk can doom the project. As a project unfolds over time, the world evolves. Financial markets change, the business climate changes, technology changes, and the governmental and cultural climate changes. Virtually no project is undertaken in a static system. Risk analysis should be an essential part of the planning process. An important early step is to examine the risks along with the potential benefits before determining whether to continue on or to terminate the project.
Other reasons. A few other reasons for project failure were postulated by engineers in the study. One of these was “failure of suppliers to meet their commitments.” The commitment and reliability of a supplier is a serious concern, especially in the present-day continuous quality improvement environment. The supplier is a project team member and needs to understand the importance of timely deliverables.
Another reason given by respondents for project failure was “government interference.” Many projects have succumbed to the stress of changes and associated cost increases that come with fickle government regulations. Project planning risk analysis should include both an examination of current regulations and crystal-balling about likely regulatory changes. Survey respondents mentioned as a reason for project failure the “inability to assess community reaction to the project ahead of time (usually environmental concerns).” Often we see on the news construction projects that are halted because of grassroots environmental movements. Preliminary project planning should include test market research as to the acceptance of the project by the community. Perhaps a “testing of the waters” can be done by floating the project idea in community meetings before investing significant financial resources in it.
There are many different, seemingly independent causes of project failure. However, as one studies the entire spectrum, it becomes clear that many of these causes are actually interwoven and dependent. Changing the project's scope not only affects cost, but it also affects schedules and resource allocation. Ineffective project managers or poor information systems can result in slipped schedules, increased cost, and dissatisfied team members. One major recommendation of this study is that the various stakeholders of the project be included in a very thorough planning process, thereby maximizing the input from the various vested interests and broadening the understanding of the project manager and team members. If realistic goals and objectives are set in the beginning, increased costs, missed schedules, the assignment of inappropriate or substandard resources, and changes can be minimized or overcome, resulting in success rather than failure. ■
Ken Black, an associate professor of decision sciences in the School of Business and Public Administration at the University of Houston Clear Lake, has written two textbooks and numerous articles and papers. He has also presented seminars in project management.
PM Network • November 1996