Knowing right from wrong

what research tells us about ways to increase the chances for project success

Marv Goldstein, Manager, Technical Research & Analysis, ESI International

This paper argues that the value of project management can be calculated by showing its impact on reducing the risk of project failure and increasing the chance for project success. A cumulative look at research on project success and failure reveals several common processes and practices, which when applied, can increase the chance of a project's success.

Project success is often judged against the triple constraints of time, resources, and requirements. In other words, project management is about completing projects on time and within budget while ensuring the customer's requirements are met. Unfortunately, research has shown that most projects, most notably those involving information technology (IT) and capital expenditures, have a high failure rate. Many IT projects, for example, are late, cancelled, over budget, or do not meet user requirements.

Calculating the return on investment (ROI) is the most common way to show the value of project management. The calculation shows that $X of project management will give you $Y of benefits (hopefully with Y>X). Calculating ROI this way is very difficult because, among other things, there are factors beyond the realm of project management that can be credited (or blamed) for impacting a project's success.

Success vs. Failure

This paper examines trends identified in the results of project management research conducted in the U.S., Canada, and Europe. No review was made of the statistical significance or methodologies used in the research studies.

Several studies have exposed poor project management practices that most likely contribute to project failure. Other studies identify project management practices associated with successful projects. Factors for both project failure and success are shown in Exhibit 1.

Exhibit 1. Attributes of Project Failure and Success

Attributes of Project Failure and Success

Convergence

While a great amount of research focuses on either the causes of project failure or attributes of project success, no analysis is available comparing and contrasting the two. When the two factor lists in Exhibit 1 are compared, we see that the activities leading to project failure, if properly performed, may also contribute to project success. Thus, having a solid requirement statement with executive-level support and a project manager who has good business skills may significantly reduce the chances for project failure. Given this information, organizations may be willing to invest in project management training and tools that address these factors to increase their chances of project success.

Part I—Is There a Problem?

A significant amount of research reveals that many projects fail. A look at the studies and some of the factors that most likely contributed to project failure are shown in Exhibit 2.

The most often cited study on project failure is from The Standish Group. The Standish Group's research indicates that 74% of all IT projects fail (come in over budget, do not meet requirements, or run past the original deadline), while 28% of projects fail altogether.

Other studies reinforce The Standish Group's finding of a high rate of project failure. According to a joint study by TechRepublic and its parent, the Gartner Group, a staggering 40% of IT projects fail to meet business requirements. The study stressed the importance of the project manager in improving the effectiveness of the IT organization. The report identified specific project manager deficiencies, or as they refer to it, “competency failure,” as major contributors to a project's downfall. The Business and Behavioral Competency Failures are listed in Exhibit 3.

Exhibit 2. Studies Identifying Factors That Contributed to Project Failure

Studies Identifying Factors That Contributed to Project Failure

Another study on IT projects, which was published by the British Computer Society (Taylor 2000), revealed an 8% failure rate. The research emphasized the importance of the project manager.

A fourth study on IT projects also concluded the same poor results. The consulting group KPMG found in its study that of the projects deemed to have failed by the study respondents, 75% exceeded their schedule by 30% or more, and more than 50% exceeded their budgets by a substantial margin.

Project failure is not unique to IT projects. According to The Business Roundtable, an association of chief executive officers of leading U.S. corporations, things are not much better for capital projects. In a study on capital projects conducted by The Business Roundtable, it was revealed that while cycle times are 20% faster and projects are safer in construction than 20 years ago, cost remains unpredictable. In addition, more than two-thirds of major projects built by the process industries in the U.S. within the past five years have failed to meet one or more of the anticipated key objectives. The Business Roundtable's research also revealed that poor project definition is the prime reason companies are failing to achieve effectiveness in capital projects.

Part II—Can Projects Be Done Right?

Many projects do, in fact, succeed. A look at the studies and some of the factors that most likely contributed to project success are shown in Exhibit 4.

While the research cited in this paper until now has been based on studies and surveys, there is also research based on actual experiments. For example, the European Software Institute has conducted experiments to provide value-added information for the European Software Best Practice Repository. One experiment (Cronau 1997) involved using project management, configuration management, and change management tools in a software development process.

ESI International Research

ESI International has conducted its own research on the value of project management. Reviews have been conducted on ESI's project management consulting and training programs. For example, in 1999, a large high technology company had a program that was $100M over budget after six months. There was no formal project kickoff or project tracking, procurement support processes were not working, internal audits failed, and there were problems with poor communication. In addition, there was no discipline on the part of the project managers.

Exhibit 3. Project Manager Competencies (TechRepublic/Gartner Group)

Project Manager Competencies (TechRepublic/Gartner Group)

Exhibit 4. Studies Identifying Factors Attributed to Project Success

Studies Identifying Factors Attributed to Project Success

ESI instituted a comprehensive planning process and a communication plan, among other things, to achieve the following results:

• Programs and projects passed a second internal audit

• Project managers’ expertise has dramatically improved

• Teamwork has improved

• The project office has been recognized within the company for its efficiency and expertise.

In 2000, a large insurance company with international operations canvassed approximately 300 of its project managers who had graduated from ESI's master's certificate in project management program. The following conclusions were made:

•  Project management is now viewed as a professional skill within the company.

•  The use of tools and a project management methodology improved the company's planning process with its customers, sponsors, and project team.

Also in 2000, a large international computer company gathered Level 3 (using the Kirkpatrick model of training effectiveness) data on more than 1,000 of its employees who have taken at least one ESI course. The analysis has revealed:

• A consistent level of project management skills across the company

• A dramatic reduction in the number of troubled projects

• A higher level of organizational fluidity and adaptability

• A heightened level of customer confidence that projects will reliably meet technical, financial, and scheduling expectations.

Part III—What Does it all Mean?

Macro Look

We have identified the attributes common to project failure and project success based on several studies covered in this paper. When we take a broad look at the research results, it seems that to significantly increase the chances of a project succeeding (requirements, time, and cost), the project manager must:

1. Take the time to develop a complete and thorough requirements analysis and make sure that the requirements are tied to a critical business need.

The strategy for the project should be clearly linked to critical business objectives. It is important to understand the requirements from both a technical and business perspective. While the analysis should be intensive, the payback can be large. Much is written about the difficulties of managing a project due to continuous changing requirements; perhaps more time spent in developing a complete and thorough requirements analysis could reduce this problem.

2. Work to obtain and retain executive and client support.

The golden rule for ensuring an initiative's success is to obtain executive-level support. This applies for initiatives dealing with quality, knowledge management, customer relations, and so on, and appears to be true for project management. The research tells us that the support must be developed during the initial phases of the project and nurtured and maintained throughout the effort.

3. Possess leadership, motivation, and team-building skills.

The project manager must reach beyond technical competency to be a leader; coaching and mentoring are equally important project management responsibilities. The project manager must possess a persona that instills confidence about the project among stakeholders and the project team.

Two Enablers

There also are two enablers that are necessary to create an environment in which the three aforementioned factors can be more effective. The first enabler is for the project manager to provide clear and continuous communication with executives, clients, and stakeholders. Communication between the project manager and user can help in better defining the requirements and ensuring that they are tied to a critical business need. Communication with executive management can help to obtain and retain support.

The second enabler calls for a project management career path. This enabler was identified in the two Gartner studies, the Interthink study, and through ESI's independent research. A project management career path is important in helping the project manager develop the leadership and organization skills (soft skills) that are necessary for working with stakeholders, executive management, and the project team. It is also important to allow an experienced project manager to grow professionally and have an opportunity to demonstrate skills necessary for corporate executive positions.

Conclusion

Do people want to know if the project will provide the intended results, or do they want to know the likelihood that the intended results will occur? Assuming the latter, this paper argues that the value of project management can be calculated by showing its impact on reducing the risk of project failure and increasing the chance for project success. A cumulative look at research on project success and failure reveals several common factors that can increase the chance of a project's success. Two enablers— communication and a project management career path—create an environment that fosters three factors that increase a project's success. Those factors are (1) thorough requirements analysis, (2) executive support, and (3) a project manager who possesses strong business skills. Given this information, organizations should consider investing in project management training and tools to ensure these factors and enablers are in place to increase the chances of a project's success.

References

Cronau, Jürgen. 1997. IMPACT: Improving Horizontal Activities in Project Execution: Project Management, Configuration Management and Change Management (21628). European Software Initiative. http://www.esi.es/VASIE/Reports/All/21628/Report/title.htm

Howard, Ronald M. 1997. The Business Stake in Effective Project Systems. The Business Roundtable. http://books.nap.edu/books/0309062446/html/11.html#pagetop

Kavanagh, John. 2000. Project Sick-List. The Computer Bulletin Internet. The British Computer Society. http://www.bcs.org/publicat/ebull/mar2000/article2.htm

KPMG Canada. 1998.What Went Wrong? Unsuccessful Information Technology Projects. http://pmri.home.mindspring.com/itpro.htm

Leedle, Robert D. 1994. The Impact of Front-End Loading on Project Success. Workshop Proceedings: Tomorrow's Projects, Meeting the Challenges They Present. European Institute of Advanced Project and Contract Management.

Mullaly, Mark E. 2000. 2000 Project Management Baseline Study. Interthink Corporation. http://www.interthink.ca/research/home.html

Smith, T. 1999.What Skills Will Characterize Top Project Managers? Gartner Group. SPA-08-7617.

Smith, T. 2000. IT Project Management Research Findings. 5th Annual Project Leadership Conference. http://www.techrepublic.com/pressroom/press.jhtml?id=r00120001115boo01.htm

Taylor, Andrew. 2000. IT Projects: Sink or Swim? The Computer Bulletin Professional Practice. The British Computer Society. http://www.bcs.org.uk/publicat/ebull/jan2000/article1.htm

The Standish Group. 1995. Chaos. http://standishgroup.com/visitor/chaos.htm

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville, Tenn., USA

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