Why Projects Fail

Why do some projects flourish and others flounder? Here, we take stock and explore the factors that can help us avoid project failure in the future.

Mark Oliver

A business lives and dies on the strength of its people. This research investigates the importance of people-related factors within the wider body of learning as to why projects succeed or fail.

The body of research conducted has been broad. Multiple industry sectors and project types have been investigated. Government and industry projects have been assessed, and contributions from consultants and academics used to inform the conclusions of the study.

As a broad brush stroke, it has been found that between 20% and 40% of projects are deemed to have ‘succeeded’. Failure rates are approx 20%. These results are common across industry sector and project type and worryingly — they haven’t changed significantly over the last 25 years

The Factors

The key factors enabling project success or contributing to project failure have been identified. The factors are many of the basics of project management but despite this they have not changed fundamentally over the years despite a significant “project improvement” industry developing globally.

During the work to assess project success, it has been found that the standard parameters of completion within time, cost and performance parameters do not give the complete picture. Stakeholder satisfaction is of pivotal importance and its impact upon success must be appreciated and acted upon.

The Case for Change

It is estimated that at least 50% of the variance in project success rate is attributable to people-related factors. Issues associated with sponsorship, stakeholders, leadership, experience, communications and teams are not new but are all major contributors.

Despite the significance of the people-related factors, it has been found that the focus of education, methodology and support continues to be primarily focused on the techniques and tools issues as opposed to the basic issues of people performance.

Finally, throughout the research an overriding observation with respect to organisations inability to learn must be made. The failure factors are well known and are not new but despite this organisations continue to make the same mistakes.

Pan-industry Benchmarks

The research conducted covered a multitude of industry sectors. It is fair to say that the majority of information on record is generated by the Information Technology sector but balance has been maintained by ensuring that other industries have been assessed. The construction and defence sectors both contain rich experience as they are historically “project” orientated businesses.

A growing number of other sectors are now generating learning into project delivery. These are typically not the large-scale project delivery organisations but reflect the growth in project management as a delivery methodology within a business as usual model or standard business. These projects are often initiated to introduce “change” of some nature and can often be staffed by non-full-time individuals who are expected to “support the project” in addition to an existing role.

Further to ensure balance, the research has included data from the Professional Project and Change Management Associations, Consultants, Government and a body of academic writing on the wider topic of what makes projects succeed or fail.

The Findings

1. Project success and failure

The study of project success/failure is broadly aligned in that only between 20% and 40% of projects are deemed to have “succeeded.” The majority are either “challenged” or are deemed to have “failed”. Failure rates are generally considered to be at least 20%. These results do not vary considerably with type of project or industry sector.

It is also of significance to note that the results do not appear to have changed dramatically over the past 25 years despite a complete industry having emerged and £millions being spent on the subject of project management. It is worth noting that whilst overall failure statistics have not changed significantly the impact of these failures in terms of cost and schedule has improved.

2. The key factors

The key factors enabling project success or contributing to project failure are comparable across the body of research.

The factors can be summarized as follows —

1. • Stakeholder management
   • Sponsorship
   • Clarity of mission, objective and benefit
   • Accuracy of definition and planning including understanding of risk
   • Skills and experience
   • Communication
   • Team
   • Leadership
   • Resource
   • Change

An important observation is that these factors are well known and have not changed with time. They are not a surprise however organisations continue to be impacted by the consequences of not paying sufficient attention to them. It is also interesting to note that most failed projects were exhibiting the warning signs sufficiently early to enable recovery but the signs were not acted upon in a timely fashion.

3. What is success?

Interestingly, the research has found that the definition of success or failure is not as straight forward as may be imagined. It has been found that project success cannot be adequately defined as: completion within time, cost and performance parameters.

Perceived project success can best be defined as:

• Meeting the project technical specification and/or project mission to be performed

1. • Attaining high levels of satisfaction from the project stakeholders.

Technical performance is integrally associated with perceived success of a project, whereas cost and schedule performance are somewhat less intimately associated with perceived success. In the long run what really matters is whether the stakeholders are satisfied. Positive schedule and cost performance mean little in the face of a poorly performing end product.

Next to technical performance and stakeholder satisfaction, effective communication and relation patterns are the most important contributors to perceived project success. Project Managers can therefore attain high levels of success even under adverse circumstances through effective management of stakeholders. For example:

1. • • Was Concorde a success or failure? Late and overspent but a technical and public success, gave France an aerospace industry and assisted UK entry to European Community. So a success?
     • Was the Millennium Dome a success or failure? Opened on time, overspent but perceived as a major failure
     • Was the Millennium Wheel a success or failure? Late and overspent but regarded as a success
     • Was the Thames Barrier a success or failure? Late, overspent and badly managed in early stages but is now a tourist attraction and made a profit for the contractors so is judged a success
     • Was the Heysham II Nuclear Power Station a success or failure? Well managed, nearly on time and cost but judgment clouded by perception of nuclear industry so judged unsuccessful

4. Lifecycle

A typical project lifecycle transitions through start up (where objectives are established), Plan (where what needs to be done is defined), Execution (where solutions are developed and implemented) and Close (where project is completed). Failure can occur at any stage of a project lifecycle. However, the majority of significant failure cases identified can be traced back to the early stages of the lifecycle: management attention is, however, often only optimised during the delivery phase of execution.

It is worthy of note that particular attention must be paid to certain of the people factors during the execution phase as this is when environmental issues such as politics and corporate pressure and individual issues such as effective communication, listening skills and courage can prevent objective assessment of status.

5. Significance of people factors

It is has been found that the people factors have a significant influence on the ability of a project to succeed or fail. Quantitative research into the percentages is scarce but what is available indicates that the people factors account for at least 50% of the variance in project success rate.

Subjective indications in discussion with key individuals in the domain indicate that this figure could be as high as 80%. A brief review of the various lists of key criteria for success or reasons for failure quickly highlights the central role of the people factors as they are the most consistently repeated themes discovered.

The key people factors identified:

Sponsorship issues

Effective sponsorship is a key factor. It must exist, is necessary from day one and needs to drive clarity into the project objectives and establish clear definitions of responsibility and accountability. It needs to create an organisational environment of culture, ethics and learning in which the project can succeed

Stakeholder issues

It has been found that stakeholder relations can influence the perception of project success or failure. It has also been found that effective management of the project stakeholder community is a key enabler for a successful outcome. This is essentially a people topic and encompasses relationships, effective communication, conflict resolution, persuasion and negotiation. Harmony within the stakeholder team is a key enabler for success whereas conflict will typically lead to failure

Leadership and experience issues

Clearly the key players in the extended project team must be suitably skilled and experienced. However, the role of leadership must be recognized and addressed in the selection and development of key individuals and especially the Project Manager. The need for passion, drive, and commitment together with communication skills, a holistic view, impartiality and other leadership attributes is an essential blend. The Project Manager or Project Leader?

Communication issues

Communication could be a subset of the other factors but its importance drives its rating to the first level. Basic communication failings are behind a number of the success/failure criteria. The ability to maintain clear, unambiguous communication within the project community is essential. This is at a transactional level of listening skills, reviewing skills, ability to recognize true position, knowing your audience etc., but is also at a cultural level of fear to challenge, fear of bad news, tackling entrenched views, courage of confrontation, denial etc.

Team issues

The team issues include team roles, experience and selection, team dynamics and maintaining team coherence and performance under pressure.

6. People and processes — redressing the balance

The findings of the research indicate that the methodologies and processes of project management do not alone deliver successful projects; people do. Projects are conducted by people, so every technical aspect of project management has a human dimension. Successful projects recognize the importance of people, the need to create the right environment, the need to assemble a team of capable people, to service the people-related aspects and to lead people effectively. To be effective the Project Manager must understand the importance of these issues and master the techniques and complex interpersonal relationships necessary to underpin project success. Despite this an analysis of the various project management “bodies of knowledge” indicates that three times as many “technical” topics as “people” topics are considered central to what a project manager needs to know.

7. An inability to learn

The findings above indicate a fundamental inability to learn the lessons of project failure. The organisations involved include some of the biggest names on the planet, the financials are staggering and a complete industry has emerged to address the topic. However, an assessment of the reasons for failure indicates a set of basic issues.

We’re left with the important questions — why do organisations not learn and why are the basics not addressed?

Refocus and Repair

Lack of focus on the people aspect of business, and creating the environment where projects can succeed are the biggest factors responsible for why projects fail.

Supporting projects to optimise their success can be championed by stakeholders. Coaching improves levels of skill around identifying, influencing, motivating and managing stakeholders by understanding their needs, characters, level of influence and perceptions.

Explore the Stakeholder Management programme