What is Project Failure?

Does Project Failure Happen Often?

There is evidence to support that project success rates are rising. The original Standish's 1994 CHAOS study found that only 16% projects met the criteria for success—completed on time, on budget, and with all the features and functions originally specified. In subsequent studies this rate has improved and project failures have decreased.

Sources: http://www.softwaremag.com/archive/2001feb/CollaborativeMgt.html and “Chaos, a recipe for success”, Standish Group, 1998
 

For 2004 results show that 29% of all projects succeeded (delivered on time, on budget, with required features and functions); 53% are challenged (late, over budget and/or with less than the required features and functions); and 18% have failed (cancelled prior to completion or delivered and never used). A staggering 66% of IT projects prove unsuccessful in some measure, whether they fail completely, exceed their allotted budget, aren't completed according to schedule or are rolled out with fewer features and functions than promised.

Sources: http://www.standishgroup.com/sample_research/PDFpages/q3-spotlight.pdf Chaos, 2004

IT projects are notorious for being over budget. In fact, Gopal Kapur, president of the Center for Project Management in San Ramon, Calif., estimates that 77% of projects blow their budgets, with an average cost overrun of 169%. As for the remaining 23%, Kapur doesn't have a lot of faith in those project managers. "They just lie about it," he says.
Sources: http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=95196 August 16, 2004 (Computerworld)

In 2005 organizations and governments will spend an estimated $1 trillion on IT hardware, software, and services worldwide. Of the IT projects that are initiated, from 5 to 15 percent will be abandoned before or shortly after delivery as hopelessly inadequate. Many others will arrive late and over budget or require massive reworking. Few IT projects, in other words, truly succeed.
Sources: http://www.spectrum.ieee.org/sep05/1685 September 2005 (IEEE)

Notable Project Failures

The following list of failures happened within the project itself supporting the Standish claim that close to 50% of projects are seriously challenged:

       The IRS project on taxpayer compliance took over a decade to complete and cost the country an unanticipated $50 bn.

        The Oregon DMV conversion to new software took eight years to complete, the budget grew by 146% ($123m).

               Public outcry eventually killed the entire project.

       The State of Florida welfare system was plagued with numerous computational errors and $260m in overpayments!

        In September 2006 Department of Homeland Security admitted project failure.

               The Emerge2 program closed with a loss of $229m (a new financial IT system).

        In May 2006 the disastrous Seasprite helicopter program for the Australian Navy was stopped.

               With $1bn spent, the helicopters were grounded due to software problems.

        In April 2005 inter-departmental warfare played a significant role in the failure of a $64m federal IT project.

        In 2005 British food retailer J Sainsbury wrote off $526m automated supply-chain management system.

        In 2005 US Justice Department Inspector General report stated $170m FBI Virtual Case File project was a failure.

               After 5 years & $104m in expenditures.

               In one 18-month period, the FBI gave its contractor nearly 400 requirements changes. 

        In 2005 the UK Inland Revenue produced tax payment overpayments of $3.45 bn because of software errors. 

        May 2005 major hybrid car manufacturer installed software fix on 160,000 vehicles.

               The automobile industry spends $2 to $3 bn per year fixing software problems.

        July 2004 a new government welfare management system in Canada costing $200m.

               It was unable to handle a simple benefits rate increase.

               The contract allowed for 6 weeks of acceptance testing and never tested the ability to handle a rate increase.

        In 2004 Avis cancelled an ERP system after $54.5m is spent

     In 2002 the UK government wasted £698m on Pathway project, smartcards for benefits payments.

             £134m overspend on magistrates' courts Libra system.