Projects failure rate – the conventional wisdom is wrong!
The Problem
Don’t be fooled, as despite what you might have heard, told or read, projects’ failure rate is not as high as some might want you to believe. I’ll say it again, now more explicitly: There is no reason to believe any of all these doom and gloom articles and expert papers, suggesting that a catastrophic ratio of projects have failed to deliver.
What I am referring to are expert reports, published in the last 10-15 years, all of which suggesting that the number of projects failed to meet some sort of criteria is nearing 70%! Got that? 7 out of every 10 projects are a failure. Let’s see what they say:
- Chaos Report (1994) – only 16.2% of projects were successful by all measures. Of the 70% of projects that were not successful, over 52 percent were partial failures and 31% were complete failures.
- OASIG survey (1995) – the IT project success rate quoted revolves around 20-30% based on its most optimistic interviews.
- Chaos Report (1995) – The Standish Group research predicts that 31.1% of projects will be cancelled before they ever get completed. Further results indicate 52.7% of projects will cost over 189% of their original estimates.
- KPMG Canada Survey (1997) – 61 % reported details on a failed IT project.
- Conference Board Survey (2001) – 40 % of the projects failed to achieve their business case within one year of going live.
- Robbins-Gioia Survey (2001) – 51 % viewed their ERP implementation as unsuccessful
- Dr. Dobb’s Journal (DDJ) Survey (2007) – 72% of all Agile projects were successful, compared to only 63% of traditional of Data Warehouse projects.
- Chaos Report (2009) – Only 32% of projects have been defined as being ‘successful’ compared with 35% in 2006.
The Conventional Wisdom
Ok, let’s leave these surveys for a moment and attempt to define what does ‘success’ actually mean. I believe it was John Kenneth Galbraith who, in his 1958 book “The Affluent Society”, coined the term Conventional Wisdom. Conventional Wisdom can be defined as “A belief or set of beliefs that is widely accepted, especially one which may be questionable on close examination”. JKG himself had the following to say about this term: “We associate truth with convenience, with what most closely accords with self-interest and personal well-being or promises best to avoid awkward effort or unwelcome dislocation of life. We also find highly acceptable what contributes most to self-esteem”. Conventional Wisdom, according to JKG represents a convenient view that may or may not be true. It does not mean that any Conventional Wisdom is false, it does suggest though that in some cases underlying assumptions and truths might collapse on close examination.
So what does it mean to have a ‘successful’ project? Furthermore, once defined, could this definition withstand the rigour of life, i.e. can it actually be achieved in real life situations?
The strictest definition for a project success would probably require that the project is completed on-time, on-budget while meeting all its in-scope requirements/specifications. This, by the way, seems to be the definition suggested by The Standish Group whose Chaos Report seems to be the driver for most future projections and success trends. If we were to adopt this definition how would be rate the following scenarios?
- The project was delivered on time but was 10% over budget
- The project was delivered on budget but was 10% over time
- The project was delivered on-time and on-budget but lacked a number of in-scope features.
The Conventional Wisdom is Wrong
According to the current Conventional Wisdom, projects exhibiting the above attributes will most likely be classified as failed projects. This however represents false reality as it is based on a false assumption, according to which project planning is a scientific process that can be executed with a high level of predictability and success rate. This is clearly not the case. Project planning and estimation is, despite all claims to the contrary, a process that is largely dependant on subjective human input and as such cannot be relied upon to guarantee 100% success rate. It is not that humans cannot produce a close to 100% successful processes, they most certainly can, and space missions are the best example to attest to this success. After all each space mission is a project that delivers (at least in most cases) a successful delivery that ends up with successfully returning the astronauts to earth. But the successful completion of the mission only proves that the scope was achieved. It says nothing about the timeliness and costliness of the project. If we were to adopt the Standish Group’s strict definition, there’s a good chance that some (if not all) of the ‘successful’ space missions will be deemed as failures as they failed to meet at least one of the ‘cost’, ‘time’ or ‘scope’ criteria.
As I was writing this article I came across a fascination article in “Scientific American” titled “War Is Peace: Can Science Fight Media Disinformation?” with the sub-title “In the 24/7 Internet world, people make lots of claims. Science provides a guide for testing them”. The author, Lawrence M. Krauss, states that “The increasingly blatant nature of the nonsense uttered with impunity in public discourse is chilling. Our democratic society is imperilled as much by this as any other single threat, regardless of whether the origins of the nonsense are religious fanaticism, simple ignorance or personal gain.”
I couldn’t agree more. The fast pace in which information is released and the large quantities of it do not allow us to apply due diligence and apply common sense and challenge the conventional wisdom thrown at us by experts – all claiming to provide us with their processed truth.
So I, for one, choose not to accept this Conventional Wisdom. I do not accept the definition that requires 100%, all round, success for a project to be deemed successful. If I were to accept it I would probably look for another profession as it would make me, in most cases, a failed professional – which I don’t believe I am.
What do YOU think?
I value your opinion, if you have any thoughts on the above please join in and share with others!
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The fundamental issue with every one of these surveys is none define the sample space from which they were drawn. This is a common error with those unfamiliar with the guidance of statistical sampling. They send out a survey, collect the response, make some kind of adjust for those not responding.
In fact the proper way is to identify who they should send the surveys to. This is a population sampling design issue.
Never believe survey results from consulting firms selling their services.
Never believe survey results in the absence of the raw data that can be confirmed independent of the survey provider.
Never believe survey results that do not have margin of errors associated with the numbers.
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quantmleap: Projects failure rate – the conventional wisdom is wrong! http://is.gd/dYcsM #pmot #ftpm #pm
Projects failure rate – the conventional wisdom is wrong! Read comment from from Glen Alleman at bottom http://bit.ly/al3nUe #pmot
I present on the topics of Project and Portfolio Management (PPM) and PMOs with great regularity. I ask all of my audiences if they are aware of their project failure rate and I yet to have someone say, \yes.\
I use project failure rate statistics to support my contention something needs to be done about it. When doing so, I always point out the vast differences in project failure definition and computation. Then I share my definition of project failure.
I believe a project should be characterized as a failure when it takes longer than we said, costs more than we said, or does not deliver what we said. I go on to explain I am allowing for the \acceptable variances defined at the onset of the project\ – and that projects are only classified as failures if they are outside of those established thresholds. I also go on to say that just because a project fails, it does not necessarily mean it should not have been undertaken. I have never viewed any of my perceptions as \conventional wisdom.\
First, I find few organizations that even use the \f-word\, let alone provide their definition of failure when it comes to projects. So in my opinion, the discussion of project failure rates in Enterprises is unconventional in itself.
Second, few organizations establish reasoned and rational cost, schedule and performance (scope) variance thresholds for projects. I agree with your statement that \a process that is largely dependent on subjective human input and as such cannot be relied upon to guarantee 100% success rate.\ So if we know that going in, we should ask ourselves what the acceptable level of deviation is in each of the categories for us to approve and sanction the effort. I have found project variance threshold management and administration for the purpose of improving PPM and PM decision-making to be incredibly unconventional.
Third, a project can \fail\ and still be a good business decision. The failure was in the PPM or project execution \process.\ If we are outside of our variance thresholds, then something failed somewhere and calling the project a failure simply alerts us to that fact.
Lastly, if Enterprises do use the \f-word\ they do so for the purpose of assigning blame. Most have a punitive response to project failure. Until organizations accept the inevitability of project failure and use it as a tool to continually improve their PPM and PM decision-making processes, we won’t see much improvement in the project failure statistics you question in your post.
Steve Romero, IT Governance Evangelist
http://community.ca.com/blogs/theitgovernanceevangelist/
RT @shim_marom: quantmleap: Proj failure rate: conventional wisdom is wrong http://is.gd/dYcsM itgE: Nothing conventional about the wisdom
RT @shim_marom: Projects failure rate – the conventional wisdom is wrong! ##pmot ##ftpm http://bit.ly/cE4JLq
Hey Steve, thanks for your detailed response.
Although I don’t fully agree with some aspects of your response I can’t but fully endorse your last paragraph. At the end of the day it is about awareness and preparedness for facing the inevitability of project failure (with the understanding that this failure is conceptual only – i.e. based on the definition of failure being the failure to meet a subset of the planned project parameters – cost, schedule, cost, quality, etc). Using this understanding as a tool for continuous improvement is the key for better performance in the future.
Thanks again for your response.
Shim.
RT @steelray: RT @shim_marom: Projects failure rate – the conventional wisdom is wrong! ##pmot ##ftpm http://bit.ly/cE4JLq
@ronrosenhead Is the project failure rate being talked up? http://bit.ly/al3nUe #pmot #pmi
RT @/tonyrcollins2010@ronrosenhead Is the project failure rate being talked up? http://bit.ly/al3nUe #pmot #pmi http://bit.ly/asr7mx
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