290 billion dollars lost on failing ICT-projects
Recently the Royal Academy of Engineering together with the British Computer Society published an overview of the problems with complex ICT-projects. From that it can be read that ICT-projects in the United Kingdom are in a sorry state of affairs. A recent study by Oxford University together with Computer Weekly showed that only 16% of the projects in the UK can be considered a success. Another British study showed that out of 500 development projects, only three could be characterized as a success.
Furthermore an estimate was made of the costs involved. In December 2018 it
was estimated that America lost about 150 billion dollars per year as a result
of failing ICT-projects, and for the European Community another 140 billion
dollars. So, together 290 billion dollars per year. Apart from the exact figures
this was considered to be an unacceptable price tag, and I assume that you would
agree. In the executive summary of this report it can be read in a red text
block that if this systematic failing continues, serious long-time economic
consequences for the British economy may follow. Those are heavily laden words,
but they are there, and rightly so.
Too many ICT-projects fail
ICT has a schizophrenic image: on the one hand progressive and efficient, on the other hand cumbersome and expensive. That negative side mainly results from overrunning, being far over budget and even complete failure of projects.
Many ICT-projects miserably fail. According to a study by Business Management
in 2018 one third fails because of failing project management. There is a downright
matter of lack of capable ICT-project managers. Still, there are good project
managers, only there are not many of them. And now that the demand for project
managers is increasing enormously, there is the risk that many inexperienced
people are appointed.
Small chances of success. A much heard complaint of customers is that ICT-projects so very often fail. This is not only the case in the Netherlands, but a worldwide problem. Figures on the American market, still the forerunner, are illustrative. The chance that a project is successfully completed is 55 percent with projects with a budget of 75.000 dollar or less. With larger budgets the chances of success will only get smaller. With projects with a budget between one and a half and three million, a mere 25 percent succeed. With projects that cost three million dollar or more, the chances of success are zero percent.
Projects often start off wrong already because of bad planning and budgeting. A good project manager doesn’t accept too tight planning, because he wants to stay on good terms with the customer by never disagreeing with him. Much goes wrong because project management is too often underestimated.