Industries view project failures as either a pathological state to be avoided or a logical problem of goal definition (Lindahl & Rehn, 2007).
This paper will focus on the different key factors that influence the failure of projects especially on the field of information technology (IT). It will discuss the different stages in the project lifecycle and the possible areas of failures in each stage. Furthermore, the paper will tackle the concept of risk management and its benefits in a successful project development as well as in preventing failures. A successful risk management system incorporated in a project will create a programme for handling probable causes of project failures.
IT projects fail when it does not meet one or more of its criteria for success. The criteria for successful IT projects are delivery on time, completion on or under budget, and satisfaction of user requirements. Only a few projects achieve all three (Grossman, 2003). In summary, failure can be defined as a system which does not perform as expected, not operational at a specified time and cannot be used in the way expected.
There are four key factors that can be associated with project failures. These are design, data, cost and operations. A poor design phase can result in a system that does not match customer expectation, or fails to capture the basic business requirements. The data factor may include inaccurate, inconsistent, not available or incomplete information and records. The cost factor involves the operational costs to implement and run the system that far exceeds the identified business benefit. A survey showed that 35% of all major information systems projects are over budget, termed "runaways", such as the Stock Exchange Taurus Project and the London Ambulance Service (Flowers, 1996).
The project lifecycle defines the beginning and the end of a project. It is a collection of generally sequential and sometimes overlapping project phases whose name and number are determined by the management and control needs of the organisation (Project Management Institute, Inc, 2008). It also determines which transitional actions are included and which are not in every stage of the project from beginning to end. It can be used to link the project to the ongoing operations of the organisation. (Choudhuri, 2005)
The first phase of the lifecycle is the initiating process which involves those processes performed to define a new project by obtaining the authorization needed to start the project. The second phase is the planning process which includes those processes required in establishing the scope of the project, refining the objectives, and defining the course of action in order to attain the objectives of the project. The third phase is the executing process which encompasses those processes performed to complete the work defined and to satisfy project specifications. The fourth phase is the monitoring and controlling process which includes those processes required to track, review, and regulate the progress and performance of the project. The last phase is the closing process which considers those processes performed to finalise all activities to formally close the project. (Project Management Institute, Inc, 2008)
Causes of Project Failures
In every phase of the project