Project Management and Failed Projects - Essay Example

1) One of the most important examples regarding the failure of project due to inadequate contract management and procurement management efforts was the failure of House of Representatives payroll system. From the outright, this project lacked the support from the staff as it cut few jobs and faced strong resistance from the employees regarding the perceived change. However, what was most important regarding the failure of this project was the lack of effective contract and procurement management strategy. Due to this lack, the system produced strong errors such as cancelling the paychecks of the employees, addition of extra money into the accounts of some staffers, etc. This fact clearly suggests that at the time of procurement, project managers did not clearly defined the exact needs of the project. Based on wrong assessment of the same, the system appeared to work on wrong footings as what was expected out of the system was not clearly delivered. It was therefore believed that the project failed because project managers failed to clearly anticipate the needs and solicit the correct vendors to implement the project. The vendors were probably either not as professionals as they should have been in developing the payroll processing system or the information to them was not correctly provided. This resulted into the cancellation of the project as well as it cost a lot of money to the organization because of the loose credit management as well as the wrong procurement polices because there was no clear strategy being developed by the project managers. (Washington Times, 2005) I believe that there were multiple issues involved in this project's failure. Initially it attracted the criticism of the employees working over there therefore at first stage, it failed to achieve the necessary acceptability within the organization. The issues were further complicated when the project managers failed to properly prepare the strategy for implementing effective contract as well as procurement management for the project. If project managers have given a good thought to the solicitation stage of procurement, it would have been lot better and the project would have been a success. 2) Department of Defense initiated a project in 2002 with the name of Personnel Management Key solution. The perceived objectives were to obtain efficiency in different functional areas such as organizational structures, personnel administration and leave, career management as well as work force planning etc. Many believed that it was a bigger project for a military organization however it started with lot of ambitions and hopes to accomplish something bigger for the organization which was termed as too administrative and bureaucratic in nature. The major reason for the failure of the project was cost overrun. Initially it was estimated that the total project cost would be $ 25 million in 2002 however as the project unfolded the cost rocketed to $70 million dollars forcing the project managers to abandon the project in the middle due to high cost variations and other factors which led to the cancellation of the project. However, a much deeper analysis of the issue would suggest that there were other factors which were directly responsible for the failure of the project. Initially it may be considered that the project managers have properly planned the procurement as well as contract management strategy however they were not. Though the whole details of the project are not available but the cost escalation suggests that the type of contract entered by the project managers may not have been adequately selected. It seems that the project managers may have selected actual cost reimbursement contracts where they became legally obliged to pay or reimburse all the costs to the vendors regardless of the need to assess that the cost overruns can also be caused because of the vendor's inability to provide the desired goods and services at the agreed contractual terms. If the project managers would have entered into a fixed pay contract, they could have easily shifted the risk towards the vendors in order to hedge or cap the cost overruns. Thus it seems that the project managers have not adequately planned and that was the major reason behind the project being labeled as a failed project. It is also important to understand that the procurement process was not adequately planned and executed too because first the project managers failed to clearly assess what is required out of the project in terms of cost i.e. the budgeting and estimation. Based on their initial assessment of the cost, the whole procurement process however since the assessment was not correct therefore procurement process was not adequately performed too. (http://www.humanresourcesmagazine.com.au, 2004) 3) An ERP project involving Waste Management and SAP was successful however at the later stages; it proved a failure since the vendor did not have the capability to deliver an ERP system of such high magnitude. It is often argued that an ERP consists of complex programming involving millions of lines of written codes with complicated interlinkages between different objects of the project therefore project managers working towards the deployment of such program need to be very accurate and exact in their assessment of the vendors and their capabilities to deliver projects of such high intensity and magnitude. It is now being revealed that the SAP fabricated the company by demonstrating a fake software environment which was not fully replicating the realities of the project once it was implemented. Though the project may be considered as the failure because of the inability of the vendors to deliver however, it was a failure on the part of the project managers too because the procurement and contract management process was inadequate. (All, 2008) The vendor procurement process was faulty at the end of the Waste Management because the project managers may have been overwhelmed by the market reputation of SAP in delivering high end products. In doing so they have largely overlooked the core competencies of SAP and relied much on its past history. The project managers must have been able to clearly evaluate the needs of the project and core competencies of the various vendors who have bid for the project before deciding to award the contract but apparently it seems that the project managers have violated the prudence and largely depended on SAP to provide the solution which in fact failed to provide what was desired. Conclusion Failed projects are often the result of the inadequate planning on the part of the project managers because they tend to over look basic prudence when it is time to exercise the same. The selection of vendors in the procurement process and the writing of contract are two important and critical exercises because failure at this stage would virtually mean a failure of the project. Project managers therefore need to be more careful and prudent at this stage and evaluate all possible risk and return aspects of the procurement and contract management process. Bibliography All, A. (2008). Who's to Blame for Failed ERP Project that Prompted SAP Lawsuit Retrieved September 09, 2008, from http://www.itbusinessedge.com: http://www.itbusinessedge.com/blogs/tve/p=294 http://www.humanresourcesmagazine.com.au. (2004). Defence's payroll system explodes. Retrieved September 08, 2008, from http://www.humanresourcesmagazine.com.au: http://www.humanresourcesmagazine.com.au/articles/59/0c025159.asp Washington Times. (2005). New House payroll system troubled; Some employees fault failure to work out bugs before going online.(NATION) . Retrieved September 07, 2008, from Goliath: http://goliath.ecnext.com/coms2/summary_0199-4845974_ITM Read More