Do 71% of Your Projects Fail? (Part 1)
Written jointly by: Paul Dandurand, CEO of PieMatrix and Lawrence Dillon, Practice Leader of ENKI LLC.
This is the Part 1 of a 3-Part Series. Today, we introduce the scary project failure statistics. Part 2 talked about the root causes of project failures. Part 3 introduces solutions to reduce project failures.
We recently hosted an ITMPI webinar tilted "70% of your projects are likely to fail" to spearhead the conversation in our combined communities around what we keep doing wrong.
Today, we would like to engage you in the discussion and ask you how your organization does with project success versus failure rates.
Before answering, let's consider our simplified definition of project success and failure.
Success – A project delivers expected business value such as measurable improvement to revenue, profits or net income, automation to improve productivity, new product release, reduce inventory costs or some other targeted outcome.
Failure – A project that did not meet or exceed expected business value.
Our view of project success is relatively straightforward. If you do what you say you're going to do, then you should be on-time and on-budget.
If you deliver what you say you're going to deliver then you should achieve or exceed the business value promised.
Now we'll be blunt: Executives don't care about PowerPoints, Excel spreadsheets, Gantt charts, task lists, stoplight reports, or SharePoint files. Executives care only about the positive financial impact of the project. If that is achieved, the company’s bottom line should improve.
It doesn't matter if the project is an IT project, a new building, a new product, an inventory rationalization effort, or any other process.
The reason executives seem to care about the other documents is because projects rarely succeed, so they leaders want to somehow engage to help improve the chance of success.
The Shocker!
The Standish Group 2015 CHAOS Report showed that out of all 50K projects in the study, 71% failed to meet these three criteria: on time, on budget, and satisfactory results.
The problem is even higher for big projects. Medium-sized projects failed at 91% and large projects at 94%.
That's scary since PwC reported that capital projects and infrastructure spending between 2014 and 2020 could reach $29 trillion!
Does this mean that $27 trillion is at some risk? That's crazy! Are we doing anything about this? And what about all projects that include small, medium, and large? We read this as 70% of all projects fail.
Note: The Chaos Report has three criteria for project states: Success, Challenged, and Fail. Our view is that in the business world, you either succeed or you fail. If you're challenged, you have yet to succeed.
The sad part of this story is that we are NOT getting better!
2013 - 31% of projects successful
2014 - 28% of projects successful
2015 - 29% of projects successful
So, where does your organization fit based on the above success definition? Do you find your success rate to be similar to the averages above?
Do you see any improvement trends? What is your company doing differently to improve project success?
Go to Part 2 of this 3-part blog series where we discuss our thoughts on the root causes of failure.
Blog Authors
Lawrence Dillon is the Practice Leader of ENKI LLC, a boutique consulting firm specialized in helping executives execute strategic programs and projects to deliver business value. Previously, Lawrence was VP IT and Operations of RS Medical, CIO of Aramark Healthcare, and Chief Enterprise Architect of HCSC (Blue Cross Blue Shield of TX, IL, NM, OK, MO).
Paul Dandurand is the CEO and founder of PieMatrix. He has written a number of blogs related to project management tied to process improvement. Previously, Paul was co-founder of FocusFrame, Consulting Manager at Ernst & Young, and Technical Account Manager at Siebel Systems.
Photo by Peter Pryharski