Projects Fail Because of Poor Estimates in the Planning Phase

If you are looking for some light bedtime reading then I’d recommend the latest 2015 PwC report on Insights and Trends: Current Portfolio, Programme, and Project Management Practices.

One of the report’s most significant, and yet not surprising, findings is that poor estimation during the planning phase continues to be the largest contributor to project failures.

The PwC study looks at the most common reasons why projects do not achieve the desired results. It is based on survey results from organisations across 38 countries with approximately two-thirds of those organisations in the private sector and a third in the public sector. Those organisations represented a wide range of industries including IT, Consulting, Banking, Energy, Telecommunications, Health Care, Manufacturing and Construction.

The 10 factors that contribute most to under-performing projects

1. Poor estimates/missed deadlines
2. Lack of executive sponsorship
3. Poorly defined goals/objectives
4. Changes in scope mid-project
5. Insufficient resources
6. Poor communication
7. Lack of stakeholder involvement
8. Change in environment
9. Change in strategy
10. Inadequate risk planning

Inadequate estimates are the single largest cause of projects that don’t deliver on their promises and it is a worsening trend, and has been for over a decade. These top 3 factors alone contributed to 53% of poor project performance. The top six factors contributed to 78% of poor project performance.

Anyone who has worked in a project management environment for any length of time will probably not be surprised by those findings, but what is surprising is that organisations continue to make the same mistakes. However, there is some good news: the survey also found that organisations at a high level of “project maturity” i.e with well-defined project management processes consistently deliver better project results than those without well-defined PM processes.

Improvements in any of the 10 major contributing factors in project failure will, of course, have a positive effect on the project outcome but hopefully the trend for poor estimating will soon reverse as the report also notes that it is now common to use an established project management methodology and to ensure staff have training and certification in the preferred approach. Using a proven Project Management approach is seen to improve the success of projects across the key performance indicators:

1. Quality
2. Scope
3. Budget
4. Time

Project managers with experience managing projects of similar size and complexity, and within the same industry, are a major component in meeting these key performance indicators. There is a direct correlation between trained, skilled project managers and successful project outcomes, according to the PwC report, suggesting that an organisation could avoid project failures by training staff and/or employing staff with the right experience and accreditation.
There could of course be other reasons related to the relationships and dynamic between project managers and senior executives, which is explored in a little more detail over on a Community Discussion “Why Projects Fail”

What About Agile Project Management?

 
The use of Agile project management methods continues to grow, sometimes combined with more traditional, well-established methods. It is still predominantly used in the IT industry (over 70% of those taking part in the study who use Agile do so in an IT environment), where the benefits of short cycles to deliver working products is often a better solution to clarify requirements and continually develop improvements. Nearly two-thirds of those using Agile say their projects are successful because of the Agile method, although organisations using Agile have not typically reached the same level of project management maturity as those using more traditional methods.