Why Multimillion Dollar Projects Often Fail

Greetings Leaders!

You don’t have to go very far to find a failed multi-million dollar project. To be clear, let’s define failure as a multi-million dollar project that ran consistently behind budget and schedule, that came in years late. If you’ve been around for any length of time, I’m sure you’ve involved with a few. I know I’ve seen my fair share. To give you a few examples, here are some interesting articles on failed projects:

10 Famous ERP Disasters, Dustups and Disappointments: From CIO Magazine

Famous Failures of Complex Engineering Systems: CalTech

Catalog of Catastrophe Why Technology Project Fail: Calleam Consulting

So… why are these projects failing? I’m sure you’ve seen the typical answers, Poor Project Selection, Scope Creep, Bad Estimates, Poor Project Management. However, there may be another reason  unrelated to project management or organization dysfunction that may surprise you…

I am in the middle of reading The Black Swan by Nassim Nicholas Taleb and while it deals with life in general, I couldn’t help but relate it to project management. His basic premise is that life is unpredictable. This is not good news for project management. Don’t get me wrong. As a project manager I obviously think project management can improve the project success rate. But… can it always? If the project is small, and the length of time is short, odds are that a managed project will come in as planned. But even that is not always guaranteed. Life is unpredictable. Key resources could leave, the organization could change its vision, the company could be bought out.

What about large projects? If life is unpredictable, large projects will most certainly come in late and over budget. Think about it. Name one, just one, successful project over $10 million and over a year long, that didn’t run into some sort of problem that pushed the date and budget out. This is especially true in technology projects, or construction projects that deal with new technology.

So my question is, are we just kidding ourselves into thinking we can manage large complex projects, and if so, why? Well as a species, humans don’t like uncertainty. We try so hard to create the illusion that life is in our control. We go about our lives in such a way as to give us the comfort that life is predictable. Bad things happen… but not to us. I don’t understand why people in flood or earthquake zones are so surprised when it floods, or when there is an earthquake where they live.

If  you consider our leaders in government and business, most of them are successful because they are good at creating the illusion of certainty. CEOs are hired because they WILL get things done. Politicians are elected because they WILL bring home the bacon. Executives, Managers and Project Managers are all in their position because the WILL get their teams to perform. But on large complex projects… can they… really?

My answer is no. Because we believe in success (things getting done), because we worship power and control, because bad things happen to others and not to us, we have created the illusion that large complex projects can be managed successfully.

I know that some of you will point to a successful project that will be the exception to the rule. But… could this be due to chance, and not to project management itself? Odds are that some projects will be successful, but are they the outliers? And if they are the outliers, can we really take the best practices at those projects and apply them to other projects and expect the same results? Again, on a small project, perhaps. On a larger project? I don’t think so.

Some of you may be wondering if I am saying that we shouldn’t manage large complex projects? Not at all. What I am proposing, is a new paradigm for looking at large complex projects. If you are considering a multi-million dollar project, there is a HUGE risk that the project will not adhere to the original plan. The question you must ask yourself is how to reduce the risk as much as possible, and to admit, from the very beginning, that the project could double in cost and time. Is the organization willing to absorb that possibility?

Executives and Project Managers will bring in charts, graphs, numbers, assesssments, all showing that the project can be done. But, on large projects, this is just an attempt at creating a sense of control. Control that we don’t have. Too many things could go wrong, and they will. Accept this up front before you begin.

Why do large complex projects fail? Because life is unpredictable and the larger the project, the greater the odds of something happening that will negatively impact the project. In other words, large projects will undoubtedly be late and overbudget, because they are large.

Thoughts?

All the best!
All the time!
JT

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One thought on “Why Multimillion Dollar Projects Often Fail”

  1. This is a great article that could help leaders, especially non-technical leaders, understand some of the reason why most project fail…and correct it.

    One of the points that John makes is that things change. Your business changes, your customers change, expectations change, employees change, project teams change and management changes. With all of these human elements involved in every project, it is a tribute to project teams that they succeed at all.

    Project Management as we know it today was cultivated from the building of US Navy ships during WWI and then adopted to business in the 60’s to help streamline processes just as it did for the ship building business.

    However, the process of building a ship from the original design and blueprint to completion does not change much. What was originally designed, was usually very close to the final product when finished. Furthermore, when building a ship, the exact design, blueprint and project plans are virtually unchanged when building another ship of the same type. Consistent and repeatable…WOW, what a great business concept!

    For software and business projects, the ship building process is not a good project management process to follow, “cause things change.” And on large and long projects “things change” even more, and for good reasons.

    John points out that large projects have a huge risk of failure and smaller/shorter ones have a better chance of success…which my experience tells me the same. So, one solution is to divide your large projects into smaller/shorter ones that can be accomplished quickly; this will give you faster time to market and better success rates.

    There are a lot of tools and processes that can help your team with these concepts. Some that I like are Enterprise Architecture and Agile/SCRUM.

    Good Luck!

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