Taxpayers beware: New survey reveals high price of troubled projects everywhere
By Staff -- Manufacturing Business Technology, 9/1/2008 6:00:00 AM
Research from project management resources provider ESI International and Independent Project Analysis (IPA), a project benchmarking company, confirms that troubled projects are costing taxpayers millions.
Study findings raise these points:
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34 percent of all projects succeed.
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An average of 15 percent of all projects fail.
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Projects that are considered “challenged”—usually due to cost or schedule overruns—account for 51 percent of all projects.
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The lost dollar value for U.S. projects in 2002 alone is estimated at $38 billion, with another $17 billion in cost overruns, for a total project waste of $55 billion against $255 billion in project spending (Source: The Standish Group 2003).
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59 percent of organizations in the Asia-Pacific region had at least one project failure with an average cost of $8.9 million.
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Africa, Europe, and the Americas followed suit with an average of 56 percent of the organizations reporting at least one project failure with an average cost of $11.6 million (Source: KPMG International 2003).
“Effective project management can save organizations millions of dollars in lost revenue,” says J. LeRoy Ward, an executive VP at ESI International. “When a project fails, it's important to first acknowledge what's happening,” he says, adding that signs of failure include strained team relationships, long hours, and threats of legal action.
The study confirms that troubled projects are a worldwide affliction.
“Projects that lack detail regarding costs and schedules at the time of execution are not likely to meet business objectives,” says Mary Ellen Yarossi, director, IPA Institute. “Based on the IPA database of more than 300 IT projects, the quality of project scope development in conjunction with team effectiveness [leads to] projects with more predictable and more effective project results. Best practices are known to reduce costs by 10 percent, cut execution and implementation time by 8 percent, and improve performance by 10 percent.”
For more information, visit:
www.ipaglobal.com or www.esi-intl.com
