One in six IT-projects runs out of control
A study by the University of Oxford reveals that one in six IT-projects exceeds their initial budget by an average of 200 percent.
IT projects often go beyond the initially planned budget. In one of the largest studies of its kind, conducted by the University of Oxford, 1.500 projects have been examined where companies have renewed their information systems in the last 10 years. Result: One in six projects exceeded their initial budget by an average of 200 percent.
For two years, both commercial and public projects, with an
average budget of 170 million U.S. dollars, were put under the
microscope. Compared to conventional risk-management models IT
projects ran 20 times more frequently out of control than expected.
Lack of risk calculation, problems with software compatibility, and
missing skills in implementing a new technology were frequent
reasons for the additional expenses, according to the study. The
risk of failure rose proportionally to the size and growing
complexity of the projects.
As an example, the study mentions a project of the National Health Service (NHS) in Great Britain for the digitization of patient data. The software was developed for 7 billion pounds, but the plans then put on ice by the parliament under public pressure.
The study draws the conclusion that failing IT projects
regularly cost investors and taxpayers billions and lead whole
companies into bankruptcy. IT projects therefore represent an
entirely new challenge for top managers, a challenge which is still
not sufficiently taken into account. Bringing the implementation of
large IT projects to a new level of professionalism is
The results are a wake-up call for top managers considering significant IT projects. Our experience shows that IT projects are often not managed the right way. The new research tells us why we, so can fix the problem and take IT project management to a new, more professional level.
Jürgen Laartz, Director McKinsey & Company
IT project managers are relatively often beaten by a so-called “Black Swan blindness” and would give the unlikely event of an immediate success more attention than a realistic assessment of the possibility of failure. Differences between public and private-sector projects in this respect were not visible.