The main reasons why business projects fail

If we are going to stem the tide of failed projects, we need to get an understanding of the common reasons why business projects fail. Here are some of the more common reasons, and what can be done to mitigate them.

Depending on which research article you look at, anywhere from 50-70% of all business projects fail.  (Search for “what percentage of business projects fail?” – I dare you!)   While I have seen my fair share of business project flops, I cannot say that I have worked for any organization that has been successful only 20% of the time.

That said, I believe that everyone will agree that there are very few projects that manage to come in on time, on budget, and with the expected deliverables. Even when they are not outright failures, too many projects arrive on the scene late, slow, limping, requiring immediate fixes, and/or missing key features of the business system they replaced.

It seems somewhat strange that all the education given and documentation published about project management has not resulted in more effective project management.  Is there an underlying cause?  Yes.

In my experience, there are several underlying reasons why business projects fail or underperform.  We will now outline some of main reasons why business projects underperform and, in general, do not succeed.

Imbalance of power/responsibility

One key problem that becomes quite evident in why business projects fail is that the people with the authority to make decisions about how the project will proceed, almost never have to personally bear the responsibility for the fallout from those decisions.  If people are allowed to increase the scope of the project, or otherwise constrain options in the project, but then are not penalized for the additional time or complexity introduced into the project, then there is likely to be an undesirable outcome for the project.

Solution: There needs to be some balance among stakeholders, such that those most affected by an outcome can have an appropriate voice in the decision making process.

Everyone is not at the table

Another key problem that often results in projects coming off track, is when foundational assumptions are established for a project before everyone who could weigh in on the issue has been made aware that they need to weigh in.  This is not quite the same issue as an imbalance of power.  It’s an issue where there are many “starting points” for the project, and at each of those starting points, critical decisions are made which are deemed irrevocable/irreversible, but not everyone has yet arrived who could intelligently weigh in on the decision.

Common example: The vendor is pre-selected by a business unit or senior management, before legal and IT are even aware of the project.  (Okay, so the legal team can usually avoid this problem).

Solution: It is important to have a formal project starting point, and valid business criteria for kicking off a project, and no external pre-conditions should be applied before all stakeholders and subject matter experts (SMEs) have had a chance to weigh in.

Insufficient clout

Insufficient Clout does not imply any personal inadequacies or lack of charisma.  What I’m highlighting here is that the person who is managing the project or who is the business owner for the project, lacks sufficient authority to keep everyone else focused on the project to the degree required for success.  This can be due to their organizational standing (outranked by too many of the project players), or because of competing business interests (overutilization of project resources on projects deemed more critical to the organization).

Solution: Projects need to be headed up by someone who is delegated enough authority to manage the project successfully, and this delegation needs to be respected by the entire organization and enforced by senior management until the project has been completed.

Immaturity

Certainly, personal immaturity introduces a degree of risk into every business project, but more important than this, is organizational immaturity.  As a corporate society, we have spent lots of time over the past few decades preaching project management discipline and training/certifying project management professionals.  Yet, very little has been done to train senior management and organizations on a whole about why business projects fail and what makes business projects successful.

Too many organizations are just flying by the seat of their collective pants, with little disciple or consistency of methodology.  And attempts to introduce organizational maturity are often seen as bureaucracy, rather than much-needed disciple.   The following are common symptoms of immature organizations where project management is concerned:

• Inconsistent project initiation processes
• Overutilization of staff (not taking non-project workloads into account)
• Starting new projects before old ones are complete
• Unclear requirements and metrics
• Failure to properly access project dependencies
• Inadequate communication to all stakeholders in all directions

Remember:  The above list contains just some of the more common problems – this is not close to being an exhaustive list.

Solution: It is vitally important that organizations realize that successful project management is not just the domain of the project manager, in the same way that successful business management is not just the domain of the CEO.  Successful leaders know that their organizations can only be successful as every member of the organization is successful.   This is true for projects as well.  There can only be success in projects if everyone throughout the whole organization is not prevented from succeeding in their sphere of responsibility.

This will require patience, discipline, appropriate staffing/workload balance, realistic expectations, and hard work – but it is absolutely achievable.

Don’t undermine your organization’s ability to manage its projects successfully by allowing authority/responsibility imbalances, or by having inconsistent processes around project initiation and governance.

And don’t take on more than you can actually handle as an organization.  There’s always one more must-do money-making project you think you could be doing, but if you take it on, you could very well jeopardize the projects you are already engaged in.  To put it another way, when you have reached the maximum number of eggs you can safely juggle (n), adding one more egg to the picture will risk the loss of n+1 eggs.

Unless your goal is to make lots of omelets, you would be well advised to choose a more prudent path.