By Bupesh Jain, 12 September 2007 15:44
NEWS
A third of IT projects carried out in the private sector run over budget, according to a survey.
One in three projects implemented each year ends up with an overspend of between 10 and 20 per cent on the original budget. And one in four projects costs 50 per cent more than it was expected to, according to a survey of 100 CIOs.
The survey also found the typical large company is running 29 projects at any one time.
According to the research, sponsored by software management company CA, the main reasons for overspending include poor forecasting, increases in project scope, and issues of interdependencies and conflicts between multiple projects.
It said this isn't helped by the lack of visibility and control CIOs have over their project portfolios - 39 per cent of IT directors do not have clear visibility of projects and so do not know when they are close to running over budget.
CA said the survey shows CIOs are still principally being judged on whether they deliver within budget rather than whether they deliver strategic value to the business.
Staffing is also an issue, with highly skilled workers being assigned tasks off-the-cuff rather than being strategically placed where they would be most effective, according to the survey.
Comments
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1. Anil Srikantiah
Hi,
Many times it so happens that the leadeship are not familiar with the technological part of how to implement the project being scoped .There is no proper estimation done since most of the estimations is being done by individuals who dont details of the implementation . The other issue is improper hiring and huge wastage of resources by not allocating tasks properly . All this are issues which i have seen /faced which leads to cost overruns.
2. Charles Smith
The mistaken belief that having a certificate in Project Management methodology makes you a project manager. However to attempt to project manage without a clear plan is plain foolish.
Secondly believing what people report at progress meetings. Project Managers have to develop a sense of cunning misbelief of spreadsheets and timesheets.
Thirdly a failure to control function creep is the final nail in the coffin of a project budget/timescale.
3. Roger Huffadine
If CIOs don't have visibility & control of projects then sack them and employ someone who knows how to do the job of CIO.
Many projects overrun & under perform because they would never be approved if everyone was honest when presenting the project to the Board.
When will MDs realise that a poorly designed project needs to go in the waste bin?
Implementing projects costing a small fortune that eventually hobble a business is stupid and not the best use of capital.
4. Tim Jackson
If you require contractors to tender competitively but don't then hold them to the price, you get overrun. It's inevitable. It's human nature.
5. Julian Dobbins, Micro Focus
Without clear visbility into the complex projects that IT are faced with today, it is little wonder that many tech projects exceed their budget. Having the right portfolio management tools and processes in place is vital, both in determining how well a project is running, but also in assessing whether the project should be undertaken in the first place. And while Project Portfolio Management (PPM) tools are a critical part of IT's ability to manage itself, the fact that the applications being developed are poorly understood in many cases, or rely on the availability of highly-prized subject matter experts, means that many project estimates are doomed from the start anyway.
Application Portfolio Management (APM) technology and processes bring greatly increased levels of understanding, in terms of application complexity, composition and business value, so that IT projects can be started with a greater certainty that they will deliver value to the business, and then go on to be delivered in accelerated time-scales, through the increased insight they provide to the development staff who must identify, locate and change all the relevant programs that fall within the project request.