Delivering large-scale IT projects within budget and without overrunning the time
IT is an essential part of any organization and this is what helps build a competitive advantage over others in the industry. With time, the IT projects are getting larger, touching almost every aspect of an organization and a threat to the company if something goes wrong and unfortunately, something always does seem to go wrong. After extensive research, it has been found out that most of the IT project largely blow out their budgets. On average, the larger IT projects run approximately 45% over budget and 7% over time and the value delivered is almost 56% less than what was initially predicted. Software projects run the highest risk of going over the budget and time.
These findings have been quoted through research done by McKinsey in association with Oxford University on 5400 IT projects. They compared budgets, schedules and forecasted performance benefits with the actual costs and results and found out that these IT projects had overrun a total of $66 Billion. This research helped find out that the longer a project is scheduled to last, the more likely it is that the project will run over time and budget with approximately an increase of 15% every year in cost.
Astounding as these findings are, most companies are able to survive these costs and overruns. That being said, it is also true that 17% of the total IT projects go so bad that they might threaten the very existence of the company and this situation occurs more often than one would anticipate. These projects have been termed as the ‘black swans’ and are defined as those IT projects whose budget overruns by 200%.
A small example of what impact the budget overruns have on the companies is that of a large retailer who started a project to upgrade and modernize it’s IT systems. The project was worth $1.4 Billion and was eventually abandoned. The retailer continued but was falling behind its competitors so they initiated another project for their Supply Chain and when this effort failed, they had to file for bankruptcy.
Ways to improve project performance
You can manage a project with great skill, and still the project might fail. There are a lot of studies about why projects are abandoned, but it’s hard to compare someone else’s project performance with your own.
So what are the reasons your project might be lagging? Maybe a team member is blocked. Perhaps more resources need to be allocated in one area, and less in another. Maybe your communications aren’t clear. It could be any one of these or dozens of other issues.
Our surveys of IT executives indicate that the key to success lies in mastering four broad dimensions, which combined make up a methodology for large-scale IT projects that we call “value assurance.” The following elements make up this approach:
- Prioritizing Tasks
Start with the currently assigned tasks. Of course, not all tasks are created equal; some are more important and need attention first.
But does your team know which tasks to prioritize?
That’s where you come in. You know the priorities of the project. You’ve planned and have been in meetings with sponsors, stakeholders & customers, but your team may not be privy to this information. How do you get that crucial information out to your team?
Why not review the task list for each team member and spend a couple of minutes together reviewing them. Find out where the areas of confusion may lie and resolve to have a solution for each.
2. Review Workload
It can be frustrating when team members are late in handing off their work, but what expectations have you actually set with your team in terms of completing their workload?
Call a meeting. Not tomorrow. Not next week. Do it today. But don’t use the meeting as a platform to unload your frustrations, use it to listen. Take the first 30 minutes of the meeting to hear from your team. Find out what’s working for them and what’s not. Understand where roadblocks are occurring as a team, and listen to their concerns. It’s vital you establish expectations of workload and task deliverability, but only after you’ve listened to your team.
Next, use your project management software’s workload management feature to confirm each individual’s availability on projects. Remember, not every team member is just working on your project. They may have other tasks and duties across the organization.
3. Status Reports
A status report is your daily briefing on where things stand in the project. You can’t find a more important piece of information, because without it you’re flying blind.
So, how long did it take you to build your current status report?
If your answer is more than two minutes, then you’ve got a problem. If you’re still using Excel, then I know it took too long, and it’s high time that you use the online project reports in your project management software.
Old data is about as useful as yesterday’s newspaper. When you manage the whole project online, you have access not only to one-click reports but also real-time dashboards so you can monitor performance daily. Then you know exactly the status of each team member, and you also know the overall health of your project.
Large-scale IT projects are prone to take too long, are usually more expensive than expected, and, crucially, fail to deliver the expected benefits. This need not be the case. Companies can achieve successful outcomes through an approach that helps IT and the business join forces in a commitment to deliver value. Despite the disasters, large organizations can engineer IT projects to defy the odds.