Over the next 12 months, organizations that average closing $65 million worth of projects will see $30 million of those projects at risk of failing. That risk can be mitigated if the organization has in place a standard process for reviewing and recovering their troubled projects. These and other conclusions are among the findings detailed in a new report from the Center for Business Practices (CBP), the research arm of project management consultancy PM Solutions.
The CBP's report, "Troubled Projects: Project Failure or Project Recovery," polled 84 senior project management practitioners about the health of their organizations' projects and efforts to turn troubled projects around. According to the study, approximately 42% of organizations' projects are troubled, and fewer than half of the organizations had a project recovery intervention in the past three years to mitigate the risk of failure. In addition, only 24% of the organizations had a standard process in place for recognizing and recovering these troubled projects, increasing the likelihood of significant loss.
There is good news, however, in the study's findings. Project recovery interventions were found to have an 80% success rate, either with the projects recovered and completed successfully (in 43% of organizations) or by setting new project expectations and meeting those new requirements successfully (in 37% of organizations).
"What's promising about the study results is that organizations with a standard recovery process have 83% more successful projects, 195% fewer troubled projects, and 120% fewer failed projects," said Jim Pennypacker, director of the CBP. "Companies can avert failure in the first place if they have an established process for reviewing their existing projects, identifying projects that are in trouble, and recovering them before they get significantly derailed."
A troubled project is one that (plus or minus acceptable variances) exceeds the estimated budget, is behind the estimated schedule, does not meet expected requirements, or has unacceptable overall project quality.
In addition, the study identifies the leading causes of troubled projects:
- Expectations that are too high, unrealistic, not managed, or poorly communicated.
- Requirements that are unclear, contradictory, ambiguous, or imprecise.
- A lack of agreement on requirements or disagreement as to priority.
- A lack of resources, resource conflicts, turnover of key resources, or poor resource planning.
- Planning that is based on insufficient data, missing items, insufficient details, or poor estimates.
The Center for Business Practices is online at http://www.cbponline.com.
