PM World Today Editorial July/August 2005
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WHY ARE CANCELED PROJECTS CONSIDERED FAILURES?
An editorial by Hugh Woodward
Canceled projects are almost always considered failures. The oft-quoted Chaos Report, published by the Standish Group, groups projects into three categories: "succeeded", "challenged", and "failed". "Failed" is defined as "canceled before completed or never implemented". In the 2000 survey, "failed" projects accounted for 23% of the 280,000 evaluated.
PMFORUM’s own research produced the same result. Project managers consider canceled projects to be failures. In an on-line survey on project "failure" conducted in June, the respondents often cited canceled projects in providing examples of failures. Even projects that were canceled because of unrelated corporate decisions were considered failures. One respondent answered the question: "Why was this project viewed as a failure?" by stating: "Project objective was to re-engineer processes and procedures for a 206-store retail chain. Project was cancelled when the corporate parent sold the chain."
There were other reasons projects were considered failures, of course. In fact, respondents cited a wide variety including:
- "Could not generate profit"
- "No uptake of the product / service by the intended clients"
- "Cancelled after spending considerable money and delivering nothing"
- "The project was stopped part-way though because it had no hope of ever delivering anything reliable, predictable or that met a true business need"
Nevertheless, an analysis of the survey responses leads to a revealing conclusion: projects fail for reasons that are usually outside the project team’s control. Of the reasons cited by the respondents, 67% were outside the team’s control and included:
- Canceled by management because the need went away
- Changing priorities and/or business requirements
- Poor integration
- Unprofitable product
This suggests that project managers should be devoting at least some of their attention to external issues. At least, they should be implementing risk management processes that address and monitor external influences. Disturbingly, the evidence suggests project managers tend to focus overwhelmingly on "internal" measures of success and causes of failure. According to PMFORUM’s on-line survey:
- 72% of factors the respondents listed as contributing to success were within the project team’s control (assuming sponsor involvement, business requirements, and communication with management are considered outside the project team’s control)
- 79% of the "signs a project is in trouble" are internal to the team
And when the respondents were asked to describe generally why projects fail (as opposed to describing specific projects) 80% of reasons they listed were within the project team’s control.
PMFORUM’s survey, while revealing, was not statistically valid. But the results are alarming, nevertheless. Project managers are focusing 80% of their attention on 30% of the risk. Admittedly, project managers are paid to execute and so some imbalance is understandable, and even desirable. But surely it would be prudent to also attend to the factors that actually cause 70% of project failures.
Ironically, the project manager is likely to be the first to realize the project is no longer addressing the real "problem" or represents the "right" solution, providing an opportunity to recommend changes that could make an even bigger contribution to the organization’s results.
In some cases, the business case will no longer be valid and the project should simply be canceled. This is not failure. It is simply the right business decision. Failure is continuing to spend money with no reasonable chance of achieving benefits.
PMFORUM thanks the many readers who contributed to our survey on project failure. We will be reporting the results in more detail in future issues of PM World Today.
Hugh Woodward is the President and Managing Editor of pmforum.org, and an
internationally recognized leader of the project management profession.
He served two terms as Chair of the Project Management Institute and almost
six years as a member of PMI's Board of Directors. His professional experience
includes projects and programs in manufacturing, construction and IT, and
involving both the public and private sectors. He continues to promote the
profession as a frequent conference speaker, having addressed audiences
in Argentina, Australia, Canada, China, France, Hungary, Israel, the Netherlands,
New Zealand, Russia, Singapore, the United Kingdom, and the United States.
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