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Chapter 14 Managing Projects 559

14.1 THE IMPORTANCE OF PROJECT MANAGEMENT

T here is a very high failure rate among information systems projects.
In nearly every organization, information systems projects take much
more time and money to implement than originally anticipated or
the completed system does not work properly. When an information
system does not meet expectations or costs too much to develop, companies
may not realize any benefit from their information system investment, and the
system may not be able to solve the problems for which it was intended. The
development of a new system must be carefully managed and orchestrated, and
the way a project is executed is likely to be the most important factor influencing
its outcome. That’s why it’s essential to have some knowledge about managing
information systems projects and the reasons why they succeed or fail.

RUNAWAY PROJECTS AND SYSTEM FAILURE

How badly are projects managed? On average, private sector projects are
underestimated by one-half in terms of budget and time required to deliver the
complete system promised in the system plan. Many projects are delivered with
missing functionality (promised for delivery in later versions). The Standish
Group consultancy, which monitors IT project success rates, found that only 32
percent of all technology investments were completed on time, on budget, and
with all features and functions originally specified (McCafferty, 2010). A large
global study of 1,471 IT projects reported in Harvard Business Review found that
the average cost overrun was 27 percent, and that one in six of the projects
studied had an average cost overrun of 200 percent and a schedule overrun of
almost 70 percent (Flyvbjerg and Budzier, 2011). Between 30 and 40 percent of
all software projects are “runaway” projects that far exceed the original sched-
ule and budget projections and fail to perform as originally specified.
As illustrated in Figure 14.1, a systems development project without proper
management will most likely suffer these consequences:
• Costs that vastly exceed budgets
• Unexpected time slippage
• Technical performance that is less than expected
• Failure to obtain anticipated benefits

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