Global firms counting cost of failed IT projects

A survey of companies in the UK, USA, Africa, Australia and Europe has revealed more than half have lost millions of pounds from failed IT projects in the last year.

The average cost of a failed IT project amongst the 134 companies surveyed by KPMG International, the global accounting and consulting firm, was found to be £8 million - with the largest single project failure costing £133 million.

Commonly cited reasons for failure were inadequate planning, poor scope management and poor communication between the IT function and the business.

Sixty-seven per cent of companies interviewed rated their programme management function as 'in need of improvement or immature.'

Only 44 per cent measured project performance against established metrics. On average, each programme management office oversaw 83 projects valued at a total of £67 million.

Bryan Cruickshank, UK Head of Information Risk Management at KPMG, said: "Large organisations often run multiple business transformation and IT projects at any one time, where a central programme management office is pivotal to ensuring the effective co-ordination, quality assurance, risk management and reporting of all the programmes underway. The risk is that without a sound programme management function, project costs overrun, timescales slip and the planned benefits lose their focus and are not realised."

Additional findings from the research showed only 23 percent of organisations' relevant employees were certified by the Project Management Institute. Whilst four per cent of personnel have 5-10 years experience, only 20 per cent have 10 years or more. Eighty-one per cent used a home-grown methodology to manage their projects.

"The fact that the research showed that companies rate meeting business-case requirements as the most important factor in evaluating project success is encouraging. But it should not be at the cost of poor programme management, or an excuse to miss deadlines and budgets," added Cruickshank.

"In this economic climate, companies cannot afford to be losing money hand over fist on failed projects. Without a robust business case, effective application of project standards and processes and an appropriate level of attention to managing project risks, companies are heading for more failures."