Top 8 Causes of Project Failure in 2020

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Krystal

Senior editor

Parul Saxena

Chief editor

Last updated: February 23, 2021

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Every year thousands of projects fail, and with it, millions of dollars get wasted per failed project.

Of course, there is no definite structure that can define the success of a project. Different organizations handle functional projects differently. And even if you carefully handle all your projects, some of them will still fail.

While there are many causes to it, which we will discuss in the latter part, let’s first understand what project failure is. Also, let’s look at some project failure statistics.

What Is Project Failure? 

In general terms, project failure is when the team fails to deliver it on time and in line with expectations. In order to succeed, a project must be delivered on time and with quality as well. If a project doesn’t meet the financial forecasts set out in its business plan, it is considered a failure too. 

Furthermore, a project to be considered successful must also deliver the minimum ROI criteria. There is no silver bullet to ensure projects don’t fail, there are. However, there are some measures you can take to avoid it. For instance, implementing project management software can drastically help reduce failure rates by keeping track of every activity.

Deadly Project Management Failure Statistics

According to a survey by KPMG, a whopping 70% of organizations have suffered at least one project failure in the prior 12 months. 

That means wasted resources and efforts. If you put a value to projects failure, for every $1B invested in the US, $122M was wasted due to project failure. 

Another survey revealed that on average, large IT projects run 45 percent over budget and 7 percent over time. Plus, it delivers 56 percent less value than predicted. 

The stats say it all. This brings us to our next question — Why do projects fail? Let’s look at some of its causes so that we can avoid it in the future.

Causes of A Project Failure

1. Limited planning

You have probably heard some iteration of this quote attributed to Benjamin Franklin: “By failing to prepare, you are preparing to fail.” If project management is the practice of turning ideas into reality, then it is vital to know the goals and parameters of the idea before you start.

Before initiating the project, ensure that you have met with stakeholders to discuss their expectations on time, cost and quality. Include as much detail as you can in your scope of work, too.

With a detailed scope, projects can follow a clear direction and progress can easily be tracked. Guard the scope and requirements as fiercely as possible. If your client would like to make changes, issue a change order along with an adjusted budget and timeline.

Remember that your projects should fit within a realistic timeframe. KPMG Canada conducted a study that showed that 60 percent of the failed projects have a deadline of less than a year. Keep a buffer so you have the liberty of completing a project without rushing through it.

2. Infrequent tracking

Having regular check-ins is vital to the health of your project. By doing so, you can spot risks before they develop into bigger unyielding problems.  

Track your milestones, so you have a clear idea of how the project is progressing. If it’s behind schedule, you will have time to course correct and inform stakeholders well in advance.  

Keep an eye out on your budget and resources, so you can allocate or request for more before you encounter any hurdles. If your team knows that you have your eye on the budget, they are less likely to account their grey hours to projects you’re leading.

Choosing the right best project management tools can help you with this.

When a project is on the verge of failing, there will be warning signs. Close monitoring will allow you to take action sooner and can help save the project.

Also, Read: The Five Phases of A Successful Project Management Cycle

3. Inadequate training

Project Managers in small to medium-sized businesses are less likely to have formal training to certification.

While there are great project managers out there who don’t have certifications, going through training equips you with tools, tips, and a network to lean on. According to PricewaterhouseCoopers Insights and trends report, certified project managers supervise 80 percentage of successful projects, thus we need some great project management tools.

With stats like that, it’s wise to hire trained professionals and encourage upskilling. Project managers have a lot of responsibility, so it’s in everyone’s best interest that they are formally educated and experienced.

Furthermore, each project will have its own unique set of challenges and risks. However, with knowledge and experience, PMs will be better equipped to identify and mitigate risks.

Looking for Project Management Software? Check out SoftwareSuggest’s list of the best project management software solutions.

4. Misaligned culture

Happy employees have a 12% spike in productivity compared to their counterparts and people who are invested in what they’re working on are generally happier.

This is why it’s important for team members to “buy in” to the project their working on. Teams with a sense of ownership are more likely to produce better quality work because they know that their efforts make an impact on the overall success or project failure. In order to foster a sense of ownership, there are four things you can do:

  1. Include your team in the planning stage of the project. Allowing input in the way things are done will encourage a sense of ownership in the project.
  2. Clearly delegate responsibilities and tasks to team members. Clarify with your team the types of decisions they can make with and without you. This eliminates any grey areas and needs for micromanaging.
  3. Communicate – do it early and often. Discuss and celebrate progress; address and learn from mistakes together.
  4. Lead by example. Be as accountable to your team as you would like them to be to you.

Teams should be supported on the management level, too. Whether it’s bringing in extra resources or empowering employees to become better project managers.

5. Poor communication

A survey conducted by Spike Cavell shows that 57% of project failure due to poor communication. Teams that don’t communicate well with each other will have a lack of transparency. Without transparency, key decision makers won’t have all the information to make optimal decisions and chaos may ensue.

Aim to make communication a habit. It creates an environment of trust and kills conflicts that stem from miscommunication.

Plan how you intend on ensuring everyone is on the same page. Whether it’s a casual ten-minute recap at the end of each day or strategic weekly meetings. Examine the needs of the project and go from there.

Finally, remember to include all contact information on the project plan. Include email addresses, phone numbers, as well as the ongoing meeting schedules so everyone is in the loop.

6. Lack of resources

A lack of resources is a problem that can be attributed to all of the symptoms above. Projects with poor cost estimations and infrequent tracking are likely to go off budget. Team members that don’t raise flags with each other or account their grey hours to a budget will exacerbate the problem. Finally, project managers that are don’t know how to track and manage finances will surely drive a project failure.

Any project that is 10% or less over budget is doing well and most projects that come in 10% over budget would be deemed a success. However, diligent oversight of expenses, re-analyzing and re-planning the budget, and educating the project team will help drive the project in the right direction. Use historical data kept from previous projects to build out your budget for resources instead of guesstimates.

7. Scope creep

The scope is everything you’re going to do, and conversely, not going to do. As mentioned before, include as many details as you possibly can – then guard it throughout the duration of the project against informal or unplanned changes. If a client wants more work or needs to make a change, issue a change order. That way, a new schedule, risk plan, and budget can be created.

If the goals of the project change frequently, more time and resources get wasted and people involved in the project may get confused. This will make management and the customer unhappy and may lead team members to “buy out”.

8. No stakeholder management

Stakeholders have a vested interest in the project, either for good or the detriment of it. Project managers should identify all stakeholders and communicate with them in a timely fashion.

Depending on the project, not doing so can escalate the risk of project failure.

Also, Read: Top 7 Project Management Blogs Every Manager Must Follow

Conclusion

Managing projects is tricky business. However, if you know what to look out for and make mitigation part of your process, your projects will be better for it.

Make use of the right tools and software to help you plan, track, schedule and manage your projects as efficiently as possible, and you’ll be on the right track to project success.

If project management is the path for you, consider best project management training that leads to certification, like the PMP. Certified project managers have a higher success rate with projects, get paid more, and have a global network of peers to connect with.

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Krystal is a marketing manager at GoSkills, an online learning company that helps anyone learn business skills to reach their personal and professional goals. With a GoSkills.com subscription, members receive personalized courses consisting of high quality and to-the-point video tutorials, transcripts, cheat sheets, exercise files and short quizzes.

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