In 2012, McKinsey & University of Oxford conducted a study of 5400 IT projects. After comparing budgets, schedules, and predicted performance benefits with the actual costs and results, it was found that these IT projects, in total, had a cost overrun of $66 billion. It was also found that the longer a project is scheduled to last, the more likely it is that it will run over time and budget, with every additional year spent on the project increasing cost overruns by 15 percent.
Staggering as these findings are, most companies survive the pain of cost and schedule overruns. However, 17 percent of IT projects go so bad that they can threaten the very existence of the company. These unpredictable high-impact events—“black swans” in popular risk parlance—occur significantly more often than would be expected under a normal distribution.
Findings – Four ways to improve project performance:
✓ Focusing on managing strategy and stakeholders instead of exclusively concentrating on budget and scheduling
✓ Mastering technology and project content by securing critical internal and external talent
✓ Building effective teams by aligning their incentives with the overall goals of projects
✓ Excelling at core project-management practices, such as short delivery cycles and rigorous quality checks