Nothing makes a greater impression than bad news. Offer a sobering statistic, and you’ve got someone’s attention. If you’ve spent any time discussing IT projects, you’re heard the following too many times:

  • Only 16 percent of projects started are completed on time, on budget, and within specifications.
  • 31 percent of projects are cancelled or fail before completion.
  • 53 percent of projects are considered “challenged” by their project teams.
  • Project overruns average 189 percent of original budget and 222 percent of original schedule.

Although trotted out at almost every project management seminar, these numbers are based on a six-year-old report entitled “CHAOS” from The Standish Group, which tried to understand the factors that influence project success and failure.

Jump ahead seven years, and the good news about these dismal project success numbers is that they are now obsolete. In the most recent CHAOS report, researched in 2000 and released this year, the success rates for IT projects—compared to the 1995 study—have increased dramatically. (The 2000 report is based on an analysis of 30,000 IT projects from large companies like Fidelity Investments and Compaq Computer and government agencies such as the Internal Revenue Service. Thousands of smaller companies were also part of the study.)

  • 28 percent of projects were delivered on time, on budget, and within spec.
  • 49 percent of projects are now considered “challenged.”
  • 23 percent of projects fail or are cancelled.

More significant improvements were reflected in cost and budget control, which improved to 45 percent from 189 percent in 1994. While that’s still not as accurate as customers expect, it’s an improvement that suggests that the practice of applying structured and robust methods to budget management is working.

Busted schedules also improved, down to 63 percent from 222 percent in the earlier study. While clients may not be thrilled to discover that, on average, their IT project will take 63 percent longer than expected, at least these numbers are heading in the right direction.

Why the improvements?
So why are project results improving? Quoted recently in CIO magazine, The Standish Group Chairman James Johnson credits three factors for the upswing in project management practices:

  1. Closer, more granular project control or “microproject” management
  2. Stronger concentration on user participation
  3. Better communication and consensus-building within the executive suite

Johnson calls for standardized project methodologies that can then be adapted for the project at hand. And, as we’ve reviewed many times, consulting is communication, a statement that holds true for project management as well.

True two-way communication that informs the community and allows it to participate and shape the results is a best practice that has now been validated statistically, Johnson argues. Additionally, the involvement of executive management in the communication and consensus process is the third element of Johnson’s IT project pantheon.

As Johnson says: “More frequent delivery of application components and regular communication is the best way to demonstrate IT value.”

(As discussed in my interview with Jim Highsmith, shorter, more adaptive IT project lifecycles, with frequent chances for ferreting out errors or issues, and more opportunities for involving the client help project teams improve results.)

Competition demanded improvements
Another reason the project management success rate has improved is because it had to.

The market has become so competitive, and the client so much more sophisticated, that normal market pressures have conspired to send poor project managers to the sidelines. Companies that lack robust, repeatable, consistent project delivery methodologies and cultures fall away as clients become more knowledgeable and demanding of results.

Many commentators have remarked that the demise of some of the e-consultancies was based on a simple phenomenon—they had no reference accounts, especially when their dot-com client base started to evaporate.

What the new numbers suggest
What can IT consultants take away from this new study and the analysis of the results?

The study clearly indicates that there is a direct correlation between the close, detailed management of projects at the task level and their success. While not appropriate for every project, new methodologies such as extreme programming and adaptive development can teach project managers some valuable lessons.

For example, old style “waterfall” methodologies, which consider a specification “frozen” once the project moves beyond the requirements phase, are being supplanted by more nimble, iterative, and change-friendly techniques. Project managers and consultants need to move beyond the mentality that says every change means a mistake was made in an earlier project phase.

Changes occur because business needs change, because what we visualize is not always what we can deliver, and because new and innovative solutions are conceived. Our project methodologies need to retain the discipline of the earlier techniques but must be adaptable and accept the reality that change happens.

The Standish study also points to a new trend in project management as a key driver to improved project results: the use of the Web or other collaborative environments to allow distributed project teams to work together without being together. Applications like Lotus Notes, Microsoft Exchange, or some of the newer professional services automation (PSA) products like Changepoint, provide virtual team environments that project teams can use to facilitate collaboration and communication while maintaining control of elements such as code versions and documentation.

The good news is that, by applying these new techniques and technologies, the IT community has made progress in our efforts to deliver quality projects on time and on budget. While the numbers indicate that we still have a way to go, the future looks good for those organizations and teams that learn the lessons of this survey and apply those lessons to their engagements.

Are you using any of these methods?

Have any of the methods or suggestions that Rick Freedman discusses here made it to your business? Are they having the same kinds of success that the updated CHAOS study would suggest? Send us an e-mail or post a comment below.