Business Project Management

By

Sachin Mathews -18241208

CRITICAL ANALYSIS OF SUCCESS AND FAILURE OF

SOFTWARE PROJECTS

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Executive Summary

This paper has two objectives. One to uncover the potential reasons of software project

failures and discuss the critical factors that influence successful projects. The other to

evaluate the validity of the statement given in assessment, that is taken from Attarzadeh

(2008). The first part of the paper analyses the trends of IT project success rates over the

past two decades and then describes the critical factors that cause software project failures

in detail. The paper then tries to recognize what constitutes a successful IT Project from the

IT industry's perspective and explore the possible ways by which success rate can be

improved by citing few of the best practices from sources within the industry. This paper

then discusses the research findings along with inferences drawn and finally give our

recommendations that can help managers to better navigate the common pitfalls in IT

project management and enable them to achieve higher success rates.

In terms of the scope of the paper, it is limited to the reasons for failure or success of IT

and software projects and does not go into projects related to the other management aspects

of an organization, such as sales or marketing or the affect IT projects have on them.

For the purpose of the research, the author of this paper mainly used articles from journals

pertaining to Information Technology that are listed in section 2. We also used conference

papers and world accepted reports such as IEEE, Standish Group reports, along with

articles and popular books on this subject written by renowned experts from the industry

and notable authors to support our research.

The main findings of the research are that around 60 percent of IT Project fails. This

percentage is excluding those that are challenged or have cost and schedule overruns. The

paper broadly classifies the reasons found into three categories, which are people,

organizational culture and processes and lack of proper resources and technological

platforms. The paper explores the critical failure factors falling under each category in

detail. After analysing the causes of IT project failure, we feel that the use of agile methods

such as Crystal, Extreme programming and Rational Unified Process along with some best

practices in terms of organizational management and having a Project Manager with

appropriate skill set and experience and good top management support can help IT projects

to be more successful. However we feel that further research needs to be done in order to

find out what constitutes IT project success especially in some specific cases.

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1. Introduction

In this global age, an age where speed, accessibility and visibility are the talking point,

companies rely heavily on Information Technology for their business performance. This

fact has been validated beyond doubt as companies are incessantly trying to use IT where

ever applicable in order to optimize their resources, be it manpower, finances, material or

information flow and most importantly "time" to gain competitive advantage and increase

profitability. Software companies on the other end are trying to get as many projects as

they can to garner greater respectability, expand their business and obviously their bottom-

line. However, it's not a rosy picture for software firms who develop these softwares.

In November 2012, the U.S Air force had to give up the "Expeditionary Combat Support

System" an ERP project, after it racked up $1 Billion, with only one forth its original scope

completed. It would need additional time, and would not be completed until 2020. The

department felt it would not be suitable as it was not improving anything in terms of

military application and was eventually scraped. Kanaracus. (2012). There are many such

cases of projects being scraped in various industries.

Software projects have a high failure rate compared to other projects which is matter of

great concern not only for the IT industry but to all those companies who use them, as it

can incur huge losses in terms of money, time and resources as seen in the above examples.

In this paper we explore why this happens, what are the critical factors that cause IT

projects to fail. We also look at ways by which we can improve the success rate and

explain some key methodologies used by successful projects. We then discuss the findings,

weather it substantiates the statement provided in the assessment, from Attarzadeh (2008).

Finally the paper gives its recommendations to have better success rate in the future.

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2. Scope of the Literature Review

3. Software Project Management

The term "Software" is a widespread term and can be applied in a variety of ways

depending on the requirement. For example there are real time, engineering and scientific,

embedded, personal computer, artificial intelligence softwares. Softwares are intended to

improve the overall efficiency of systems and process that use them. It is essential for

business, science and engineering at hence effects all areas of life. Software applications

are increasingly being used in various sectors such as telecom, banking, infrastructure,

manufacturing, healthcare, hospitality, transportation, defence and government

organizations to name a few. They have become an integral part of any office, for the main

purpose of speeding up process by automation and information sharing. It has become the

single most important technology in the world and is an excellent example of "law of

unintended consequences" as described by Kelkar (2013).

A software project like any other project is a mission to create a platform that will make the

end user's life easy. It is limited by time, budget and people and constitutes of certain

performance specification and features to meet the user expectation. It involves what is

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known as "software programming" which is building a software tool or application using

programming languages. It could either use "object oriented" programming languages like

C++,Java, Linux or "assembly level" like microprocessor 8085/86, or even "hardware

development" language like VHDL. And there are different methods of system

development each using different tools to accomplish the same task ( examples - object

oriented, rapid prototyping, waterfall etc.) Dorsey (2005) Stepanek. (2012)

Project management as Schawalbe (2011) describes it is " the application of knowledge,

skills, tools and techniques to project activities to meet project requirements." The project

manager along with the project team must make every effort to meet the specific scope,

time, cost, quality and goals of projects while facilitating the entire process to meet needs,

the wants and the expectations of the customer. Software Project Management as the term

suggests deals with management of every stage of the development cycle and the proper

management of the people involved, or its stakeholders Mc Leod (2011). They include the

project sponsor, project manager, client, client team, solution architect, consultants, sub-

contractor. A example of a IT project roadmap is shown in the figure 1 and the

stakeholders that are involved in an IT project are shown in figure 2.

Figure 10: Example of a IT Project Roadmap, Source - Kothari (2010)

Figure 2 : Stakeholders in a IT project Source - Kothari (2010)

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3.1 Why is Software Development Different

In order to better understand why software projects fail we first need to understand what

makes Software Projects so different from other kinds of projects. Stepanek. (2012) an

experienced team leader and software developer describes how complexity, conceptuality,

frequent technological changes that are inevitable ( For example, Java 6 a programming

language, had 81 updates, each differing significantly) which results in the lack of

developer's expertise in the new technology, lack of proven best practices. These factors

along with some others make software development unique and different from other

projects. To explain it in a lucid way he tells us that software development is not just a

method to build software but also a process of learning how to build the software that is

best suited for its function. No software is perfect as first envisioned it will always require

changes, to make it more suitable to its role.

3.2 IT Project Success Rate Trends

Kraft (2008) observe that on a average 66 % IT project fail, with 52 % project being

cancelled and 82 % being delivered late. These stats might look shocking given the fact

that companies invest huge amount of money on IT projects. In order to validate this data

we explored a few other reports and came across the Standish Group Report Rubenstein

(2007), that says in 2007, 35 % of software projects started in 2006 were completed

successfully compared to 16% in 1994, which was a significant improvement Cerpa and

Verner (2009).

Figure 3: IT Project Success Rate, Source - Chaos Research 2012 Standish (2013)

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The latest report "Chaos Manifesto 2013" by the same group suggest that it has further

improved to about 39% as shown in Figure 3, indicating that the industry is responding

well to the situation Standish (2013). However, the fact that still around 60% are either

unsuccessful or had cost and schedule overruns or dint deliver the required features means

there is much more to be done. Figure 4 illustrates the percentages of time, cost overruns

and features for the period - 2004 to 2012. As shown there has been an increase in time and

cost overruns since 2010 ( 71 to 74%). Although, percentage of projects failing to meet the

"features" that is nothing but the specified functional requirements has gone down a bit to

69%, but is still higher than during the period from 2004 to 2008. These stats are very high

and is a reason for concern in many organizations in the world as lot of the company's

resources like people, time, money, hardware and software can be saved as stated by Purna

Sudhakar (2012).

Figure 4 : IT Project Overruns and Features, Source - Chaos Research 2012 Standish (2013)

3.3 Why Software Projects Fail

"If there's more than one way to do a job and one of those ways will end in disaster, then

somebody will do it that way." Murphys Law. The current scenario of IT projects sums

up this statement. So Why do software project fail ? Let us look at some of the causes of

project failure that we have explored in our paper.

Existing literature on software projects failure point towards that failure are caused by the

project environment, tasks, process and individuals Lehtinen, Mntyl et al. (2014). For the

purpose of this research paper we broadly classify the reasons for failures into three

categories which are people, organizational culture and process, and the lack of proper

resources and technology which are discussed in detail in the following sections.

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3.3.1 Effect of People

(i) Lack of understanding between participants of a software project system

Project coordination, collaboration and common understanding among the stakeholder is

necessary for a project to be successful as portrayed by Imtiaz (2013). However this is

sometimes what is lacking. This could be between users and developers or among the

developers within a project team. The developers may have good technical knowledge but

lack the business knowledge and on the other hand users lack the technical understanding.

What results is a difference in expectations. The developers might perceive certain aspects

to be important and may enhance or add new features, but these may not be useful or

required by the customer. The aspects that are essential to their jobs might not be there.

This in turn can make their jobs more complicated as it may require additional steps that

are unnecessary making it "non-fit". In addition, many of the projects are outsourced to

companies in different countries, and hence factors like geographical distance, cultural

differences and languages (at a communication level) add to lack of understanding between

participants.

(ii) Lack of User Involvement

User involvement is another aspect that needs to be present throughout the project

development cycle. Most of the time the user involvement will be good at the start of the

project but at this stage all systems requirements that are needed to make it a complete fit

for the purpose cannot be well understood. Majid, Noor et al. (2010) had carried out a

research in this regard and found that software professionals tend not to include the end

users in the technical meetings which then results in the not involvement of users in

formulating the type of software used. This is why in many cases we see that user

satisfaction is not met.

(iii) Lack of people with the required technical skills

Technical as well as business and soft skills of the team members and the project manager

plays a crucial role in success of software projects as validated by Mc Leod (2011). Earlier

while differentiating from software project from other projects we learnt that software

technology keeps undergoing changes. This leads to lack of knowledge of new platforms.

The team members need to adapt to the changes quickly or need to be trained as per the

latest tools or versions required for the project. It becomes even more important for the

project manager to have solid knowledge of the platforms, software version and programs

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to better guide the team. In addition to this, he must also have the ability to lead, negotiate,

communicate, assess his teams capabilities and be able to reorganize and solve problems

quickly and effectively. Jiang (2007) in their paper discusses how these aspects effect the

performance of software projects. In his research he establishes how Information Systems

(IS) personal skills and project performance is to some extent mediated by organizational

technology learning. Hence skill set of the people involved in development is a critical

factor for software project success.

3.3.2 Effect of Organizational Culture and Process

(i) Lack of Project Selection and Insufficient Planning

Planning is the foremost step in an IT project. It refers to the process of deciding in

advance what to do, where to do and with what resources. It is at this stage that cost

estimates, team size and composition, the customer requirement, project assumptions and

other resource planning activities pertaining to the IT environment and systems are

established. It is also in this stage where "Software Requirement Specification" or SRS is

defined. This is a basic component of any software development project and when not well

defined can cause misunderstandings. Imprecise or an unconvincing business case might

lead to lack of proper approvals which in turn leads poor estimation and causes project

failure.

(ii) Lack of Top Management Support and Commitment

The entrepreneur in the company is the one who makes the strategic decision and thus it

goes without saying he plays the most important role in terms of the 'decision context'. All

studies done so far point towards this attribute as a critical success factor. The management

need to be aware upfront or be visibly and vocally behind a project. In some cases a strong

backup from top management can turn things around for projects that are going badly or is

going through a bad implementation phase. Commitment is another aspect that is

important. At times change of management occurs in the client company. The new

manager might not understand the initial project scope and might not have the complete

knowledge of processes involved and sometimes may withheld approvals. He may not

want to pursue the project in the current manner for a variety of reasons as elucidated by

Imtiaz (2013). Also the project team might not be able to easily communicate and convince

the new manager. This leads to project failure.

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(iv) Project scope or scope creep is managed poorly

Not all projects that are cancelled can be termed as failure. For example, some projects

though well managed gets cancelled because of the expediency of original purpose ceases

and can be no longer applicable Jrgensen (2014). In some of these cases, what happens is

that the project scope is extended beyond the initial requirement also known as "scope

creep" in order to meet the new objectives. This uncontrolled changes that keep occurring

during the project life cycle leads to project failure.

(v) Deadlines and project goals are unrealistic

It has been researched that there is close relation between the expectations or project goals

and pressure caused by deadlines and the skills set of the team. At times, project leads

neglect to understand that it's not practically possible to cover all aspects of the project

within the stipulated time frame. Even over estimating the capabilities and skills of team

members add on to this. This may be due to lack of experience of the project lead in

properly analysing the situation. All these factors put together, lead to not meeting the

desired objectives within the stipulated time frame.

(vi) Absence or Bad Risk Management

This one aspect that has not be adhered to sufficiently enough even in the latest context of

new agile methodologies being adopted by companies for software project success. Not

giving due attention to risk management can cause projects to fail. Risks are unplanned

events that can occur at any stage of the SDLC cycle. These may include workforce issues

and financial conditions on both the clients either or the developers side. These

unprecedented events include global recession, natural calamities in either ones location,

high dependence on certain project team members and their unavailability, certain failures

of technical platforms etc. Some of these can't be predicted but there many management

process like the predictive risk analysis for example that can be used tackle the threats of

these risks. In his paper de Bakker, Boonstra et al. (2012) discusses how risk management

can be approached with regard to the IT Industry in particular.

3.3.3 Effect of Lack of Resources and Appropriate Technological Platforms

Insufficient allotment or Poor estimation where initially itself project receives fewer

resources than that would be required for carrying out the planned activities is one of the

main causes of project failure. These resources could be in terms of people with

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appropriate skill set, appropriate technological platforms needed and the availability of

financial resources. Many times projects goes wrong because wrong and inappropriate

technology choices. A project may receive the right resources but if managed poorly leads

to wastage and requirement of additional resources. Imtiaz (2013) points out that

availability of these resources- financial, people and technology are dependent on the Top

Management support discussed earlier.

3.4 Defining IT Project Success

Figure 4: Defining IT Project Success, Source - 2013 IT Project Success Rate Survey Scott W. (2013)

The above figure illustrates what IT professionals consider a successful project based on

survey carried out in 2013 by Scott W. (2013) . Majority felt completing project on time

was the most important determinant for defining project success, were as 36 % believed it

was to be within budget constraints and 14% felt it was to meet the desired specifications.

Agarwal (2006) in their research found that most of the stakeholders of IT project

management team consider 'scope' of the software project as the most important criteria for

defining success. Scope includes the functionality and quality of project outcome.

Schawalbe (2011) in her book gives a more inclusive definition of IT project success,

saying if it met scope, time, cost goals, satisfied customer or the sponsor.

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3.4.1 Critical Factors of IT Project Success

From the above discussion on what constitutes a successful IT project and after

understanding the causes of IT project failure the paper find these factors to be most

important for IT project success. Most of these factors were explained in section 3.3 and

supported by research carried out by Imtiaz (2013) .

(i) Proper Planning and Estimation

(ii) Avoiding Scope Creep

(iii) Top management support

(iv) Well Qualified Project team and Project Manager

(iv) Clear Goals

(v) Effective monitoring and control

(vi) Customer or User Involvement throughout the SDLC

(vii) Proper Risk Management

In order to have greater IT Project Success rate firms need to adopt "agile" practices that

cover the entire SDLC. This is discussed briefly in the following section.

3.4.2 Use of new Agile Software Engineering Methods to achieve Project Success

The emergence of agile software engineering methods as compared to conventional

methods have improved the overall efficiency in software development Chow and Cao

(2008). Agile methods give greater flexibility and responsiveness in environment of

constant change. Some of the agile methods used in the software industry are Crystal,

Extreme Programming (XP), Scrum, Feature driven development (FDD), Dynamic System

Development Method (DSDM), Adaptive Software development (ASD), and Lean

Software Development (LD) and Joint Application Design (JAD) Koch (2005). The book

explains how adopting these new practices helps in improving the overall project

performance. For example XP's pair programming concept programmers can learn from

each other and monitor each other's progress. It includes the simple designing methods that

help in keeping the complexity of the software within the skill level of the whole team.

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4. Discussion

In today's world, no field is without software programmes and systems. To work

effectively one must be able to articulate one's needs to the Software developer in order to

get a system that best works in the business environment. In order to do this the IT user

must be able to "speak the IT language". As we have seen that all is not well with Software

Project Management with success rate currently being a mere 40 %. Hence I do agree with

factors discussed which are quite valid especially with regard to the software industry.

But there is another side to it. The definition of IT project success with regard to the time -

budget requirement is usually decided by the vendor or supplier. There needs to be a

stakeholders perspective while defining success as well. Also the fact that most of the time,

the budget and timelines are set at the start when uncertainty is at its maximum it is

practically impossible to define the project success criteria at that stage. In addition as we

have seen in section 3.1 how software development is unique in its own way and have

constant technological changes that are inevitable, along with the fact that all techniques

need not work with specific types of project I feel that there are more things that need to be

considered in terms of the definition of IT project success. Hence the statement found in

Attarzadeh (2008) is valid.

5. Recommendations

All is not lost for IT projects. I feel there are certain things that need to be set right, some

of which are quite basic in nature with regard to project management, this along with best

practices followed by leading firms could enhance the project success rate. Some of the

key recommendations that I would like to propose in order to have IT project success in the

future based on the research carried out are discussed below.

(i) Team Motivation and Collaborative Atmosphere plays a critical role in project

success. Higher the motivation greater will be the overall output. I find this the single most

important factor especially considering the fact that there is a lot of pressure when it comes

to software projects. People get disgruntled fast especially when things don't go right.

Sometimes they even leave their jobs in middle of the project. How well the project lead

can motivate the team when the chips are down, when there are disagreements or when

deadlines are approaching close, more the chances of the project succeeding. I would also

like to includes aspects such as user involvement, and better understanding between all

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stakeholders, discussed in section 3.3.1 under this point. There needs to be an overall

collaborative atmosphere among team members, internal and external stakeholders,

solution architects, client team and the executive sponsor.

(ii) Manager should use Best Practices and Lessons Learned

In order minimize or avoid the nastiest scope creep, a project manger should contemplate

even minor changes to the initial project scope cautiously and rework the course of events ,

provide new estimates and communicate it with all the stakeholders before incorporating

the changes. Jones (2010) discusses about fifty best practices used by highly successful

software project companies like Microsoft, IBM, Sony and EDS. The author explores how

these practices can ensure success in the field of software engineering. One practice for

example is instilling a process of continuous improvement while modelling the software

development process which can have a good impact on the performance of future projects.

(iii) Use of Agile Methods

I believe the use of latest Agile methods can be very effective technique and can turn

things around for IT projects. It covers all aspects of the SDLC right from planning to

delivery in a very unique and effective way. Many of the methodologies discussed in

section 3.4.2 are not yet being followed on a large scale and more the companies use them

better will be the end results. However there is much more to be done with regard to use of

agile methods to mitigate risk.

6. Conclusion

Summary: This paper investigated the prime factors that affects software project success.

The study was carried out in order to understand why there is such a low success rate for

IT projects compared to other projects.

Findings : We found that currently the project success rate of IT projects is around 40

percent section 3.1 that is quite low compared to other kinds of projects and causes huge

losses to companies. Nevertheless, in our study, we also found that the industry is

responding well by incorporating new and agile methods that has helped in improving the

success rate over the last decade. In addition we found that Project Managers play an

important role. They need to inculcate a habit of using best practices and have a continuous

learning mentality that can help the entire team in meeting the project deliverables.

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Limitation : We limited the scope of this study to projects pertaining to the Information

Technology sector or the software projects and its success criteria. We did not explore the

affects, IT projects have on other management aspects of an organization, such as sales or

marketing. Also our paper does not look into specific IT projects where additional

determinants needs to be considered in defining "success". Further research needs to be

carried out for analysing and understanding these factors in a more comprehensive way.

7. Reflection

Coming from a Telecomm management background there were many things I could

connect with in terms of project management, but nonetheless the learning curve was a

steep one for me as it had a lot to do with software projects in particular. In order to find

the criteria for success and failure, I had to start from square one, which was understanding

the fundamentals of IT Project Management and how IT Project Management differ from

other kinds of projects. The next challenge was to understand the way IT projects are done

in the real world, the processes, tools and techniques. Only then could I move towards

critical analysis of the project cycle and its pitfalls. There are two books I liked in

particular and would like to mention. One was Schawalbe (2011) and the other Stepanek.

(2012) which helped me understand information technology projects in a better way. From

the research, I learnt that a Project Manager plays a crucial role in building the team and

delivering a successful system. He needs to have experience, good technical and analytical

skills along with exceptional soft skills that are needed to bring the team together and get

the best from each team member. I also learnt a few things about the latest technological

and statistical methods that are used in better analysing the pitfalls in software

development and how they improve the process in order to achieve greater success.

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8. References

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