Developing a Risk Estimation Model from Technology Project Failure

Surveys, research and government reports show that IT projects tend to go wrong and that developers and those in charge continue to underestimate risk. This paper considers the costs of failure, compares views of why IT projects go wrong, looks at some examples of IT project failure and presents a technique for estimating an IT project’s risk before too much is spent.

Introduction
IT projects have a bad reputation for going over budget and schedule, not realising expectations and for providing poor return on investment (Clegg et al, 1997; Keil et al, 1998; Fielding, 2002; The Register, 2002; Jaques, 2004). Surveys and reports on the acceptability of new IT systems seem to highlight constantly the same problems and probable causes of failure yet businesses, large and small, continue to make mistakes when attempting to improve information systems and often invest in inappropriate or unworkable changes without proper consideration of the likely risks.

This paper aims to explain the reasoning behind the development of an enhanced technique for evaluating potential threats to the success of an IT project at an early stage. To begin with we look at the scale of the problem by reviewing evidence of the remarkable costs and frequency of project failure over the past 10 years. Then we consider the findings of five important reports on IT project failure and capture the factors or pointers that, according to these reports, most influence success in a table. Next the paper explores concepts of success and failure before commenting on some of the wider issues that caused problems in a variety of case studies. There follows a section that discusses approaches to risk management which leads to an explanation of a technique that can help with the estimation of IT project risk. Links between this technique and the assessment of the causes of failure are explained. Finally some conclusions are drawn.