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On-time and on-budget -- but projects still fail

Although IT project governance has generally improved over the past year, companies are having difficulty recognising when a project has actually failed, accountancy firm KPMG says.

Although IT project governance has generally improved over the past year, companies are having difficulty recognising when a project has actually failed, accountancy firm KPMG says.

Egidio Zarrella, global partner in charge of information risk management at KPMG and co-author of the Global IT Management Survey 2005, told ZDNet Australia  that even if a project comes in on time and on budget, if people don't use the system - or find it is not what they needed -- then companies need to recognise they have failed.

According to the report, 49 percent of respondents said they had experienced at least one project failure, which is a "modest" improvement from 57 percent last year. Zarrella said however that this improvement could be related to the actual definition of success being altered.

"If all you think is, 'is it on time and on budget,' then you are in trouble. Organisations have come in on time and on budget but nobody uses the new system because the scope [of the project] has been cut. You wouldn't believe how many times that has happened," said Zarrella.

Zarrella said that companies are generally good with short term and even when starting longer-term projects, but they tend to run scared when the project encounters difficulties.

"We keep seeing that when a project goes off the rails everybody runs for cover. That is not the point of project management. Project management is there to say 'if it is going off the rails, how do we pull it back? It is like steering a ship -- you don't just say 'everybody jump off and let the ship smash into the land'," said Zarrella.

Zarrella believes that one way companies could improve their governance of IT projects is by creating an enterprise project management office (EPMO) that directly reports to the board. The EPMO should be experienced and mature enough to recognise when certain projects are "going off the rails" and learn from any mistakes that are made.

"The [EPMO] does not intervene on every project -- that is not the point. They become part of the learning organisation. You don't want them taking on the admin role, you want them to share best practice and if they see a project going wrong they let people know early on," said Zarrella.

Australian companies could also improve their standing in the global project management community by learning from Europe and the US and making bonus and wage structures better represent the relative success of projects.

The report found that although 87 percent of executives in the survey were responsible for delivering the potential benefits of a project, only 23 percent had their compensation linked to the project's success.

"In Australia we are behind the pace of Europe and the US. There, the project sponsor, the project director and others should all tie their renumeration to successful completion of the project," said Zarella.

Zarella concludes by recommending companies take a simple approach to projects and ensure that the people in charge of delivering the project's expected benefits are compensated depending on the final result.

"You can buy thousands of books on benefit realisation or project management but that is not what we are talking about. We are talking about having a simple process where everybody knows that they are accountable to make sure the system goes in," he said.