One in six IT projects have 'out of control' budgets

Major IT projects are put at risk by low probability but high impact problems, such as show-stoppers, which can put businesses and public sector organisations in jeopardy.

One in six IT projects for private businesses and governments are 'ticking time bombs', according to researchers at the University of Oxford.

Believed to be the largest global study of IT change initiatives, examining nearly 1,500 projects over two years, with each project costing an estimated $170 million, the research helps to understand why so many IT project budgets runs wildly out of control.

On average, one in six major IT projects goes over-budget by 200 percent, with researchers citing show-stoppers and unforeseen circumstances as the main reasons why budgets are broken.

Along with growing complexity and unexpected events, such as compatibility or access to provisioning, most IT projects however still went into the red by 27 percent.

Uncertain economic times and fluctuating inflation also contributes to the ongoing issue of whether an organisation can afford to run into credit.

"Black swan blindness" -- the ignorance taken by IT project managers to consider low probability but high impact risks -- poses the greatest risk to set budgets.

Focusing on U.S.-based projects and public sector organisations, researchers found little difference between government departments and private sector businesses in this area.

One of the cited examples of IT cost mismanagement, where by a major IT infrastructure which spun out of control, contributed to the downfall of the Auto Windscreens business -- a major supplier of windshields in the UK -- which went into administration earlier this year.

The UK's National Health Service (NHS) is another example of where an IT project has caused major headaches for central government.

The plan to digitise patient records and to make records available to every healthcare provider in the UK was scrapped earlier this month, after members of parliament deemed the project "unworkable".

Costing £7 billion ($11.5bn), it was once seen as a worthwhile aim. But nearly a decade into the development, only 10 out of the 166 health trusts across the United Kingdom had received only a basic version of the upgrade.

The remaining £4.3 billion ($7bn), saved by scrapping the project, will be spent elsewhere.

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