The Distressed Project

by Dr. Robert K. Wysocki, Senior Consultant, Cutter Consortium

Whenever the performance of a project falls outside nominal values, it will be judged to be a project in distress and likely to fail unless some intervention strategy brings it back under control. How it got to that state is certainly a question that needs answering. But more important is how it can be returned to a state of normalcy -- if at all. A distressed project will have one or more of the following characteristics:

• A project that has exhibited a performance trend that, if continued, will result in its failure. When the cumulative history of the project exhibits certain trends, it suggests that the project is out of control and the reason for the trends needs to be identified.

• A project whose performance has exceeded one or more metric values and is at a high risk for failure. When any one of those metrics exceeds its trigger value, this sets off a series of activities designed to identify the source of the anomaly and a decision has to be made as to what action needs to be taken.

• A project that has recently experienced some significant change that may result in failure. Oftentimes, these changes are related to personnel changes or other major organizational shifts. Even though the project performance metrics do not indicate any problem, the environmental change may be sufficient to throw the project off course.

Why Projects Become Distressed or Fail

There have been many studies done over the years that attempt to discover the reasons for project failure. The failure rates for IT projects are documented to range from 70% and higher (such as in the Standish Group's Chaos Reports {1}). We must find a way to reduce those numbers. Many of those reasons can be tied back to the methodology that is being used.

The Standish Group has tracked the reasons for project failure for several years now. A recent Chaos Report listed the top 10 reasons why IT projects fail in order of importance:

1. Lack of executive management support

2. Lack of user involvement

3. Lack of experienced project managers

4. Lack of clear business objectives

5. Minimized scope

6. Lack of standard infrastructure

7. Lack of firm basic requirements

8. Lack of formal methodology

9. Lack of reliable estimates

10. Lack of skilled staff

To obtain additional data on this topic, I recently conducted an informal survey with a number of my clients. Several factors emerged as possible reasons why their projects become distressed or eventually fail. They include:

• Poor, inadequate, or no requirements definition

• Requirements complexity not recognized

• Lack of executive support; no one making the tough calls on the project in a timely fashion

• Lag time between estimate and kickoff too great

• Project conducted after a 20%-30% cut in resources/time with the original time and estimate constraints kept

• Estimates done with little planning or thought

• Customer sign-off not consistently done

• No credibility in the baseline

• Scope becomes unmanageable

Strategies for Dealing with Distressed Projects

In general, there are two types of strategies for dealing with distressed or potentially distressed projects: prevention and intervention.

Preventing distressed projects is certainly a high priority, but we must face the reality that not all prevention strategies will work. Therefore, some of our projects will become distressed. Recognizing them and intervening before it is too late to correct the problem is thus also a high priority. Unfortunately, the majority of the project management community isn't dedicated to figuring out how to get out of trouble -- quite the opposite. However, project managers should be focusing up front on building a sound project foundation along with a team whose mission is the success of the project. This is not to say that we won't get into trouble, but it will be much less trouble, and we might even have a mitigation plan handy for those situations.

-- Dr. Robert K. Wysocki, Senior Consultant, Cutter Consortium

Note

{1} Standish Group. Chaos Reports