An IT project has run hugely over budget. Help!

Dear Aunty B,

I run a largish business and have just been told that one of our IT projects has overrun to the tune of almost 30%! This has put a huge hole in my budget.

I am spending my time imagining horrible torture for my IT staff who assured me it was a fairly straight forward project and now say it was actually really complicated.

My problem is I have no idea what they are talking about. They speak to me slowly like I am deaf and dumb and it still sounds like gobbledygook.

So Aunty, how common is this and how do I avoid it next time around?

Spitting chips,
Sydney

Dear Spitting chips,

Ha! I was reading a story in the Harvard Business Review about this the other week. Here is what it said: “Any company contemplating a large technology project should take a stress test designed to assess its readiness.” Well the business owner should be stress tested as well and then injected with sedatives before the thing starts.

Anyway, the story aptly titled “Why your IT project may be riskier than you think” was about avoiding “black swans”: high impact events that are rare and unpredictable but in retrospect seem not so improbable. In fact, pretty bloody likely.

And the reason this applies to IT projects? They now touch so many parts of an organisation that they pose a singular new risk. In fact they can completely stuff your company – and country! When Hong Kong’s airport had months of IT problems it cost the economy $600 million in lost business over two years.

See how bad things can be? Bet you are feeling a bit better now. Bet even grumpy old Mr More than over it is feeling positively chirpy that he didn’t stuff up a country with a stuffed IT project.

Interestingly some boffins at Oxford decided to sit down and measured IT change initiatives (and I hoped they stress tested themselves before they did it because I would rather stick pins in my eyelids).

And guess what they found? When they broke down the project cost overruns they found an average overrun of 27%. And that included a large number of gigantic overruns. In fact one in six projects had a cost overrun of about 200% on average and a schedule overrun of almost 70%!

So here is what you say to staff next time they suggest an IT project. No!!!!!

No, not really. You say make sure you break the project down into ones of limited size, complexity and duration. Make contingency plans to deal with unavoidable risks. And lastly cross your fingers and hope for the best!

Be smart,
Your Aunty B

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