The recent cancellation of a significant public sector IT
initiative in Ontario highlighted how frequently IT projects result
in delay, cost overruns and generally unsatisfactory results. The
reported percentage of unsatisfactory project outcomes vary widely
(ranging from approximately 30% to as high as 60%). (For a survey
of various reports on the percentages see: "Why Projects Fail.") A thought
provoking September 2011 Harvard Business Review article,
"Why Your IT Project May be Riskier than You
Think," highlighted a number of projects that not only
encountered delay and project cost overruns, but destroyed or
severely impacted the broader business.
From our vantage point when dealing with IT projects (usually at
the procurement and contracting stages), the following steps will
help reduce the risk that your next IT project will join the ranks
of failed projects:
Defining requirements. Take time to gather and
properly document business requirements. Allowing sufficient
planning lead time before engaging suppliers contributes to better
Governance. Establish a state-of-the-art
governance structure. This should ensure that the right people in
both the customer and supplier organizations are aware of progress
and problems. This includes establishing a process to elevate
problems from the technical team to the executive team quickly.
Proper project management is key – remedies in the
contract won't save a project that is poorly managed.
Statements of Work. Devote the time and
resources to write good quality statements of
work. SOWs are part of the contract and deserve
equal (if not more) attention than the body of the agreement.
It is risky to accept vague and broadly stated
requirements, assumptions and dependencies that don't
create clear understandable performance obligations for the
Manageable Phases. Consider breaking
large risky projects into smaller manageable
phases. It is common to divide a project into technical design
phases and implementation phases.
Milestones. Clearly define a manageable number
of milestones. These milestones should represent material
components of the project and are linked to measures that motivate
timely performance, including one or more of the following:
liquidated damages, fee credits, delayed payment, escalation
requirements, mandatory remediation plans and termination.
Teams. Transformative IT projects require
dedicated teams at both the supplier and the customer. Identify who
these people are and write commitments into the contract to ensure
team continuity for the duration of the project.
Change Management. Ensure that scope is well
described and subject to change through a well thought out change
management process. This process should allow the customer to set
and manage cost expectations.
Businesses and public enterprises are increasingly reliant on IT
resources for their core business functions. Change and large
projects dealing with IT are inevitable and necessary. Businesses
and government enterprises embarking on such projects must devote
the necessary time and resources to planning, procurement and
contracting to avoid potentially devastating business outcomes.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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