Learn from Project ‘Failures’ – Part 2

Part 1 of this post considered definitions of project ‘failure’ and looked at where two case study projects failed. In Part 2, the causes of failure on our two case studies are outlined and compared with published common causes of project failures.  The article concludes by considering how and where you can learn from others’ mistakes.

Causes of Project Failures – Case Studies

The previous post argued that there’s no clear definition of ‘project failure’, but a continuity between total failure and total success.  Our two case study projects – a hotel development and the Scottish Parliament – were successful in that they were completed and brought into operation, while exhibiting failures in:

  • delivering to budget
  • delivering to schedule
  • achieving anticipated benefits
  • achieving customer satisfaction
  • enhancing the reputations of the project team, and
  • enhancing the rewards and careers of individuals in the project team

What were the causes of those failures?

Hotel Project

Following completion of this 5* hotel development, I was called in by the Owner to investigate the causes of time and cost over-runs.  The following short-comings were identified in my report:

  1. Brief:
    – While a brief had been agreed, it failed to reconcile scope/quality of the completed development and the approved budget (which was much too low).
  2. Strategy
    – Adoption of a high risk contracting strategy to overcome programme drift and incomplete design.
  3. Project Life Cycle/Gateways
    – Lack of clear phases and gateways.
  4. Organisation, Roles and Responsibilities
    – Lack of clarity of roles and responsibilities. Conflicts of interest.
  5. Communications
    – Infrequent, low quality and at times imprudent reporting.
  6. Procedures and Processes
    – Lack of documented management processes and procedures.
    – Lack of any systematic change control during design and construction phases.
  7. Design
    – Lack of design co-ordination (between disciplines)
  8. Procurement
    – Incomplete tender documents, incomplete design at time of tender, and no contingency provisions.
    – Unusually long bid lists.

The report concluded with a number of recommendations for improvement on future projects with examples of good practice.

The Scottish Parliament

The following is a summary of the conclusions from Lord Fraser’s report of the public enquiry:

  1. Brief
    – The initial budget was insufficient given the scope and quality desired.
    – During a critical 18 months of the design period sight was lost of the brief and design proceeded without a clearly formulated set of client or user requirements.
    – Priorities not clearly resolved: whenever there was a conflict between cost and quality, quality was preferred; and, whenever there was a conflict between cost and early completion, early completion was preferred (without actually achieving and significant acceleration!)
  2. Strategy
    – Adoption of a relatively high risk contracting strategy to achieve fast construction without full evaluation and appreciation and without consultation with Ministers.
  3. Project Life Cycle/Gateways:
    – Incomplete at a critical RIBA Stage D gateway
  4. Organisation, Roles and Responsibilities
    – Blurred lines of communication.

    – Inexperienced Project Sponsor (wrong skill set)
    – Conflict of interest
  5. Communications
    – Reporting weaknesses: late reporting of budget increases to Ministers and resignation of project manager; elements of cost information was withheld or altered in reports to Ministers; not informing Ministers and stakeholders of risks; and, unjustified optimism in reports
    – Extremely poor levels of communication between key players at times.
  6. Procedures and Processes
    – Failure to finalise a Project Execution Plan
  7. Procurement
    – Insufficient enquiries made into the organisation of the design competition winning architectural joint venture. The joint-venture was a misnomer – two teams separated by geography working in quite different ways. Overall performance of the architect below reasonable expectations.
  8. Design
    – Complexity (and cost) of the evolving design was not appreciated until it was too late to change.
  9. Programme
    – Unrealistic programme given the complexities of the design

Common Causes of Project Failures

There are many common features when comparing our two case study projects:

  • Wishful thinking – both projects started with a budget which did not recognise the briefed aspiration for scope and quality. Optimistic reporting of cost and time as the projects went forward in the (mistaken) belief that cost could be managed out and deadlines achieved.
  • Adoption of high risk contracting strategies
  • Organisational weaknesses
  • Poor communications, particularly in reporting to owners and stakeholders
  • Lack of documented project management procedures and processes
  • Failures in areas such as change control and risk management

From experience, the failures exhibited in delivering the case study projects are fairly common.

However, two case studies is a very limited sample.  The UK Government, which has a fairly mixed record as a major purchaser of capital projects, established the Office of Government Commerce (OGC) to help the Government deliver best value from its spending.  OGC have published a booklet “Common Causes of Project Failures” where they place the common causes of failure in the following 8 general categories:

  1. Lack of clear links between the project and the organisation’s key strategic priorities, including agreed measures of success.
  2. Lack of clear senior management and Ministerial ownership and leadership.
  3. Lack of effective engagement with stakeholders.
  4. Lack of skills and proven approach to project management and risk management.
  5. Too little attention to breaking development and implementation into manageable steps.
  6. Evaluation of proposals driven by initial price rather than long-term value for money (especially securing delivery of business benefits).
  7. Lack of understanding of, and contact with the supply industry at senior levels in the organisation.
  8. Lack of effective project team integration between clients, the supplier team and the supply chain.

The booklet goes on to provide detailed questions that OGC suggest are addressed by those managing or involved in delivery of government projects.

When the failures in the case studies are mapped against the OGC common causes of project failures we see the results tabulated below.

Cause Hotel Development Scottish Parliament
Lack of links between the project and the organisation’s priorities
Lack of ownership and leadership
Lack of engagement with stakeholders  √
Lack of project and risk management skills and proven approach  √
Too little attention to breaking the project into manageable steps  √
Evaluation of proposals driven by intial price rather than value.
Lack of understanding of and contact with the supply industry  √  √
Lack of effective project team integration  √  √

It appears from the above mapping that the OGC list is fairly comprehensive and can usefully inform the private sector as well as the public.

How and where to learn from the mistakes of others

Failures are often swept under the carpet rather than aired in public. There are exceptions: projects which end up in the courts; and, public projects which are subjected to detailed scrutiny through public enquiries/investigations.  To learn from the mistakes of others you could consider the following:

  • published materials such as the OGC’s “Common Causes of Project Failures“;
  • taking an interest in those ‘failed’ projects which come into the public domain such as the Scottish Parliament;
  • participating in professional bodies such as APM and PMI, and networking with peers; and,
  • ensuring that your organisation has robust processes for learning from its projects and absorbing the lessons learned for the future.

Accepting that few of us will actually attain the perfectly successful project, I’ll leave the last word to Winston Churchill (1874 – 1965):

Success is the ability to go from one failure to another with no loss of enthusiasm.

About Sandy McMillan

Sandy, who semi-retired in 2011, is the former COO of development and project management businesses operating in the construction and real estate sector throughout Europe, the Middle East and North Africa. He holds university degrees in civil engineering from the Universities of Strathclyde and Glasgow, and is a Chartered Engineer, a member of the UK's Institution of Civil Engineers, and a Member of the Association for Project Management. Since graduating, Sandy has more than 35 years management experience with the last 20+ years being in the fields of development and project management. While his early experience was in the heavy civil engineering sector e.g. power stations, he has operated primarily in the building sector since 1988 where he has managed development of retail, office, residential, and industrial properties. When Sandy's not travelling around EMEA on business, he has a home in Warsaw, Poland.
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