Learn from Project ‘Failures’ – Part 1

Our last Project Management Insight article considered how we can learn from mistakes on our projects.  ‘Project Failures’ are more common than most of us would like to acknowledge, although some care is necessary in defining ‘failure’. This post is the first of two which consider common avoidable failures in project delivery and how we can learn from the mistakes of others! As John Keats (1795 – 1821) said:

Don’t be discouraged by a failure. It can be a positive experience. Failure is, in a sense, the highway to success, inasmuch as every discovery of what is false leads us to seek earnestly after what is true, and every fresh experience points out some form of error which we shall afterwards carefully avoid.

Definition of Project Failure

A little searching of the Web shows a multitude of articles on the topic of ‘project failure’.  Some  articles are written from a limited perspective while others are written with the objective of selling you some ‘magic bullet‘ which will ensure the success of your project.

There’s no clear definition of project failure.  Many commentators suggest that failure occurs when: project cost exceeds budget; and/or, time to deliver exceeds the plan; and/or, the agreed scope is not fully delivered. It’s not really so clear cut – for example, while a short delay and small cost over-run on a project which is otherwise fully delivered and generally realises the expected benefits may be regarded as ‘failure’, it is certainly not catastrophic failure.

We might alternatively consider a project as failed if it is not delivered or is cancelled or if it fails to deliver the benefits expected by the promoter.  From a purely project management perspective there are a number of issues with this approach:

  • a project might be cancelled for reasons such as changed market conditions e.g. as happened to many real estate developments following the marked downturn in the market in 2008.
  • a promoter might realise a profit of 25% rather than the expected benefit of 30% – depending on your point of view, this might be considered a partial success or a partial failure!  The partial failure might not necessarily be a failure in the delivery of the project, but could result from changed market conditions.

In reality there’s no clear cut line between success and failure, but rather a range of possible outcomes from total failure to total success.  Where our projects sit in this range is partly a matter of perspective – for example, a delay may not have a major impact on the outcome or success of some projects, but where time to market is critical the same delay might be regarded as a major failure.

From experience, there is almost always room for performance improvement on projects. A few years ago I was involved in periodically auditing a major shopping centre development which was a huge success on opening and remains highly successful – yet, from my perspective I observed many failures or poor practices in the project delivery processes and strategies which detracted from the commercial outcomes and which might, in different market conditions at the time of opening, have led to losses for the promoter.  So our aim must be to push our projects up the scale towards total success.  The principal criteria where we can judge success (or failure) of our projects include:

  1. Actual time vs. projected time.
  2. Actual cost vs projected cost
  3. Project deployed/introduced, or cancelled?
  4. Revenue, profit, or productivity gains realized, vs projected
  5. Customer/user satisfaction
  6. Affect on reputation of company/department/project team
  7. Were project staff rewarded (promoted, given bonuses), punished (sacked, demoted, given pay-cuts), or neither?

Case Studies – Real World ‘Failed’ Projects

What can we learn from real world ‘failed’ projects? I’ll look at  a couple of projects which might be considered failed, but which fell short of total failure while having significant shortfalls in delivery and many lessons to be learned. One project is from my own recent experience, while the other is in the public domain.

Hotel Development

A few years back I was called in by a project’s promoter to audit a 5* hotel re-development. The promoter was an experienced developer and operator of hotels.  The property had recently opened, but had suffered costs considerably over budget and delay in completion.

The redevelopment was of an existing historic hotel property with extensive demolition, but retaining the principal building facade.  The promoter’s project management subsidiary was appointed as client’s representative and, in addition, took over the project manageer and cost manager/quantity surveyor roles for the construction period.

The promoter’s objective for the audit was to establish grounds for suing his architect for the cost and time over-runs. The reality was somewhat more complex and my report suggested a number of lessons learned to be implemented in the promoter’s future projects.

The table below shows how the project fared against  the success/failure criteria described above:

Criteria Achievement
Actual time vs. projected time. Actual time exceeded planned time by 50% based on forecast at the start of construction.
Actual cost vs projected cost Final cost around 30% above budget.
Project deployed/introduced, or cancelled? Hotel completed and put into operation.
Revenue, profit, or productivity gains realized, vs projected Reduced returns on investment due to higher than planned delivery cost exacerbated by a market downturn shortly before the hotel opened for business.
Customer/user satisfaction Promoter highly dissatisfied not only by the cost increases and delays, but also the lack of communication.
Affect on reputation of company/department/project team Promoter hurt in eyes of shareholders. Delivery team reputations damaged.
Were project staff rewarded (promoted, given bonuses), punished (sacked, demoted, given pay-cuts), or neither? There were a number of departures from the project management team (partly due to a general market downturn) and an internal re-organisation by the developer.

Scottish Parliament

The new Scottish Parliament opened in 2004 some 3 years late and at a cost almost 9x greater than the original budget. A public enquiry was launched to establish the reasons for the project’s failures with the report being in the public domain. Having worked in Edinburgh for a number of years, a large number of the parties involved were known to me personally and I followed reports of the progress of the public enquiry with a great deal of interest.

The table below shows how the project fared against the success/failure criteria described above:

Criteria Achievement
Actual time vs. projected time. Delivered 3 years later than planned.
Actual cost vs projected cost Final cost was c. £431 million versus a budget of £50 million.
Project deployed/introduced, or cancelled? The Scottish Parliament held its first debate in the building in September 2004.
Revenue, profit, or productivity gains realized, vs projected The project delivered a landmark building which houses the Scottish Parliament and which has been highly commended winning many awards including the 2005 Stirling Prize.
Customer/user satisfaction Taxpayers highly disatisfied by the cost of the project.
Affect on reputation of company/department/project team Reputations were damaged including politicians, civil servants, project managers, construction managers and other members of the design team.
Were project staff rewarded (promoted, given bonuses), punished (sacked, demoted, given pay-cuts), or neither? A number of the participants in the project were castigated at the public enquiry.

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Part 2

The second post in this series looks at:

  • how/where our case study projects failed;
  • common causes of project failure in general;
  • lessons that can be learned from project failures; and,
  • how and where to learn from others’ mistakes.

Meantime to wrap up Part 1, I’ll give the last word to the American actor Mickey Rooney (1920 – ):

 You always pass failure on the way to success.

Learn from Project ‘Failures’ – Part 2 →

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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