Are we really surprised that bargain-bin IT projects fail?

On the surface the figures look grim. At its inception the National Programme for IT was touted as costing a mere GBP2.3 billion, which swiftly rose to GBP6.2 billion. Now the government agency responsible admits that this figure did not actually include implementing the system, just developing it, so the final cost is going to be at least GBP12.4 billion and possibly as high as GBP20 billion. Cost overrun is not the whole problem either: the National Clinical Records system, an electronic medical records system for 50 million people, is at least two years behind schedule, and the choose-and-click appointment system that allows GPs to book hospital appointments for their patients is over a year late.

The stark truth is that few of us are surprised at these statistics. Indeed this project may not be good, but it simply isn't bad enough to make it into the IT Hall of Shame--the home of the world's most disastrous IT projects. Given the sheer scale of the project, it could have been a lot, lot worse. But like many projects the reasons why it hasn't gone entirely to plan are fairly straightforward. Firstly, it has suffered from the twin effects of least-cost procurement and poor initial scoping (see Figure 1), which have meant the requirements have changed, costs have risen, timescales extended, and it may not even deliver all the promised functionality.

[FIGURE 1 OMITTED]

An almost universal obsession with least-cost procurement means that all too often the cost of IT projects are specified at well below what everyone knows they're actually going to cost to deliver. We indulge in a curious form of self-delusion that we can still deliver a good project for the lowest possible price. And we're not just talking about cutting back on the fat. Taken to extremes, this type of procurement cuts into the bone. Suppliers are forced to drastically reduce their prices to win the contract. They do this by either purposefully underestimating the cost--resulting in the cost bloating later on--or, alternatively, they 'cut their cloth' accordingly and find ways to reduce their costs in order to get their price down. Somewhere along the line this usually means compromising on quality. So suppliers will, for example, use less well-qualified staff or less staff to implement the project, and everyone is then surprised when it's late or doesn't deliver what' s needed.

Yet everyone wants to spend less on IT. As tax payers we're supposed to be impressed that the government is delivering value for money, because of tough negotiations with suppliers such as Microsoft and Oracle that delivered GBP860 million of savings on the National Programme for IT. But in all walks of life, experience shows that the least-cost route is rarely the optimal one. Ask yourself, if your life or those of your loved ones was at stake would you want the cheapest surgeon operating on you in the cheapest operating room with the cheapest equipment? Of course not, you'd want a skilled and experienced surgeon operating with equipment that was fit for purpose to maximize your chances of survival.

The focus on least-cost procurement exists for a variety of reasons. Both in the governmental sector and within enterprises there can be an element of self-delusion, because the harsh truth is that if a realistic figure was put on these projects then many of them wouldn't get off the ground. Naturally, both taxpayers and business managers are keen to get value for money, but if projects are to be delivered fully-featured, on time and to budget this consideration cannot override all others.

So while I'm not suggesting that suppliers have it all their own way, many IT projects have little chance of ever coming in on budget because the initial costings simply weren't realistic. The bargain-bin mentality to IT procurement produces contractual terms that are so tough that they significantly reduce the likelihood that the project is going to be delivered fully functional and on time. That is why I advocate best-cost procurement rather than least-cost. This strategy encompasses the requirement to get a competitive price, although not necessarily the lowest possible price, and encourages procurement to be driven by a range of factors, including the ability to deliver.

Best-cost procurement needs to be implemented hand in hand with a professional approach to project management, in order to maximize the chance of a project succeeding and to minimize wasted effort. After all, the basic building blocks of a successful project are the people that deliver them, and here you cannot afford to scrimp and save. You need an adequate number of good quality people who are motivated to deliver what's needed.

The most successful projects employ professional staff that are motivated by more than just money. After all, human nature being what it is, motivating solely on money means that staff will simply maximize the potential for themselves. This often undermines timely delivery and will certainly blow the budget. A better approach is to use basic team-building and management techniques to motivate project staff. This involves building a psychological contract so that staff buy in to the project's goals and are committed to the team they are working in.

These techniques are already widely used within enterprises and organisations to get the most out of employees, but are rarely extended to project staff. However, it is even more critical to employ these techniques in project teams because of their temporary nature and the consequent psychological impact this has on those staffing them.

Some of the best projects that I have witnessed used basic techniques such as regular whole project social occasions to bond teams together. On one project I worked on, the management implemented an unusual but highly successful approach to motivate staff, that also cost very little money. This involved running a regular training evening once a week for project staff- making no differentiation between in-house staff, supplier staff and contractors. So they had plasterers and builders learning to use Microsoft applications after work, with the result that all the project staff felt included and committed. The company not only benefited from a successful project but also got some great PR into the bargain.

So the good news is that not all projects are failures. Here at Comunica we have never delivered a project late or over budget. So here are my top tips for successful project delivery.

www.comunica.co.uk

Comunica's Project Director, Brendan Loughrey, Comunica