How Do We Make IT Projects More Successful?

At least nuclear waste storage is worse. In his book “How Big Things Get Done,” professor Bent Flyvbjerg ranks 25 categories of projects by their average cost overrun. IT projects are the fifth worst offender, better than nuclear but worse than buildings, rail, airports, tunnels, and many others. We all know many public IT failures (Denmark has its fair share), and the private sector has suffered many more, even if less publicized.

What can we do about it? One chapter in the book is dedicated to creating better estimates. The problem with our estimating today is that we treat every project as unique. We then estimate each bit, and our usual how-hard-can-it-be optimism leads to the underestimation so common in IT. Flyvbjerg argues that we should start by identifying the class of projects this new project belongs to. The average for this class of projects is then the starting point for our estimate, adjusted up or down.

For example, you estimate an ERP project by looking at other ERP projects. If the cost in your industry is $20 million on average, that is your initial value. Then adjust up or down depending on whether your project is smaller or larger – or more straightforward or more complex – than the members of the reference class.

Bring this book with you to the beach this summer so that you can help our industry move forward when you return from vacation. IT projects exceed their budgets by an average of 73%. We can do better.

Is Estimation Bullshit?

“Estimation is bullshit.” David Heinemeier Hansson (of Ruby on Rails fame) doesn’t mince words. He takes pride in being controversial, and some of his advice is useless or downright dangerous for most organizations. But his point of using budgets instead of estimates is solid.

The reason is it forces everyone to think in terms of business outcomes instead of cost. Instead of asking the impossible “how long will this take” question, you start by determining what a certain feature is worth. If it is worth $200K, you might be willing to spend $50K on trying to build it. If your team hasn’t been able to build the feature after they’ve spent the budget, you kill that project and try something else.

I encourage you to read Wojtek Borowicz’ interview with David Heinemeier Hansson.

If you are involved in the day-to-day running of IT development as a program manager, architect, project leader, or scrum master, I encourage you to read the whole “Shape Up” book. It’s available for free online.