September 13, 2007 6:25 AM PDT

Survey: A third of IT projects exceed budget

A third of IT projects carried out in the private sector runs between 10 and 20 percent over the original budget, according to a survey.

And one in four projects costs 50 percent more than it was expected to, according to the survey of 100 chief information officers, which also found that the typical large company is running 29 projects at any one time.

According to the research, sponsored by software management company CA, the main reasons for overspending include poor forecasting, increases in project scope, and issues of interdependencies and conflicts between multiple projects.

It said this isn't helped by the lack of visibility and control chief information officers have over their project portfolios--39 percent of IT directors do not have clear visibility of projects and so do not know when they are close to running over budget.

CA said the survey shows that chief information officers are still principally being judged on whether they deliver within budget rather than whether they deliver strategic value to the business.

Staffing is also an issue, with highly skilled workers being assigned tasks off-the-cuff rather than being strategically placed where they would be most effective, according to the survey.

Bupesh Jain of Silicon.com reported from London.

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12 comments

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Let me guess ... and Clarity from CA will solve these issues
I love vendor researches.
Posted by shikarishambu (89 comments )
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Vendor Research
I was thinking the exact same thing...
Our research shows you'll be over budget, so hire us to keep you on track...
Posted by itworker--2008 (130 comments )
Link Flag
It's called Outsourcing Software Disasters
Look, I'm only going to say what managers say in private- anyone who outsources their IT work to one of these companies is a fool. The BMV of Indiana, to take one example, is 6 million over budget in a 32 million upgrade and that after a failed 34 million dollar upgrade, all done by an well known Indian outsourcer and all with nothing to show for it.

<a class="jive-link-external" href="http://www.takingdownwords.com/taking_down_words/statehouse_joel_silverman/index.html" target="_newWindow">http://www.takingdownwords.com/taking_down_words/statehouse_joel_silverman/index.html</a>

Mitch Daniels, the governor of Indiana
(and the neocon who said the Iraq war would be "very affordable"

<a class="jive-link-external" href="http://thinkprogress.org/the-architects-where-are-they-now/" target="_newWindow">http://thinkprogress.org/the-architects-where-are-they-now/</a>

<a class="jive-link-external" href="http://www.csmonitor.com/2006/0110/dailyUpdate.html" target="_newWindow">http://www.csmonitor.com/2006/0110/dailyUpdate.html</a>
)

hasn't learned anything in the past 6 years, or from the BMV debacle, and is outsourcing the processing of welfare benefits to Infosys, all the while talking about how important it is to give Indiana companies business and how he wants to keep tax dollars at home.



Want your company to survive? Don't outsource to companies who could give a damn who in turn outsource to companies who could give even less of a damn who in turn employ people who are nameless, faceless nobodies with no investment in the outcome, and are underpaid and overworked.

See how that works?
Posted by asdf (241 comments )
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Give that man a cupie doll!
Yup.

But the mantra of "Outsourcing is the way to go..." being taught to all these "brilliant" MBAs who have no real life experience, only to regurgitate what they learned in school.

Of course, the other problem is that the majority of those who run IT shops aren't IT professionals. Meaning that they don't have a formal IT education.

While that may not seem like a big thing, it really helps.
Posted by dargon19888 (412 comments )
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Not Bad
If they budget right half would be over budget and half under budget with an average cost that matches budget.

You can't plan a project accuratly enough to know in advice all the nuances that will come up. But you can plan a working budget if you have the experience.
Posted by Renegade Knight (13748 comments )
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Planning followed by planning followed by planning
An increase in project scope should not be deemed as a reason for surpassing the budget. The actual budget itself should increase if there are additional elements added to the project.

You can't take enough money to the store to buy five apples and then decide to buy six for the same money.

Upfront detailed planning is essential to establish the 'initial' budget, but iterative planning, (and re-forcasting time and budget if needed), as you progress through the project is equally important.
Posted by sheaver (1 comment )
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Project Scope - Growth is expected
It would be wonderful if deadlines, costs and staffing were solidly tied to project scope. It's just not true. Scope creep exists because of poor planning, more poor planning and squeezing more out of less. It's short sighted but has worked for many project managers that lack or even care about the technical complexities involved. And they wonder why projects fail, staff is burned out and the customer unhappy. The expectations are set incorrectly from the start when no consideration is given to multiply booked resources. Too often I've heard, "I know you have other tasks but do my project first, that's all I care about." Everyone can't be first.
Posted by 9009M (1 comment )
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But IT with out Business experience is just as bad
Trust me...I have both IT experience (and education) as well as businees experience (and education). My whole job (in a multibilliion dollar international company) is trying to keep both sides (IT and Business) in alignment. Business doesn't understand IT and IT doesn't understand busines...it take a unique skill set to be able to both....and outsourcing does work if you know how to do it (that is, you don't send everything) certain types of work are good, Entire ERP development, not good...if you need constant input from business on a project then it should not be outsourced...period...
Posted by grossph (172 comments )
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Tell Us Something We Don't Know
I agree with most of the comments made here with the exception of a few. It's extremely important that IT managers and execs have an intimate grasp of the technical as well as the business expertise required to be able to succesfully exectute within the IT industry, Steve Ballmer and most of the managers and executives at Microsoft are examples of this truism.

The fact that this conclusion was arisen at by vendor research is irrelevant as it has been known for years and years that most IT projects come in over schedule and over budget, we didn't need CA to arise at and express this in 2007.

In my opinion, it all comes back to upfront planning and preparation in the form of software requirements practices. Shreaver's last paragraph hit the nail on the head, establishing a project scope lets you control feature creep down the road by being able to determine what's in as opposed to what's out. Baselining the requirements (technical, budgetary, and otherwise) and establishing an iterative approach to their development and management will ensure that you don't get stuck in analysis paralysis while simultaneously being able to avoid a waterfall approach to development which could subsequently result in an outmoded product at the end of the development cycle.
Posted by TheRCG (4 comments )
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project schedules?
What is the scenario with project schedules?
Posted by rajender.tella (2 comments )
Reply Link Flag
Re - Project Schedules
With regard to the fact that most software projects overrun their budgets and schedules? Well first off there's a tremendous multitude of literature and advice out there regarding this (if only competent IT project managers took the time to read them :). Rapid Development by Steve McConnell is regarded by most in the software development industry as the "de facto goto book" even though at this point in time it's about 11 years old which is commensurate to dog vs. human years in the IT industry, it still contains some highly relevant information for IT managers and I would recommend supplementing that with a more up-to-date and high-quality book or reference material of which there are many.

Most projects overrun their schedules in the field of information technology not for reasons that most would think. It's usually related to issues of up-front software requirements development and management, but more importantly it's a subset of that; gold-plating, or feature creep. This is literally, creeping features, features and functionality added to a project during after and/or in-between the development cycle(s) that either do little to address actual user needs and concerns or are simply too much of a tax on already constrained project budgets and schedules. Most agree that this is necessary in order to ensure a relevant and up-to-date product upon release, and it is, but this is where a project scope document at the beginning of a development endeavor or a change control board becomes such a critical necessity. It keeps you on track to a timely and simultaneously accordant release.
Posted by TheRCG (4 comments )
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