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5 Definitions of Project Failure

        posted by , November 14, 2012

Most IT professionals will agree that project failure is common. Exactly how common largely depends on the definition of project failure.

Different studies peg the average IT project failure rate between 50%-80%. However, they tend to use differing criteria to define failure.

There are at least 5 common definitions of project failure:

1. Judgment Call

The stakeholders (or some subset of stakeholders) decide if a project is a success or failure. For example, a project board may make this decision as part of project closure activities.

In other words, a project is a failure if its stakeholders consider it a failure. This is the most commonly accepted definition of project failure.

2. Delivery to Plan

Any project that fails to meet time, budget and quality targets is considered a failure.

This is a relatively strict definition that may lead project managers to pad schedules and budgets with excessive contingency.

3. On-time Delivery

Any project that is late is considered a failure.

Organizations in highly competitive, time-to-market driven industries are sometimes tolerant of cost overruns as long as a project meets its target launch date.

4. Financial Results Match Projections

Any project that fails to meet the financial forecasts set out in its business plan is considered a failure.

In many ways, this is the most effective definition. It's hard to mark a successful investment as a failure.

5. Minimum Return

The project fails to meet a minimum return criteria (e.g. a minimum ROI target).

This approach marks a project as successful if it pays back (even if it comes short of the financial forecasts in the business case).



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