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LEXPERT MAGAZINE | JANUARY 2013 71 | COLUMNS | BY GEORGE TAKACH TECHNOLOGY A new study from Oxford University shows that mega-projects are often prone to mega-failure The Bigger the Build ... COMPELLING RECENT research con- firms what many of us in the IT trenches have viscerally felt for some time — large tech projects are fraught with risk, and the situation is getting worse and not better. It is therefore incumbent upon IT profession- als, business people and their advisors – in- cluding legal counsel – to heed the warn- ings of this research and learn its lessons. > THE BIG PROBLEM Earlier this year, a leading UK research in- stitute at Oxford University studied 5,400 large-scale IT projects, to see if they came in on time, on budget and "on value" (the last point being, did the project actually result in the benefits to the business or organiza- tion originally contemplated). e results of this survey are sobering in- deed. While only 7 per cent of the projects were late (that's the good news), a whop- ping 45 per cent were over budget, and over half (56 per cent) delivered less value than expected. Adding these deficiencies together, the total cost overrun was US$66 billion, which is more, the study points out, than the GDP of Luxembourg. It gets worse. An astounding 17 per cent (almost one in five!) of large IT projects (defined as those costing more than $15 million) go so awry as to put the organiza- tion at risk. ese near debacles have bud- get overruns upward of 200 per cent, and indeed in some cases 400 per cent. e survey did not track another impor- tant statistic — namely, how many manag- ers lost their jobs when these projects went off the rails. One presumes, however, that a good percentage of these resulted in career- limiting circumstances. > MANAGING RISKS What lessons can be learned from these survey results, and the entrails of these case studies? A lot, it turns out. Here are the most compel- ling teachings, in my view. First, and perhaps fore- most, you should always prepare a business case for the large IT project. You need clear and measurable answers to the following kinds of questions. What are we trying to achieve with this project? What are the specific, tangible benefits it will bring? How will we be able to measure success? And when do we know we will be able to declare victory? e answers to these questions become your guideposts for the project as it unfolds. You will hit bumps in the road. When you do, you need to reassess the original goals for the proj- ect, and ask whether (given the changed circumstances), they still apply. Is the busi- ness case for doing the project still there? Sometimes the answer (if you are honest with yourself and your organization) is no. But this conclusion is oen ignored, or the suggested analysis is simply not done, so that the project proceeds on a blissfully and ignorantly fatal course. > SOBER-COLOURED GLASSES Another factor that will help you manage this minefield is the ability to make your initial expectations and assessments of your own organization (and its capability to carry out large-scale change) brutally re- alistic. Many IT project leaders (including the all-important executive business spon- sor) fall prey to "planning fallacy," or what is sometimes called "optimism bias." In essence, you overestimate your strengths and you underestimate the chal- lenges ahead. Now, if it's any consolation, this happens very frequently with respect to "big builds" in a wide range of other industries as well — for example, the con- struction of power plants, dams, concert halls, weapons systems (just look at the F-35 program) and water projects. Misery truly does deserve company! One interesting training exercise that can help you determine your level of opti- mism bias – and become more honest with yourself on just how long and expensive your project will be – is to test your expec- tations against the results of similar proj- ects in a database such as the one at Oxford I mentioned above. For example, if the next organizer of the Olympics truly wants to figure out how expensive hosting these games will be, he or she should get a hold of a database that