Project management : Overdue and over budget

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Why so many projects fail over and over again? From The Economist print edition.

Projects, says the Project Management Institute, have five distinct phases: initiation; planning; execution; control; and closure. Problems arise most frequently when initiation gets separated from execution. To secure a project, bidders often make overly optimistic assumptions about costs and revenues—an example of what Max Bazerman of the Harvard Business School calls “self-serving bias”, a phenomenon he uses to explain why good accountants do bad audits. It may also explain why good project managers make bad forecasts, particularly in the public sector, where after-the-event accountability to a project's paymaster, the taxpayer, is less rigorous. This may be pronounced with prestige projects (such as Wembley Stadium) where bidders are chasing glory almost as much as commercial gain.

A study published this year in the Journal of the American Planning Association examined 210 big rail and road projects in 14 different countries, and found their forecasts of future passengers to be wildly optimistic: for the rail projects, they were, on average, an astounding 106% higher than eventually turned out to be the case, with one in eight out by over 400%; the road projects' miscalculations were more modest, by over 20% in more than half the cases. The article's authors, led by Bent Flyvbjerg, a professor at Denmark's Aalborg University, claim that the forecasts on such projects are no more accurate now than they were 30 years ago.

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