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What the CHAOS Chronicles 2003 Reveal

Gerrit Klaschke

Cost Xpert Group

"We know why projects fail, we know how to prevent their failure --so why do they still fail?" - Martin Cobb

When will it be done?

Let us look at some statistics. Studies conducted over the last years show that 66% of all IT projects fail. This means that they are 20% or more over budget, 20% or more late, and fail tomeet 20% or more of the business requirements for the system. 15% of projects failcompletely and are canceled prior completion. The average cost overrun is 43%. 82% of thechallenged projects experience time overruns. Further, only 52% of required features andfunctions make it into the released product.

These numbers are a significant improvement over the previous survey conducted in 1995.That survey indicated that 80% of IT project failed. In 2003 this number shrank to 66%.Although fewer projects fail nowadays, the general trend is that more projects are deliveredlate; statistically this is at 82%, up from 62% in 1995. However, there is also good news: theaverage cost overrun is currently at 43%, down from 180% in 1995.

Although we see some improvements, the impact of the problem is still significant. TheStandish Group estimates a total waste in the United States alone of $82 billion in 2003 (thetotal project spending is about $382 billion).

62%80%

42%

180%

31%

82% 66% 52% 43% 15%

Delivered

Late

Failed

Projects

Fail to meet

objectives

Cost

Overrun

Cancelled

prior to

completion

20031995

CHAOS Chronicles 1995 vs 2003

 

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Where do we go from here?

The most effective way to avoid cost and schedule overruns is to get better at makingsoftware cost estimates. Software has become more complex and increased in size, whichmakes estimation more challenging, however, several studies (e.g. Standish Group, Capers

Jones) have shown that by using software cost estimation techniques alone, the probability of completing a project successfully doubles. Estimating the schedule, cost, and resourcesneeded for the project is paramount for project success.

The bad news according to Boetticher is that 87 % of the time, managers use a human-basedapproach which include expert judgment, analogy, and rules of thumb to make software costestimates.

A software estimation tool helps you create the best estimate based on your inputs. Apartfrom other obvious benefits, this gives you the leverage to sell your estimate to managementand prevent one typical problem: Management often dictates unrealistic project deadlines and

is usually not convinced unless the Project Manager can support his claims with a 3

rd

partyopinion. With a tool at hand you can rely on mathematical models based on a historicaldatabase of completed projects.

In addition to cost and schedule estimates, the project manager also needs to know whether the resources (people and time) he has are adequate. Not having enough resources leads to projects, which overshoot their budgets and deadlines. A software cost estimation tool alsogives you an estimate of how many people are needed at what points in the lifecycle.

The most important aspect of software cost estimation is inputting sizing of the software youwant to create. Estimation tools have different methods to guide you: describe the projectusing function points, or other more specialized methods such as Internet points for Web-site projects, number of Requirements or UML use cases. Assessing a proposed project with theappropriate sizing methods often allows the Project Manager to assess the complexity of thesoftware system. This leads to better a better understanding of the risks involved.

Using formal project estimation techniques to determine the schedule, cost and neededresources of a project is one of the many step to counteract the risk of project failure. In thelong run, this gives you the mileage as it implicitly assists you in defining and managing thescope of the project .

"We know why projects fail, we know how to prevent their failure --so why do they still fail?" - Martin Cobb