Why Project fail

October 7, 2009

The projects fail when they do not meet the following criteria for success:

  • It is delivered on time.
  • It is on or under budget.
  • The system works as required.

Only a few projects achieve all three. Many more are delivered which fail on one or more of these criteria, and a substantial number are cancelled having failed badly.

So what are the key factors for success? Organisations and individuals have studied a number of projects that have both succeeded and failed and some common factors emerge. A key finding is that there is no one overriding factor that causes project failure. A number of factors are involved in any particular project failure, some of which interact with each other. Here are some of the most important reasons for failure.

1. Lack of User Involvement

Lack of user involvement has proved fatal for many projects. Without user involvement nobody in the business feels committed to a system, and can even be hostile to it. If a project is to be a success senior management and users need to be involved from the start, and continuously throughout the development. This requires time and effort, and when the people in a business are already stretched, finding time for a new project is not high on their priorities. Therefore senior management need to continuously support the project to make it clear to staff it is a priority.

2. Long or Unrealistic Time Scales

Long timescales for a project have led to systems being delivered for products and services no longer in use by an organisation. The key recommendation is that project timescales should be short, which means that larger systems should be split into separate projects. There are always problems with this approach, but the benefits of doing so are considerable.

Many managers are well aware of the need for fast delivery, leading to the other problem of unrealistic timescales. These are set without considering the volume of work that needs to be done to ensure delivery. As a result these systems are either delivered late or only have a fraction of the facilities that were asked for. The recommendation here is to review all project plans to see if they are realistic, and to challenge the participants to express any reservations they may have with it.

3. Poor or No Requirements

Many projects have high level, vague, and generally unhelpful requirements. This has led to cases where the developers, having no input from the users, build what they believe is needed, without having any real knowledge of the business. Inevitably when the system is delivered business users say it does not do what they need it to. This is closely linked to lack of user involvement, but goes beyond it. Users must know what it is they want, and be able to specify it precisely. As non-IT specialists this means normally they need skills training.

 

4. Scope Creep

Scope is the overall view of what a system will deliver. Scope creep is the insidious growth in the scale of a system during the life of a project. As an example for a system which will hold customer records, it is then decided it will also deal with customer bills, then these bills will be provided on the Internet, and so on and so forth. All the functionality will have to be delivered at one time, therefore affecting time scales, and all will have to have detailed requirements. This is a management issue closely related to change control. Management must be realistic about what is it they want and when, and stick to it.

5. No Change Control System

Despite everything businesses change, and change is happening at a faster rate then ever before. So it is not realistic to expect no change in requirements while a system is being built. However uncontrolled changes play havoc with a system under development and have caused many project failures.

This emphasises the advantages of shorter timescales and a phased approach to building systems, so that change has less chance to affect development. Nonetheless change must be managed like any other factor of business. The business must evaluate the effects of any changed requirements on the timescale, cost and risk of project. Change Management and its sister discipline of Configuration Management are skills that can be taught.

6.Poor Testing

The developers will do a great deal of testing during development, but eventually the users must run acceptance tests to see if the system meets the business requirements. However acceptance testing often fails to catch many faults before a system goes live because:

  • Poor requirements which cannot be tested
  • Poorly, or non planned tests meaning that the system is not methodically checked
  • Inadequately trained users who do not know what the purpose of testing is
  • Inadequate time to perform tests as the project is late

Users, in order to build their confidence with a system, and to utilise their experience of the business, should do the acceptance testing. To do so they need good testable requirements, well designed and planned tests, be adequately trained, and have sufficient time to achieve the testing objectives.

Conclusion

These six factors are not the only ones that affect the success or failure of a project, but in many studies and reports they appear near, or at the top of the list. They are all interlinked, but as can be seen they are not technical issues, but management and training ones. This supports the idea that IT projects should be treated as business projects.

 

 

 

Project management: Why projects fail

As soloists, our work is often project-based. Have you ever wondered why some projects go smoothly and others seem plagued with problems? Here are five reasons why projects can fail and how with good project management these problems can be avoided.

1. Lack of stakeholder buy-in

There are two types of stakeholder buy-in. Firstly commitment from a top-level executive authorised to make decisions and spend money. By a top-level executive I mean one person – I have made it a rule to avoid projects that are directly accountable to a committee.

Secondly, you need support from all project participants. Sometimes, project managers make the mistake of pandering to the needs of their employer at the expense of relationships with other stakeholders, or the ‘little people’ and this can have a negative impact on teamwork and cooperation.

2. Hidden agendas can compromise progress

This is a particularly difficult problem to identify and overcome. We all have unexpressed thoughts and concerns. We all have egos to protect. A good project manager with a high level of emotional intelligence will use their intuition to identify any unsaid needs and draw out any hidden agendas without alienating or threatening anyone.

Good project management also involves actively encouraging open dialogue with all stakeholders in the project, including arranging one-on-one time with those individuals who are uncomfortable voicing their opinions publicly.

A good project manager needs to be clear about their intentions. I once had a project manager who was primarily there to secure her position with the client. The project only succeeded because we ended up managing her and building a barrier to protect ourselves from her interference.

3. Unmanaged expectations

Every stakeholder in a project will have their own expectations. If not managed carefully, this can lead to chaos, confusion and frustration all round.

It pays to establish as much clarity up-front as you can by clearly defining the project parameters such as aims, inputs, outcomes, influence, boundaries, roles and responsibilities. Every time a change occurs, it needs to be evaluated against these parameters. A change could be as simple as a stakeholder changing their mind about something.

Role confusion is a classic problem. Rather than assuming everyone has the same expectations of their roles and the roles of others, spell it out. Kick the project off by getting everyone to set down their expectations and priorities on paper. You’d be surprised how much these vary – the finance exec may well put more priority on quality over price.

4. Ineffective communication

Email is probably the most prevalent form of project communication. A great strategy I have learnt is to discuss only one subject per email and to use a succinct subject line. This helps the recipient to quickly determine an email’s relevance and urgency. It also makes it easy to work with each email as a clear to-do task. This approach is essential to effectively leverage project management tools like Basecamp.

Good documentation is also important, but it must be accessible and relevant. Needlessly complex documentation or the production of documentation for its own sake just gets in the way.

In the throes of telling people what they need to do, it is easy to forgo the respect you can afford someone by genuinely listening to them. All too often, we listen so as to compose our response. The ability to just listen is a rare skill.

5. Insufficient planning

There is a great temptation to not think too much and just dive into the doing. Looking productive and busy is good. The problem is, by foregoing careful planning, you often end up being busy for longer than you need to. An extra hour of planning could save you weeks of fire-fighting.

Not allowing sufficiently for contingencies is a common problem. This means making allowances for unexpected variances within the project, such as delays in approvals or resource shortages. If you think you can deliver by January, promise it for February.

You also need to plan for contingencies across projects. Build in slack to allow yourself to do the admin stuff, to chase future projects and to just rest. It can be difficult to get a sense of how long a project could take. Be careful about being too optimistic with timelines!

By following these project management tips you will enhance your project’s chance of success. Do you have any other project management tips or pitfalls to add to this list?

Reasons Why Projects Fail

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By Tom Carlos PMP

In a perfect world every project would be “on time and within budget.” But reality (especially the proven statistics) tells a very different story. It’s not uncommon for projects to fail. Even if the budget and schedule are met, one must ask “did the project deliver the results and quality we expected?” True project success must be evaluated on all three components. Otherwise, a project could be considered a “failure.”

Have you ever seen a situation where projects begin to show signs of disorganisation, appear out of control, and have a sense of doom and failure? Have you witnessed settings where everyone works in a silo and no one seems to know what the other team member is doing? What about team members who live by the creed “I’ll do my part (as I see fit) and after that, it’s their problem.” Even worse is when team members resort to finger-pointing. Situations similar to these scenarios point to a sign that reads “danger.” And if you read the fine print under the word “danger” it reads, “your project needs to be brought under control or else it could fail.”

When projects begin to show signs of stress and failure, everyone looks to the project manager for answers. It may seem unfair that the burden of doom falls upon a single individual. But this is the reason why you chose to manage projects for a living! You’ve been trained to recognise and deal with these types of situations.

There are many reasons why projects (both simple and complex) fail; the number of reasons can be infinite. However, if we apply the 80/20 rule the most common reasons for failure can be found in the following list:

Poorly managed Undefined objectives and goals Lack of management commitment
Lack of a solid project plan Lack of user input Lack of organisational support
Centralised proactive management initiatives to combat project risk Enterprise management of budget resources Provides universal templates and documentation
Poorly defined roles and responsibilities Inadequate or vague requirements Stakeholder conflict
Team weaknesses Unrealistic timeframes and tasks Competing priorities
Poor communication Insufficient resources (funding and personnel) Business politics
Overruns of schedule and cost Estimates for cost and schedule are erroneous Lack of prioritisation and project portfolio management
Scope creep No change control process Meeting end user expectations
Ignoring project warning signs Inadequate testing processes Bad decisions

Even with the best of intentions or solid plans, project can go awry if they are not managed properly. All too often, mishaps can occur (and usually do). This is when the project manager must recognise a warning sign and take action. If you understand the difference between symptoms and problems and can spot warning signs of project failure, your training will help you take steps to right the ship before it keels over. Yes, it’s the project manager’s responsibility to correct the listing no one else. In addition to applying the processes and principles taught in project management class, you can also use your personal work skills of communication, management, leadership, conflict resolution, and diplomacy to take corrective action.

During the course of managing a project, the project manager must monitor activities (and distractions) from many sources and directions. Complacency can easily set in. When this happens, the process of “monitoring” breaks down. This is why the project manager must remain in control of a project and be aware of any activity which presents a risk of project failure. Yes, this is why “you are paid the big bucks

VALUE ENGINEERING PADA JASA KONSTRUKSI

Oleh : Nur Al Fata

Dalam dunia jasa konstruksi Value Engineering (VE) adalah suatu usaha untuk mencapai konstruksi yang optimal dengan biaya minimum. Banyak istilah mengenai Value Engineering ini, antara lain Value Analysis, Value Management, Value Control atau lainnya.yang makna dan aktivitasnya tidak banyak berbeda. Secara umum VE adalah usaha yang disengaja atau terorganisasi dengan menganalisis fungsi suatu barang dan jasa yang bertujuan untuk mendapatkan biaya yang paling rendah dengan pencapaian perfomance yang essensial sesuai kebutuhan dan harapan pelanggan.
Usaha yang disengaja artinya kegiatan yang direncanakan dan diketahui oleh para pihak : penyedia jasa maupun pengguna jasa, karena nilai manfaat atau efisiensi yang dihasilkan harus bisa dinikmati oleh para pihak, terutama bagi penngguna jasa. Dengan demikian apabila tidak diatur dalam perjanjian / kontrak, maka sebelum proses VE dilakukan, penting kiranya disepakati atas proporsi terhadap nilai biaya efisiensi yang dihasilkan.
Sebelum VE ini dijalankan, sebenarnya banyak ditemukan produk dan jasa yang memiliki biaya yang tidak diperlukan. Penyebabnya antara lain : informasi yang tidak lengkap, pengetahuan terhadap biaya kurang, kurangnya pengetahuan tentang teknologi, waktu yang terburu-buru, kebiasaan, dan lain sebagainya.
Secara unik VE meliputi designability, constructability, dan contractability sebagai value yang mempengaruhi terhadap budget dan cost control. Jadi tiga komponen Value pada bisnis jasa kontrruksi adalah :
Designability : berhubungan dengan nilai dari optimalisasi disain
Constructability : berhubungan dengan nilai material, alat, metoda dalam kemudahan pelaksanaan konstruksi
Contractability : berhubungan dengan nilai yang tertuang secara kontraktual yang bisa diterima para pihak

Sumber-sumber perubahan dalam melakukan VE antara lain :
1. Optimalisasi disain = 27.8 %
2. Biaya yang tidak perlu = 23.1 %
3. Spesifikasi = 14.4 %
4. Kemajuan Teknologi = 13.9 %
__________________
Total = 79.2 %

VE pada dasarnya dapat diaplikasikan pada semua hal, sebab semua hal memiliki fungsi, dan semua biaya adalah untuk fungsi. Namun dalam melakukan proses VE, hukum Pareto berlaku : yaitu 80 % dari biaya total dikandung oleh 20 % komponennya.

Hukum ParetoHukum Pareto

Lalu kapan sebaiknya dilakukan VE? VE sebaiknya dikonsentrasikan pada masa sebelum tahap procurement dan konstruksi, yakni pada masa engineering design. Pada tahap engineering design sangat leluasa dalam melakukan analysis fungsi terhadap disain, spesifikasi dan teknologi. Pada saat tahap disain, biaya yang dikeluarkan juga masih kecil, karena belum dimulai pengadaan barang-barang. Hal ini disebabkan karena proses masih berlangsung ‘di atas kertas’ yang dengan mudah dilakukan exercise, membuat alternatif-alternatif atau pilihan-pilihan.

Potensi Saving Cost - Tahap PelaksanaanPotensi Saving Cost – Tahap pelaksanaan


Proses VE pada tahap disain harus dilakukan bersama-sama antara desainer ( arsitek, engineering), praktisi VE dan quantity surveyor.

Aktivitas VE - Disain
Aktivitas VE – Disain


Pada disain tahap program planning & concepts, VE melakukan kajian konsep-konsep model Quality , sedangkan QS menyajikan master schedule, market survey, dan budget model. Selanjutnya desainer mendevelop konsep-konsep alternatif dan dengan masukan estimasi biaya, maka dipilihkan salah satu konsep disain yang selanjutnya dilanjutkan dengan proses disain skematik. VE melakukan kajian-kajian terhadap disain skematik. Begitulah selanjutnya pada tahap design development, tahap construction documents, maka VE dan QS turut bersama-sama dengan disainer melakukan kajian sehingga dihasilkan dokumen tender yang paling efisien.

Dengan demikian support knowledge yang menunjang keberhasilan VE diantaranya adalah :
Kompetensi disain
Estimasi biaya
Teknologi ( material, alat )
Procurement
Scheduling

Proses VE dimulai sejak diperolehnya informasi-informasi awal dari hasil studi pendahuluan, kemudian dilanjutkan pada Value Circle. Tahap awal dari proses ini ialah analisis fungsi. Analisis fungsi merupakan hal yang paling penting karena semua biaya adalah untuk mencapai fungsi.

Value Circle

Value Circle

Tingkat efisiensi dari sauatu VE diukur dengan Value Index.( VI ). VI adalah perbandingan antara Cost dengan Worth ( VI = C/W ). Worth adalah biaya terendah untuk mencapai fungsi yang diperlukan.Good Value apabila nilai VI =1 . Fungsi terdiri atas fungsi basic dan fungsi sekunder. Fungsi basic adalah fungsi harus dicapai yang apabila dihilangkan menyebabkan berkurangnya kepuasan yang dibutuhkan pelanggan atau pengguna.

Proses decision making pada VE jasa konstruksi didasari atas analisis keputusan terhadap faktor designability, constructability, dan contratcability dengan kajian pokok terhadap biaya.

Proses VA/VE Decision Making

Proses VA/VE Decision Making

PROFITABILITAS JASA KONSTRUKSI

December 14, 2008

Mengapa Kontraktor Rugi ?

 

Bisnis Jasa Konstruksi merupakan suatu bisnis yang berisiko disebabkan karena alamiah bisnisnya itu sendiri. Material shortages, kenaikan harga material, upah yang tidak mencukupi; maka profit margin yang tipis itu akan mudah lenyap tatkala pengendalian proses tidak dilakukan dengan hati-hati.

 

Pada tahun 2002, the Surety Information Office mempublikasikan suatu penelitian tentang ” mengapa kontraktor gagal ?” Dari sekitar 823.830 kontraktor yang beroperasi di tahun 2000 (termasuk kontraktor spesialis), hanya 71,6 % yang masih beroperasi di dua tahun berikutnya. Dan dari penelitian A Dun & Bradstreet menyebutkan bahwa tingkat kegagalan kontraktor yang bisa berumur kurang dari 5 tahun adalah 32 %, untuk yang bisa beroperasi 6 s.d 10 tahun sebesar 29 % dan yang berumur lebih dari 10 tahun, tingkat kegagalannya mencapai 39 %.

 

The Surety Bond Association of America (SAA) mempelajari terhadap 86 klaim kontraktor menyimpulkan bahwa terdapat 5 faktor utama penyebab kegagalan, yaitu :

 

1.    Pertumbuhan yang tidak realistis ( sebanyak 37 % )

 

-    Disini memang tidak menyebutkan berapa persen pertumbuhan yang dianggap tidak realistis, hanya menyebutkan al :

-    Ekspansi bisnis yang cepat

-    Pertambahan yang signifikan terhadap ukuran & nilai proyek yang dikerjakan

-    Perubahan terhadap tipe bisnis unit dan lokasinya

 

2.    Masalah perfomance  ( sebanyak 36 % ), antara lain :

 

-    Tidak punya pengalaman yang cukup terhadap type pekerjaan yg dihadapi

-    Tidak cukupnya kompetensi dan pengalaman staf

-    Tidak tersedianya personil yang memadai

 

3.    Masalah karakter/personil  (sebanyak 29 %)

 

-    Staf tidak cukup mendapatkan training

-    Personil kunci terjadi turn-over

-    Perubahan leadership & fokus perusahaan

 

4.    Manajemen dan akuntansi  ( sebanyak 29 %)

 

-       Tidak cukupnya biaya (masalah estimasi dan procurement)

-       Tidak memadainya sistim manajemen proyek

-       Pelaksanaan akuntansi yang tidak baik

-       Ketidakcukupan lingkup cakupan asuransi

 

 

Pada tahun 2005 The Great Thornton melakukan pengamatan terhadap kesulitan-kesulitan keuangan yang dihadapi para kontraktor yang dibandingkan dengan kejadian yang sama di tahun 1996 seperti terlihat pada tabel sebagai berikut :

 

No

Penyebab Utama

1996

2005

1

Profit margin rendah

45 %

64 %

2

Kolekting tagihan lambat

n.a

57 %

3

Kurang Modal ( Kelebihan utang )

43 %

50 %

4

Tidak cukup volume ( estimasi tidak akurat )

20 %

47 %

5

Kontrol / pengendalian kurang

26 %

38 %

6

Mismanajemen

28 %

35 %

7

Overhead tinggi

23 %

34 %

8

Risk taking yg tidak prudent

24 %

29 %

9

Eksekusi proyek lemah

16 %

21 %

10

Estimasi biaya tidak akurat

18 %

21 %

11

Change order

n.a

19 %

 

 

 

 

 

 

Dari tabel di atas, penyebab-penyebab utama kesulitan kontraktor dalam keuangan kecenderungan naik. Masalah kekurang-akuratan estimasi, pengendalian biaya yang lemah, dan profit margin yang rendah merupakan penyebab dengan trend tinggi.

 

Selanjutnya untuk mencegah atau mengurangi timbulnya kesulitan-kesulitan finansial tersebut, SAA menyiapkan suatu warning sign berupa ’ apa yang tidak boleh dilakukan’ sebagai berikut :

 

1.       Sistem manajemen keuangan yang tidak efektif,

 

-       Ketidakmampuan melakukan proyeksi cash-flow, atau cash-flow saat ini berlangsung sangat ketat

-       Penerimaan sangat lambat

-       Vendor minta pembayaran cash

 

2.       Estimasi lemah

 

3.       Manajemen Proyek lemah

-       Supervisi ’kurang’ atau lemah

-       Pengelolaan Variation Order lemah

-       Proyek terlambat

-       Perusahaan sering terlibat dalam litigasi

 

4.     Tidak ada perencanaan bisnis yang komprehensif

-       Perusahaan tidak punya rencana strategis

-       Tidak ada perencanaan kontijensi

 

5.       Punya masalah komunikasi

-                    Dispute antara kontraktor dan owner

        -   Komunikasi yang lemah antara proyek dengan manajemen office

 

 

PROFITABILITAS

 

Dari informasi tentang faktor penyebab rugi (gagal) nya kontraktor, maka masalah rendahnya profit margin, tidak akurasinya estimasi, tingginya overhead, dan lemahnya pengendalian merupakan suatu penyebab yang dominan.

 

Lalu dari sisi profit margin, berapakah yang wajar ? Berapakah yang harus ditetapkan agar cukup ’menahan’ laju loss dimana kontijensi risiko yang ada tidak mencukupi? Lalu bagaimana mensiasatinya ?

 

Kalau kita membaca laporan keuangan audited terhadap para kontraktor besar nasional pada tiga – empat tahun terakhir , maka perfomance terhadap laba kotor berkisar 6  % sampai dengan 9 %, dan Laba bersih setelah pajak hanya berkisar  antara 1,4 % sampai dengan 4 %.  Laba yg kecil ini tidak hanya terjadi pada kontraktor nasional kita, melainkan juga pada kontraktor multi nasonal, global player yang sudah berpengalaman lebih dari 100 tahun – pun, laba bersih  yang tercapai berkisar disekitar 1,5 % sampai 3 %.

 

Dengan demikian, bisnis konstruksi sangat rentan terhadap kerugian. Apabila terjadi kenaikan material besi, baja, dan metal yang timbul belakangan ini di mana tingkat kenaikannya diluar kewajaran serta ditambah lagi dengan kenaikan minyak bumi yang berdampak langsung terhadap biaya konstruksi, maka sudah pasti mudah diproyeksikan perfomance laba nanti.  Hal yang menolong suatu perusahaan konstruksi untuk tidak jatuh dan gulung tikar adalah ditopang dengan perolehan laba dari diversikasi usaha, atau ditolong dengan nilai penjualan yang besar , sehingga walaupun persentase laba kecil tetapi secara nominal masih cukup memadai untuk bisa survive dan sustain. Namun dari pada itu perlu kehati-kehatian untuk mencapai sales yang besar, jangan ’membabi-buta’ , melainkan harus didasarkan terhadap kemampuan dan kompetensi sumberdaya, terutama sumberdaya manusianya.

 

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December 14, 2008

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