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Why Software Projects Fail? Here Are the Reasons

According to a Gallup study, only 2.5% of companies complete 100% of their projects. The numbers are shocking but they show the scale of the problem. Other studies show that 17% of IT projects go so badly, they threaten the existence of the business itself. Who’s to blame? Or, maybe, it’s not about who, but about how?


According to the Gallup study, only 2.5% of companies complete 100% of their projects. The numbers are shocking but they show the scale of the problem. Other studies show that 17% of IT projects go so badly, they threaten the existence of the business itself.

So who is to blame – managers, employers or stakeholders? Or maybe it’s the technology itself? There is no clear answer to this difficult question because the explanation is more complex. There are many reasons that contribute to the failure of IT projects in large organizations.

To understand the complexity of the problem, it’s crucial to understand the small parts that constitute it. Why? Because, in most cases, it’s these minor elements that are an inseparable part of the main problem.

Yet all the flaws that cause the failure of implementing technological projects can be easily avoided.

In order to do so, you need to identify them prior to starting the implementation process. And, to help you succeed, we’ve prepared a list of 9 factors that contribute to the failure of IT projects in large organizations.

In short:

  1. Lack of involvement from senior management

  2. Gathering inaccurate requirements

  3. Poor communication between teams and project sponsors

  4. Lack of clearly defined objectives and milestones to measure progress

  5. Inaccurate estimates

  6. Limited resources

  7. Poor project management

  8. Undefined opportunities and unexpected risks

  9. Lack of review process

1. Lack of involvement from senior management

First and foremost, the problem starts in the minds of CEOs, managers and other governing entities at the top of the organizational hierarchy.

The common benchmark for all top companies is to be innovative. Yet you can’t be innovative without investing in innovations. There is a large awareness barrier that stands in the way of successful project implementation.

Employers underestimate the value of technology and its importance in implementing IT-related projects.

New technological projects should incorporate all departments and climb up the hierarchical ladder – beginning from the marketing branch, developers, administration and HR, sales, production, and ending on management itself.

If the entire organization doesn’t take part in the project implementation, especially the senior management, the chances for failure are much stronger.

2. Gathering inaccurate requirements

In the study conducted by PMI in 2017, 39% of respondents pointed to inaccurate requirements gathering as the second cause of project failure.

This is because management doesn’t clearly communicate the needs and specifications to stakeholders or other appointed business representatives who supervise the project from the outside.

Managers base cooperation with stakeholders on false assumptions and expect that they will deliver the perfect project. But people need guidelines.

If, for example, the organization implements new software but the stakeholder is not provided with the specific needs - the purpose for which the software is to be used - then the organization may end up with fewer features and functions than it expects, exceed the budget or complete work behind schedule.

The outcome will be favorable only if the business and technical requirements are clearly defined.

3. Poor communication between teams and project sponsors

One of the most important ingredients of every successful project is communication and collaboration. If teams, managers, and project sponsors are not willing to work with each other, the chances for victory are small.

If one of the sides doesn’t want to cooperate or communicate, there is no exchange of information on updates, possible troubles or obstacles. Sometimes, priorities and tasks may change and there may be problems with budget or with resources. It’s crucial to communicate such factors and work together to create a solution.

When the project is already implemented and this hasn’t been the case, the organization will end up on the short end of the stick because it’s too late for talks and questions.

Also, it’s important that employees can consult their problems, doubts and ideas with stakeholders. It motivates, helps to provide transparency and keep up team spirits.


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4. Lack of clearly defined objectives and milestones to measure progress

Another reason for which large organizations fail at implementing IT projects is deprioritization.

Objectives should be stated at the planning stage of the project. If the endeavor lacks a strong, long-term plan and goals, it will be hard to bring it out until the end. Shifting objectives introduce chaos and make it difficult to choose the right path for the project to run.

Moreover, organizations aren’t able to measure the objectives to assess the state of the project because they don’t determine the KPIs, time and budget.

Without clearly defined objectives, it’s impossible to evaluate current results and modify the project, if necessary.

5. Inaccurate estimates

Estimates affect the decision-making process. They determine the project route and its outcome, which is why they need to be as precise as possible. Of course, it may not always be possible to make accurate calculations.

But you can get to the desired accuracy by following certain practices:

  • Use relevant historical data

  • Follow market changes

  • Refer to lessons learned from previous projects

  • Make sure to allocate your resources evenly

Unfortunately, many large organizations base their technological projects on assumptions. Moreover, they don’t specify their financial conditions and criteria, which in turn leads to over or under-budgeting.

TIP ⇒ when working on a project, use project management software with time and budget tracking features to collect all important data and use it for future projects. It will help you create accurate estimates.

6. Limited resources

Implementing a technological project is successful only if the resources are sufficient.

Limited resources may cause significant problems:

  • Budget – according to the Harvard Business Review, many large organizations that work on implementing IT projects often end up with so called “black swan” disasters; they fail because of overrunning costs

  • Lack of qualified staff – assigning unqualified staff to work on an IT project is like digging a tunnel with a chisel, it may go on, and on, and on…

  • The know-how – not having the necessary knowledge about the market, the trends, the software and the project itself, as well as relevant expertise, may bring different effects than expected

  • Equipment and software – a lack of these simply makes it impossible to work effectively

Without appropriate resource allocation, project management may lead to ambiguous results or even a humiliating fiasco.

7. Poor project management

Although people are part of the resources, it’s important to hire employees whose abilities and experience are relevant to the project and adhere to the company culture.

It’s also crucial that they are competent, have the right skills, as well as relevant experience, and know how to work in a team. They should likewise want to cooperate, believe in the project and desire to contribute to the change of the organization.

Such people can apply adequate techniques and responsibly manage the team.

Organizations that invest in proven project management practices waste 28 times less money because more of their strategic initiatives are completed successfully.

Source: PMI – Pulse of the Profession Survey, 2017

It’s worth to invest money in people and their skills – eventually, it will pay off. Otherwise, Incompetent project managers will bring more harm than good.

8. Undefined opportunities and unexpected risks

Often, IT projects fail because project managers don’t pay attention to risks and opportunities. And the two are strongly intertwined. The bigger the project, the wider the window of opportunities available - but also much higher risk as well.

Opportunities should be measured as the value of the project. This includes the ultimate goal and effects the project will have on the organization. It’s about eliminating all the roadblocks that stand in the way to success, which includes internal barriers(lack of communication in the team and personal issues, financial issues, etc.) and external barriers (irresponsible project sponsor, economic upheavals, etc.)

Evaluating risks is important to eliminate possible scope creep and its negative consequences. You need stages to measure the progress of the project and adjust to unexpected changes and perils:

  1. Define

  2. Document

  3. Control

All this can help in keeping a steady hand on any project modifications and make safe alterations, if needed.

9. Lack of review process

Every project needs to be checked for errors and accuracy. Eliminating flaws and defects will help save money, as well as improve both the workflow and overall implementation process.

The review process should be thorough and involve all possible entities, beginning from team members, project planners, sponsors and project managers, through to the final users and customers.

Most importantly, the review process should cover all aspects, including contracts and official documentation, plans and schedules, requirements, marketing documents and other specifications.

Establishing a comprehensive evaluation process is the only way to assure the IT project won’t fail in its final stage. This means that all elements on this list are taken into account and given careful attention.


Altogether, these relatively small issues comprise a large problem. It all comes down to three common ingredients – accuracy, responsible assessment and defining the ultimate goal.

If you pay attention to the small glitches, you will avoid serious complications.

Furthermore, once the small problems build up, it will be too difficult or too late to fix them. And they will eventually lead to failure. It’s like a chain reaction. Resources will start disappearing. People will get stressed. Small tasks will not be done on time. More risks will come up. Milestones will change. Priorities will shift drastically. Discipline will turn into chaos and you never know when it becomes a ticking bomb waiting to go off.

Large organizations can succeed at implementing IT projects by learning and adapting to changes, and by being open to transformations.

The future of value delivery is a spectrum of approaches— a predictive, iterative, incremental, agile, hybrid, and whatever will come next to change how we work.

Source: PMI – Pulse of the Profession Survey, 2018

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