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What is the most common reason for going over budget?

Mar 6, 2017

A recent survey looked at the most common reasons for projects going over budget. The reasons are sadly not unusual to most of us who have worked in the digital or transformation space.

Uncertain scope

Goals and planning are not clearly defined. This is probably the least surprising. An Agile approach can help to reduce some of this uncertainty and can be a good approach providing there is the necessary buy in from sponsors and business.

Drama

When egos and attitudes clash. An example would be an Agile purist trying to push agile onto a company or group that isn't set up for Agile. Sometimes it's just a case of some people who for whatever reason, do not see eye to eye.

Outdated systems

Large companies will frequently have legacy systems that are key to the business yet are so old that very few people know exactly how they work. Just to do something in the front end might require huge changes in the back-end system.

Meetings and more meetings

Talk, talk, talk and at the end of day there is often no time to follow up on the actions. As one proverb goes, "The palest ink is better than the best memory." If you don’t capture the conversation and put into a form that can be easily retrieved, the thinking and the agreements can be lost. At least if the actions are not followed through there will still be a record of what needs to be done and it won't get lost. That way, constant monitoring can ensure we prioritise the right actions for the next phase of work.

A tool that I use and find extremely good for Agile working is Jira and Confluence. These are great tools and if you know how to structure and manage them, are invaluable for tracking, recording, and collaboration.

Delay getting sign off

Red tape may cause delay, as may the methodology that is being used. In a project that uses a traditional, waterfall style approach, project governance may dictate that a number of documents must be completed which all have to be reviewed.

Often this review falls to people who may have had very little active involvement in the project or aren't appropriate reviewers, unable to give proper feedback. Inevitably these people deprioritise review and significant effort needs to be spent chasing these people up. This takes us to the next reason for going over budget, and often a reason why a project does not deliver on what it was supposed to do.

Lack of communication

Everyone needs to be on the same page and be available. In waterfall approach, business domain subject experts will often be engaged only a part time basis or as BAU allows. They will only be involved at the beginning of the project and not engaged again until testing, by which time it might be noticed that what was produced doesn't meet what the business thought they specified or the needs of the current business climate. An Agile approach seeks to break this model of working and deliver small pieces of functionality with the full engagement of the business.

Poor estimates

Estimates can be very difficult to do so is it no surprise that budgets are often exceeded. This is another reason for going down the Agile approach rather than committing a major amount of money for a project which will take 18 months and without any benefit to be seen until the end.


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