Why Big Projects Go Bad

June 26, 2014 from CFO – In a project’s earliest stages, very little is known about what it will take to execute it. So most companies seek out expert internal opinions — usually from proponents of the project, since they are the most knowledgeable. The problem is bias. Research is clear that project proponents are likely to fall under its influence, favor optimistic outcomes and produce dangerously inaccurate estimates.

Most companies can accurately estimate small projects that may take, say, three to six months, but they are horrible at estimating the time and cost of big ones. There are three key reasons for that.”

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180 View – We agree and have learned this lesson based on the school of hard knocks. In a past life, I was responsible for the development of a multi-million dollar system. It was really challenging to get good estimates from the programmers who in the early days of the project don’t know what they don’t know. So we developed tools to assist in the estimates based on the complexity of the system and based on history of similar projects.

The same problem can occur with ERP systems in not scoping the size of the implementation properly. You don’t want surprises during the implementation so analysis is required in advance to ensure the implementers know as much as possible so that they can fix price the implementation.

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