Overspend? Late? Failure? What the data say about IT project risk in the public sector

Budzier, Alexander and Flyvbjerg, Bent (2012) Overspend? Late? Failure? What the data say about IT project risk in the public sector. In: Jones-Parry, Rupert and Robertson, Andrew, (eds.) Commonwealth Governance Handbook 2012/13: Democracy, Development and Public Administration. Nexus Strategic Partnerships, Cambridge, pp. 145-157. ISBN 978-1908609045


Implementing large-scale information and communication technology (IT) projects carries large risks and easily might disrupt operations, waste taxpayers’ money, and create negative publicity. Because of the high risks it is important that government leaders manage the attendant risks. We analysed the based on a sample of 1,355 public-sector IT projects. The sample included large-scale projects, on average the actual expenditure was $130 million and the average duration was 35 months. Our findings showed that the typical project had no cost overruns and took on average 24% longer than initially expected. However, comparing the risk distribution with the normative model of a thin tailed distribution, projects’ actual costs should fall within -30% and +25% of the budget in nearly 99 out of 100 projects. The data showed, however, that a staggering 18% of all projects are outliers with cost overruns >25%. Tests showed that the risk of outliers is even higher for standard software (24%) as well as in certain project types, e.g., data management (41%), office management (23%), eGovernment (21%) and management information systems (20%). Analysis showed also that projects duration adds risk: every additional year of project duration increases the average cost risk by 4.2 percentage points. Lastly, we suggest four solutions that public-sector organization can take: (1) benchmark your organization to know where you are (2) de-bias your IT project decision-making, (3) reduce the complexities of your IT projects, and (4) develop Masterbuilders to learn from the best in the field.

Item Type: Book Section
Additional Information: Listed on SSRN's Top Ten download lists for the following two ejournals: (1) Public Sector Organizations: Project & Program Management and (2) Types of Organizations & Organizational Behavior.
Keywords: Public sector; IT project; risk, project failure; black swans
Subject(s): Project management
Date Deposited: 24 Jan 2014 09:57
Last Modified: 13 Nov 2018 15:55
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4952

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