GovernanceLAB

The role of management in project failure

November 27, 2015

Project failure is often due to the phenomenon of escalation, and organizations where this does not happen have three characteristics. And leaders play an important role, says Distinguished Professor Ferry Koster.

It is often thought that starting and running a project is a purely rational process. You notice it in the comments in the press when things go wrong, "They should have seen this coming" or "Why did they not stop the project earlier?" However, projects fail for two main reasons. The first is that people do not always think rationally. Another reason is: There are additional mechanisms playing a role in the project that make it difficult to reverse it.

An example of such a mechanism is the linking of an individual to a project. Someone has come up with the idea for the project, is enthusiastic about it, and puts his or her name to it. When a group of people starts to believe in the project, then the process gets off the ground. And this is where a danger lies. Because, as soon as the process starts, any critic is likely to be seen as a nag. Once a lot of time and money has been invested in the project, there emerges an unmanageable monster. Complete organizations are set up around big projects. People are dependent on it. Reversal seems no longer an option.

Phenomenon of escalation

There has been a lot of research into this phenomenon, called "escalation of commitment." It has generated many a juicy story. In the Netherlands, we know them too: the Fyra high-speed train, the North-South metro line in Amsterdam, or the Betuwelijn (a rail link between the port of Rotterdam and Germany). But there has hardly been any research into the characteristics of organizations that do not escalate their projects. I have studied this on projects in the medical sector. There are plenty of projects that fail in that sector. One example is care robots, which now gather dust in many hospitals.  

You could come up with numerous examples of projects that went wrong in the government sector too. These projects are visible because large sums of public money is spent on them. The private sector also wastes a lot of money on initiatives that never get off the ground.

Three characteristics of organizations

It transpires that organizations that are able to prevent escalation have three characteristics. First of all, there is clarity about the objective of the project. There is also clarity about the process. These organizations have set clear evaluation points at which it is discussed whether or not the project should continue. The discussion is held to establish whether the project is still on track to fulfil the objective. The third characteristic is that these projects involve people with the necessary level of skills, who get the opportunity to do their job well and can provide a counterbalance.

It is also evident that management plays an important role. A reflective style of management is essential to ensure that the organization preserves these characteristics. The managers should be open to suggestions, even if they are not what they want to hear. It also appears that the willingness to admit mistakes is crucial. Evaluations only make sense if there is intervention in case of negative feedback.

We can learn something from these results. And we must learn from them. Because, if we do not, nothing will ever change. And that means that projects will continue to fail with associated wasting of money.

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