How the Traditional Contract Model Increases the Risk of Failure


In 2007 the UK Department for Communities and Local Government (the DCLG) entered into a contract with European Air and Defence Systems (EADS, now known as Cassidian) to deliver an IT system that would underpin the FiReControl project.

The FiReControl project aimed to improve the UK Fire and Rescue Service by replacing 46 local control rooms with a network of nine purpose-built regional control centres. The project was expected to be completed in October 2009, and the DCLG’s original estimate of the project costs was £120 million. By 2009, two years into the project, the expected duration of the project had doubled, and the anticipated total project costs had increased by more than 500% to £635 million. In 2010 the contract was terminated. The DCLG had wasted at least £469 million as a result of the failure of the project to deliver.

This is a sobering story of a large IT project spiralling out of control. But it is not an isolated incident. Indeed, about two thirds of all software projects are delivered late or fail outright. Not only that, but one in six IT projects has a cost overrun of 200% on average and a schedule overrun of almost 70%. It seems that no organisation is immune from these risks. There was a common belief that out of control IT projects were the preserve of the public sector, but recent studies show that the private sector does not fare any better in comparison. Organisations in the private sector are simply less publicly accountable and so have greater ability to conceal IT disasters.

So why are IT projects so high risk, and how can this risk of failure be mitigated?

The article can be found here.