The recent eNatis chaos is an example of large-scale IT projects failing because of a lack of maturity in the relationship between service providers and clients. A mature relationship, when dealing with high risk projects, is characterised by flexibility on costs and deadlines.
According to Mike Sewell, group executive: outsourcing at Business Connexion, properly classifying and communicating the risk profile of a project is the first step towards its success. Once a project has been identified as being high, medium or low risk, an appropriate approach can be mapped and expectations managed.
“With all projects the issue of risk is very important, to both the developer and the buyer. If the risk associated with the project is not properly articulated to the buyer, the project can run into problems,” Sewell says.
Hew adds that it is a mistake to for both parties to commit to a fixed price on a high risk project. The reason for this is that such projects often take longer or cost more than expected, and clients should be prepared for this possibility. He points out that even organisations like NASA overshoot budgets and deadlines on very large projects, despite having massive amounts of funds and intellectual capital.
“Too often price is the major driver behind important IT decisions. The tendency to partner with the most competitive bidder has changed the dynamics of the market so that service providers sometimes under-quote on jobs, but include long lists of provisos. At the same time, clients are pressurising service providers to sign contracts that lock them into fixed prices,” he says.
Sewell emphasises that while an ironclad contract is suitable for low and medium risk projects, it would not be appropriate for high risk projects – such as the Department of Transport’s eNatis implementation.
Assessing and communicating the risk profile of a project requires a well-trained and experienced project manager. Unfortunately, Sewell says, too many IT companies in South Africa are underinvested in this area.
“IT companies that haven’t bolstered their project management capabilities should do so as soon as possible. At Business Connexion we train project managers according to customised NQF4 (National Qualifications Framework level 4) criteria and evaluate their capabilities according to evidence of previous project management success.
“Service providers experienced in implementing high risk projects know how to negotiate with clients in order to craft contracts appropriate to the risk profile of the projects. All projects are not the same,” Sewell says.
Sewell adds that good project managers also understand the importance of change management and training programmes to deal with the social implications of the project launch.
“Developers must pay careful attention to the user community. Users are very vocal in their responses to new systems and a proper change management process is necessary to ensure that they hit the ground running,” he says.
Projects fail for a number of reasons, but high on the list are incomplete requirements and specifications, unrealistic user expectations, a lack of developer and user resources, unrealistic time frames, poor communication and inadequate risk management. Many of these factors stem directly from underestimating the size and risk profile of a project.
“It is very important to fully appreciate the size of a project, relative to the size of the projects the developer usually works on, as well as whether or not the technologies being used are new to the developer. If the project is regarded as large and/or the technology is new, the risk profile is high,” Sewell adds.