A complete understanding of what causes project failure is a difficult task since the project management literature has a variety of definitions and notable examples of project failure. This suggests a lack of agreement with regards to project failure. However, an examination of the project management literature identifies three aspects against which the failure or success of a project is assessed. The aspects are the implementation process, the perceived value of the project and client satisfaction with the delivered project. The article discusses three main reasons why a project fails and ways of mitigating the causes to ensure project success.
Financial Crisis
Failure to calculate the cost of the project, and identify where the money to pay for it is to come from has been the primary reason for project failure. The high unaccounted costs together with the constrained budget make the project rapidly fall apart due to bankruptcy issues. This is common in large projects where the prices of operation are quite high. One of the primary reasons the Kuala Lumpur LRT project failed during the operation phase was the financial crisis of 1997 in Malaysia (Abdul Rahman, Memon, Zulkifli, & Sheda, 2014). The 1997 financial crisis was characterized by an increase in the country’s inflation rate from 8% to over 40%, which resulted to less profit rate and the contractors were unable to repay the bank loans they had taken to facilitate the construction works of the LRT. The high inflation rates and the inability to repay the bank loans resulted in the termination of the project which is considered a failure since the project goals were undelivered. The financial crisis does not only include failure to calculate and plan for the costs but also, overspending. Overspending occurs when the project spends more that is required to meet its objectives. Meeting of proposed goals beyond the means of the budget results in bankruptcy of the project. The financial crisis is common in projects, however, specific measures when put in place, mitigate the impact of the financial crisis. Budgeting is utilized when planning for the finances of the project. Each activity in the project is listed, with the maximum amount allowable to spend stated and the total amount in the budget represents a figure, only if met, ensures aversion of the crisis.
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Lack of Involvement from All Stakeholders
For a project to be successful all the relevant stakeholders have to be involved to ensure their participation and that the shared resources are all geared toward a common goal. This can, however, prove difficult especially in areas without any form of social structure. It is in such regions that resistance of the project is quite high since the people feel that the project is imposing into their lifestyles. Poor communication between the different groups being involved in the project can also be a moderating factor leading to inefficient stakeholder involvement.
The UN-REDD project in Central Sulawesi failed to unite the various stakeholders since it was unable to incorporate vital community interests in the project planning (Howell, 2015). The community felt that they were being ignored and demanded ‘a place at the table.’ This brought about resistance among the community members hence the failure of the project to achieve client satisfaction. Additionally, there were instances of miscommunication within the management structure of the implementing body. Information often failed to reach the intended person; hence the implementation of the project was inefficient. This problem can be alleviated by carrying out a systematic stakeholder analysis during the planning stage of the project. A stakeholder analysis helps the implementing body identify the strengths and weaknesses that will either support or hinder the implementation of the plan. Involving everyone at the start gives them a sense of belonging, hence motivates their spirit of participation in ensuring the project’s success.
Poor Planning of the Project Activities
A plan serves as the route map of what the project wishes to achieve and how it will make it. A laid-out plan ensures all the stakeholders understand the core mandate of the project. Nevertheless, it is in planning that contingencies are stipulated to accommodate for the factors that the management team cannot control. A poor plan will miss out on some vital components leading to the poor implementation of the project. When the project is poorly implemented, all the aspects that gauge the success of a project will not be met, hence the project will be a failure.
In the two cases; Kuala Lumpur and Central Sulawesi, adequate planning might have saved the projects. The inflation rate that occurred in Malaysia would not have hit the LRT project the way it did (Abdul Rahman, Memon, Zulkifli, & Sheda, 2014). The same goes for Central Sulawesi. Adequate planning would have involved a stakeholder analysis hence the population would have been included and their interests accommodated. However, when a project is designed and implemented, there is always a room that something could go wrong. No plan is 100% failure proof. Accommodating unforeseen circumstances at the planning stage of a project increases the chances of its success. It is also advisable for a project to have more than one implementation strategy. Do not put all your eggs in one basket!
References
Abdul Rahman, I., Memon, A. H., Zulkifli, M., & Sheda, N. (2014). Failure reasons of PPP infrastructure projects: case study of Kuala Lumpur LRT Project. Life Science Journal , 11 (7), 238-246.
Howell, S. (2015). Politics of appearances: Some reasons why the UN-REDD project in Central Sulawesi failed to unite the various stakeholders. Asia Pacific Viewpoint , 56 (1), 37-47.
