Factors Affecting the Completion of Information Technology ... · PDF fileSri Lanka's Information Technology ... Factors Affecting the Completion of Information Technology Projects

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A.T. Fonseka

Abstract

Sri Lanka's Information Technology (IT) industry which has recorded significant growth in exportearnings in recent years is saddled with problems relating to project completion. This study aimedat understanding the critical factors underlying project success. The study was based on a surveyundertaken in ten IT companies and included 136 respondents. While winning more clients andprojects is essential for company survival, the study showed the necessity for top managementto devote more time and effort to (i) clearly understand project objectives and deliverables (ii)improve the accuracy of estimations and risk assessment (iii) adequately equip teams withnecessary expertise (iv) provide inspiring leadership and (v) institute effective controlmechanisms. IT professionals need to sharpen their management skills. Inter-firm learning tooneeds to be enhanced. Failure to provide high quality services will only compel international clientsto look to other destinations such as India, China, and Mexico for such services.

Key Words: Sri Lanka’s IT Industry, IT Project Completion

1. Introduction

The contemporary economic scene is characterized by intense competition, rapid changeand increasing business complexity. Information technology (IT) has been one of the maindrivers of this transition. It has enabled firms from developed and developing countries aliketo design and develop new products and access new markets and new partners. It has alsohelped to raise the productivity of individual workers and work teams through the streamliningof processes and the connectivity that it offers. It is a field with vast potential as the applicationsof IT in the service of business are limitless.

Factors Affecting the Completion ofInformation Technology Projects in Sri Lanka

Prof. A.T.Fonseka is a senior faculty member at the Postgraduate Institute of Management (PIM), Co-lombo, Sri Lanka.

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Sri Lanka is emerging as a global information technology destination of choice in a numberof key focus domain areas and has been ranked among the Top 50 Global Outsourcingdestinations by AT Kearney Global Services Location Index, 2007. Companies operating inthe industry offer various application products, software services, and off-shore developmentservices to their clients, both local and international.

Despite the recognition gained by Sri Lanka for its IT capabilities, the problem besetting theindustry is the low completion rate of IT projects which is bound to impact adversely onindustry progress. This is the specific issue addressed in the study.

The article is structured on the following lines. It begins with a description of the researchproblem and a review of the literature relevant to the problem. This is followed by theconceptual framework and the study design. The data gathered during the field study arepresented next, followed by the study findings and a discussion of the findings. The finalsection contains the conclusions of the study.

2. Research Problem

Sri Lanka’s Information Technology (IT) industry has recorded significant growth during thepast twelve years. Export earnings from software and IT-enabled services which stood at US$5.0 million in 1996 rose to US$ 200 million by Sept. 2009 (http://www.itpro.lk/).

Despite the progress recorded, a problem afflicting the local IT industry is the limited successachieved in project completion. This is not a problem unique to Sri Lanka. Standish Group’sstudy (2006) on project outcomes in US IT companies showed that only 35% of the projectswere successful. A KPMG study done in 1997 with respect to leading IT firms in Canadashowed that 61% of the projects were failures.

In order to understand the problems faced by the local IT industry, preliminary discussionswere held with professionals of several IT companies in Colombo. According to Ms. SashiFernando, Project Executive of a BOI- approved IT company, only a quarter of the IT projectsundertaken by the company in 2005, 2006 and 2007 had succeeded. A quarter of theprojects had failed in that they had exceeded the time and cost estimates and not metcustomer requirements. The remaining 50% were challenged in that they were completedbut had exceeded the time and cost estimates. Ms. Fernando stated that one of the mainreasons for project failures was ‘uncontrolled’ scope. “Scope creep” is the insidious growth inthe scale of a solution during the life of a project. Frequent changes in requirements whilethe project is in progress have caused many failures.

Mr. Ranjith Dias, team leader of another BOI- approved IT company, stated that 30% of the ITprojects in his company never reach completion and emphasized that improper staffing wasa key reason for project failures. For example, when a project needs twenty JAVA- certifiedprofessionals with minimum three years experience, senior managers disregard therequirement and allocate less experienced members to the project.

Factors Affecting the Completion ofInformation Technology Projects

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Mr. Lakshman Kodithuwaku, Project Coordinator of a BOI- approved company, stated that onaverage 51% of the IT projects exceed the cost and time limits. The primary reason forproject failure was attributed to weak leadership. He explained that IT leadership requiresexcellence in three key areas: Technology, Business, and People. If the leadership does notaddress any of these three components, the project is at risk.

Ms.Chathura Deniyawatta, Senior Engineer of a member firm of the Sri Lanka Association forthe Software Industry (SLASI), stated that five out of six projects in the company were failures.She said that projects usually impact a large number of people and this requires constantcommunication with different levels of staff. Hence, effective communication was crucialfor project success.

Mr. Kushan Wijesundera, Associate Engineer of another member firm of the Sri LankaAssociation for the Software Industry (SLASI), said that at least 43% of the IT projects wereabandoned before completion. He added that one of the reasons for failure was the lack ofcontrol mechanisms, which are necessary to keep track of project progress and take timelycorrective action.

Dr. Madhu Fernando, presenting a paper at the ISACA Sri Lanka Annual Conference (2008)on the theme “Maximizing IT Project Performance through Better Governance”, stated that70% of the IT projects in Sri Lanka failed to meet the specified requirements.

Needless to say, project failures have negative consequences for firms and for the industry asa whole. IT companies desire to forge long-term relationships with clients but project failuresjeopardize a company’s relationship with clients. It gives rise to negative market perceptions,poor references, less clients and fewer projects. It also costs the company money and lowersemployee morale. With increased global competition, it is necessary for companies to offerworld class services. Almost the entire current demand for off-shore services comes fromdeveloped countries. Failure to deliver successful projects compels international clients torelocate their development centers in more effective, low cost bases like India (the biggestplayer in off-shore operations), followed by China, Mexico, Brazil, and Canada.

It is clear that the local IT industry faces problems with regard to project completion. Thisstudy attempts to investigate the causes of this unsatisfactory phenomenon.

3. Objectives

The objectives of the study are:

a) To establish the reasons for the low completion rate of IT projects.

b) To make recommendations that would help to improve the success rate of IT projects.

Sri Lankan Journal of ManagementVolume 14, No. 4 & Volume 15, No. 1

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4. Significance of the Study

Research studies done so far do not seem to have addressed the reasons for the low successrate of IT projects at the industry level. This study intends, at least partly, to bridge thisknowledge gap.

The study also has practical importance as it offers recommendations to management forimproving the success rate of IT projects.

5. Literature Review

In project management literature, a project is defined as “a one-time, multi-task job that hasclearly defined starting and ending dates, a specific scope of work to be performed, abudget, and a specified level of performance to be achieved” (Lewis, 2002). All projects areconstrained by three factors: time, cost and scope. For a project to be successful, these threeconstraints, also called the Triple Constraints of Project Management, must be in equilibrium.If any constraint is out of balance, the project is heading for disaster.

The project management cycle consists of two broad phases viz. i) project planning and ii)project execution and control. It is deciding WHAT to achieve and HOW to achieve. Theproject planning component is concerned with goal setting, cost and time estimation, andrisk assessment. The execution or implementation aspect focuses on leadership, teamwork,and control mechanisms. Project success depends on the proper management of all theseelements.

A key success criterion in project management is clarity of goals and objectives. Goals arehigher level statements that provide overall direction for what an organization is seeking toachieve, while objectives are lower level statements that describe the specific products thatthe project will deliver. Project objectives should be defined and agreed upon before theproject commences. It is necessary to understand the objectives of a project and thendetermine what deliverables are needed to achieve them (Pritchard, 1990). Every projectneeds an established goal and clear deliverables to control the scope of work. The deliverablesof a project are created based on the objectives - not the other way around. Satterthwaite etal. (2002), state that unclear project goals and objectives can result in project failures. It is alsonoted that change of objectives during project execution is another reason for project failure(Cardin, 2008).

Accurate cost and time estimation is one of the cornerstones of effective project planning.It is a process of forecasting or estimating the time and cost of completing project deliverables(Gray and Larson, 2007). Underestimating project needs can cause major problems becausethere may not be enough time, money, materials, or people to complete the project.Overestimating needs can be costly for the organization because a decision may be made todefer the project because it is too expensive or the project is approved but other projects arestarved because there is less to go around (Murthi, 2007; Zivkovic, 2003).


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Risk Management is the next important criterion for project success. It is the process ofanticipating hurdles in carrying out the original plan and providing alternate plans so that theimpact on the originally anticipated final outcome is minimal. Risk is a measure of theprobability and consequence of not achieving a defined project goal. It is not an easy tasksince the probability of occurrence and the consequence of occurrence are not directlymeasurable parameters and must be estimated (Kerzner, 2002:653). It is important toimplement software risk management in order “to avoid software project disasters, includingrun away budgets and schedules, defect-ridden software products, and operational failures;and avoid re-work caused by erroneous, missing, or ambiguous requirements, design orcode, which typically consumes 40-50% of the total cost of software development” (Boehm,1989). Billows (2004), says that project managers often skip the risk management processbecause the sponsor wants them to expedite the work. This may well doom project managersto fighting fires for the rest of the project.

Project execution, the other major phase in project management, calls for effectiveleadership, teamwork, and control mechanisms. These factors are discussed in the ensuingparagraphs.

The role of leadership is essentially one of “establishing direction, aligning people, andinspiring” them to achieve the desired end. With regard to knowledge, Mochal (2007) statesthat project managers must not only have technical knowledge but also sound businessacumen and business knowledge. With regard to skills, Thite and Simmons (1997) observedthat many project managers lack managerial skills including leadership skills, which arecritical for project success. Project managers must possess an understanding of the corporateculture and good social, interpersonal and communication skills. Mishra (2005) states that“project managers must be able to motivate others to work on low-grade work; they mustenergize them to work harder and put more effort into their work; they should inspire othersto invent new things; they should build job satisfaction for others and help them reach self-actualization”. With regard to leadership style, there might not be one style which is effectivefor all projects and the style would have to change depending on the specific situation.However, a task- oriented leadership style with its exclusive focus on getting the job done,disregarding the well-being of the team would be most inappropriate. A participative stylewhich promotes good teamwork and creative collaboration would be more suitable (Bass &Avolio, 1994; Luis, 2008).

Teamwork is a key ingredient for successful execution of IT projects. For team success, it isnecessary to have the right number of persons with the right skills. If there is a mismatchbetween the current mix of human skills and the project requirements, it is the projectmanager’s job to liaise with senior management and the human resource manager to addressstaffing needs (Bernardy, 2007). Second, there has to be effective communication amongteam members to discuss project- related issues, to interact with other staff members in theorganization and also with multiple clients. Management of global IT projects requires cross-cultural communication skills due to differences in culture and language (Ramesh, 2002).

Team leaders must possess strong oral and written communication skills as their work involvesthe conduct of frequent meetings and submission of periodic reports to management (Mehra,2003). They must also be able to maintain the morale of the team at a high level throughout


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the duration of the project noting that the level of motivation tends to wane as the projectprogresses, resulting in possible resignations. Team leaders must maintain the morale of theteam at a high level by providing continuous support and encouragement.

Control is the final project management function carried out by the project team. It is theprocess of measuring progress towards project objectives, monitoring deviations from theplan, and taking corrective action. Progress has to be monitored with respect to the projectcost, schedule, and technical performance objectives. The standard control measures adoptedare budgets, review meetings, periodic performance and status reports. Sound controlmeasures, therefore, are critical for project success (Schwalbe, 2000; Cleland & Ireland,2000; Gray & Larson, 2007).

The foregoing review of literature shows that the criteria for project success are i) clarity ofgoals and objectives ii) accuracy of estimates iii) risk management iv) effective leadership v)teamwork and vi) effective control mechanisms. The literature review provides the logicalfoundation for the conceptual framework that follows.

6. Conceptual Framework

A project has two broad phases and both phases have to be managed well viz. projectplanning and project execution. The literature review showed that the key elements inproject planning were: clarity of goals and objectives, accuracy of estimates, and riskmanagement; the key elements in project execution were leadership, teamwork, andcontrols. These six independent variables affect the performance of IT projects, which is thedependent variable. Project performance refers to the degree of completion of projectswithin the time frame, the budgeted cost and with the specified features and functionsexpected by the client. The conceptual model depicts the causal relationships between theindependent variables and the dependent variable (Figure1).

Figure 1. The Conceptual Framework

Source: Conceptualization by the Researcher

Clarity of goals & objectives

Accuracy of Estimates

Risk Management

Leadership

Teamwork

Control Mechanisms

Performance ofIT Projects


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7. Hypotheses

Six hypotheses are derived from the above conceptual framework for testing purposes viz.

H1: Higher the clarity of goals and objectives, higher the performance of IT projects.

H2: Higher the accuracy of project estimations, higher the performance of IT projects.

H3: There is a significant positive relationship between risk management and theperformance of IT projects.

H4: There is a significant positive relationship between leadership and the performanceof IT projects.

H5: There is a significant positive relationship between teamwork and the performanceof IT projects.

H6: There is a significant positive relationship between control mechanisms and theperformance of IT projects.

8. Study Design

The concepts appearing in the hypotheses are reduced to their operational terms i.e. to theirvariables, indicators, and measures. Table 1 shows the process of conceptual reduction.

Table 1. Process of Conceptual ReductionSource: By the Researcher

Concept Variable Indicator Measure Question

Performance

ProjectPlanning

Degree ofcompletion

Clarity of Goalsand Objectives

- Time

- Cost

- Quality

Understanding thedeliverables tomeet the goals andobjectives

Number ofprojectscompleted ontime

Number ofprojectscompleted withinthe budget

Number ofprojects whichmet userrequirements

5-point Likertscale

Section B,Part 1ThreeQuestions

Section B,Part 2 ThreeQuestions


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ProjectExecution

Accuracy ofEstimation

Risk Management

Leadership

Teamwork

ControlMechanisms

Approaches toestimation

Knowledge of thepossible risks andthe different riskmanagementapproaches.

Leadership styles

- Staffing- Communication- Motivation

Tools formanaging projectscope, cost,schedule, quality,and performance

5-point Likertscale

5-point Likertscale

5-point Likertscale

5-point Likertscale

5-point Likertscale

Section B,Part 2 TwoQuestions

Section B,Part 2 OneQuestion

Section B,Part 2 FourQuestions

Section B,Part 2 SixQuestions

Section B,Part 2 ThreeQuestions

The main instrument for data collection was the questionnaire. Section A of the questionnairesought background information on the respondents. Section B consisted of two parts: Part 1was designed to gather information relating to the completion of IT projects (the dependentvariable); Part 2 was designed to gather information on factors affecting the completion of ITprojects (the six independent variables). The questionnaire was pilot- tested to establish theclarity and appropriateness of the questions. Table 1 above shows the number of questionsformulated to tap each variable.

With regard to the degree of completion of projects, absolute numbers were sought fromproject managers. Companies which show a project completion rate in excess of 70 percentare considered as high performers; companies with a project completion rate between 50 –69% are regarded as average performers, while companies with a project completion ratebelow 50% are treated as low performers.

Part 2 of the questionnaire aimed at gathering information on determinants of project success.This was based on 5- point Likert scale statements ranging from strongly disagree to stronglyagree. A very unfavorable response to a question (i.e. strongly disagree) was given onepoint, while a very favorable response (strongly agree) was given 5 points. It was decided tohost the survey online, making it convenient for the respondents to answer the questionnaire.

The questionnaire was supplemented by an interview guide containing open- endedquestions. This was to obtain detailed information on factors affecting project success. It wasexpected to yield valuable qualitative information on such matters as the quality of leadershipand teamwork. By this procedure, triangulation was ensured.


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The sample consisted of ten (10) IT companies chosen from the 39 companies registeredwith the Software Exporters’ Association of Sri Lanka. They were selected on the basis ofconvenience i.e. the ease of access to information. It was ensured that the companieschosen were relatively long established ones serving international clients. Two hundred(200) IT professionals were included in the survey but the actual selection of participants wasleft to the discretion of project managers in the ten IT companies.

9. Data Presentation and Analysis

Table 2 presents the profiles of the ten IT companies which were selected for the study. Thecompany names are not disclosed in deference to the wishes of the managers who wereinterviewed; instead, they are identified by means of a code. All companies in the sample,except for company I, have been in operation for several years. Five companies were relativelysmall with less than 100 employees, while the remaining five had 100 or more employees.

Table 2. Profile of the IT companies in the Sample

Source: http://www.islandsoftware.org/, http://www.slasi.com/

Company Year No. ofEstablished employees

A 1998 25

B 1983 650

C 2003 100

D 1983 400

E 2000 55

F 1998 300

G 1994 70

H 1995 1300

I 2006 37

J 1997 85

Business interests

Joint Ventures, Partnerships, IT outsourcing,strategic alliances, collaborations for softwaredevelopment.

Lifecycle management, midmarket ERP, whichcovers distribution & Manufacturing. in midsize Co’s.

Outsourcing, Business model verticals andtechnologies, payment devices and technologies.

Software Development & Outsourcing, ProductDistribution, IT Training, IT Enabled Services.

Software engineering.

Seek strategic partnerships, and new businessopportunities for software development.

Offshore Software Development, BPO

Software Development, Content Management,Quality Assurance.

Business & technology consulting, IT infrastructureservices, Business process outsourcing, TurnkeyProjects.

Software Developers and providers of JointVentures for Software Development and Off-ShoreDevelopment Servers.


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Two hundred (200) IT professionals from ten IT companies were earmarked for the on linesurvey. Out of 144 responses that were received, 136 responses were usable. The last columnof Table 3 shows that the highest number of respondents was from companies H and J (25each) and the lowest number was from company G (6 responses). The job wise analysis ofthe respondents shows that 42 were Programming & Software engineers; 34 were in ProjectManagement holding positions such as Project Managers, and Team Leaders. The remainingsixty were represented by professionals engaged in Technical support, Testing & QualityAssurance, Business Analysis, Sales & Marketing, and Solutions & Technical Architects.

Table 3. Job-wise Analysis of Respondents

Source: Survey data

Table 4 shows the educational background of the respondents. Seventy seven (77)respondents out of 136 possessed basic degrees while thirty four had postgraduatequalifications in Information Technology, Information Management and BusinessAdministration.

Company Programming/Software

engineering

TechnicalSupport

ProjectMgt.

Testing &Quality

Assurance

BusinessAnalysis

Solutions&

TechnicalArchitects

Sales &Mktg.

Total

A 4 1 2 1 0 0 0 8

B 3 1 2 2 1 1 0 10

C 3 2 0 0 2 0 2 9

D 3 3 2 1 2 0 2 13

E 1 1 3 1 0 2 0 8

F 7 4 5 2 1 1 0 20

G 1 0 1 1 3 0 0 6

H 12 3 2 1 4 1 2 25

I 2 4 3 2 0 0 1 12

J 6 4 14 1 0 0 0 25

Total 42 23 34 12 13 5 7 1 3 6


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Table 4. Education-wise Analysis of Respondents

Source: Survey data

Table 5 provides an experience- wise analysis of the participants. Sixty five of them had over5 years experience while another thirty counted more than 3 years experience.

Table 5. Experience- wise Analysis of the Respondents

Source: Survey data

Company Post- Graduate Undergraduate Professional DiplomasCourses

A 1 5 2 0

B 1 5 3 1

C 4 4 1 0

D 2 6 3 2

E 3 5 0 0

F 6 11 3 0

G 0 2 4 0

H 7 18 0 0

I 2 7 2 1

J 8 14 1 2

Total 34 77 19 6

Company <= 1 year 1 - 2 years 3 -4 years 5 - 6 years 7 years =>

A 0 3 2 2 1

B 3 4 2 1 0

C 1 0 1 3 4

D 3 5 2 1 2

E 0 0 0 4 4

F 4 7 3 2 4

G 2 3 1 0 0

H 0 2 8 6 9

I 1 4 5 1 1

J 0 1 5 6 13

Total 14 29 29 26 38


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The dependent variable of the study was the degree of completion of projects. This informationwas sought from project managers and their responses were accepted at their face value.Table 6 shows the degree of completion of IT projects company-wise.

Table 6. Degree of Completion of IT projects

Source: Survey data

With a project completion rate of over 70%, companies C, E, H and J are categorized as highperformers; companies B and I with a success rate below 50% are low performers; companiesA, D, F and G are average performers.

The means and standard deviations of the dependent variable and the six independentvariables are presented in Table 7. The mean values for the variables are graphically presentedin Figure 2.

Company % of Completion Performance Rating

A 67 Average

B 47 Low

C 77 High

D 64 Average

E 74 High

F 60 Average

G 61 Average

H 76 High

I 48 Low

J 82 High


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Table 7. Overall Analysis

Source: Survey data

Based on the responses of the 136 participants, it is seen that projects which met userrequirements have the highest mean value of 92.09. The mean values of the projectscompleted on time and projects completed within the budgeted cost are just above averagescoring 53.44 and 57.83 respectively. The mean values of the six independent variables arealso above the average. The average rate of project completion for the ten companies in thesample is 65 percent, which is much higher than what is generally known to be the industryaverage. The standard deviations for all the independent variables show < 1, indicating littlevariation in participants’ responses to each variable.

Correlation Analysis

The study had six hypotheses. It was hypothesized that a significant relationship existsbetween the degree of project completion and the factors affecting project completion. Inorder to test the hypotheses, a correlation analysis was conducted for the total sample toexamine all the bivariate relationships among the variables. The results are shown in Figure3.

Variables N Mean Std. Deviation

Performance:

% completed on time 136 53.44 31.75

% completed within the budgeted cost 136 57.83 30.20

% completed which met user requirements 136 92.09 13.71

Project planning:

Clarity of goals & objectives 136 3.07 0.74

Accuracy of Estimates 136 3.06 1.00

Risk Management 136 3.40 0.98

Project execution:

Effective Leadership 136 3.49 0.82

Effective Teamwork 136 3.25 0.92

Control Mechanisms 136 3.23 0.90

Valid N (list wise) 136


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Figure 3. Correlation between Project Performance & Independent Variables

**. Correlation is significant at 0.01 level (2- tailed)

*. Correlation is significant at 0.05 level (2- tailed)

Source: Survey data

The analysis showed that all six independent variables are positively correlated with thedependent variable. Accuracy of estimates, risk management and control mechanisms havesignificantly high positive correlations with performance of IT projects of +0.451, +0.437and +0.421 respectively. Overall, the r values are moderate.

Regressing each of the six independent variables with the performance of IT projects resultedin three factors being significant viz. clarity of goals & objectives, accuracy of estimates, andrisk management. A R2 value of 0.34 indicated that 34% of the variation in performance of ITprojects can be explained by these three variables. It could be said that the low R2correspondsto the high variability in the dependent variable since it is objective in nature. Besides, therecould also be other factors affecting project performance.

Tests of Hypotheses

H1: Higher the clarity of goals and objectives, higher the performance of IT projects. It isaccepted because the correlation analysis showed that there is a positive correlation(+0.188* at 0.05 significance level).

H2: Higher the accuracy of project estimations, higher the performance of IT projects. It isaccepted because the correlation analysis showed that there is a significant positivecorrelation (+0.451** at 0.01 significance level).

H3: There is a significant positive relationship between risk management and theperformance of IT projects. It is accepted because the correlation analysis showedthat there is a significant positive correlation (+0.437** at 0.01 significance level).

Project Planning

Clarity of goals and objectives

Accuracy of estimates

Risk management

Project Execution

Leadership

Teamwork

Control mechanisms

Performance of ITProjects

.188*

.451**

.437**

.421**

.404**

.345**


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H4: T here is a significant positive relationship between leadership and the performance ofIT projects. It is accepted because the correlation analysis showed that there is asignificant positive correlation (+0.345** at 0.01 significance level).

H5: There is a significant positive relationship between teamwork and the performanceof IT projects. It is accepted because the correlation analysis showed that there is asignificant positive correlation (+0.405** at 0.01 significance level).

H6: There is a significant positive relationship between control mechanisms and theperformance of IT projects. It is accepted because the correlation analysis showedthat there is a significant positive correlation (+0.421** at 0.01 significance level).

10. Findings

The results of the hypotheses tests were indicated above. In addition to the questionnairehosted on line, qualitative information was obtained through interviews held with seniormanagers and project managers attached to the sample firms. The interviews were based onan interview guide, containing open- ended questions on factors affecting project completion(i.e. the six independent variables). This was extremely useful considering the fact that thedecision as to who would participate in the on line survey was left entirely to the projectmanagers of the sample firms. The results of the interviews are summarized below.

Clarity of Goals and Objectives

Clarity of goals and objectives is the first factor affecting project performance. The viewsexpressed by managers from companies J, H, and I in this regard are useful. Companies J andH are high performers while I is a low performer.

The process of ensuring the clarity of objectives and project deliverables is a well-plannedactivity in Company J. Before a project is undertaken, there are pre-sales activities in whichthe project manager and the project technical staff are involved. They study the scope of theproject, user requirements and the likely cost of the solution. If they consider the project tobe profitable, a “statement of work” is prepared which establishes the understanding betweenthe project sponsor and the client. Once the project is agreed upon, the project managerarranges a kick off meeting. Based on the high level requirement study, detailed requirementgathering is done. The project manager liaises with top management to ascertain the budgetand manpower allocations for the proposed project. The output of the requirements gatheringis called the solutions document and it is signed by both the vendor and the client. Thisensures that the goals and objectives and requirements are clearly understood. Based on thisdocument, the project manager sets targets for the team - for example, the deliverables ona particular date prior to the actual release date so that any uncertainties can be avoided.

Managers of companies H and J maintained that changes in objectives during the project donot affect the progress of projects. This is because they have an internal change controlboard which is made up of the project team, the account manager and a representative from


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the client company. This Board analyses the extra effort, budget and time required toimplement the change, and decides on when they will have to make the release. Also, whenclients request for products based on concepts which are not clear, a prototype is designed.This gives the client an idea of the final product. Thus, the client can suggest any changesbefore project execution. This saves time and effort. Prototyping, however, is costly and so isundertaken only on request.

A respondent from company I stated that changes in business objectives are not clearlycommunicated back to the team. The work continues on the basis of goals that are out ofdate and it stands in the way of project success.

Accuracy of Estimates

Accurate estimation was described as one of the most challenging activities in softwaredevelopment projects. The first estimate is necessary at the start of the project i.e. when thecompany bids for the contract. In order to ensure accuracy of estimates, most companieslook at historical data that could be relevant to the upcoming project. Data gathering isundertaken and the project schedule is drawn for all the phases of the implementationprocess such as analysis, design development etc, and continues till the project comes to thefinal delivery stage. A manager from Company E (high performer) said that the company hasbaseline estimates in its repository. Based on past experience and a study of the changingenvironment, estimates are made. However, in company G, (a low performer), the leaderssometimes use a ready-fire-aim approach in a bid to get the job done fast and end upspending more due to unnecessary re-work.

Risk Management

A respondent from Company B (a low performer), said that in addition to financial risks ITprojects entail different types of risks. Technical risks relate to problems with languages,project size, project functionality, platforms, methods, standards, or processes and resultfrom lack of experience, poorly defined parameters, or dependence on outside organizations.There are also management risks which include lack of experience, lack of authority,communication problems, and control problems. Personnel risks are critical and these includestaffing problems, staff conflicts, and productivity issues. The exit of key managers duringproject execution has even led to the abandonment of some projects. Overseas projects areconsidered to be very risky as the interactions are limited. In such projects, the requirementgathering is done through video conferencing and this limits the exchange of information. Insuch instances, the company takes the risk and proceeds.

A respondent from Company C (a high performer) said that the company generally finishesa project six months prior to the actual release date. This serves as a buffer to face anyuncertainties. Also, the company does not undertake projects if it lacks the required skills orwhen it realizes that the project is very risky. A respondent from Company J (a high performer)said that the company maintains a checklist of items that have gone wrong with projects inthe past. This lists the uncertainties that might cause problems in future projects. Risks areprioritized by first listing those that would cause major problems and are most likely to occur.


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The high impact, high probability risks will need most attention, while the low probability,low impact risks can be ignored to avoid cluttering up of the risk management process.Undertaking an efficient risk management process has helped the company to perform well.

Effective Leadership

This is the fourth critical factor impacting on project success. A respondent from Company J(a high performer), emphasized the need to have a person with multi- skills as the projectmanager or team leader. He added that it is imprudent to assign an individual who is conversantwith only one specialized area of knowledge as a project manager or a team leader. Forexample, if a technical person is appointed as a team leader, he would spend most of histime looking at technicalities to the neglect of other aspects of the project.

Once a project is accepted and the team leader is appointed, the onus of choosing the teamis on the team leader. He has to appraise the skills needed for the project deliverables whenchoosing the team. Thereafter, he organizes a kick off meeting which provides an opportunityfor team members to acquaint themselves with each other. The team leader, of course, hasto be very knowledgeable about the educational and skill levels of the team members andalso the factors that motivate each one of them. Thus, the team leader plays a vital role inassigning the right team to a project.

Effective Teamwork

Good teamwork is a sine qua non for the success of IT projects. Teams are created based onthe complexity of the projects. In a normal project, the hierarchy is as follows: the Projectmanager, followed by the Technical Lead and the Quality Assurance Lead. Under the Technicaland QA Leads, there are senior and junior engineers. In a complex project, on the other hand,there are multiple project managers.

A senior manager from Company I (a low performing company), said that teamwork isseriously impaired in the company because it lacks clearly defined task reporting arrangementsand team members have to report to multiple leaders. However, this is a common problemthat arises in project-based structures.

IT companies maintain a database on their human resources. This enables the project leadersto identify the available skills, and also those who are currently “benched” i.e. those who arecurrently not assigned to a project. The leaders also study the people who are currentlyassigned to teams along with their dates of release. If the required skills are not availableinternally, the team leader liaises with the HR manager to recruit new staff. Undergraduatesare also assigned to projects when the internal staff is on vacation. If any project requiresnew technology, the available personnel selected from the resource pool and the newrecruits are trained before they are assigned to teams.

In companies C and H (both high performers), continuous training is provided and based onthe skill ratings, the individuals are assigned to teams. Participants are awarded certificateson successful completion of the training program. Most companies conduct employee


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assessments biannually and adopt the Management by Objectives (MBO) system. Everyindividual is given a MBO scorecard, and this scorecard is filled based on the deliverables metand special bonuses are given on performance.

Control Mechanisms

Generally companies have regular meetings to review the progress of projects. They alsohave meetings with the client where key personnel from the client company and the vendorcompany meet to discuss the progress of projects. Team members are required to maintaina detailed record of the tasks completed by them and the time taken. This record is studiedby the team leader and poor performers are replaced, if the need arises.

11. Discussion of Findings

The study showed that the project completion rate achieved by the sample firms (65%) washigher than what is known to be the industry average. This was a relatively sensitive piece ofinformation sought from senior managers in the sample firms and the information wasaccepted at its face value. This is a limitation of the study. However, the higher success rateis partly explicable by the fact that the ten companies are well- established ones with arelatively stable workforce, a strong base of professional expertise and with membership ina professional body.

According to the degree of project completion, it was possible to classify the ten companiesas high performers (companies C,E,H,& J), average performers (companies A,D,F,& G) andlow performers (B & I). The literature review indicated six critical factors which bear onproject success. Many of these factors were also mentioned during the preliminary surveyconducted by the researcher. Hence, some comments on inter-company variations seemappropriate at this point.

Goals and objectives are important because they show shared understanding between theproject manager and the project sponsor on the overall purpose of the project. The specificdeliverables of an IT project, for instance, may or may not make sense to the project sponsor.However, the objectives should be understood by all project stakeholders. According to theresearch findings, the companies categorized as moderate and low performers obtainedonly moderate and low scores on goals and objectives.

It was also revealed that the success of projects will be compromised if the person in theposition of project manager does not have the right skills, experience and personality to leada project.

People engaged in projects should have the requisite qualifications and expertise. Employeesin the high performing companies had a sound educational background and hadundergraduate and postgraduate qualifications in the field of Information Technology andManagement. They had at least 5 years experience in handling projects. On the other hand,most of the employees from average and low performing companies held professional


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qualifications and diplomas, and only a small number possessed post graduate qualifications.Also, they had less than 4 years of experience in handling projects. These differences reflectin the performance of the IT projects undertaken by the companies.

Respondents from all companies had encountered difficulties in allocating adequate staffand hiring new staff. The IT industry experiences high attrition rates and reached a peak of16.6 percent in 2006. Employees move to organizations which provide better compensationpackages. Respondents also reported that employees are unhappy with the technologyadopted in the companies. Therefore, they move to organizations which use newertechnologies and which offer better career prospects. Experience in working with newertechnology gives employees greater mobility. With the global economic crisis, however,attrition rates have declined for the time being and employees fear to leave their currentjobs due to the prevailing uncertainty.

The view was also expressed that project managers do not anticipate problems but reactonce problems arise. Most companies grapple with day- to- day issues and fail to anticipatepotential problems. Measuring progress towards the accomplishment of objectives,monitoring deviations from the plan, and taking corrective action are important for thesuccessful completion of projects.

12. Conclusions and Recommendations

The first factor that merits attention is the process of goal setting. Goals and objectives needto be clearly defined at the commencement of the project. It is necessary to devote sufficienttime and effort for this process and the objectives should be understood by all projectstakeholders. Unclear goals and objectives frequently lead to ambiguities and conflicts. Italso becomes difficult to define roles and responsibilities clearly. Changes in objectivesduring project execution is another issue that has to be faced and low performers, in particular,would do well to adopt some of the techniques followed by the high performers to resolvethese issues. Inter- firm learning appears to be a weak aspect and members of the professionalassociation must endeavor to learn from each other in order to take the industry forward.

Poor estimation of resource requirements and activity durations is another reason for projectfailure. Building and maintaining software is a risky business. Since, software controls somuch of the present-day enterprise, delays, cost overruns and failure to perform as per userrequirements can have far-reaching consequences. To improve estimation, one could utilizestandards of similar past projects to gain an insight into the duration of the project. It is alsoadvisable to draw on the experience of employees when making estimates. Adequate timeshould be spent for estimating and the process of estimation should continue from thebeginning of a project to its very end.

Also, the project manager needs to understand and assess the risks involved in a projectexceeding the budget, missing schedules and failing to meet any other requirements. Thestudy showed that risk management is a very weak area in most companies. The maintenanceof a risk register indicating the status of the risks and whether the risk is receding or growing


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would be particularly useful. It is to be noted that new risks always tend to arise as the projectprogresses. If these risks are significant, they need to be added to the register and the risksthat are no longer applicable should be deleted. Practising this risk management processwould help to improve the success rate of IT projects.

Leadership is critical in any human endeavor and Thite and Simmons (1997) had the followinginteresting observation to make: “It is generally recognized that technical/scientificprofessionals lack managerial skills, including leadership skills. Many project managers areperceived as having average or less than average managerial skills”. Project managers andteam leaders must enhance their knowledge of behavioral sciences (on areas such as humanmotivation and group dynamics) because technical knowledge alone is not sufficient forsuccessful management of projects.

Leadership is easy when things are proceeding smoothly but in tough and challenging timesstrong leadership is needed. At such times employees tend to get emotionally drained andeven the most loyal team members can become pessimistic and begin to blame each other.A leader always has to keep the end in mind and remain focused on the project objectivesand deliverables. He must always maintain a positive attitude, maintain team cohesion andkeep the morale of the team high.

The study highlighted the importance of the people factor for project success. In successfulprojects, the project team is staffed with the necessary expertise and experience; and thereis trust, confidence, mutual understanding and good teamwork.

It is important to recognize that IT professionals are not motivated solely by monetary rewards.Reputed IT companies in India (such as Infosys and Wipro) are not the best paymasters butthey value their talent base. IT professionals desire exposure to state of the art technologies,frequent overseas assignments, higher responsibilities and recognition. Well-known IT firmshave realized this fact and by catering to these needs they have been able to keep employeemotivation at a high level and retain their talent pool.

Interviews with IT professionals brought to light a few other factors that bear on projectsuccess besides the six success criteria discussed above.

First, it was disclosed that senior managers were not 100 percent committed to projectobjectives; they lack understanding of the project and are not actively involved in the project.Without top level commitment, it is difficult to align business objectives with the projectobjectives.

Second, there is a lack of user/customer involvement. Without user involvement, thoseworking on a project may not feel committed to it and may even be hostile to the project.Users need to be involved in the progress of a project from the beginning to its final delivery.Often, the users are not prepared to allocate time for the project and this has led to crises.

Third, there is a lack of familiarity with new or changing technologies. If the skills are notavailable internally, the HR Division has to recruit personnel to fill the gap. At times, it is


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difficult to find the needed skills even from external sources. In such instances, the project iseither turned down or accepted with a high probability of risk.

Finally, there are the challenges posed by projects that are too big or complex. Smallerprojects are simpler, faster to implement, and easier to manage. Communication with usersand team members is easier when the project is small. The larger or more complex theproject, the greater is the likelihood that its size or complexity would overwhelm the abilitiesof the people leading it. Large projects need to be broken down into smaller chunks so thatthere are more focused teams, each of them dealing with a limited sub-set of requirements.This is likely to ensure greater success in the case of large projects.

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