Why do projects fail? 9 reasons + tips for project success

“Why do projects fail?”

The project you spent months working on with your team is finally complete and ready for review. You’re all exhausted from the constant changes and miscommunications. Still, at least it’s finally done (past deadline, but who’s paying attention at this point?).

You feel defeated when you compare the project scope with the final version. Instead of your original vision, your final project has turned out to be something else entirely (and not in a good way).

You wrack your brain to come up with reasons for why this happened. You did your best. So did your team members.

Then what went wrong? Or, to address the issue directly — what is it about the way we work that makes big projects fail?

Source: Giphy

Let’s dive into the nine most common project failure reasons to identify the barriers between your team and project success.

What is project failure?

9 most common causes of project failure

6 tips to ensure project success

What is project failure?

In short, it’s no picnic.

Project failure happens when a project has not been delivered by the set deadline, exceeded the planned budget, and/or hasn’t met the project’s set objectives and quality standards.

We all know what a failed project looks like: it’s not pretty.

It often entails seemingly endless feedback loops, poor communication, frustrated stakeholders, missed milestones, and a jumbled (or nonexistent) project schedule.

If you’ve experienced all of the above, don’t worry – you’re not alone.

When a project begins, we’re all guilty of wishful thinking and optimistic expectations. However, we should take a step back and keep that enthusiasm at bay—or at least out of the room where the planning is happening.

Big ideas are great. But, if we can’t be realistic when setting project objectives, all hell breaks loose later on. And we’re not just saying that!

Look at the numbers yourself to see the consequences of poor project management.

Project failure in numbers

The Project Management Institute (PMI) says that around 60% of projects fail to meet set objectives. In that same report, PMI also found that 17% of projects are deemed failures. And when projects fail, it can be an expensive lesson for an organization (not to mention a huge bummer!). For every $1 billion spent on a failed project, $135 million is lost forever.

But that’s not all.

According to a similar report by PMI, which interviewed leading organizations to analyze how teams implement initiatives, we find that:

Around 40% of projects exceed their budget
Almost 50% of projects are not delivered on time
35% of projects fail and cause budget loss
34% of companies experience scope creep

So, what the heck is going on here? If you’re wondering how and why so many projects fail, you’re not the only one.

Business professionals across industries are constantly working to try to understand the source of the evil that is project failure. And guess what? There isn’t only one cause of project failure. We identified nine!

9 most common causes of project failure

A successful project starts with realistic project planning, a project team that knows exactly which part they are responsible for, clearly established objectives, and a killer project scope.

Right?

But even when you seem to do everything right, things can go south.

Deliverables might be submitted way past their due dates or project goals just are not being met.

To prevent that from happening to you in the future, let’s explore the most common causes of failed projects and ways to avoid them.

The trickiest thing behind the causes of project failure is the simple fact that no single hiccup or blocker happens in a bubble.

For instance, if the set project objectives are not realistic, deadlines will be missed. If team collaboration is not optimal, you might register drops in employee productivity. When resource management is inefficient, additional tasks might be added to the project scope, which will lengthen the project timeline.

It’s like the domino effect: when one small thing goes wrong it affects the dependent tasks that follow and has a negative impact on the whole project.

Source: Tenor

That’s why it’s vital to know all aspects of the problem and be aware of everything that could possibly go wrong before the project begins. Doing so will enable you to tackle any challenge that might appear along the way and deliver high-quality projects on time and within budget.

Reason #1: The planning fallacy

The planning fallacy is a psychological phenomenon that defines humans’ tendency to wrongly predict the amount of time it takes to complete a task.

Specifically, we tend to be overly optimistic when we set deadlines, plan budgets, estimate costs, and identify risks.

We can see this phenomenon happening in projects like the Sydney Opera House, which opened a decade later than expected. Not only was it ready 10 years late for the party, but it also exceeded the estimated budget of $95 million.

How can you avoid awkward situations like that?

Embrace a pessimistic planning strategy and always overestimate when setting deadlines. This will give you the necessary time to overcome unpredictable situations and obstacles.

Remember – it’s better to under-promise and over-deliver rather than the other way around 😉.

Reason #2: Undervalued project management

Only 46% of organizations recognize the importance of project management (PM). The remaining 54% of enterprises that undervalue PM register a rate of 67% of project failure. That’s because an efficient PM plays the leading role in delivering on time and on budget.

PM helps you ensure you’re providing your project team with motivation and the right instructions on what and how to get the job done.

Plus, a qualified project manager will help you create realistic project plans with accurate budget estimates based on past projects. The bottom line is that you need to put an emphasis on PM and hire experienced talent that can guarantee you a solid, actionable plan to achieve your objectives.

Reason #3: Exceeded budgets

Going over budget (sometimes called ‘budget overruns’) might look more innocent compared to the other causes of project failure. Are they though?

Sure, you can ask management for supplementary funds when you overspend. But when this becomes a recurring issue with each project you’re working on, it will surely affect your reputation as a project planner.

Your reputation is especially at stake when you’re part of a public company where investors and shareholders are looking at each action that could negatively impact the company’s profits through a magnifying glass.

At the same time, when requesting additional funding, other planned initiatives might have to suffer. Think about it: that sum of money you need will not be magically donated by the Tooth Fairy. Instead, management will have to reduce the budget for other projects.

When doing so, business productivity can decrease and the growth of your organization might slow down.

To sum it all up: the most common causes of budget overruns are poor resource management and inaccurate estimates of the time needed to complete a project.

Reason #4: Low productivity and poor performance

Low employee productivity or poor performance is often the result of inefficient resource planning.

Sure, there can be a couple of bad apples on each team. But when the entire project team is unmotivated and registers low productivity, there’s something wrong with how the talents of each team member are being utilized.

The most common reasons for an overall low productivity rate include:

Overutilization (not enough team members to tackle the project tasks)
Employees stuck with non-billable activities (i.e., team meetings, fixing errors, administrative duties, etc.)
Lack of motivation
Unwelcoming workplace environment
Low employee engagement rates

Luckily, there are a few simple things you can do to boost team morale and increase productivity:

Put on some music when you start working. Studies show that as many as 85% of employees are more productive when listening to music. Pop, rock, and country tunes are among the most popular picks for a productivity boost..
Ensure the right work environment. A recent study discovered that over 50% of employees are not as productive when working in a cold space. So, make sure your office or at-home workspace is at a cozy temperature.
Change your pet policy. A study from Purina discovered that taking dogs to work increases employee satisfaction by 22%. If you’re working from home, keep your dog around your workspace for a productivity boost.

Reason #5: Poor resource management

Resource management helps you make the most of your existing resources. It involves planning, scheduling, and optimizing the lifecycle of your resources.

When done right, resource management helps you deliver projects successfully and improve your business’ profitability over time while also:

Reducing the cost of your project resources
Maximizing billable resource utilization
Managing the discrepancies between resource demand and available capacity

When resource management is inefficient, you risk increasing project costs and decreasing employee performance.

For instance, over-allocating tasks to project team members leads to burnout and higher turnover rates (one more time for the people in the back! 📢).

On the other hand, under-allocations will surely increase your project costs and result in utilizing way more workforce than necessary.

It’s a delicate balancing act, but it’s important to get it right.

Reason #6: Collaboration bottlenecks and inefficient communication

Businesses today often run virtually. Therefore, executives need to be able to effectively manage their employees based in multiple locations.

Remote collaboration is a problem that needs to be solved in order to improve how well businesses work internally and with their customers.

Efficient collaboration is one of the building blocks of innovation. It contributes to a team’s ability to problem solve and increases the chances of delivering work on time.

Plus, collaborative teams are more likely to be able to adapt quickly and overcome new obstacles.

Whether your team is together at the office or working from different time zones all around the world, it can be helpful to utilize tools that can keep everyone on the same page.

Connecting virtually through messaging apps and collecting feedback on deliverables with the help of visual collaboration tools like MarkUp.io, can help:

Alleviate the downtime in productivity
Encourage teamwork
Minimize feedback loops
Increase productivity

Reason #7: Scope creep

When starting a new project, it’s best to create a chart or diagram that displays the necessary tasks and subtasks for the project to be completed.

This outline is part of the project scope, which goes into further details on resources, timeline, deliverables, etc.

Scope creep happens when people are making last-minute additions to a project. Oftentimes, they are not considering that:

It’s too late and there’s not enough time to make more changes.
The team has other priorities to take care of.
There’s a lack of resources (like employees 🙄), which makes completing additional tasks in a reasonable time frame impossible.

With each little task added, the time necessary to complete the project increases.

When scope creep appears, project progress is affected. In the worst cases, it can look like there were no advancements made on the project, even though every team member works at total capacity.

How can this happen?

Well, the number one culprit is the poorly-defined project scope. This usually happens when clients and project managers are not on the same page and have different visions of the assignment.

Other reasons include:

Not adhering to project management practices
Adding additional features that were not agreed upon from the get-go
Ineffective communication between clients, project managers, senior management, and other key stakeholders

Avoid a visit from the scope creep by just getting your clients to approve the initial project scope. At the same time, be transparent about the process. Help clients understand how last-minute requests can keep a project from being completed by the agreed-upon deadline.

You can create your diagrams and charts in Microsoft Excel, Google Spreadsheets, or by using a project management software solution.

Next, share your plans with stakeholders via links using collaboration tools like MarkUp.io. Your collaborators can then add any comments or questions they have about your plan to the MarkUp you shared. Using online proofing tools as part of your internal and external communication plan will help you get concise feedback and input without defaulting to the walls of text that accompany email-based review sessions.

Reason #8: Unclear objectives and a vague project goal

Strategically defined measurable steps help you map the roadmap that your team needs to follow to achieve the project goal.

Having clear goals and project objectives will help your teammates create strategies to get their tasks done on time.

To establish objectives and set achievable goals, you can use the S.M.A.R.T. method. The SMART goals system stands for:

Specific: The goal is defined as clearly as possible and broken down into detailed tasks and subtasks.
Measurable: The goal can be measured by tracking key performance indicators.
Achievable: The goal can be accomplished using the available resources.
Realistic: The goal is rational and can be achieved in a real-life scenario.
Time-bound: The goal has a clearly-defined deadline.

Failing to create precise goals and objectives will result in delivery delays, confused teams, and frustrated stakeholders.

Reason #9: Unrealistic expectations

We’ve all been there. You got a little over-excited during a brainstorming session and promised your client the moon. As the project deadline inched closer, you realized your suggestion was just not possible. And now you have to let the client know.

Unrealistic expectations are a pretty common phenomenon in project management and, usually, go hand in hand with the planning fallacy (a.k.a. overly optimistic deadlines).

Overestimating one team’s ability to complete a project can result from:

Vague project briefs from customers. In this situation, it’s the project manager’s responsibility to ask for as many details as possible and clarify the client’s expectations from the start.
Lack of efficient communication channels between everyone involved in the project.
Overpromising to keep the client happy. What did we say before? Ah yes, that’s right – always under-promise and over-deliver.

What happens when clients, stakeholders, and higher-ups have high expectations that can’t be met?

There are three possible scenarios:

Deadlines will be missed.
The team delivers the project on time, but the quality of the deliverables is subpar.
The project is delivered on time with quality deliverables, but the budget has been exceeded.

In other words, there’s no way to overpromise and get away with it without rippling consequences that will affect the project’s outcomes.

6 tips to ensure project success

The previous section might’ve looked grim. But from here on you’ll only get sunshine. 🥰

Now that you’re well aware of all the things that can go wrong, we’ve got some tips to help you shake it off and make project failure a thing of the past.

Tip #1: Establish a risk management process

Risk management is the process of identifying, assessing, and controlling the risks that an organization faces from a financial standpoint.

Simply put, risk management helps you pinpoint events that could happen in the future and hurt your business’s profitability.

For example, financial uncertainties may cause a negative impact on your earnings. In addition, legal liabilities due to accidents or natural disasters can have an impact on the way your organization conducts business.

With risk management strategies, you can have a plan in place for each of these scenarios.

So, when conducting a risk analysis before planning your project, you can forecast (maybe not all, but) a lot of obstacles, bottlenecks, and events that may affect the project outcomes.

Tip #2: Set clear objectives and deadlines

We’ve already gone through the planning fallacy and its consequences.

It’s a good idea to talk with your teammates and get estimates from them when creating the project timeline. It’s an even better idea to add some extra days to their estimates (which are probably not entirely realistic, anyway).

Equally important, detail each task and subtask as much as possible to correctly break down the project timeline into reasonable time segments and clear objectives.

Tip #3: Invest in project management software

54% of businesses are unable to track KPIs in real-time due to not using a PM software solution.

Not only that, but organizations are wasting as much as 11.4% of their resources because of poor project management. Plus, a 2/3 project failure rate increase is registered by companies that don’t have a project management strategy in place.

There’s no way around it. Efficient project management is a vital step to achieving your project goals successfully.

“But,” you chime in. “I do use spreadsheets and pen-and-paper planning. That’s some sort of PM, right?”

Well, technically yes. But it’s so easy to overlook important details when you’re dealing with dozens of spreadsheets, misplace a piece of paper, and so on.

Why risk it? PM software can offer you a centralized overview of the entire project, eliminating data silos and neatly keeping everything you need to know in one place.

Tip #4: Track and analyze relevant metrics

Tracking and measuring KPIs help you objectively analyze the progress of your project.

You can create a list of expected measurable results at the beginning of the project and compare it with real-life metrics.

This method will help you learn to accurately estimate the time it takes to complete certain tasks.

When comparing planned and actual metrics, your forecasts and estimates will get more and more accurate with each project, and you’ll be able to avoid falling into the trap of the planning fallacy.

Examples of project KPIs that you can track include:

Completed tasks in percentages
Allowed time for each task and project activity
Budget per task
Quality standards for deliverables
Team efficiency
Customer satisfaction evaluation
Return on investment (ROI)

Tip #5: Use collaboration tools

When working on creative projects that rely on the client’s approval, try to avoid asking for feedback over email or in a meeting.

Instead, you can use collaboration tools and proofing solutions developed to offer users an easy way to request, provide, and collect concise feedback.

For example, you can integrate a tool like MarkUp.io into your creative workflow and send your deliverables over for review via link.

MarkUp.io helps you make virtual copies (called MarkUps) of multiple file formats, including PSD, AI, JPG, JPEG, DOC, DOCX, MOV, MP4, HTML, and a lot more. Plus, you can also create MarkUps of live websites using the MarkUp.io Chrome extension.

Once you’ve created a MarkUp containing your deliverable, you can send it over to reviewers.

Then, the reviewers can:

Pin frame and pixel-accurate comments to specific elements on your project
Record quick explanations via short Loom videos that are added to comments as clickable links
Tag team members with @mentions

Plus a lot more!

Tip #6: Implement a standardized workflow

Having a standardized creative workflow in place will save you a lot of planning time. Plus, you’ll have a tried and true method of working on certain tasks.

Workflows create predictability and a routine you, the team, and the clients can follow. This will help you shorten project approval cycles and deliver work promptly.

Go to our blog on how to master creative workflows and mark another item off your project success to-do list.

You learned about what can go wrong and how to prevent it. Now you’re properly armed and ready to fight this battle against project failure—the most feared enemy of project managers.

Over to you

Project failure can’t be prevented with a single strategy or solution. There’s an entire checklist you need to go through before starting any project. Make a “what can go wrong” list, check everything off of it, and say: