Why Your IT Project Might Be Riskier Than You Think

By Bent Flyvbjerg, Alexander Budzier. 2013

318 citations recorded by the source corpus.

Out-of-control information technology (IT) projects have ended the careers of top managers, such as EADS CEO Noel Forgeard and Levi Strauss' CIO David Bergen. Moreover, IT projects have brought down whole companies, like Kmart in the US and Auto Windscreen in the UK. Software and other IT is now such an integral part of most business processes and products that CEOs must know their IT risks, which are typically substantial and overlooked. The analysis of a sample of 1,471 IT projects showed that the average cost overrun was 27% - but that figure masks a far more alarming 'fat tail' risk. Fully one in six of the projects in the sample was a Black Swan, with a cost overrun of 200%, on average, and a schedule overrun of almost 70%. This highlights the true pitfall of IT change initiatives: It's not that they're particularly prone to high cost overruns on average - it is that there are a disproportionate number of Black Swans. By focusing on averages instead of the more damaging outliers, most managers and consultants have been missing the real risk in doing IT. In conclusion, the article outlines ideas as to what can be done to avoid Black Swans.

Subfields: Management Information Systems, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/98d35263882119c91786dab26ca18f641c7603f6

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Management Information Systems

1. Bent Flyvbjerg
2. Agung Wahyudi
3. Haiko Van Der Voort
4. Marijn Janssen

In Strategy and Management

1. Bent Flyvbjerg
2. A. Ansar
3. Daniel Lunn
4. Alexander Budzier
5. Haiko Van Der Voort
6. Marijn Janssen
7. Bert van Wee

Citations in the corpus

• Top Ten Behavioral Biases in Project Management: An Overview (2021, methodology): “This interpretation is supported by research on IT project management reported in Flyvbjerg and Budzier (2011), Budzier and Flyvbjerg (2013), and Budzier (2014).”
• What you Should Know about Megaprojects and Why: An Overview (2014, background): “At Kmart, a large U.S. retailer, the entire company went bankrupt when a new multibillion-dollar ICT enterprise system, which was supposed to make Kmart competitive with Walmart and Target, went off the rails (Flyvbjerg & Budzier, 2011).”
• Should We Build More Large Dams? The Actual Costs of Hydropower Megaproject Development (2014, background): “Material information about risks, for example, related to geology, prices of imports, exchange rates, wages, interest rates, sovereign debt, environment, only reveal in future shaping episode to which decision-makers are “blind” ex ante (Flyvbjerg and Budzier, 2011).”
• Factors influencing big data decision-making quality (2017, background): “A single case study can contribute to scientific development through a deep understanding of the context and by capturing experiences (Flyvbjerg & Budzier, 2011).”