Do you regularly see overspend and under delivery in your change projects? If so, you’re certainly not alone.
Research conducted on over 5,400 projects by the University of Oxford showed that, on average, large IT projects run 45% over budget while delivering 56% less value than predicted.
Among the causes, the research cites outdated approaches such as manual project reporting, along with process-driven cultures where outcomes aren’t clearly linked to business objectives.
But what might that look like in real monetary terms for your business?
Try our project waste calculators
We’ve built our calculators around known statistics relating to manual processes and under-delivery of projects.
You can try the calculators on the ‘Why Sharktower?’ page. But if you want to know how we created them, here’s a bit more about the calculations.
Manual reporting waste calculator
We typically hear that those running projects can spend up to 30% of their time on manual reporting.
Yep, that’s almost a third of their working hours. And it adds up.
If a business has 50 people working full-time on project management (earning an average salary of £45k) plus an additional 20 contractors on an average day rate of £750 working 200 days/year, that amounts to £5.25million per year on PM/PMO resource.
And if that team spends 30% of its time on manual reporting, that amounts to a staggering £1,575,000. For a business spending £20million a year on change, that’s 8% of the total.
Project delivery waste calculator
On average, large IT projects run 45% over budget, and half deliver 56% less value than predicted.
OK, if you’re involved in delivery, you were probably aware of this already (or at least something that looks like it).
The calculation for this one is a bit trickier, but here’s how it might look in real terms:
First, let’s talk about the overrun (the ‘45% over budget’ bit). If a business has a £20million change budget (£1,666,667 per month) and each delayed project runs over by an average of 2 months, that overrun is going to cost £3.33million.
And if that’s happening to 45% of projects, that’s £1.5million per year!
Now let’s look at the ‘56% less value’ part. Assuming the same £20million change spend and an internal rate of return of 3x (in other words, for the business case to be approved, it calls for a 3x return on the cost of the project).
So, each year the expected benefit from the investment is £60m. Assuming all projects can be treated equally (which is obviously an approximation), if half of those projects (£30million) deliver 56% less value, that’s a whopping £16.8million of potential benefit.
Calculate the waste in your business
Introducing an intelligent delivery system like Sharktower can help shift your business to a data-driven culture, with real-time reporting and predictive AI project management models to help teams highlight risks and issues before they have an impact on delivery.