Project or Program Failure and Organization Reputation

Abstract

Organizations undertake project or programs development in order to meet certain needs of their businesses. These projects do not always become a success as they fail to meet the expected outcomes and in the expected quality. Projects and program failures have negative impacts on the reputation of an organization. There are several factors that lead to the failure of such projects, such as lack of a clear link between the project or program and the organization’s key strategic priorities; lack of effective involvement with the right stakeholders who should be identified, and the rationale for doing this identified too; when attention was not given to breaking development and implementation into manageable steps among others. This may result in impacts on organizations such as failure to comply with legal or regulatory requirements, loss of trading licenses, public scrutiny through the media, and in public organizations, a lot of public criticism and inconveniences in service delivery. There is a need, therefore, to study the impacts of project failure on an organization’s reputation, which was the objective of this study. The methodology used is a case study where documented information on this case was reviewed. The study found out that public outcry, criticism, and negative press; inconveniences in services delivery; loss of customer confidence and money are some of the impacts of project failure in organizations. It also recommends a number of measures such as the use of small and value delivering consultancy firms, clear vision, and involvement of top executives.

Introduction

‘The purest treasure mortal times can afford is a spotless reputation,’ William Shakespeare wrote (Laszlo, (1999). Projects and program failures have a negative impact on the reputation of an organization. According to Bowenkamp & Kleiner (1987), a project is a distinct and compound set of harmonized activities undertaken with clear-cut starting and finishing points by an organization to meet specified objectives within a specific time. He continues to say that it has a defined lifespan, measurable outcomes, organizational structure, defined amount of resources, and a corresponding set of activities. A program, on the other hand, is a system of projects that are designed to meet a certain need in an organization. Project or program failure is when there was no actual realization of the expected outcomes and in the expected quality. A study by the Standish Group (US) in 2003 showed that 60% of IT projects undertaken either totally abandoned or fall against a measure of budget, scope, time, or quality (Barber & Warner, 2005). The same study also estimated that the cost of abandoned or failing IT projects in the United States of America alone run into hundreds of billions of dollars. Common causes of project or program failure include lack of a clear link between the project or program and the organization’s key strategic priorities; lack of effective involvement with the right stakeholders who should be identified and the rationale for doing this identified too; when attention was not given to breaking development and implementation into manageable steps; Proposals driven by the initial price rather than the long-term value for money. Lack of effective bonding between clients, suppliers, and supply chain and the project team leading to failure to make a market evaluation also leads to project failure (Bowenkamp & Kleiner, 1987). One or a combination of these factors may lead to project failure.

Impacts of failure of projects and programs on the reputation of the company include the imposition of business fines, suspension, public admonishment and/or parliamentary inquiry, loss of trading licenses, inconvenience in service delivery, negative press, and even firing of involved staff.

Statement of the problem

In spite of all the negative effects of project failure on the reputation of organizations, the organizations discussed in this paper continued to face a number of issues such as criticism from the public, negative press, and inconveniences due to collapsed systems. This study, therefore, is designed to explore the impacts of Projects or program failure on the reputation and image of an organization, find out whether transformational and leadership in the management of organizations enhances handling its reputation in the event of failure.

Research questions

1. What causes project or program failure?
2. What are the Impacts of project failure on the reputation of an organization?
3. Does transformational and leadership in the management of organizations enhance to handle its reputation in the event of a failure?
4. What are the problems and/ or opportunities for enhancing reputation after project or program failure?

Objectives of the study

The study aims to:

1. To explore the impacts of Projects or program failure on the reputation and image of the company.
2. Find out whether transformational and leadership in the management of organizations enhance handling its reputation in the event of failure.
3. Find out problems and/ or opportunities within the study environment for enhancing reputation after project or program failure.

Research premises

The study assumes that:

1. Project or program failure affects the reputation and image of the company.
2. Transformational and leadership in the management of organizations can enhance it to handle its reputation in the event of project or program failure.
3. There exist problems and/ or opportunities for enhancing reputation after project or program failure.

Justification of the study

The study is necessary as project failure has a long history where companies big or small, public or private, profit-making or non-governmental, are affected. It is therefore important to study how this failure affects company reputation in order to be prepared on how to deal with them because the image is important.

The study will also add to the poll of knowledge on the subject of project failure and the organization’s reputation.

Literature review

A project is a distinct and compound set of harmonized activities undertaken with clear-cut starting and finishing points by an organization to meet specified objectives within a specific time frame. It is characterized by a definite lifespan, measurable products, organizational arrangement, a set amount of resources, and a matching set of activities, according to Orwig & Brennan (2000).

Project management is a merging of the roles and responsibilities of individuals assigned to the project, the organizational structures put in place in the project, and the laid down processes to achieve the set objectives. This is important because it helps to guide the undertaking since the responsibilities and accountabilities of individuals are outlined and the process clearly documented and repeatable. The type of projects determines the approach of project management to use (Longman & Mullins, 2004). A program is a system of projects that are designed to meet a certain need in an organization.

Project or program failure is when there was no actual realization of the expected outcomes and in the expected quality. A study by the Standish Group (US) in 2003 showed that 60% of IT projects undertaken either totally abandoned or fall against a measure of budget, scope, time, or quality (Barber & Warner, 2005). The study also estimated that the cost of abandoned or failing IT projects in the United States of America alone run into hundreds of billions of dollars. In a study by Barbaro (2006), an IT project by the state of Washington License Application Mitigation Project (LAMP) was abandoned in March 1997, which was aimed at automating the state’s vehicle registration and license renewal processes. The project was initially budgeted at $16 million, which then went up to $41.8 million in 1992 and $51 million in 1993, and $67.5 million in 1997. It was clear that the project was a time-waster, and calculations estimated it would have cost $4.2 million to run annually more than the current one, which cost $800,000 per year. Moreover, it would have been much too big and obsolete to run by the time it was finished.

Common causes of project failure

According to Razgui (2007), the lack of a clear link between the project or program and the organization’s key strategic priorities is a major cause of project failure. Those designing the project fail to define critical success factors (CSFs) for the project, which should be agreed upon by suppliers and stakeholders. They also fail to design a plan that covers the whole period of the planned delivery, changes required in the business, and the means of benefits realization. Lack of effective involvement with the right stakeholders who should be identified and the rationale for doing this identified too is another cause of project failure. Inadequate skills and experience in project and risk management by the project team. These are not exposed to areas of systems for measuring and tracking the realization of benefits and therefore fail to point out the major risks, weighed and planned for by the whole project team.

Projects or programs may fail in projects where attention was not given to breaking development and implementation into manageable steps (Seanor & Meaton, 2008). Details such as testing the approach; keeping delivery timescales short, and building review points in the project so as to stop If circumstances change to the effect that the desired benefits can no longer be achieved or do not represent the value for money; Proposals driven by the initial price rather than the long term value for money; and lack effective bonding between clients, supplier, and supply chain and the project team due to failure to make a market evaluation.

Impacts of project failure on organizations reputation

Project failure may lead to non-compliance with legal or regulatory requirements that may attract business fines, suspension, public admonishment and/or parliamentary inquiry, loss of trading licenses, for instance, Citigroup, Japan which lost trading license due to failure to comply with legal and regulatory requirements and caused inconveniences to clients (Yatim, Bredillet, & Ruiz, 2009); public scrutiny through the media especially, if the press coverage is negative.

In the case of public organizations, where universal acceptance of the projects is required, failure creates a lot of public criticism and loss of confidence, and citizens can force the organizations not to invest in such projects as they use their taxpayers’ money. For instance, In 1993, the Oregon Department of Motor Vehicle project to automate its operation, which resulted in the killing of the same in 1996 after being a total failure and consuming $123 million. The public outcry was great and led to the sacking of the project officials (Kutsch, 2008). Such cases will be published, documented, and quantified, which further damages the reputation of organizations.

Adverse effects on customer base as failed projects inconvenience service delivery. In 2008, a large British food business canceled a project which had cost US$ 526 million to automate its supply chain management system. This led to their commodities being jammed in their stores and warehouses and not being able to reach most of their stores. The company incurred extra costs as it had to hire 3000 more workers to stock their goods manually on the shelves (Greyser, 2009).

Transformational and leadership in the management of an organization can enhance it to handle its reputation in the event of failure. A case in the study on how leadership builds a business’s reputation is that of Haas Levi, then chairman of corporate social responsibility in Avon international. In 1982, the mysterious AIDS virus was seriously affecting the gay community in San Francisco, there were a lot of stigmas associated with the disease, and lower-level employees of Avon wanted to distribute fliers to create awareness on the disease in the company but were afraid of being stigmatized. Haas and other top executives run an information desk and distributed fliers. From there, the company foundation became involved in the AIDS campaign (Benn, (2007). Another example was that of Citigroup in Japan when it lost its private banking license due to legal and regulatory misdeeds where it faced public admonishment and loss of trust. To mend its reputation, Citigroup’s CEO apologized to the public and promised to take the necessary steps to conduct business properly (Greyser, 2009).

Discussion

In this study, attention is given to public failed information technology (IT) projects and programs.

ContactPoint was a 244 million pound online database project which was being developed by the Department for Children, Schools and Families (DCSF), United Kingdom, to hold details of 11 million children and teenagers. Ahmed (2009) reported that the program, which was intended to improve children protection, was canceled in March 2009 after major flaws in the security systems for shielding details of an estimated 55,000 vulnerable children victims of domestic violence, children of the rich and famous, children under witness protection program and those in difficult adoptions. The system was to include the age, sex, name of the children at risk from computer records obtainable to 400,000 children’s provision staff who had contact with the files. It did not always work as shielding disappeared every time the database was updated (Ross, 2009).

Causes of the problem

This was caused by a lack of qualified and experienced IT workers who could have detected unqualified consultants or obsolete technology as most of the department workers had gone to work for the private sector and especially the company engaged as consultants for this project.

The use of the methodologies that were passed by time was another problem. Moreover, the engineers did not prioritize the most important outcome of the project, which was security.

The result of this failure was a dented public confidence since it was associated with controversy since its inception in 2003. This brought a lot of attention to the government’s other failed projects, further affecting confidence. Ross (2009) establishes that a report by Joseph Rowntree Reform Trust this year reported that most government databases have significant problems which may be unlawful and that ContactPoint failure was an indicator of a wider problem.

Public outrage was another impact of the project. Failure to shield the vulnerable children where citizens felt that trusting the 400,000 workers not to abuse this database was sheer recklessness on the side of the DSCF whilst it was clear that the system would have been of great benefit to combat children abuse by enabling the children services providers to communicate quickly in time of urgency to save children in dangerous situations.

In the United States of America, the Oregon Department of Motor Vehicles started a five-year $50 million project to computerize its procedures in 1993. This was to help the department save $7.5 million by cutting its labor force by one-fifth. By 1995, the project decommissioning date was pushed to 2001, and the budget was estimated to be $123 million. During the testing in 1996, it was discovered that the project was a complete failure. The public cried foul, and in response, the department of motor vehicle officers overseeing the project was fired. (Vidal & Marle, 2008).

Discussion of the selected issue in relation to case example

It is clear in the examples above the major issue in project failure is project management or lack of it. Projects are at risk of running out of time, budget, or expected outcomes, and therefore, good project management is required to eliminate the risk. It puts a structure where the chain of accountability is short, and individuals responsibilities are defined, and the processes of the project are put in writing to provide guidance and learning experiences. Such large public projects where millions of dollars are used should adopt management methodologies such as PRINCE2 (Ross, 2009).

Public organizations should also engage qualified consultants to develop their projects and also hire qualified personnel in order to deliver up-to-date technologies. In ContactPoint, the critical system of security should have been detected and resolved earlier during system design and test by the engineers.

Opportunities within the project environment

One of the major opportunities within the public project or program environment is that public projects are funded by the government, and therefore funds are not as limited as in the private sector.

Public projects also have a wider stakeholder base, and therefore knowledge pool is larger, which can be utilized to minimize chances of failure, and when projects go wrong, blame is also shared.

Recommendations

Public organizations should make sure that when hiring consultants, properly skilled people are hired who deliver quality projects. In this case, small firms that deliver the expected outcomes on time should be given an equal chance with big firms.

The public officials charged with project or program development should have the attention of the highest management level. This is because the changes desired will affect the whole organization.

Stakeholders’ management is important. They should be kept engaged throughout the project cycle through project boards where their input is considered and conflicting objectives resolved.

Roles and responsibilities should be clearly defined, such as decision-making roles, sponsorship, ownership, project management, and project team. This ensures that people concentrate on their roles for smooth running.

Project managers should have a clear line of reporting and decision-making. This way, he is able to build links between technologists and top management through communication.

The clear vision of what is to be achieved and well-defined scope and understood and agreed with outcomes of the project. It is also important to outline what not to do at the begriming of the project. The outcomes of public projects must be agreed upon with stakeholders or their representatives. These should be prioritized as one project can not meet all the expectations in order of functionality, technicality, and usability.

Conclusion

Project failure knows no boundaries; it can occur in any organization, big or small, public or private, and without regard to reputation or status. Companies should be bold enough to manage their projects well, and if they fail, they should take measures to protect their reputation. The silence when things go wrong should never be an option as this pushes the company out of the debate table and also is interpreted by the public as arrogance which is not good for the image. They should come up with an explanation good for the public and even apologize for inconveniences experienced by their customers, suppliers, and the general public.

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