Why Projects Fail

A great deal of research has been done one why projects fail. The primary causal factors are poor leadership and low organizational maturity.

94 percent of variations observed in workers’ performance levels have nothing to do with the workers. Instead, most of the performance variations are caused by the system, of which those people are but a part. People can’t perform better than the system allows

W. Edwards Deming – The System of Profound Knowledge

At its core, every project is an exercise in managing change. Variations from planned activities, assumptions, and outcomes are not exceptions—they are inevitable. The distinguishing factor between successful and unsuccessful projects is not the absence of change, but the ability to anticipate, quantify, and manage it effectively as it occurs.

An organization’s capacity to manage change is directly tied to the strength of its leadership and its level of maturity across strategy, processes, governance, and resource alignment. Where maturity is high, change is controlled and purposeful. Where it is lacking, change becomes reactive, disruptive, and costly.

The consequences of poor change management are well documented:

• An estimated 40–50% of project effort is either rework or non–value-added activity
• Over 85% of projects exceed budget, with only 31% staying within 10% of their original budget (KPMG)
• 52% of rework is driven by poor project data and miscommunication (FMI, Construction Disconnected, 2018)

These are not isolated inefficiencies—they are systemic failures rooted in how organizations plan, communicate, and respond to change.

Organizational Maturity and Programmatic Discipline

Mature organizations do not react to change—they manage it through defined, programmatic processes. They operate within structured frameworks where projects are consistently planned, procured, and executed according to standardized methodologies.

Conversely, organizations that fail to adopt and continuously improve program-based approaches often experience:

• अस्पष्ट or poorly defined objectives
• Continuously shifting requirements
• Unrealistic schedules and budgets
• Reactive, short-term decision-making

In these environments, poor planning and ineffective change management are not symptoms—they are the norm. The result is predictable: diminished project performance and increased cost waste.

The Opportunity: Applying Change Management Fundamentals

Despite the scale of the problem, the solution is not complex. Owners, architects, engineers, and contractors could realize significant performance gains by consistently applying fundamental change management principles—what might be considered “Change Management 101.”

At a minimum, effective change management requires clarity and discipline around:

• Who can propose changes (formally and informally)
• Who evaluates the technical, cost, and schedule impacts
• Who reviews and approves changes
• How changes are implemented and communicated
• How outcomes are documented and fed back into organizational learning

These elements form the backbone of a repeatable and scalable change management process.

The Broader Challenge: Legacy Delivery Models

Traditional construction delivery methods remain largely fragmented, adversarial, and outdated. These legacy approaches inherently resist transparency, integration, and proactive change management, contributing to systemic inefficiencies and poor outcomes.

However, modern tools and services now exist that enable a more integrated approach—aligning planning, procurement, and project delivery within a unified framework. These solutions connect people, processes, data, and technology, enabling organizations to move toward more Lean, data-driven, and collaborative delivery models.

Leadership: The Root Cause and the Solution

Progress ultimately depends on leadership. Organizational resistance to change is natural, but it is leadership’s responsibility to define the vision, enforce discipline, and sustain momentum.

In practice, this means clearly communicating how programmatic improvements impact project scope, budget, and schedule—and ensuring alignment across all stakeholders, including:

• Internal teams and departments
• Owners and operators
• Architects and engineers
• Contractors and consultants

Without this alignment, even the best processes will fail.

At its root, chronic project underperformance is not a technical problem—it is a leadership problem. Conversely, organizations that prioritize leadership-driven change management consistently outperform their peers in cost, schedule, and overall project outcomes.

 

Senior  management  failure is the #1 cause of poor project outcomes. 94 percent of variations observed in workers’ performance levels have nothing to do with the workers. Instead, most of the performance variations are caused by the system, of which those people are but a part. People can’t perform better than the system allows,

W. Edwards Demming

The role of senior  management is to  prioritize and clearly communicate requirements, provide resources to efficiently accomplish those requirements,  and  make decisions in support of continuous improvement.

Mature organizations management recognize change management is essential to project success and the overall attainment of best value outcomes. 

ORGANIZATIONAL MATURITY

Research has readily demonstrated the correlation between the maturity level of an organization and project failure, i.e. excessive time spent upon change orders/rework, budget overruns, and overall client and/or participant dissatisfaction with outcomes. (2006, Gibson, et al, 1994, Haley).

There are several maturity models that describe the degree of maturity of an organization and/or associated projects. These are helpful in determining current and future levels of progress. The Berkeley PM Process, is one of these. It and others like it, strive to define and organization’s maturity and assist in improvement via a systematic and incremental approach. The various capability maturity models (CMM) can be applied to virtually any industry or market segment.

 

CHANGE MANAGEMENT

Getting an organization to do new things, to collaborate effectively internal and with other organizations, and to improve overall effectiveness is a the up to individual in leadership roles. The “people side” of the equation is the element upon which any organization succeeds for fails. Achieving buy-in form all participants and stakeholders is an ongoing process, but required in order to promote long lasting behavior change. Project rarely fail due to technical issues. It’s the non-technical items that are the root cause of most failures. Oddly, most organizations fail to address people issues and process first. Instead that focus on address problems on an ad-hoc basis, and/or attempt to throw technology at problems.

COMMON MANAGEMENT FAILURES

• Short term priorities take precedence over total cost of ownership and best value
• Failure to implement LEAN processes that require collaborative participation across multiple disciplines and groups
• Lack of continuous improvement strategy, true cost visibility and transparency
• No common data environment, including lack of locally researched detailed unit price cost data
• Poor measurement capability, improper or weak metrics

PROBLEMS CAUSED BY MANAGMENT FAILURE AND LOW ORGANIZATIONAL MATURITY

• Ill-defined roles and responsibilities
• Poor resource utilization
• Scope creep
• Poor decision-making
• Inaccurate, outdated, unverifiable information
• Poor definition of roles, responsibilities, desired outcomes
• Lost learnings/knowledge
• Poor communication

Project Management Constraints

• Time: Deadline for delivering the output
• Scope: Detailed description of required outcome
• Cost: Funds available to achieve the outcome
• Talent: People available to lead and work on the task
• Process: Associated planning, procurement, and project delivery method
• Environment: Location, climate, social….

Project Workflow

•Problem (Need) identification 

•Problem submission

•Verification of problem submission 

•Analysis of problem possible solution 

•Proposed solution approval

•Solution development 

•Problem resolution delivery 

•Approval 

•Request submission by client

•Request analysis and verification 

•Request for contractor proposal 

•Proposal review – acceptance/rejection

•Work order notice to proceed

•Execution and monitoring

•Work order closure  

Project Failure – A project becomes a failure when it does not deliver what was required within the agreed-upon budget and time, to the dissatisfaction of one or more participants.No matter how well-planned your project is, lack of visibility can lead quickly to failure. It’s essential to create a process and system that provides visibility, not just for the project manager but for all team members. Visibility includes full transparency of tasks and costs, status, clear communication, and full document management. When everyone knows the full scope and status of each project task, they can assist or adjust accordingly. It encourages proactive work and problem-solving. Document management must include version control in addition to authorized change management. Simple file sharing and email is ineffective. A centralized, digital storage place for all project documents, forms, status tracking, and authorizations, etc. enables full visibility. Systems supporting real-time notes, notifications, and “chats” support the highest level of information access, sharing, and notifications.

Project Management Statistics

Understanding Why Projects Fail

• Only 58% of organizations fully understand the value of project management, yet 93% of organizations report using standardized project management practices. (PMI)
• 68% – more than 2/3rd – of organizations outsourced or contract project managers in 2018. (PMI)
• 62% – general contractors who believe lack of coordination and communication between team members is the cause of low construction productivity
• Only 23% of organizations use standardized project management practices across the entire organization. (PMI)
• 35% of a construction professional’s time is spent on non-productive activities, including looking for project information, conflict resolution, and dealing with mistakes and rework.
• 56% of trade contractors cite poor coordination and communication as negative impact on productivity
• 68% of trade contractors claim that poor schedule management is the top contributor to low productivity
• Only 22% of organizations use a PM software. (Wellingtone)
• Only 55% of organizations don’t have access to real-time KPIs. (Wellingtone)
• 50% of organizations and people spend one or more days attempting to manually collate project information and reports. (Wellingtone)
• 70% (average) of organizations primarily use spreadsheets to manage projects. (VersionOne)
• 77% of high-performing projects use project management software.
• 66% of project managers say that they would use PM software more extensively if they had adequate support from their organization. (Hive)
• 56% of organizations that have used project management systems have only used one. (Capterra)
• 54% of of PM software being used is not cloud-based (Capterra)
• 41% of organizations with an enterprise-wide project management office report that it is highly aligned to the organization’s strategy. (PMI)
• Implementing PM solutions yields 33% improvement in projects delivered under budget, 27% improvement in customer satisfaction, 25% increase in productivity, and 25% reduction in failed projects. (PMSolutions)
• 42% of organizations noted resistant to change adopting new PM methodologies.
• Only 32% of organizations say that they’re satisfied with their current project management maturity level. (Wellingtone)
• 62% of successfully completed projects had sponsors who were actively supportive. (PMI, University of Ottawa)
• 33% of projects fail because of a lack of involvement from senior management. (PMI, University of Ottawa)
• 44% of project managers use no software, even though using commercially available PM software has been known to improve performance and project satisfaction. (PwC)
• 52% of organizations Businesses say that the biggest impact of project management was on team communication . 44% also said that it improved the quality of the final product, while 38% said that it improved customer satisfaction. (Capterra)
• Reported reasons for project failure – changes in priorities – 76% (39%, objectives 37%)
• Poor scope of work / inadequate vision – 64%
• Poor communication – 29%
• 2.5% of companies completed 100% of projects successfully (met original goals, budget or deadlines. (PWC)
• 80% of respondentssaid that they spend half their time on rework. (Geneca)
• 55% of people involved in projects – team leaders and project managers – feel that the project’s business objectives are clear to them. (Geneca)
• 80% also feel that the requirements process doesn’t articulate the needs of the business. (Geneca)
• 76% of users say they are either “very satisfied” or “satisfied” with their decision to use project management software. (Capterra)
• 64% and 67% of projects with high maturity of PM processes are delivered on time and within budget, respectively. The equivalent figures for low-maturity organizations are just 36% and 43%. (PMI)
• 83% of high-performance organizations made an ongoing investment in project manager training. 77% of such organizations have formal processes to develop PM competency. (PMI)

It is possible to discriminate between healthy and failing projects prior to failure before the project execution phase in the capital facility delivery process.

Chen et al

 Symptoms of Poor Leadership and Process Failure

• Project leader/manager inexperience
• Poor communication
• Poor project oversight
• Vendor/service provider relationship issues
• Poor quality
• Lack of financial visibility/transparency
• Poor resource allocation
• Inaccurate budgeting and/or project estimates
• Design or scope of work issues
• Excessive change orders/rework
• Poor site management
• Wrong team members

Project Failure – Discrete Causal Factors

 

Causes related to human resource capability

1. Excessive overtime
2. An insufficient manpower skill level
3. Inadequate coordination &integration
4. Insufficient training and skill development
5. Disturbances in personnel planning
6. Lack of employee motivation and rewords
7. The absence of job security Added (pilot study)
8. Unclear line of authority and responsibility Added (pilot study)
9. Personnel attitude (personnel issues) Added (pilot study)
10. Conflict of interest Added (pilot study)
11. Lack of safety and welfare commitment
12. Poor communication system
13. Ineffective management and decision-making
14. Failure to implement Quality management
    practices
15. Causes related to construction process
16. Lack of Audit and control
17. Schedule pressures
18. Late designer input
19. Constructability problems
20. Inadequate pre-project planning
21. Non-compliance with specification
22. Unclear work specification
23. Inadequate supervision
24. Poor project document
25. Rigidity to improvement Added (pilot study)
26. Absence of clear uniform standard to accept
    work Added (pilot study)
    Causes related to materials and equipment supply
27. Untimely deliveries
28. Non-compliance with specification
29. Materials not in right place when needed
30. Pre-Fabrication not to project requirement
31. Emergency conditions (siege and closures) Added (pilot study)
32. Adulterated materials Added (pilot study)
33. Invalidity of needed tests Added (pilot study)
    Client-related causes
34. Lack of knowledge of construction process
35. Inadequate briefing
36. Lack of funding allocated for consultation Added (pilot study)
37. Changes because of change in officials Added (pilot study)
    Design-related causes
38. Lack of professionalism
39. Inadequate procurement methods
40. Poor project document
41. Design errors and omission
42. Competitive/ low design fees
43. Incomplete information for design
44. Incomplete design Added (pilot study)
    Contractor-related causes
45. Poor quality system
46. Misreading of drawings and specifications
47. Competitive pressure / low contract value
48. Attempts to fraud Added (pilot study)
49. Unqualified technically Added (pilot study)
50. Financial weakness (Phantom cash flow) Added (pilot study)
    External environment related causes
51. Government (Regulations, taxes. Interest rates)
52. Economy (Inflation, exchange rates, market
    Social (Changing social environment,
    resistances
53. Technological (techniques, facilities,
    machines)
54. Inadequate local education
    (Collectors – craftsman – technical)
55. Physical conditions (Infrastructure,
    transportation, etc)
56. Acts of God/Force Major (Weather, disaster)
57. Political situation (Siege- conflicts) Added (pilot study)

 

SOLUTION

1. Improved real property owner leadership, capacity, and accountability.
2. Focus upon People, Process, Information, then enabling Technology   
3. Understand the most “failures” track back to preconstruction.
4. Ensure full technical and cost visibility, leverage objective, verifiable, current, and locally researched granular cost data organized using expanded CSI MasterFormat.
5. Recognize that the organization has many internal and external interrelated connections and interactions instead of looking at each department as an isolated silo.
6. Follow the chain back to the source of the problem when running into a reoccurring issue. Do tests along the way to confirm.
7. Focus on driving long-term results instead of fixating on isolated events.
8. Implement a programmatic, process-centric approach in lieu of an ad-hoc project-based approach.

Real property owners should demand high quality project management and procedurally-mature organizations as they choose their service providers. In doing so, owners will be displaying appropriate leadership as well as stewardship of the built environment.

Project management is changing, and it’s changing fast. New tools, techniques, processes, and frameworks are disrupting entrenched players and undoing long-held beliefs.

Definitions

I) Project Mission-Initial clearly defined goals and general directions.
2) Top Management Support-Willingness of top management to
provide the necessary resources and authority /power for project success.
3) Project Schedule/Plan-A detailed specification of the individual
action steps for project implementation.
4) Client Consultation-Communication, consultation, and active
listening to all impacted parties.
Personnel-Recruitment, selection, and training of the necessary
personnel for the project team.
6) Technical Tasks- Availability of the required technology and
expertise to accomplish the specific technical action steps.
7) Client Acceptance-The act of “selling” the final project to its
ultimate intended users.
8) Monitoring and Feedback-Timely provision of comprehensive
control information at each stage in the implementation process.
9) Communication-The provision of an appropriate network and
necessary data to all key actors in the project implementation.
Trouble-shooting-Ability to handle unexpected crises and deviations from plan.

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