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Over-budget IT projects need structural remedy, says expert

Over-budget IT projects need structural remedy, says expert
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CA has published a survey of 100 IT directors which showed that executives in charge of large projects feel that they do not have sufficient control over them and that they often are not even sure what stage the project has reached. The survey found that a typical company is running 29 projects at any one time.

David Barker, an outsourcing specialist at Pinsent Masons, the law firm behind OUT-LAW.COM, said that companies should consider restructuring their deals to deal with the principal problem in large IT projects.

"The first problem is to tie down at the start exactly what it is that is going to be delivered," said Barker. "An IT solution is an intangible thing, and very often the people in procurement are not the people who will be using it on the ground."

Barker said that suppliers will want to race through the process of specification of a system because it is generally part of the tendering process, and so done for free with no guarantee of work at the end of it. "They will want to get as quickly as possible to the part where the clock is running," he said.

"A structural way to solve this is to create two distinct phases to the project. One is project definition, where you actually pay someone to do this, to design an appropriate solution so that the scope of it doesn't keep growing throughout the project," he said. "You could spend 10% to 15% of your project budget on this phase, but you know what you need and you have a document of that."

Barker said that a company could choose to use whoever produced the specification for the project itself, or in order to guard against the specification being constructed to be the most profitable, rather than the best, plan, the company could exclude the supplier which produced the project plan from building the system itself.

Team Outlaw

Posted by Team Outlaw on 17 Sept. 2007

This article was contributed by OUT-LAW.COM, part of international law firm Pinsent Masons. See http://www.out-law.com for further details.

Tags: Economics, Management