Why the Average Cost Overrun doesn’t tell the whole story
This will be my last (short) blog for the time being and I will discuss an interesting old article I found on MIT Technology Review posted in 2013. It’s about how a bad IT project can bring down an entire corporation. One of the things mentioned in this article is the fact that companies use the ‘Average Cost Overrun’ as an indicator of how much money has been spent on average all ready on a project that already should have been finished.
According to the article, based on scientific research, this cost specification does not do justice for IT projects because many companies experience way higher costs overruns than the average IT project cost overruns, both in public and private sector. Apparently the average cost overrun is around 27%, but the researchers came across projects that had costs overruns of around 200%.
The reason for these cost overruns is apparently due to excessive overages that come with certain IT projects. Based on my personal experience, I personally interpret this as, acquiring systems that are marketed as ‘future proof’ to the company and buy way too expensive equipment, which barely anyone uses at full capacity. Or, software that is required to do a thousand things but only 10 features are actually used, but the project would pay for all the thousand features. And the list goes on.
I hope more research is done in the future on how we can mitigate unnecessary expensive IT projects and that new tools are created so that we can be much more aware of how we manage these projects and getting what we need without the excessive costs.