New research suggests one in six IT projects run three times over budget. Keeping expectations realistic might avoid this.
A study that came out last week was about IT projects breaking their budgets (see
this and
this). According to the research, in a sample of 1,471 large-scale IT projects, they ran on average 27% over budget, but the headline-grabber was then observation that one in six projects go three times over budget. The researchers have named these projects “black swans”, and blames managers for failing to account for low-probability high-cost risks in big IT projects. To the more cynical IT professionals, this is nothing unexpected. It’s not hard for a software tester to witness at least one project like this – failing that, you don’t have to look far for the
latest story about the notorious NHS IT system.
What was interesting, however, was the reference to the
Black Swan theory. This phrase was originally coined by Lebanese-American essayist Nassim Nicholas Taleb. There’s a whole book about this, but the basic idea was that there was a time when it was believed all swans were white. No-one had ever seen a swan in any other colour, so no-one gave serious thought to this possibility. Then Dutch explorer William de Vlamingh went to Australia and discovered that some swans are black, fundamentally changing how people saw swans. And in hindsight, it was nonsensical to assume swans could never be that colour just because you hadn’t seen one before. Taleb used this analogy for all sorts of events: he suggested, amongst other things, the
attack on the World Trade Center and
the Credit Crunch could be considered “black swan events” – both unexpected at the time, both easy to rationalise now.