Over-budget IT projects need structural remedy, says expert

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.

When actually conducting a project, Barker said that a company must ensure that the contract itself is being followed. "Instead of putting the contract in a dusty drawer and getting on with the delivery on a practical level, get on with the delivery but keep one eye very firmly on what the contract says and work to the contract."

If disputes and cost or time over-runs do occur, Barker recommends again sticking very closely to what procedures are laid down in the contract. This will usually involve three levels of escalation up the management chain, depending on the seriousness of the dispute. Only the most serious problems will be sent to the customer and supplier chief executives to resolve, he said.

"It is surprising how many times people will sort out an issue before they go to their chief executive and say 'here's something for you to sort out'," he said.

Though formal dispute resolution, arbitration and litigation are available to the two sides in the dispute, Barker said that this was rarely a good idea while a contract was actually ongoing. "Ultimately you can go to court but at that point the chances of the project reaching a happy conclusion are pretty low," he said. "Projects really do depend on goodwill on the ground."