Introduction
Nuldén (1996) equates information technology projects with a boring movie; after viewing it for more than one and a half hours, one still attempts to complete it even though they know that it is an absolute waste of time. The same situation occurs with information technology projects. In most cases, the amount of money already used up by the project, together with other factors, can influence managers and other stakeholders into continuing to fund a failing project (Nulden, 1996).
Keil et al. (2000) discovered that around thirty percent
and forty percent of all information systems projects show some level of
escalation. Escalation is a costly and prevalent issue among IT projects. No
matter what brings about the failure, escalation behavior undertakes the
the underlying function of producing other serious decision-scenarios for the
information technology project.
Question One
Issues to be dealt with
1.
Project cost overruns
The leading cause of project cost overruns is optimism
bias. Optimism bias entails the problem of estimation bias arising from being excessively
optimistic about the prospect of an information technology project regarding
time and cost. In infrastructure project planning, it implies the tendency to
overate the project’s completion time while miscalculating the risks of the
project and project costs. In the case of Denver International Airport, the
project was approximated to cost 175.6 million dollars. By February 1995, the
project had already consumed an extra 2 billion dollars and was sixteen months
behind schedule. They had to give up on the project, and in its place, they
employed a manual baggage handling system.
The Taurus project also faced similar project cost
overruns. In the beginning, the project was approximated to cost 6 million
dollars and take three years to complete. By 1988, the complexity and scope of
the system increased. Cost estimated to complete the project had risen to 60
million dollars pounds. In-house development was denied so as not to hire more
workers.
2.
Technical Issues
In the DIA project, challenges with the baggage system
prevented them from launching on time. In 1994, BAE carried out its first test.
So many issues were detected that the trial had to be stopped. To handle this
issue, Wellington Webb, Denver’s mayor, postponed the opening of the airport to
an unknown date. The Taurus project, on the other hand, also faced technical
issues. When the development process progressed, many problems arose. They
mitigated this issue by opting for packaged software.
3.
Changing requirements.
In the beginning, the DIA project plan did not include an
airport-wide baggage-handling system. Individual airlines were supposed to
develop their systems. The project managers only realized its importance in
- They had to change their requirements and later developed a system that
incorporated both. In the case of Taurus, there were several concerns from the
stakeholders involved. The Security Industry Steering Committee played a
crucial role in developing a new design that was satisfactory to all
stakeholders. The end design integrated the numerous options and bore great
complexity.
4.
Institutionalization
Projects have a higher chance of escalating when plans
are institutionalized and when there is strong political backing. In the Denver
International Airport case, the Denver mayor, had shown full commitment to the
project. Eventually, after so many problems arose during the testing, he
withdrew his commitment. He even went ahead to postpone the opening of the
airport.
In the Taurus project, Rawlins had raised his concerns
with the leading members of the banking community and the exchange chairman.
From the moment he was hired, he had been doubtful about the prospects of the
project and the direction it was taking. However, there was nothing he could do
to redirect or stop it as it had “taken on a life of its own.” In the end, Webb
had to deny more funding and resources to put a stop to the project.
Question Two
What could have been included in the processes to evade
damage control afterward
1.
Feasible cost estimates
Cost estimation is a vital process in an information
technology project and is one common reason for project cost overruns. If cost
is calculated based on inexperienced or unqualified personnel or of a hunch,
then the project is unpredictably going to incur budget project cost overruns.
Although this might look okay in the first stages of the project, it usually
seems unrealistic in the latter stages (Noorani, 2016).
Both the Denver International Airport project and the
The Taurus project had cost overruns. For instance, in the case of DIA, they incurred
one million per day for the cost of delay and ended up 2 billion dollars over
budget. Similarly, the Taurus project cost estimation increase by the factor of
ten. From an estimation of 6 million pounds in 1986 to a cost estimation of 60
million pounds in 1988.
To have a feasible cost estimate, the two
should have sought assistance from subject matter professionals and expert
staff members while coming up with the cost estimates of the projects. Also,
achieving this would require breaking down the work into smaller divisions to
come up with detailed design requirements. Basing estimates on high-level
requirements can lead to cost overruns, as seen in the case of Taurus.
2.
Backup plan
A backup plan is very crucial to any project. When a
problem arises, lacking a backup plan leads to project cost overruns even with
the slightest delay in the schedule, as seen in the DIA and Taurus cases. In
both, they would not have dealt with the costs of further delays if they had a
backup plan.
Question Three
Lessoned Learned
1.
Reduce uncertainty
In both cases, decision-makers functioned in some form of
an information vacuum. Most of them did not have data, which would have
assisted in determining whether it is feasible to continue with the previous
course of action. Every organization should establish numerous communication
systems to minimize uncertainty in the work environment. Managed and structured
communication can guarantee decreased uncertainty and, therefore, fewer chances
of escalation.
2.
Avoid runway projects.
Organizations and people have become overcommitted to
failing projects resulting in escalation scenarios. Most studies state that
escalation as a cause of information technology project failures is given
little attention in both practice and risk management literature. Escalation mostly
takes place when decision-makers need to defend their past behavior, and when
internal politics and organizational inertia unite to hinder a project from
being shut down, as seen in both DIA and Taurus cases. Organizations should put
in place formal techniques to monitor the progress of projects. What’s more,
intense project audits must be undertaken to evaluate the progress of projects.
Conclusion
Due to the costly and persistent problem of escalating
information technology projects, it is crucial to comprehend how projects can
be de-escalated effectively, leading to project turnaround if feasible, or
termination if essential (Keil, Mahring, Mathiassen, & Pries-Heje, 2008).
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