Project Management: Analysis of Project Failures and Solutions

This report examines project failures, defining failure based on scope, schedule, finance, risk, and quality. It uses case studies like the Aqua project, Denver International Airport, FoxMeyer Pharmaceuticals, and Novopay to illustrate common themes. Key factors include lack of scope definition, inaccurate cost estimation, poor communication, and disregard for warning signs. The Aqua project faced land acquisition issues, the airport suffered from automation problems and cost overruns, FoxMeyer experienced ERP implementation failures, and Novopay had software bugs and communication issues. The report analyzes these themes, emphasizing the importance of communication, stakeholder involvement, and proactive risk management to avoid project failures. It highlights how these failures stem from issues like incomplete scope definitions, cost estimation errors, communication breakdowns, and ignoring project warning signs. The report concludes by stressing the need for effective project management practices to ensure project success.

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Project Management
Why Projects May Fail and What to Do About it ?

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Table of Contents
Introduction................................................................................................................................................3
Description of cases...................................................................................................................................3
Common themes........................................................................................................................................5
Conclusion.................................................................................................................................................6
References list............................................................................................................................................6

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Introduction
In terms of definition, A project is regarded as a failure when, in line with
expectations, it has not achieved what was expected. People's criteria for measuring
project failures vary in detail, but in general scope, schedule, financial, risk, and
quality are the main aspects that need to be considered to define project failure. For
any given project, the scope can be used to determine whether a project is complete.
(Diana, 2010) And we consider that Lack of scope definition is the standard for
judging failure through scope and it is also Common themes of failure. Both the
Novopay project and the Denver international airport project have very incomplete
definitions of scope, which is one of the main reasons for the failure of these projects.
In addition, the financial aspect is also the most recognized factor for the failure of the
evaluation project. Money is an issue for most companies and is one of the few
measures that can be a big indicator or cause of failure. (Diana, 2010). We realize that
Inaccurate cost estimation is the main factor of Aqua project's and Foxmeyer project's
failure. After that, Risk is a good measurement to determine the possibility of failure
or other bad situations. (Diana, 2010). Besides that, Risk is a great predictor to assess
the probability of failure or certain terrible conditions, so it is a nice view into the
performance of a project from the viewpoint of management. Moreover, the quality
will also be a significant key element in a project's performance. Quality defects have
a direct impact on the reputation of the product, and a high defect rate can lead to
large scale re-production which higher costs. In addition to the previously mentioned
points, Lack of communication and Disregard of project warning signs were also
major factors in the failure of Novopay and Foxmyer respectively.
Description of cases
The Aqua Project, a hydroelectric power scheme announced by Meridian Energy Ltd
in April 2001. The project intends to transfer 73 percent of the mean flow of the lower
Waitaki River to a 60-kilometre-long, 80-metre-wide, 7-metre-deep canal containing
six power stations, before returning to the river 6 kilometres above its mouth. The
project is expected to generate 3,200 GWh per year, enough to meet 8 percent of New
Zealand's energy needs, and Meridian Energy Ltd. claims that without the Aqua
hydroelectric project, New Zealand would not be able to meet its growing energy
needs for several years and its economic base and well-being would be threatened
(Singh-Ladhar, 2020). The construction of the canal requires a certain amount of land
and Meridian Energy Ltd is required to purchase certain private land. However, some
landowners were unwilling to sell their land or seeking exorbitant prices, and
Meridian Energy Ltd stated that by September 2002, it had been unsuccessful in
acquiring 43 percent of the private property required for the project. One of the
Government's solutions to pursue the project was to enact regulations that would give
Meridian Energy Ltd the opportunity to apply for requiring authority status under the
RMA to compulsorily acquire the private land it needed. At the same time, about 60
groups and individuals around the canal have applied for water rights on the lower
Waitaki River in order not to lose the economic benefits that come with irrigation. In
August 2003, the Government introduced the Waitaki Bill on water allocation. Much
of the commentary opposed this special legislation on the Waitaki Bill, arguing that it

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would set a precedent for bypassing the RMA in the future and will do no good to
encourage the Government to fulfil its duties under the RMA. On March 29, 2004,
Meridian announced that they would discontinue the development of the Aqua project
and would not proceed with it.
Denver International Airport is the largest airport in the United States, and its
unique location makes it a hub for multiple airlines and connecting flights. Thus,
between 1929 and 1995, residents and officials of the City of Denver and surrounding
counties voted to build a new airport. New Denver International Airport was slated to
fully automate baggage handling, but mechanical and software problems with the
baggage handling system left the newly built airport idle for 16 months. At the same
time, the total cost of the new Denver International Airport exceeded $4.8 billion, $1
billion more than the total cost of the airport as originally estimated (Lauesen, 2020).
Most of the cost increase came from airport-wide changes such as the addition of an
automated baggage system and extended concourses. During the construction
financing period, the Federal Aviation Administration planned to spend $655 million
on the airport. As the project was further delayed, the construction problems of the
135,000 concrete slabs that make up the airport's runway system became apparent.
For example, there were faulty construction methods and poor workmanship on the
three runway systems that affected approximately 14,400 panels. As a result,
additional time was required to carry out maintenance work to correct the remaining
problems. The final automated system fell far short of the original plan, and instead of
integrating the three terminals into one system. The system supported outbound
flights from only one terminal, and the other terminals are handled by a manual
towing system and trolleys transporting the luggage. At the same time, monthly
maintenance costs of $1 million exceeded the value it created, and the system was
completely abandoned in August 2005.
FoxMeyer Pharmaceuticals is the fourth largest pharmaceutical distributor in the
United States. To improve operational efficiency, FoxMeyer implemented the Delta
III program in 1993. In order to move the project forward, FoxMeyer conducted
market research and product evaluation, and purchased SAP R/3ERP software in
December of that year. FoxMeyer also purchased warehouse automation from a
vendor called Pinnacle and selected Andersen Consulting to integrate and implement
both systems. The official implementation of the Delta III project took place between
1994 and 1995. As three warehouses were closed and transitioned to the first
automated warehouse, there were some morale issues among warehouse employees
and the new system created data errors in processing transactions, resulting in the loss
of $34 million worth of inventory (Zid, Kasim and Soomro, 2020). At the beginning
of the project, FoxMeyer entered into a contract with the University Health Systems
Consortium. Before the contract was signed, tests showed that SAP R/3ERP system
on HP9000 servers could handle FoxMeyer's throughput. But after FoxMeyer adopted
SAP R/3ERP system in 1994, customer order processing plummeted from 420,000
per night to 10,000 per night. The FoxMeyer project to implement an ERP system is
expected to save $40 million per year, with an estimated project cost of $65 million
and an additional $18 million for the complete installation of the ERP system and
automation system. However, the final cost of implementation exceeded $100 million.
Additional costs also included $34 million in unrecoverable transportation losses, as
well as inventory costs. Other costs paid by FoxMeyer included loss of customers,

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loss of market reputation, loss of employees, and loss of management structure
totaling $40 billion in lost stock value. FoxMeyer eventually declared bankruptcy in
1996.
Novopay is an automated web-enabled payroll system, proposed by the New
Zealand Ministry of Education. Before the Novopay project, the Ministry of
Education's payroll system was outsourced to an IT service provider called Datacom
between 1996 and 2012, and the payroll system required many manual operations to
complete the fortnightly payroll of about 110,000 staff. In each school, a payroll
administrator was needed to enter data and check for accuracy (Holgeid and Stray,
2020). In 2008, the Ministry of Education hired a software company called Talent2 to
provide a simplified payroll system, known as the Novopay project. The project is
scheduled to begin services in 2010 with a budget of NZ$30 million. The Novopay
project went live on 25 August 2012, two years after the estimated time, and data
showed that the Novopay project had hundreds of bugs and that thousands of teachers
and staff in 90 percent of the schools received either too much or too little salary or
even no salary at all. The average time for a call for service for the Novopay project
was ten minutes and the wait time was ten minutes, and there was a 50 percent
abandonment rate for those who called the service. Three months after Talent2
Software attempted to fix the problem, 70 percent of schools continued to experience
faulty payroll services. In February 2012, the New Zealand Ministry of Education
invested $5 million to remedy the Novopay program and provided schools using
Novopay with an additional NZ$6 million. By then, the budget for the Novopay
project had risen to NZ$100 million (Westfall, 2020). The Education Minister at the
time resigned after receiving a large amount of criticism. Evidence showed that
Talent2 was still fixing bugs a year after the Novopay payroll system went live.
Subsequent tracking and analysis by the Ministry of Education of the bugs discovered
after the launch revealed that the system had more than 500 different bugs, 44 of
which were considered to be very serious.
Common themes
The automated payroll project named Novopay, Aqua Hydropower projects, Denver
International Airport construction, and FoxMeyer's ERP projects state they share
many common mistakes, such as lack of definition of project scope, wrong cost
estimates, lack of communication, disregard for project warning signs of failure,
imperfect project cycles, and lack of feedback. . In this article, four of these common
themes will be analyzed specifically: lack of definition of project scope, incorrect
estimation of costs, lack of communication, and ignoring project failure warnings
(Mabelo, 2020).
One of the most important reasons for project failure is the lack of
communication at any level. Communication is always important and everyone
should feel free to come forward with their concerns or suggestions as a way to make
the project fit the needs and avoid being negatively impacted or even resisted for
violating the interests of the stakeholders. In this article, the example of the Novopay
project and FoxMeyer's ERP project was chosen to use to illustrate the point.
Interestingly, the Novopay project was not a failure in the traditional sense of a

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project stopped and cancelled, but rather a failure defined by the fact that it cost far
more to develop and maintain than the estimated budget, had hundreds of bugs, and
had a remediation plan that lasted up to a year. The Ministry of Education was too
dependent on Talent2 because it had less knowledge and was too weak to
communicate with Talent2 about the progress of the project and to communicate
about proposed solutions. The Novopay project also lacked communication with the
users. 10-minute waiting time and a 50 percent abandonment rate of callers prevented
the Novopay project from identifying and fixing the users' incorrect wages on time. In
the case of FoxMeyer's ERP project, resistance from employees who feared they
would be replaced by the system resulted in dissatisfied workers damaging inventory,
failing to fulfil orders, causing it to lose customers, market reputation, etc. FoxMeyer
lacked communication with end-users, that is, workers, etc. FoxMeyer did not consult
and negotiate with workers before the project began. Instead of consulting and
negotiating with the workers before the project began, the project was carried out in a
top-down manner by management, with only a few users involved in the analysis and
design process, resulting in a lack of communication between users and system
planners, which led to workers feeling threatened by the system and resisting the
operation of the system and even damaging the inventory (Lubis, Parmita and
Lumingkewas, 2018). Therefore, in order to avoid project failures due to lack of
communication at any level, the project manager needs to communicate with the
stakeholders at the planning stage to come up with good solutions that balance the
needs of each stakeholder. Communication with users is also essential, as user
feedback can help the project to identify where improvements are needed to avoid
failure.
The second most important cause of project failure is the lack of a definition of
the project scope. A project scope statement helps all stakeholders to have the same
understanding of the project so that they can prioritize the project, make trade-offs
between cost, time, and scope, and avoid the trade-off of expanding or changing the
project scope as the project progresses, which can lead to project failure due to high
cost, long development time, and poor quality. The Denver International Airport
construction project is one of the examples this article is chosen, with the total cost of
DIA at more than $4.8 billion, S$1 billion over the projected budget first established
in 1990. In 1989, the City solicited bids to build the airport without obtaining a formal
airport design from the airlines, and many design changes were agreed to by the
government at the time of signing the contract with the major tenant, which resulted
in significant changes to the airport design, increased project costs, more time
consuming to deliver in the expected time, difficulty in maintaining a trade-off
between money, time, and scope, resulting in excessive costs and project failure (Xu
and Zou, 2020). It was too complicated and eventually, the project was abandoned
completely. Another example is Novopay. The failure of the Novopay project
involved the lack of a scope definition of the project's users, and the system ignored
the possibility that the same teacher could teach in different schools, resulting in the
teacher not being able to receive her/ his salary. Therefore, to avoid project failures
due to lack of scope definition, project managers need to clearly define the scope of
the project, reduce scope creep due to conflicts and later changes to project
requirements, set milestones, and ensure that the project meets the required technical
requirements, so that the lack of project scope does not lead to changes in

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requirements, and the project does not meet the required technical requirements and is
therefore difficult to move forward. Failed eventually.
A project is estimated in terms of time, cost and resources. The project manager
balances the expectations and needs of the various stakeholders in the forecasting and
evaluation process to distribute the benefits. And evaluating a project in the wrong
way can lead to time and cost not matching the facts, and lack of actionability leading
to project failure. In the case of Aqua's project, Meridian misestimated the monetary
cost of private land and the time cost of legislative change (Zahid and et.al 2018).
Forced land acquisition has resulted in controversy and opposition to empowerment
practices and legislative reform. Making Meridian's access to land resources more
difficult, delaying the time and cost of the project. It has also created some obstacles
to issues such as the impact of the technology chosen for the project on the land.
These had not been carefully evaluated and measured at the outset of the project. As a
result, Meridian ultimately decided to abandon the project when company was
suddenly confronted with significant investments (court costs, estimated costs,
operating hours) that differed significantly from the project's budget. In the early
stages of its implementation of the SAP project, FoxMeyer only anticipated the
underlying costs of the project and the benefits the company would receive, ignoring
the other costs that would be incurred during the project. The company's management
always had great expectations of the SAP project, so much so that they did not
estimate the negative impact of project failure on the company, and did not deescalate
the project and corrective management in a timely manner to avoid risks after certain
problems occurred. Eventually the failure of the project led to the bankruptcy of the
entire company. It is very necessary for a project manager to estimate a project. The
manager should not only assess the benefits that the project will bring, but also
whether there will be any risks associated with the project, such as additional costs
and the negative impact of a project failure on the company. Correctly assess the risk
level of the project, for high-risk projects try to do a graded batch of careful
investment and phase control or avoid development (Verenych, Bushuieva and
Bushuiev, 2019). It is also important to be able to identify areas of deficiency in pre-
assessment from
During the course of the project, the professional will warn the organizer or
project manager of some of the obstacles they may encounter on this project. Hence
the ability to identify the specific meaning of alerts becomes critical for project
managers to address and resolve issues. If the project manager ignores these warnings
it could lead to a stalemate and eventual failure of the project. In FoxMeyer, Andersen
Consulting and SAP R/3ERP system needed to prove the viability of the Delta III
project externally, and FoxMeyer did not take advice from other consultants at the
time of the first inventory loss. A consultant from Chicago warned the company that
the SAP R/3ERP system would not provide what FoxMeyer needed. However,
FoxMeyer ignored the consultant's important advice because of the reputation of the
SAP R/3ERP system and the project manager's belief that the software would improve
the company's throughput capabilities. And the importance of this advisor issuing a
warning was proven. Even if FoxMeyer were to downgrade this project at a later stage
of the project and reduce the company's losses through change management, it would
not make up for the damage to the company's interests from this project. In April
2012, an independent project reviewer evaluated Novopay's project and concluded

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that the payroll delivery system was not performing at the level required to meet
expected results and that there was no going back (implying a high risk index). And
Novopay didn't heed this auditor's prompting and went live in August of that year,
resulting in 90 percent of the school payroll system being affected. The matter directly
affected the salary accounting of thousands of teachers and staff, and even the
Minister of Education resigned and apologized for causing resentment (Afaq and
Faisal, 2020). If Novopay had heeded the auditor's warning and redesigned the payroll
delivery system in a more logical and scientific manner to fix the bugs in the system,
it could have avoided unnecessary errors and confusion in the payroll calculations of
thousands of teachers and employees. Project failure can happen at any time in the
project cycle, but success will only happen at the end. When a project is on the verge
of failure, there are always warning signs. The project manager needs to take
immediate action that can save the project. Otherwise, the entire project will fail and
even affect the entire operation of the company. Therefore, project managers should
pay attention to these warning signs, identify their specific meanings, and make a plan
to respond to the warning.
Conclusion
By summing up above report it has been concluded that most of the top projects
fails due to many reason. Some of the common reasons are lack of communication,
commitment, lack of project scope, wrong estimation of cost, poor quality of material
used etc. As the study provided the real life examples which clearly reflected that
there are many reason of projects failures. One of the top reason is lack of
communication which makes the top project like Novopay and FoxMeyer's projects
fails. For example in Novopay the new software is implemented name as Talent2
which fails and due to lack of communication, the Education Minister had to resign
fro their post due to payroll service's issues. Not only this, most of the teacher receive
either too much or little salary while some of them do not get anything and this is all
because of wrong payroll system installation. Thus, the case study revealed that
communication plays an important role in the success of project and if there is a lack
of communication within team members then it will leads to failure.
Moreover, the study further summarized that lack of project scope is also
consider one of the another key issue that leads to failure. It is so because if project
manager do not understand the definition of project scope then they start making
unrealistic expectation that takes a project towards failure. That is why, there is a need
to have proper parameters of a project that identifies the scope like cost, time etc.
Hence, this proved when the Denver International Airport construction Airport project
was undertaken because the project is over budgeted from the set cost. It is due to
changes in project layouts that increase cost along with time and as a result, the
projects leads towards failure. Therefore, it is concluded that this factor is also plays
an important role in project's failure and that is why, project manager should ensure to
use the best strategy and define the scope in proper manner.
Apart from this by using the real life example, the report also concluded that there
are many obstacles face by project manager, but they possess strong capabilities that
leads to solve the issues. Such that in order to implement the project (R/3ERP system)

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in FoxMeyer, the project got fails and this is due to project manager did not consult
with professionals and this in turn leads to failure of software installation within a
company. On the other side, professional also advised the company not to install this
system because of some drawback but still company did not pay attention and as a
result, it leads to failure. Therefore, it is clearly reflected that failure is vary from
projects to projects and that is why, project manager has to be very careful while
dealing with any projects. Also, involve all the stakeholders while dealing with any
projects so that they make better decisions accordingly. As a result, risk is also
identified and project managers with its team make mitigation strategies as well.

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References list
Books and Journals
Afaq, S.A. and Faisal, M., 2020. Influences of Requirement Change on Software
Failure.
Holgeid, K. K. and Stray, V., 2020, June. Factors Promoting Software Project
Escalation: A Systematic Review. In 2020 IEEE 22nd Conference on Business
Informatics (CBI) (Vol. 1, pp. 280-289). IEEE.
Lauesen, S., 2020. IT Project Failures, Causes and Cures. IEEE Access. 8. pp.72059-
72067.
Lubis, M., Parmita, E. and Lumingkewas, L.W., 2018. ERP Implementation in Crisis
Management: A Case Study of Government-Owned Electricity Company.
Mabelo, P. B., 2020. Operational Readiness: How to Achieve Successful System
Deployment. Routledge.
Singh-Ladhar, J., 2020. Water Allocation Law in New Zealand: Lessons from
Australia. Routledge.
Verenych, O., Bushuieva, V. and Bushuiev, D., 2019, September. The Blended Mental
Space: erosions as a reason of a project failure. In 2019 IEEE 14th International
Conference on Computer Sciences and Information Technologies (CSIT) (Vol. 3,
pp. 107-110). IEEE.
Westfall, A., 2020. Information Technology Project Failure Caused by Inadequate
Project Scoping: An Exploratory Qualitative Inquiry on Inadequate Project
Scopes (Doctoral dissertation, Capella University).
Xu, X. and Zou, P. X., 2020. System dynamics analytical modeling approach for
construction project management research: A critical review and future
directions. Frontiers of Engineering Management, pp.1-15.
Zahid, A.H. and et.al., 2018. A critical analysis of software failure causes from project
management perspectives. VFAST Transactions on Software Engineering.13(3).
pp.113-119.
Zid, C., Kasim, N. and Soomro, A. R., 2020. Effective project management approach
to attain project success, based on cost-time-quality. International Journal of
Project Organisation and Management.12(2). pp.149-163.