Expert Warns of High Cost Risks in IT Projects
A recent statement from an expert at Oxford University has shed light on the significant cost risks associated with information technology (IT) projects. Professor Emeritus Bent Flyvbjerg emphasized that IT projects carry a much higher risk of exceeding budget limits compared to other activities.
During the Gallant Commission’s investigation into the SAAQclic fiasco, Flyvbjerg revealed that one in five IT projects surpasses its budget by an average of 450 percent. This alarming statistic prompts decision-makers considering IT projects to carefully evaluate the potential financial risks involved.
Flyvbjerg posed a crucial question to organizations contemplating IT ventures: can they afford a one in five chance of a 450 percent cost overrun? He stressed the importance of either abandoning the project or implementing measures to mitigate such a high risk, emphasizing the need for proactive risk management.
Both private companies and government entities, according to Flyvbjerg, often overlook the critical assessment of cost risks before embarking on IT projects. Ignoring the inherent risks does not make them disappear; instead, they can manifest later, leading to challenging situations for individuals and organizations.
The expert highlighted various factors contributing to the heightened risk levels in IT projects. He noted that the IT sector, being relatively new compared to industries like construction, lacks the same level of maturity and established risk management practices.
Flyvbjerg is renowned for his work, including the co-authored book “How Big Things Get Done” with Dan Gardner, underscoring his expertise in megaprojects and risk analysis.
