© The Standish Group 1995. Reprinted here for sole academic purposes with written permission from The Standish Group.
"The Roman bridges of antiquity were very inefficient structures. By modern standards, they used too much stone, and as a result, far too much labor to build. Over the years we have learned to build bridges more efficiently, using fewermaterials and less labor to perform the same task." Tom Clancy (The Sum of All Fears)
In 1986, Alfred Spector, president of Transarc Corporation, co-authored a paper comparing bridge building to software development. The premise: Bridges are normally built on-time, onbudget, and do not fall down. On the other hand, software never comes in on-time or on-budget. In addition, it alwaysbreaks down. (Nevertheless, bridge building did not always have such a stellar record. Many bridge building projects overshot their estimates, time frames, and some even fell down.) One of the biggest reasons bridges come in on-time, on-budget and do not fall down is because of the extreme detail of design. The design is frozen and the contractor has little flexibility in changing the specifications.However, in today's fast moving business environment, a frozen design does not accommodate changes in the business practices. Therefore a more flexible model must be used. This could be and has been used as a rationale for development failure. But there is another difference between software failures and bridge failures, beside 3,000 years of experience. When a bridge falls down, it isinvestigated and a report is written on the cause of the failure. This is not so in the computer industry where failures are covered up, ignored, and/or rationalized. As a result, we keep making the same mistakes over and over again. Consequently the focus of this latest research project at The Standish Group has been to identify: • • • The scope of software project failures The major factors that causesoftware projects to fail The key ingredients that can reduce project failures
In the United States, we spend more than $250 billion each year on IT application development of approximately 175,000 projects. The average cost of a development project for a large company is $2,322,000; for a medium company, it is $1,331,000; and for a small company, it is $434,000. A great many ofthese projects will fail. Software development projects are in chaos, and we can no longer imitate the three monkeys -- hear no failures, see no failures, speak no failures.
The Standish Group research shows a staggering 31.1% of projects will be cancelled before they ever get completed. Further results indicate 52.7% of projects will cost 189% of their original estimates.The cost of these failures and overruns are just the tip of the proverbial iceberg. The lost opportunity costs are not measurable, but could easily be in the trillions of dollars. One just has to look to the City of Denver to realize the extent of this problem. The failure to produce reliable software to handle baggage at the new Denver airport is costing the city $1.1 million per day. Based on thisresearch, The Standish Group estimates that in 1995 American companies and government agencies will spend $81 billion for cancelled software projects. These same organizations will pay an additional $59 billion for software projects that will be completed, but will exceed their original time estimates. Risk is always a factor when pushing the technology envelope, but many of these projects wereas mundane as a drivers license database, a new accounting package, or an order entry system. On the success side, the average is only 16.2% for software projects that are completed ontime and on-budget. In the larger companies, the news is even worse: only 9% of their projects come in on-time and on-budget. And, even when these projects are completed, many are no more than a mere shadow of their...