UK Passport Agency: Reasons Behind Project Failure - Essay Example

UK Passport Agency: Reasons Behind Project Failure Table of Content UK Passport Agency: Reasons Behind Project Failure 1 Introduction 3 2. Project Management: An Overview 4 3. Risk Management 8 4. Reasons for Project Failure 10 5. Analysis of Case Study 14 6. Conclusion 21 7. References 22 1. Introduction Project management is seen as a tactical tool to execute project as it is essential for the growth and survival of organizations (Crawford, 2001). It is being viewed to gain strategically an advantage in the organizational performance (Crawford, 2001). The organizational performance is dependent on many factors, out of which one factor is the information technology systems (Lusthus, 2002). The purpose of project management is to manage projects efficiently and effectively that will help to improve the business processes which in turn create value for the organization. Projects also enable the development of new products and services and help the organization to respond to changes in the external environment like development of information technology. In today’s scenario, project management indulges in the use of information technology to communicate and develop projects effectively. Projects are designed to enhance the organizational performance and continuously update the systems as they are continuously developing. But in reality, many projects are scrapped or dumped as they are not able to function properly or have incurred heavy expenses during the production space. The aim of this report is to make the readers understand the different reasons behind the failure of a project. The report is divided as follows: section 2 will present an overview of project management; section 3 will discuss risk management and its importance in project management. Section 4 will discuss why a project fails and in section 5, deeper understanding would be gained by the analysis of a case of UK passport processing agency. This report will present why the project to implement new information system failed in the Agency. 2. Project Management: An Overview A project is defined as “a collaborative enterprise, frequently involving research or design that is carefully planned to achieve a particular aim” (Oxford Dictionary). It is defined as “a unique venture with a beginning and an end, conducted by people to meet established goals within parameters of cost, schedule and quality” (Buchanan and Boddy, 1992). Few examples of some well published project is the Apollo program which landed the man on moon (Nasa, 2010), the Genome project which mapped the human genome (Genome, 2010). The characteristics of the project is that it is temporary i.e. it has a definite beginning and end, it creates unique deliverables, creates capability to perform a service and is developed in steps. It is different from operations as the processes in operations are ongoing and repetitive while a project is temporary and unique. In general terms, project management is the management of the project by a team of various people. The Project Management Body of Knowledge defines project management as “the application of knowledge, skills, tools and techniques to project activities in order to meet stakeholder’s needs and expectations from a project”. The three most important factors in a project management are time, cost and scope of the project. Since, the business world has become very customer centric, quality has become another important factor in project management. A successful project management delivers projects on time, within cost, within the scope and meets most of the customer quality requirements (Schwalbe, 2008). With the development of Internet, the project management is happening in virtual world where the projects are being managed from remote locations. The managers use video conferencing, e-mailing and Webex to manage the teams and to keep track of the various critical management processes. It also uses various tools like PERT charts, Gantt Charts and Work Breakdown structures to measure and track project tasks during the project lifecycle (Heerkens, 2001). Project managed from remote locations have team members working in casual environment and is very dependent on the communication technology and internet technology (Knight and Heed, 2009). Therefore, a very strong communication infrastructure is needed to manage the team remotely. The advantage of working in these types of project is that the skills of the team member becomes very specified as it is possible to work together without traveling or relocating for work. The project schedules and deliverables are clearly defined and the team members are bound to the time schedule. However, the team member has to work in isolation and hence do not have strong relationship with the other team members. Also, it is very hard for the project manager to monitor the team member’s progress. Generally, a project whether managed on site or virtually goes through the six phases during its life cycle: project definition, project initiation, project planning, project execution, project monitoring and control and project closure (Westland, 2010). The first phase of the project is project definition where the goals, objectives and critical success factors for the project is defined and time lines are set by the senior management of the company and the project manager. In the project initiation phase, everything i.e. the resource in term of money, equipment, and employees that is required in the project is set up before the work on the project starts. Detailed plans of how the work and tasks will be carried out are illustrated in the planning stage. The planning stage is very critical as this is where the managers estimate time, cost and resource requirements correctly. Planning should be done in detail and should be well-documented so that it can be referenced by the team members and clients whenever required. Underestimation of time, cost and resource requirements and poor evaluation of project risk is another source where the project fails. Inability to monitor issues, costs and communication problem and inability to monitor the scope of the project during the execution stage of the project leads to the failure of the project. The project execution stage delivers the product, service and desired outcome. The project is monitored and corrective actions are taken in the project monitoring and control phase. The success of the project is dependent on this phase and it is very important that the managers implement the nine critical management processes to monitor and control the activities that are being undertaken by the team (Westland, 2010). All the critical management processes are filled in their respective form so that the client can get an understanding of the progress of the various features. They are: Time management: a process of recording and controlling the time spent by the team member on a task or project activities. Cost management: a process of recording the costs and expenses that is incurred in the project. Quality management: The quality of the various tasks and activities of the project is done where the task of the manager is to see that the deliverable conforms to the requirements of the customers. Change management: the changes to the project scope, type of deliverables, timelines, resources etc. are addressed by the manager before the implementation. The manager has to manage the change within the project. Issue management is the process where the issues that affect the performance of the project are formally managed. All the issues that have been addressed is logged in the issue register. Procurement management is the process where materials required to make the products are procured or bought. All the materials procured, sourced or bought are entered in the procurement register for future references. Acceptance management relate to all those processes to gain acceptance of the customer on the deliverables that are produced by the project. The form which is filled has details about acceptance criteria, review methods and results of the review. Communications management is the process where messages about the status of the project are communicated to the client. These are sent in the form of project status report. Risk management: the risks are formally identified at any stage of the project and steps are taken to quantify and manage these risks by the manager. The success of the project is dependent on the project manager ability to forecast the risks involved in the project and developing ways and means of combating it. This is the most crucial aspect of project management 3. Risk Management Risk management which is defined as “the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events” (Hubbard, 2009). An example of risk is the vendor not meeting the deadline to supply the material or budget is not sufficient to source a particular service. Risk management is not a complex if the project manager follows the four stages of risks management: Risk identification, risk quantification, risk response, and risk control. In risk identification stage, it identifies the risks associated through brainstorming and reviewing the standard risk. Risks are classified as business risks where the ongoing risks are best handled by the business and generic risks are risks that are addressed by the organization. Risks should be identified during the project definition stage and the work breakdown stage. Lessons learned from the various project enables most of the managers to become familiar with the most common risks like shortage of finance, unavailability of labor and hence should be identified during the project definition stage. Once the risk is identified at the project definition stage, it will influence the decision to put limitation on costs, resources and time schedule. At work breakdown stage, the associated risks that are identified can be mitigated by the decision maker. In risk quantification stage, the impact of the risks on the project has to be assessed. This is done by quantifying the risks and prioritizing the list based on the degree of impact on the project. Once the risk is prioritized, they are either avoided or transferred or mitigated or accepted. These steps are taken in the risk response stage which has the above mentioned strategy and action items to address the risk. It is very important that the project manager continuously monitors the issues which have the likelihood of turning into risks at various stages of the project. 4. Reasons for Project Failure Project management was first popularized by Peter F. Drucker in 1954 in his book “The Practice of Management” where he described the term as Management of objective. Management of Objective was defined by him to be “a process of agreeing upon objectives and obtaining buy-in from management and employees”. “Management by objectives – if you know the objectives. Ninety percent of the time you don’t,” said Peter Drucker. This sums the most cited reason why so many projects fail in real time. In today’s ever changing environment, there are has been many cases of project failure. Statistics have shown that “Up to 50 UK companies recently lost as much as $1Billion between them as a result of abandoning or replacing projects” (Coley, 2010). In other report, it was calculated that around 90 percent of the project undertaken by the management consultancies went over budget and 98 percent of the project were build on lower specification (Crawford, 2001). Statistics shows that software development projects are more vulnerable to failure. Nearly 70 percent of projects fail, while 50 percent are scrapped while 40 percent of problems are found by end users and 25 to 40 percent of all spending on projects are wasted as a result of rework (Wessels, 2007). The projects fail when they are not delivered on time, are over budget and do not meet the client specification and satisfaction. They also fail because there is a lack of user involvement, unrealistic time lines, poor or no specification, scope creep, no change in control system and poor testing. Few examples of failed project are: The project launched by the California Department of Motor Vehicles (DMV) in 1987 which was shut down after $45 million were spent on the project. In 1983, the five-year project that was launched by the Oregon Department was also shut down as the project budget over shooted by 146 percent and the time schedule overshoot 60 percent of the estimated time. The License Application Mitigation Project (LAMP) aimed at automating the states vehicle registration and license renewal processes was scrapped because of over budgeting and the deliverables that were completed did not conform to the client specification. The root cause of project failures is due to lack of understanding of business requirements from strategic point of view. “Poorly defined applications have led to a persistent miscommunication between business and IT that largely contributes to a 66% project failure rate for these applications, costing U.S. businesses at least $30B every year” as was stated by Forrester Research (Wessels, 2007 ). The projects fail because of lack of planning from the project managers and poorly defined project objectives. The role of the project manager is vital for the success of the project. The project manager should have the ability to communicate with his project team effectively and resolve interpersonal conflicts that occur in the team. He should have effective communication skills will help him to have open communication with his team with regard to concerns and opinions about the project (Haughey, 2010). One of the key duties that the project manager should have is the ability to recognize risks as it directly impacts the success of the project. He should be able to formally and informally measure and quantify risks throughout the lifecycle of the project. He should be able identify loopholes and risks that might arise during the project execution and have plans to address it before it affects the project. This is made easier with the help of project management software like Microsoft Project. With the help of software, the manager can also organize and set timelines for deliverables of the project (Microsoft, 2010). Leadership is an essential quality for any project to succeed. One of the reasons why the project fails is because the project manager is unable to motivate and create good working relationship between his team members and the client. The team members should have a clear understanding of their roles and duties and expectations. If the team members of the project do not understand the requirements of the client clearly, the project will bound to fail. The project will also be affected if the team members fail to verify the requirements as the progress is made. It is also very important that the people involved in the project should stick to the available resources and adhere to the architecture of the project. Lack of risk management ad communication breakdown influences the success of the project. Project manager has to take action to control the quality of the deliverables and the resources used. In case of inappropriate choice of materials, the quality of the project is affected which results in the failure of the project. It is very important that project managers should constantly be monitoring the time schedule of the deliverables. Also, the project manager should take a proactive role in learning from the mistakes. Lack of user involvement is considered to be the most common reason for project failure (Coley, 2010). It is very important that senior management and the people who will be involved in the project interact on regular basis right from start. This will ensure that the requirements are addressed by the team members of the project and any changes can be addressed simultaneously as the project advances. Excessive user involvement tends to increase the scope of the project which is known as ‘Scope Creep’ (Schulte, 2004). ‘Scope Creep’ is also responsible for the project failure where the client keeps requesting for additional features or increases the number of deliverables which increases the scope of the project, resulting in unrealistic time-schedule and delivery. Loosely defined contracts that have unclear terms and conditions, unclear requirements that leave room for interpretation and lack of legal expertise are instrumental to scope creep. Hence, management must be realistic about what is it they want and when, and stick to it (Database Design, 2009). Setting unrealistic time scales results in projects being delivered that have no utility and hence needs to be reworked or scrapped. Large project should be spilt into separate projects to keep the time span short. On the other hand, it is also unrealistic to keep very short deadline as it would result in incomplete work or not fulfilling the client requirement completely. The client requirements are also crucial for the success of the project. Most of the time, it happens that the requirements were vague which led to the development of the deliverables based on the assumption of the member of the project. Sometimes the end product or service is not what is needed by the user. It is very important that the client and the project manager interact to define the scope of the project. 5. Analysis of Case Study The objective of the United Kingdom Passport Agency was to meet the increasing demands for issuing passports and reduce the processing time to issue the passport. A System (PIMIS) was installed in 1989 to improve the response time of issuing the passport. However, the senior management of the Agency felt that the existing procedures and equipment were becoming outdated because of the fast paced change in the information technology sector. They wanted to improve the efficiency of the Agency by using more secure procedures and up-to-date information and hence set the process of design and implementation of the new system. The new system provided checks to improve security, better facilities for tracking the progress of applications and an electronic archive for retrieval of applications when required. The aim of the new system was to reduce the processing time to 10 days from the time taken to process the passport was between 25-50 days. However, the project failed because, the Agency still was not able to process the passports on the stipulated time of 10 days. June 1999 saw that around 565,000 applications were waiting processing that increased the backlog of the Agency. This created massive backlog which resulted in Agency taking drastic steps to reduce the backlog. The senior management of the Agency based their decisions on the business case prepared by them. The business case that was prepared by the Passport Agency assumed 4 million passports a year which was considerably lower than what it actually handled. The decisions that were made based on the business case proved to be serious for the Agency as they did not take into account the new laws that were introduced that pushed the separate passports for the children. This doubled the request for passport application hence skewing the calculations which resulted in the Agency having the backlog. It would have been more prudent for the senior management of the Agency to take into account the external factors of changing laws and technological advancement to reduce the risks associated with the project. Secondly, the business case should have taken into account various financial cost that would have been incurred with wide range of business volumes rather than restricting to one figure. Having different information on different business volume would have helped the management of the Passport agencies to take informed decision on how to handle the project of designing the new system. Based on the information provided by the business case, the Agency finally decided to outsource the project rather than developing in-house. The Agency felt that the best option was to run two parallel private finance contracts: one to provide a new computer system and the initial processing of applications; and a second for digital printing and dispatch of the new passport from a central site. Examining and authorizing passport issues would continue as an in-house function as it was one of the core functions of the agency. The Agency felt that outsourcing its core process of processing the application, it would be able to be more efficient and they were dependent on the external agency to understand their core processes. This proved to be a risky proposition as Siemens was unable to fully comprehend their core functionalities as various processes that are involved in the processing of the passport. Secondly, the late 1990s saw huge development in the information technology sector and hence by the time the system was ready to function technological updates were required which proved to be an expensive proposition to the Passport Agency. This was attributed to the short sightedness of the teams of both Agency and Siemens who did not evaluate the impact of external environment on the project. There are many points that were responsible to the failure of the project ‘design of the new system’. But the most important was the poor forecasting made by the senior management of the Agency and the Siemens. When working in a project especially that which involves the public, it is important that the stakeholders should understand and have the capacity to cope with the anticipated and unforeseen demand. The Agency relied on month to month forecasts to manage the demand of issuing the passports. However, the forecasting that was done just met the actual demand for issuing the passports especially during the peak season which resulted in the short sightedness when it came to design the new system. The new system was designed based on the short term planning of the senior management which resulted in the system being designed in such a way that it was unable to handle sudden surges in demand. The project failed because the requirement of the system was not specified properly at the planning staging. The other aspect where the Agency did not forecast properly was the allocation of sufficient amount of resources in terms of offices, hardware, software and people. This resulted in the inability of the system to cope with unprecedented and unforeseen demand. As mentioned in the earlier sections, planning stage is very crucial in project management as it sets the pace of the outcomes of the project. Care by the team of Siemens should have been taken during the planning stage to learn from the past mistake of the PIMIS to avoid it the second time. However, it was not done as the teams were quite confident about the scanning equipment used by Siemens. This was probably the most obvious mistake made by the project team by mirroring the existing operations. Another aspect which is discussed in the report is the monitoring and control phase, which the Agency as well as the project team of Siemens did not lay much emphasis on. Had they followed the procedures to monitor the progress of the processes, they would have been aware of the problem early on and would have taken steps to correct it. Somehow, from the beginning to the end of the project life, emphasis was made more on having a quick product. Hence, the monitoring and control phase were not stringent and thus would have contributed towards the failure of the project. The fundamental problem or the weakness in the new system was the unimaginative view of the possibilities of computerization. The new passport system captured the image of the application form including the applicant’s signature and photograph. The management of the Agency expressed concerns based on the past performance about the scanning of application forms and the correction of information that followed because the information was not captured correctly. This resulted in delay as the operator had to minutely check and recheck the information scanned. Sometimes the forms were not filled correctly or there were variability in the ink density that resulted in inaccuracy in scanning and hence delay was caused because of this. This should have been shorted out during the planning stage when the resources were being allocated for the project. If the management and the team member of Siemens had been more proactive in information exchange, this could have been avoided and a contingency system would have been allocated to the project. This illustrated the low user involvement in terms of practicability and usability which was important for the adaptability and proper functioning of the system. Seeing the mistake made in the earlier project, Siemens made sure that it gained detailed understanding of the existing processes for the new system. However, the designs stage took longer as each party took longer to understand the system’s specification. This caused a delay in the planning and design of the system. Delay in this phase had a bull whip effect on the other phases like implementation and testing phase which resulted in the increment in cost, the extra cost of maintaining the old system for another year and the extra cost of the employees and other resources. Other significant cost that occurred to the Agencies was making the system Y2K compliant as at that time every information systems were becoming Y2K compliant. The failure of the project was further compounded by the non conformance of the results of the pilot testing. Pilot testing was conducted in their busiest office in Newport. Before, the results were analyzed; another phase of pilot testing was conducted in Liverpool. The major flaw here was that pilot testing of any new system should have been done on a limited scale or on an office which had low processing orders. The pilot testing should have been done in the London or Belfast office rather than doing it in the main and the busiest office of Liverpool and Newport. Doing the pilot testing on a limited scale would have helped the Agency realize the shortcomings and it would not have had a major impact on the service delivery. Secondly, it would have been easier to understand the practicality issue of the new system. Insufficient contingency planning in the event of failure of the system further compounded the problem. A detailed understanding the existing processes was done by Siemens but they took a longer time to understand and clarify each other’s intention and to reach to an agreement. However, project managers from Siemens did not plan for adequate testing of the new system before committing it to live operation. Hence, they were unable to understand what is required to teach the employees of the Agency about the different functionalities especially the clerical procedures of the new system. Testing stage is compulsory as during that stage the team members become aware of the problems that would rise and they would be able to address it. In this case the testing was not done sufficiently by Siemens. One of the areas where they failed to do a test was the impact of the new system on productivity and clerical procedures. During the pilot testing, problems arose in these functionalities and hence, they were unable to solve it effectively. If the testing was done thoroughly, it would have saved time and would have ensured effective functioning during the pilot testing. This resulted in Siemens providing very low support available to train the Agency staff to the new features of the new system. This led to the low efficiency in the performance of the examining staff and hence the there were delays in processing the passports. Siemens did not prepare well for the change management initiatives to acclimatize the staff of the Agency to the new system. Communication was another problem as failure to communicate effectively with the public, both at a personal level in dealing with calls from the public to its telephone enquiry resulted in the people not being aware of the changes that were going on. If it was communicated properly with the masses, then the people would have refrained from sending their passport applications and only those would have applied who really needed the passport. This would have helped to reduce the workload for the Agency and hence would have contributed to as effective pilot testing in the main office at Liverpool. It was also critical that the Agency should have adequate systems for recording performance which would have ensured that they were aware of the failure to meet the agreed performance or fulfillment of the requirements. This would have given them a position to claim any compensation in terms of finance and services that was due from Siemens. The implementation of the new project in the Passport Agency did not assess the risks associated with the implementation of the new system realistically or in other words, had a poor risk management framework. For example, one of the important risks that the project manager should have taken account was the delay that would be caused by the inability of the users to understand the new system. They did not take into account the time taken for change management initiatives to acclimatize and educate the users about the systems which resulted in low productivity. This risk was not fully realized and communicated with Siemens and hence the system was not used properly. 6. Conclusion In this section, the report summarized why the project “implementation of the new system” in the Passport Agency failed. In short, the Agency was trying to do too much too quickly and it did not have sufficient resources in terms of manpower to address the situation. It should have made a realistic assessment of their capability to deal with potential problems and should have not hesitated to implement contingency plan in case of emergency. Public bodies like the Agency should undertake a formal risk analysis before introducing new computer systems and should have contingency plan in place in case of risks. It is very important that government bodies that deal with the public should be fully aware of the constraints and have a plan to cope with surge in demand due to external influences like new laws, technological advancement, boom in the economy etc. They should have ensured that the forecasting techniques were robust so that they were able to mitigate risks and manage their business efficiently. 7. References 1. Project Definition from the Oxford English Dictionary. 2. Hubbard, Douglas, 2009. "The Failure of Risk Management: Why Its Broken and How to Fix It". John Wiley & Sons, 2009. Pg 40. 3. Heerkens, Gary, 2001. Project management: A Briefcase book. 3rd edition. McGraw Hill Publisher, 250 pages. 4. Schewlbe, Kathy (2008). Introduction to Project management. 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