IT project costs explosion

It is a well known problem that costs of IT projects often rise far above the initial estimations. This might happen for non-IT projects also, but the reasons might be different. And there is a difference between reasons why IT projects fail and why they cost more!

I tried to summarize the most important reasons why IT project costs are higher than expected - from my experiences and in the order of relevance:

1. Unclear, unrealistic and permanently changing ideas of requirements (missing, unrealistic, vague or insufficient stable goals, objectives and milestones).
   Solution: Invest enough time in evaluation of requirements, put it in relation with what solutions exist on the market and define clear and concrete milestones building a path to your final goals.
   
   
2. Insufficient or wrong knowledge about the solution options (mostly from technical point of view).
   Solution: see above - and think also of the option to develop (or let develop) your own solution which is always an option worth thinking about.
   
   
3. Insufficient knowledge about the overall effort needed to implement the solution (= unrealistic estimation of time and resources).
   Solution: If you have missing experience on a particular field then ask experts or develop prototypes. And never beat down the price of your suppliers (to unrealistic values) because then you provoke final costs being higher than expected.
   
   
4. Insufficient knowledge about the destination environment where to implement the solution.
   Solution: Invest enough time in analysis.
   
   
5. Side effects of quick-and-dirty implementations of the solution (or parts of it).
   Solution: Make quality your focus and not being cheap. If you create a bad product that nobody really wants to have you waste more time and effort as if you would have created another smaller product, but well done.
   
   
6. Unqualified interference or intervention of upper management.
   
   
7. Missing GTD like and technical skills of involved people.
   
   
8. Bad time management (schedules, time reserves).
   
   
9. Missing or insufficient quality assurance (clean design, review, testing, documentation, ...).
   
   
10. Communication / teamwork insufficient or inefficient.

Related posts: Economic crisis and IT, Bronze age of IT, IT investment, Features, IT outsourcing, The Open Source movement, Paying for free and Open Source, Scope of IT projects, The small software vendors.