Why Projects Fail: Business Analysis is the Key

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Most specialists in project and portfolio management (managers, developers, analysts, sales specialists, etc.) quite often, if not constantly, encounter a lack of understanding from customers, and business owners on why they need business analysis: the “mythical” phase of diagnosis, scope and vision document, structural decomposition of work, specification of requirements or any user stories.

In part, their misunderstanding is understandable: no one needs business analysis by itself, and no one needs the best requirements (complete, connected, consistent, traceable, etc.). And even the final product, the best, without defects, with the best interface design and usability, is also not needed. Seriously – is not needed if it ultimately does not satisfy the needs of the business and does not solve the problems of the interested parties. So, the needs, problems and solutions impact, appropriateness, etc. are determined only by the business analysis. And this person is also formulating the requirements for the project to implement. The lack of such an analysis is the first and most frequent reason for the failure of projects.

Not to fail, the project must have a business analysis and requirements specification (terms of reference). Business analysis, as such, should be on the project, as well as some form of recording and communicating its results to all people involved in the project (PMs, PMOs, management, and executives). The big strategic mistake of project management is the decision to include business analysis tasks in the list of tasks, for example, of a developer or project manager.

Facts and Numbers

In confirmation of the fact, that lack of coherent business analysis during the initial phases of the project, we provide you with statistics on project failures – what could be more eloquent than numbers? According to the report of The Standish Group (about 50 thousand projects around the world fell into the study sample), about 70% of projects ended in failure or debatable. According to the same report, in the United States alone, $250 billion is spent annually on software development, and about 175 thousand projects are being implemented. Many of these projects fail or are debatable. The following is a result of the study of 8380 projects from the above report:

Why projects fail

According to the research, the main factor in the success and failure of projects is a clear set of requirements. The category of other reasons to fail or to succeed is user engagement, realistic expectations, and a clear vision of the goal, which is also associated with business analysis.

Requirements are the result of business analysis, and the cost of errors, of which amounts to hundreds of billions of dollars per year on a global scale. The growth rates of the cost of errors during the development of requirements are given below:

The factor of success and failure of projects

For example, the cost of fixing an error, equal to $1000 at the stage of developing requirements, can grow to $10,000-100,000 at the stage of operations.

Obviously, companies need to improve the production processes, as well as business analysis processes, as well as pay close attention to the main causes of project failures – poor requirement building, dubious attempts to compensate for errors in the business analysis stage in subsequent stages, inattentive attitude to problems and needs – all that is associated directly with business analysis.

Why Projects Fail: Business Analysis is the Key
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