As IT systems become an important competitive element in many industries, technology projects are getting larger, touching more parts of the organization, and posing a risk to the company if something goes wrong. Unfortunately, things often do go wrong. Our research, conducted in collaboration with the University of Oxford, suggests that half of all large IT projects$$ defined as those with initial price tags exceeding $$15$ million$$massively blow their budgets. On average, large IT projects run $45$ percent over budget and $7$ percent over time, while delivering $56$ percent less value than predicted. Software projects run the highest risk of cost and schedule overruns.

These findings$$consistent across industries$$emerged from research recently conducted on more than $5,400$ IT projects by McKinsey and the BT Centre for Major Programme Management at the University of Oxford. After comparing budgets, schedules, and predicted performance benefits With the actual costs and results, we found that these IT projects, in total, had a cost overrun of $$66$ billion, more than the GDP of Luxembourg. We also found that the longer a project is scheduled to last, the more likely it is that it will run over time and budget, with every additional year spent on the project increasing cost overruns by $15$ percent.

Staggering as these findings are, most companies survive the pain of cost and schedule overruns. However, $17$ percent of IT projects go so bad that they can threaten the very existence of the company. These unpredictable high$-$impact events $"$black swans" in popular risk parlance$$occur significantly more often than would be expected under a normal distribution.

Large IT projects that turn into black swans are defined as those with budget overruns of more than $200$ percent $($and up to $400$ percent at the extreme end of the spectrum$).$ Such overruns match or surpass those experienced by black swans among complex construction projects such as tunnels and bridges. One large retailer started a $$1\mathrm{.}4$ billion effort to modernize Its IT systems, but the project was eventually abandoned. As the company fell behind its competitors, it initiated another project$$a new system for supply$-$chain management$$to the tune of $$600$ million. When that effort failed, too, the retailer had to file for bankruptcy.

So how do companies maximise the chances that their IT projects deliver the expected value on time and within budget? Our surveys of IT executives indicate that the key to success lies in mastering four broad dimensions, which combined make up a methodology for large$-$scale IT projects that we call "value assurance." The following elements make up this approach:

$-$ focusing on managing strategy and stakeholders instead of exclusively concentrating on budget and scheduling

$-$ mastering technology and project content by securing critical internal and external talent

$-$ building effective teams by aligning their incentives with the overall goals of projects

$-$ excelling at core project$-$management practices, such as short delivery cycles and rigorous quality checks

According to survey responses, an inability to master the first W$/$o dimensions typically causes about half of all cost overruns, while poor performance on the second dimensions accounts for an additional $40$ percent of overspending. Large$-$scale IT projects are prone to take too long, are usually more expensive than expected, and, crucially, fail to deliver the expected benefits. This need not be the case. Companies can achieve successful outcomes through an approach that helps IT and the business join forces in a commitment to deliver value. Despite the disasters, large organizations can engineer IT projects to defy the odds. Extracted from a report by Michael Bloch is a director in McKinsey's Tel Aviv office, Sven Blumberg is an associate principal in the D$$sseldorf office, and J$$rgen Laartz is a director in the Berlin office.

Question $3-$ Projects can achieve successful outcomes through the adoption of best practices that can assist them to better manage their project resources. Describe the processes that should be prioritized by project managers in project resource planning. $$Make use of relevant examples.