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Chaos Report

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Chaos Report
The Standish Group is a widely known source of independent primary research and analysis of IT project performance. In 1995, the Standish Group published the CHAOS Report, an often-quoted analysis that focuses on the failure of IT projects to better improve overall IT project performance. The CHAOS Report had documented monetary loss on software developments for unsuccessful projects. The Standish Group comprised such data using focus groups, in depth surveys and executive interviews discussing project performance of completed IT projects. The CHAOS Report provides data on the failure rate of IT projects and also details common explanations for such failure.

The authors of the CHAOS Report describe the advantageous process of building bridges to accentuate the lack thereof in software development; Alfred Spector had used such a comparison originally in his article, a computer science perspective of bridge design. The concept is that an error, which resulted in the collapse in a bridge, can be so great in its severity that investigations were subsequently done, allowing those involved in the building process to learn from their mistakes. Differentially, the computer industry allegedly covers up, ignores and/or rationalizes the errors or shortcomings that led up to the failure. The Standish Group contends that project failures will decrease if the following is focused on following a project failure: the scope of software project failure, main factors that cause such projects to fail and the key ingredients that can reduce project failure.

Chaos Report
The CHAOS Report indicates that there are three outcomes upon the ending of a project. Research conducted by the Standard Group and their findings were incorporated with each type of project resolution. The CHAOS Report indicates that the average software projects completed successfully; meaning on time and on budget was 16.2%. A second type of resolution, project challenged, are projects that are completed but had taken longer than intended, over exceeded budget and/or did not meet project expectations; this type accounted for 52.7%, which in turn cost 189% of the original estimate. The remaining 31.1% are project impaired; projects that are cancelled prior to completion, resulting in the most profit loss due to the squandered investments put into the failed project (Chaos, 1995).

Two common causes of projects becoming challenged or impaired are due to cost overruns and time overruns. According to the Chaos Report, the two above-mentioned types of project resolutions result in cost overruns of 150-200%. Cost overruns averagely total 189% of the original estimate. More specifically, average cost overrun for small companies is 214%, medium size companies 182% and 178% for large companies. One third of the challenged or impaired projects that failed due to projects running past the projected time frame resulted in overruns of 200-300%. The average overrun is 222% of the original time estimate; more specifically smaller companies is 239% time overrun, medium size companies is 230% and large companies is 202%. It should be noted that the Standard Group define company
Chaos Report sizes by their annual revenue; small companies range from $100-$200 million per year, median company range from $200 million to $500 million per year, and large companies accrue over $500 million per year. Projects resulting in cost and time overruns can be attributed to restarts of the project, which can occur more than once during a projects (Chaos, 1995).

A project can also be considered a failure when the outcome does not equate with the anticipated features and functions the company sought after. According to the Standard Groups statistics, more than a quarter of the challenged projects had been completed with only 25-49% of the originally specified features and functions. Of these projects, only 61% of the originally specified features and functions were even available. The following statistics are the percentage of projects’ features and functions, based on company size, that were not available in the end product; small companies with 74%, medium companies with 65% and large companies with 42%. To emphasize the problem of projects not having the originally desired features and functions in the end result, the Standard Group determined that 365 companies have a combined total of 3,682 applications still under development (Chaos, 1995).

In determining the factor that caused a project to ultimately fail or at least cause difficulties, it stands to reason that many factors play a role. The same logic applies to the reason projects are successful. Although it’s the combination of several factors
Chaos Report that bring about success or failure in a project, there are particular factors that have the most impact on the result. According to data obtained by the Chaos report, the following statistics were taken when executives whom have experience with handling or overseeing company projects were asked in interviews the cause of a project’s success or failure. User involvement appears to have the greatest significance on the outcome of a project. The number of responses that believe user involvement has a critical role in project success is 15.9%, while lack of user input is believed by 12.8% to be the cause of project failure. Another essential requirement for project success is incomplete requirements and specifications. The number of responses that felt this requirement contributed to project success is 13%, moreover, 12.3% believed incomplete requirements and specifications contributed most to challenged projects.

It should be noted that a similar factor, changing requirements and specifications, were felt like the cause of challenge by 11.8% of those interviewed. The last discussed factor that is significant for the success of a project is lack of executive support. There were 13.9% of those who felt that this had a direct effect on project success while 7.5% felt that the lack thereof resulted in project failure (Chaos, 1995). Of course there are numerous explanations that could be made upon completion of a project in deciding factors that caused its success or failure, but it

Chaos Report appears that user involvement, executive management and clear statement of requirements have the most significant role.

Conclusively, The Standish Group had conducted a significant amount of research in their work regarding the difficulties IT projects face and the root cause of their success or failure. Positively, the Chaos Report had ensured its readers at the end that the report is not in depth enough to portray a real solution to the problem of IT project failure rates, yet the accuracy of their statistics is not mentioned. In an interview with the researcher of the Chaos Report, Jim Johnson, it was discovered that one’s involved in the studies had been paid to do so, in their attempt to get non-biased information. Due to this fact, the Standish Group gets case information and received an income from doing the analysis; therefore all data is confidential and cannot be released (, 2006). Due to the lack of information and evidence to support their statistics, it is difficult to consider the oftentimes-extreme statistics that are provided in the Chaos Report. If the statistics in the Chaos Report are disputable, it can be said that the theories associated with such statistics are meaningless.

Furthermore, The Chaos report has three resolutions types; project success, project challenged and project impaired. Those that participate in the surveys have different roles they play towards the success of such project, therefore it can be said
Chaos Report that their belief on the outcome is bias. For example, an executive manager interviewed on what caused a challenged or failed project will most likely have a biased belief on it, and are less likely to blame whichever role they played in the project. All of the factors that the Chaos report listed as a cause of failure or success in a project are believable and should all be considered when a project begins. Notwithstanding, attaching specific percentages as to their role in project success is less plausible. The credibility to the statistics in the Standish Group have been widely refuted by critics, therefore studies have been conducted to disprove such statistics.

In one intensive study to validate or refuse the Chaos Report statistics, data showed that the Standish’s definitions do not include the partiality of forecasts. According to Standish Group, a project is successful when the initial forecasts of costs and duration are higher than the actual cost and durations, and initial forecasts of functionality of a project are lower than actual functionality. It was determined that the prejudice of forecasts are not considered in the Chaos group and due to their statistics relying heavily on such forecasts, the results are misleading (Chaos, 1995). At the end, the Chaos Report can be a useful tool in determining potential flaws in IT projects and options to consider making such a project a success, but it does not seem advantageous as a project manager to rely decisions solely on the statistics quoted in the Chaos report.

Preuss, D. (2006, August 25). Interview: Jim Johnson of the Standish Group. Retrieved from CHAOS website:…...

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