Insurance against project failure

for Vendors. Pete Swabey on InformationAdvantage explains:

The number of IT projects that end in failure is staggering. According to a 2007 study by researcher Market Dynamics, 62% of all IT projects miss their deadlines, 49% go over budget and 41% fail to deliver the benefits that were expected. That is worrying enough for IT departments.

But for consultants and software vendors, keenly aware that project failure could well result in litigation, it is a constant concern. It is that concern that specialist insurer Hiscox addresses with its offering to IT vendors, insuring them against being sued by their customers. And it is a genuine danger. Stephen Wares, UK manager of Hiscox’s IT practice, tells of a small software development company with a turnover of £5 million that was sued for £18 million for the alleged failure of a project (the suit was eventually unsuccessful).

And the reasons he tells about are so well-know: bad specifications, overselling in the sales pitch, lax or non-existent change management.

2 Responses to “Insurance against project failure”


  1. 1 PM Hut September 29, 2009 at 6:51 pm

    Armin,

    I believe the essence of every project failure is bad requirements gathering. If you don’t gather the requirements properly, then your project plan will be inaccurate, and hence the failure. Some might say that the client is partially responsible for the failure, especially in software projects, where clients rarely know what they exactly want.

    I did publish an article on tips to avoid IT project failure, hopefully you’ll have the chance to take a look.

  2. 2 Armin Auth September 29, 2009 at 6:57 pm

    Esra, you are totally right. We know all this failures, yet still they are repeated over and over again.


Comments are currently closed.