Famous or Notorious? Why Procurement Projects Fail


There's a "slight" difference between being notorious and famous... Succesful procurement projects can lead to being famous for the right reasons. But being notorious for spectacular project failures, leads to fame of the unwanted kind...

Statistically, the chances are better that your procurement project would lead to notoriety. Look at some of these figures:

Project Delivered but never successfully used 47.50%
Not delivered but paid for 29%
Used briefly then abandoned 19%
Used after extensive modifications 3%
Used as delivered 1.50%
(Report by the Controller General to the US congress on 9 multi-million dollar software projects)

In fairness, not every project will have these type of statistics but lets look at some results closer to the procurement environment. Taking e-Procurement as an example, right now many companies are starting to experience e-procurement successes.

However a year or two ago ago MOST e-procurement marketplaces AND e-procurement software providers closed down, leaving their customers in the lurch.

Many companies in many countries invested millions in procurement technology only to now replacing or phasing out these solutions.

Many senior procurement professionals have been severely embarrassed or "severely fired" as a result.

If buying companies had properly analysed risks (as very few did) they might have noticed that while these vendors had very high market values their intrinsic sustainability was questionable. The essential ratios that define whether or not these companies could make it on a sustainable basis were out of line but very few people made these calculations.

This fits into the topic of Risk Management within the procurement project environment, which will be the topic for our next article.

1. Lets look at some communication issues first:

Ineffective communication leads to the following project issues:

1. Important work is omitted or duplicates are created during the project planning stage
2. Managers / key stakeholders are unprepared
3. Interdependencies between projects / interventions are not identified
4. Programme leaders are unaware of major risks
5. Lack of commitment from major stakeholders.

These ultimately lead to cost increases, risk increases, delays and unrealised benefits.

Effective project communication begins with having a formal communications plan / programme.

This programme communicates UPWARD and OUTWARD to gain support from those who determine project success and create external dependencies.
It also communicates INWARD AND DOWNWARD to the project team. This builds project team understanding and manages internal dependencies.

The Communications plan for the project can be developed using the following 5 steps:

1. Who are the stakeholders? Brainstorm around all stakeholders that:

a. could influence the success of the project,
b. are to be influenced by the project
c. are watching the projects progress from the sidelines

2. Rate these stakeholders according to:

a. how critical they are to the project success
b. the impact of the project on them

3. Determine your communication strategy per stakeholder grouping:

Various communication strategies are then planned depending on the nature of the stakeholder. These range from merely keeping them informed to closely monitoring and responding immediately to their issues. A key strategy to top management is "Maintaining Confidence"

4. Consider what type of communication would be appropriate per stakeholder strategy. These include:
a. spoken word such as: Briefing by top management, line management, one on one communication
b. informal: Grapevine, informal e-mail, discussion databases, project open days etc.
c. written Word: Terms of reference, Newsletters, Briefing Notes, Formal e-mails, Bulletins and notices.

5. Create the plan itself which will include heading such as:
a. stakeholder grouping
b. purpose of the communication
c. who is responsible for doing the communication
c. amount of focus on listening
d. amount of focus on talking
c. format of the communication
d. regularity of the communication.

Prepared By Julian Curtiss and Bernie van Niekerk

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