Project Failure Rate is a proportional or relative value that estimates the probability of failure for a given project. It shows how 'bad' a project might be done in terms operating hours, cycles, costs, quality, or other applicable measures.
Failure rate is opposite to success rate which is a measure of a project’s ability to reach its completion. There are four major parameters that determine failure rate, such as:
- Time including working hours, activity duration, work cycle time
- Budget including cost estimates, funds, cash flows
- Scope including boundaries, requirements, assumptions
- Product acceptance including product quality, functionality, features
In other words, a project becomes failed when it is delivered out of schedule, out of budget, out of scope or/and with no product accepted.
There are 5 major steps to reduce the rate of project failure. These steps are:
- Ensure good communications between project participants to avoid misunderstandings and overlaps
- Involve customer in the project execution process to ensure product acceptance and requirement matching
- Detect and manage changes timely to prevent scope creep
- Test the project before deployment to make sure it is designed and developed as planned
- Respond to risks immediately and plan for contingency in advance.