Experience with a runaway project

Most of the projects fail either because they are – a) Not able to finish in time, b) Are cost overrun, c) Are below client expectation.
I would like to analyse the only project failure that I have experienced in my previous company in India that provides technical solutions to major financial institutions worldwide. The company has a flagship banking product in its name along with major clients across globe and has repute for delivering zero defect solutions. One of the existing clients came up with the need for a system, similar to CRM systems that are getting widely implemented, that would help them in assessing and fulfilling mortgage requirements of emerging corporate with an inbuilt feature to verify collaterals requirement for the given loan amount. This story is pretty interesting and unique because this project had consecutive failures at various phases but was never discontinued or acknowledged as a failed project. Let me divide the project into phase1 which was the first time the project started and phase 2&3 when the project went to a different vendor after initial failure and came back to the original vendor after second time failure.

Phase1: The project was first started following standard project management methodologies, however at a later stage scope creep resulted in a disaster. The requirements were not clear, nor were the scope or associated risk. Client changed the requirement frequently, the deliverable deadline slipped, people lost motivation and the final deliverable had a quality that was far below acceptable limit. This resulted in the project to be lost by my company to one of the competitors. The project team was penalised for under performance by giving no hike for that year, at a time of tech bubble when rewards used to be huge. There was frustration in the company from top management to bottom as this was the first time in the company history that a project resulted in an unhappy client. This meant loss of future business with this client and a poor brand image for the company.

Phase 2&3: This project went to the competition, but the executive team from the client side remained the same. The same level of uncertainty in requirements led to a second time failure of the project. This gave an opportunity to my company to cover up for the past mistake and try to win client’s faith. The business development team approached the client with the goal of getting the project back to the company anyhow. This meant making unrealistic commitment about the deliverable timeline of eight months (6 days a week, 10 hours a day) , cutting down on the budget by 80% and committing to deliver the design for the next phase of the project for free. A top level management planning team decided that all the members from the old team who worked on the project earlier will be pulled into this project since they knew the system better and this meant lesser time for learning curve. Those team members felt that they got a chance to prove their worth. This project was a bundled project where the budget was fixed. Adding extra resources meant loss to the company. Despite that a team was formed with 75 people that included design, development, testing and management. The group head was involved in weekly meetings of the project and the CEO had been tracking the progress of the project. The high level involvement reflected the criticality of the project for the company.

Though the project was executed following standard infrastructure, good communications, with proper project management tools by adhering to key roles; it did not succeed due to poor estimation of budget, time and scope assessment. The management tried to follow best practices and also covered up for the mistakes done earlier. However they failed to realize that employee motivation was an important aspect of project success. The project failed on various dimensions of time, cost, client dissatisfaction and low morale of employees. It was a runaway project which kept on taking resources for three years and was ultimately dumped because the management finally realised that the existing technology could not support the project need. My company did not make any profit on this project. It simply helped them in getting their records clean with the client who finally walked away by accepting the deliverable as one with agreed upon quality and expectation. We however came to know that the project was never implemented at the client’s site because they realised that in three years their requirement had changed significantly and there was no way they could live with the technology that was getting obsolete and would lack support from Microsoft in future.