Project Failure Examples: 4 Famous Cases & Lessons

Projects fail, that’s nothing new. But each project’s failure can typically be tied to a common reason, most of which can be prevented. Reducing the number of failed projects in your portfolio comes down to learning from your mistakes and mistakes other businesses have made and preventing those from happening in the future.

In this article, we’ll explore why projects fail, provide examples of failed projects, and lessons you can learn from them.

Key takeaways:

• Project failure is a situation in which a project doesn’t deliver the expected results either at all or on time and on budget.
• The most common reason for project failure according to PMI is poor communication, with lack of realistic goals, poor estimates, and scope creep being close contenders.
• To prevent project failure, management needs to work on communication and project planning.

What Is Project Failure?

Project is considered failed when it has not delivered on one or more of the following:

• Creating the deliverable.
• Upholding a quality standard of a deliverable.
• Fulfilling project scope.
• Delivering business value.
• Timely delivery.
• Being executed on budget.
• Meeting any other success criteria.

In many instances, projects may fail in one of these areas in a small way. For instance, being delivered with a 5% budget increase or one week past its planned delivery date. That is still, technically, a failure, and one that may result in financial losses if margins are thin, or if there are financial penalties for late delivery.

How many projects fail?

How many projects fail exactly? Let’s look at statistics.

• A wildly cited claim that 70% of projects fail appears to be largely baseless.
• Some estimates, like Flyvbjerg and Gardner 2023 research, suggest 0.5% of projects meet all goals, but their research relates to large government projects.
• In some industries, like AI implementation, up to 95% of projects fail, MIT reports.
• Project Management Institute research places the number of failed projects at 46%.[1]

The last figure is the most accurate projection and can be applied to the majority of fields. What many project managers would be delighted to hear is that figure is relevant for companies with a low level of PMO maturity.

In companies with a high level of maturity, 27% of projects fail to meet all goals. According to Charette research, in software development, only 5-15% of projects fail so catastrophically they are abandoned. [2]

So, in the best-case scenario, you’re looking at an average of 27% of projects failing to meet all goals and much fewer to fail catastrophically.

Why should we study project failures?

Whether we study our own or others’ failed projects, investing your time into scrutinizing the reasons of failure helps us to:

• Understand the reasons behind each project’s failure.
• Find common reasons.
• Develop strategies to avoid them in the future.

As a result, your organization will become better at risk management and will reduce the number of failed projects.

Why Projects Fail: The Most Common Reasons

Before we dive deeper into examples of project failures and lessons that can be learned from them, let’s take an overview of the most common reasons for project failure.

Poor communication

PMI states that poor communications is a contributing factor in 56% of the projects that failed. [3] Effective communication is a key component of successful project management because it allows companies to:

• Align on project success criteria.
• Ensure strategic alignment.
• Improve understanding of project assessment accuracy.

Building a company where communication thrives may be harder than it seems, but it will improve most areas of business.

Lack of clear realistic goals

Goal setting for a project can go wrong in two major ways. One is being unrealistic. Setting out to finish a grand project with an overloaded team will surely lead to failure.

The other is lack of clarity. Starting a project only with a vague idea of what should be the end result will lead either to stopping the project due to infeasibility, or to significant scope creep down the road.

Scope creep

Scope creep is a situation where in the middle of a project, its main objectives shift or expand. The management or the client decides that to be successful, the project needs to include more features, different design, better quality, etc.

This expands the project resource needs, and without rescheduling it or controlling the scope creep, it will fail to meet initial estimates. Improve your change management to handle this issue better.

Poor estimates

Unrealistic estimates mainly stem from the primary reason for project failure, poor communication. When there’s no communication between the team and the management and decisions are passed from the top down, projects can often be underestimated.

Poor resource management

Lack of visibility into the company’s projects and lack of resource management can lead to making poor resource planning and allocation decisions. This can include scheduling too much work for a group of resources which makes them lose productivity or allocating resources without an adequate skill level for the task. Poor resource management results in bottlenecks that make it impossible to deliver projects on time and within budget.

Poor risk management

Even when a project manager does planning and preparation well, the project may still fail due to lack of risk management. The common examples of risks you might run into include:

• Resource conflicts between company projects.
• Equipment malfunctions.
• Supply chain disruptions.

If there is no contingency planning for those, a project may fail.

4 Lessons Learned from the Weirdest Cases of Project Failure  

In our previous article in this series, we introduced you to lessons learned from top project failures in construction. But we also want to highlight the weirdest cases of project failure. We shouldn’t forget what can stall our projects, and we should be prepared for anything.

Lesson #1: You never know what will stand in the way

David Millward, a contributor to The Telegraph, reported that the stakeholders of a flagship German rail project, Stuttgart 21, have been plagued by yet another project controversy. It turns out that two endangered species of lizard were found on the potential construction site, delaying the prestigious $7.06 billion rail project in southern Germany. The plan was to build the Intercity Express line, a high-speed 35-mile line between Ulm and Stuttgart. But construction was put on hold the moment experts found out that the land on which the line was to be built is also the habitat for thousands of sand and wall lizards, both protected by European Union environmental law. This surprise is expected to cost Deutsche Bahn $16.3 million – this cost will go to relocating the species to a safe and appropriate place some miles away that will be conditioned as their habitat.

Kate Connolly from The Guardian points out that the “costs involved cover the rescue teams, transporting the lizards, planning their new habitats and monitoring their wellbeing.” The stakeholders in this project have lost at least 18 months from their project schedule, and it remains unknown how much longer they’re going to wait.

This eye-opening project delay once again proves that in project management we’re sometimes unable to predict uncertainties. Reality dictates the rules. It speaks to us in different forms of project delays and failures, challenges our budgets, and shifts our destinations. Reality can reach us in the form of cute, rare lizards found at the construction site and seemingly mock us. The lesson learned from this particular case is that reality can always surprise you. Albert Einstein used to say that reality is merely an illusion, albeit a very persistent one. Do you agree?

Lesson #2: An unlimited budget isn’t a silver bullet

Back in 2017, Dyson announced plans to create an electric car and put it on the market by 2020. But before the projected rollout date, in 2019, the company publicly announced they will be discontinuing the project. Why did that happen?

The production was going well for Dyson. With a 400-strong team working on bringing the new electric car to the world, codenamed N526, the company has successfully developed a prototype able to run 600 miles on a single charge. The company even invested in an experimental track that would have been used for R&D purposes in the upcoming automotive branch of Dyson.

Over the course of three years, the company has invested half a billion dollars into the project. The funding wasn’t the problem, neither was the ability to create a well-performing car. What was it?

Ultimately, the N526 had to be discontinued because of market dynamics. Most car manufacturers investing in EVs were able to sell their cars without making a profit or even losing money on them while making up the losses via sales of traditional cars. Dyson’s EV projected to be priced at $150,000 just couldn’t compete and releasing it would only result in even bigger losses for the company.

Read more: 13 Methods to Forecast, Analyze, and Solve Problems

Lesson #3: One mistake in project orchestration is fatal

Mega projects are even more threatened by various factors. The release date of the Airbus A380 “superjumbo,” the world’s largest passenger airliner, was constantly postponed because management kept blundering. But what was the weirdest moment in this case? The development of the aircraft was a joint effort of four countries with teams spread across 16 sites, which resulted in a lack of supervision. It turned out that two different versions of the Aided Design CAD software were used to design electrical wires, cables, and connectors. The International Project Leadership Academy reported that German and Spanish designers had used one version of software (CATIA version 4), while British and French teams had upgraded to version 5. In the end, their designs were incompatible, and wires appeared too short to fit.

As a result, when it came time to install hundreds of miles of wiring cables into the fuselage of the aircraft in Toulouse, they failed to fit. Airbus was then left with no choice but to halt production, postpone deliveries of the aircraft for two years, and redesign the wiring system. The cost, expected to exceed $6 billion, would place the program over two years behind schedule. It was not until October 15, 2007 that the first aircraft was delivered to Singapore Airlines. – Global Project Strategy.

The entire world observed how a feat of engineering and construction transformed into a landmark project failure because management couldn’t make proper software configurations and decisions were made at a maddeningly slow pace. Scheduled for delivery in 2006, the project kept facing new looming deadlines. Puzzling over the true reason why culturally diverse teams continuously went astray, researchers concluded that there were a bunch of fateful decisions that dragged the A380 down. All of them boiled down to poor project coordination and lack of support from senior management. The teams were more reactive than proactive because their leaders overlooked the fact that it’s easier to set off with a list of priorities. Each flaw signalled the absence of initiative by senior management and too much weight being placed on employees’ shoulders.

Lesson #4: Don’t speak too soon

Projects that deal with new or experimental technology often fail not because there’s a funding problem or a lack of resources, but simply because the initial ideas about the project turn out to be too idealistic. That was the case of Elon Musk’s Hyperloop One.

An idea that started in 2014 with Musk publishing a paper on the possibility of a fifth mode of transportation (a competitor to cars, airplanes, and trains) ended in 2023 with the company selling assets and laying off employees, Bloomberg reports.

In those years, Musk’s company has managed to raise $450 million, but little to nothing was ever produced apart from a now demolished test track.

Despite the optimism both inside the company and in the public sphere for a mode of transport that could connect the East and West coast of the USA in a matter of hours, the current technology just couldn’t accomplish that dream. This big idea remained a marketing wonder but a total paper tiger.

Are you satisfied with your team’s performance? Are your projects meeting deadlines? Does your current PM system give you up-to-date information so you can make appropriate decisions? Sign up below for a live demonstration of Epicflow to learn how to finish your projects on time, find the perfect priorities, and improve your team’s performance based on real-time data.

How to Prevent Project Failure: Best Practices

You can avoid more projects failing by following a few best practices. Let’s review the most common ones.

Assess project feasibility

The first thing you do to protect a project from failure is assessing whether it’s realistic to begin the project in the first place. Ask yourself the following questions:

• Does your company have the resources to execute this project?
• Does it have enough internal knowledge to do it well?
• Is the project likely to deliver enough business value to be worth the investment?
• Can the project perform well based on market research?

It’s best to put these to a vote.

Assess project risk

The next project failure prevention measure is assessing the project risk and mitigating it. Consider what can go wrong during project execution and what steps you can take to avoid it. For instance, if you don’t have the necessary skills within the organization, you could turn to an agency to supplement those.

Read more: Project Risk Management: Importance, Challenging Issues, Recommendations

Assess portfolio risk

The risks associated with the project itself are not the only ones that can affect project success or failure. You should also consider the portfolio-wide risks. These typically include risks associated with scheduling overlaps with other projects that may lead to bottlenecks, decrease in productivity, and significant delays.

Use project risk management software to find risk-bearing areas (e.g., resource overload) and fix issues before they affect the entire portfolio.

Set realistic requirements

If you set an unrealistic deadline for the project, it will most likely fail to achieve it. To establish a feasible due date, include team members in discussions on the amount of resources the project needs and when it can be realistically done.

Simulate portfolio scenarios

In multi-project environments, one project’s expected timeline and resources allocated to it can interfere with other projects in the portfolio. To see how your decisions impact project performance, use prediction analytics to simulate how your portfolio would behave if you were to shift project deadlines or assign different amounts of resources to it.

Monitor progress and adapt

PPM tools can help you track how your projects progress and alert you if one or more of them are on track to not being delivered on time or on budget. If that happens, you’ll need to find the reason for the delay and fix it, typically by postponing low-priority projects and focusing on high-priority ones.

Read more: How to Prioritize Projects: Methods, Criteria & Matrix (A Complete Guide)

Analyze reasons for project failure

The best way to prevent project failure in the future is to analyze your own failures in the past. Use historical data and conduct interviews to understand how past projects have failed and why.

Find common reasons and work on ways to avoid them.

Final words

A project failing is nothing new in project management, it happens all the time. Statistically, 46% of projects will fail in one way or another. It is in the project manager’s purview, however, to do all in their power to reduce the odds of a project failing.

To do that, you should work on improving initial project assessment, risk management, and analyze the mistakes that have been made in failed projects.

References

1. Project Management Institute. (2012). Pulse of the profession® in-depth report: Driving success in challenging times. Newtown Square, PA: Author.
2. Charette, R. Why software fails. IEEE Spectrum, (Sept. 2005), 42–49.
3. Monkhouse, P. (2015). My project is failing, it is not my fault. Paper presented at PMI® Global Congress 2015—EMEA, London, England. Newtown Square, PA: Project Management Institute.