5 reasons why IT projects go over budget

IT projects are notorious for going over budget and have some of the highest failure rates across the industry spectrum. As a finance executive, it can be challenging to rein in eager technologists and projects that cross time and scope constraints. Let’s take a look at a few common reasons why IT projects prove to be so problematic.

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No budget-owner defined

It may seem like common sense, but many IT projects do not have someone keeping a constant eye on budgetary matters and examining the cost implications of developments. Often, these projects are undertaken in a silo or "IT black box", without thought to meaningful collaboration within the organisation.

Project changes

Unplanned project changes can wreak havoc on a IT department budget. It is not uncommon for changes to be made as a project moves along, as deficiencies are identified, but the risk of unexpected costs can be mitigated by extensive planning and consultation with a wide range of stakeholders.

Damage or malfunction

IT projects often involved a complex implementation process. Hardware and software is susceptible to damage or malfunction and this will entail repairs, replacements and time lost. A prudent budget will have a buffer to allow for these expenses without diverting funds from core requirements.

Lack of coordination

Without a precise list of tasks and deadlines, any team runs the risk of collapsing into inefficiency and chaos. Make sure that you have a clearly defined plan, scope and strong management protocols and make full use of software packages available to manage employee workflow and billing.

Poor allocation of resources

Funds need to be directed in a balanced manner. Spending too much money on non-vital functions or aggressive cost-cutting without thought to the consequences can bring down an entire project. Allocation of human resources is also critical - matching the right skillsets to the task at hand can mean the difference between success and failure.