Are public projects doomed to failure from the start?

Marc Lahmann Partner, Strategy & Transformation, PwC Switzerland 11 Oct 2018

The success rates of public transformation projects are continuing to disappoint. Yet, there is no inherent reason for their failure. Before tangible results can be achieved, expectations must be clearly defined, and their challenges and risks must be identified and addressed.

Why does the public sector need to transform?

Megatrends and changing demand structure call for strategic transformations of the public sector. However, when it comes to governmental and public initiatives, the number of spectacular failures, budgets spiralling out of control and apparent incompetence on the part of project management and sponsors seems endless. This impression is often exacerbated by sensationalist press coverage and exploitation for political agendas and conflicts. The result of this are usually enraged taxpayers coupled with a general loss of faith in governments and public organisations. Some authors even go so far as to declare the public sector incapable of successfully delivering any project. What are the main reasons for this disappointing situation, what can be done to amend it?

Macroeconomic megatrends, which can be observed today, and which will continue to prevail in the future (e.g. demographic shifts, rapid urbanisation, resource scarcity), continue to force governments and public organisations to address change. This pressure to rapidly adapt is aggravated by changes in the needs and wants of recipients of governmental and public services. This necessity is affecting all public areas, from healthcare, to infrastructure and transport, to defence and e-government. This demand and necessity for change is usually met with the instrument of information technology (IT) and business transformations, which usually have significant budgetary and resource needs.

Specific challenges of public projects: processes, leadership and uncertainty

In general, private and public-sector projects face similar risks. Nevertheless, there are discernible differences between public and private-sector environments. The influencing factors often identified in the public environment fall into four areas: administration, stakeholders, environment and politics.

Figure 1: Influencing factors in the public environment.

This opens a wide range of complex interactions and «politically» motivated challenges that may lead to project failure in general. It is therefore rather difficult to determine the core reasons for failure that apply specifically to projects in the public environment. However, we have observed distinct areas that are proving to be challenging for public projects − mainly because of the multi-dimensional layers of success and the timeframes over which success in public projects eventually becomes visible. On the basis of the literature, our own experience and best practice, we have identified three groups of key challenges that potentially hinder or enable the success of public projects:

Methods and processes
Stakeholder and leadership
Complexity and uncertainty

Reviews of failed public projects confirm that methods for project management are not appropriately applied or not correctly adhered to when it comes to methods and processes of a wide range of projects, particularly those with an IT context. These reviews also reveal an even higher percentage of cases of violations of best-practice project management principles. Such methodological and capability-related problems on the project level are exacerbated by a general lack of effective programme and portfolio management in public environments.

In the area of stakeholder management and leadership, too, there is much room for improvement, and a lack of top-management support is regularly given as a reason for failure in public projects. Political leaders often overestimate the capabilities of IT and project management and underestimate the challenges. Not only this, but their time in charge is usually shorter than the project’s life cycle. This discrepancy inevitably results in changes in major stakeholders and sponsors, in many cases followed by major changes in the scope and objectives as well. Another recurring topic is the culture of blame in public organisations that naturally obstructs people’s readiness to learn from past mistakes and concentrate on problem-solving strategies.

Complexity is the burden of public projects

A major challenge in public projects is their complexity. Projects in an information technology context, for example, are political, organisational and technical – leading to complexities that can render a project unmanageable.

Political complexity: Political decision-makers and senior civil servants often have misconceptions about the capabilities and boundaries of project management. Project deadlines are often set on the basis of political debate rather than realistic planning efforts. Political agendas frequently mean there is an unwillingness to change or end projects that no longer fit the business case.

Organisational complexity: In many cases different independent organisations have to be constrained to cooperate on public projects, and the organisational and procedural changes necessary for a project to succeed often meet with major resistance in the organisations affected.

Technological complexity: There is an intrinsic mismatch in flexibility between IT systems and political and public organisational processes. A heterogeneous landscape within and between public organisations means that interfaces and data formats have to meet additional requirements, sometimes preventing easy and fast solutions.

The idiosyncratic complexities of public sector projects can easily lead a project into deadlock. A detailed process for identifying and defining user and supplementary requirements, scope and benefits will have to be set up and installed to tackle this issue. Close collaboration among a vast array of stakeholders is necessary, and the dialogue among stakeholders during all project phases must be open, critical and constructive. Last but not least, a strict change management process must be implemented throughout the organisations and institutions involved.

The most critical success factors specific to governmental and public transformation projects are:

Public transformation projects: ten calls for action

PwC proposes ten calls for action that enable the successful completion of public transformation projects:

Methods and processes

Application of a project management methodology built for the needs of the organisation’s projects and scalable on the basis of project risk
Awareness and profound under-standing of government processes

Stakeholder and leadership

Support from management regarding the project management process
Proactive communication to a variety of different audiences (press, negative stakeholders)
Management of conflicts among stakeholders and recognition of their interests (political awareness and sensitivity)
Interactive dialogue among stake-holders during all project phases

Complexity and uncertainty

Detailed process for identifying and defining user and supplementary requirements, scope and benefits
Close collaboration among a vast array of stakeholders
Interactive dialogue among stake-holders during all project phases
Strict change management process

In conclusion, we would like to reiterate that both from a theoretical point of view and in our practical experience, there is no inherent reason why a public project should be less successful than any other. Our ten calls for action ensure that their complexity, methods and leadership issues – and main hindrances for success – are amended with the right tools to make any public project successful.