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Black swans and how to avoid them

18-08-2014 News UK

A black swan is an IT project that has gone completely off track. The Danish government has worked systematically to avoid that type of projects since the beginning of 2011, when the Agency of Digitization launched the cross-governmental IT project model and began to risk assess large governmental IT projects.

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A black swan is a metaphor for a rare event that deviates beyond what you would normally expect of a situation and that would be very difficult to predict. Bent Flyvbjerg, professor at the University of Oxford, uses the term black swan about large-scale IT projects that overrun budget or time schedule significantly. According to Flyvbjerg, there is no significant difference between the frequency of public sector and private sector black swans.

There are many reasons why large-scale IT projects end up as black swans. Some of the warnings of a potential black swan are, according to Flyvbjerg:

  • The project manager believes the project is unique.
  • There is organizational resistance towards the project.
  • The project lasts more than three years.
  • It includes much new and innovative technologies.

Managers tend to ignore the risk that large IT projects end up as black swans and treat projects as if their course can be predicted and controlled.

The risk of black swans can be reduced

To reduce the risk of ending up with a black swan, one must, among other things ensure that all project members and business share the same goals for the project throughout its lifetime, allocate and make use of the best resources, make sure that project participants can collaborate effectively, and be skilled at all the relevant project management disciplines.

This is also one of the things we focus upon when the Danish Council for IT projects in cooperation with the 40 members of the assessment corps undertake risk assessments of all governmental IT projects with a budget of over 10 million. The risk assessment is conducted at the end of the project’s analysis phase but before the specification and procurement is begun in the acquisition phase. As a result of the risk assessment the project owners are provided with recommendations on where to pay special attention.

Cross-governmental IT project model

But a risk assessment is no guarantee that an IT project will be successful. According to Bent Flyvbjerg it is usually in the specification phase – after the analyses phase and the risk assessment – that we see the most serious overruns of time and budget. This means that there is a constant need for qualified assessments and management, also after the risk assessment. In Denmark it is the project steering committee at the local authority that is responsible for taking the necessary action if the project is on its way to overrun.

It is therefore important to establish a suitable governance around the large IT projects, and make sure that the steering committee's mandate and not least its responsibilities are defined clearly. It is the responsibility of the chairman to rescope, replan or close a project if it is on its way to become a black swan.