Why IT Projects Fail – An Introduction to Budget and Timeline Overruns
Imagine that you are starting a new IT project. You have a defined budget and a clear timeline. Unfortunately, during execution, deadlines start to slip, the budget no longer matches reality, and new problems appear almost constantly.
This is a scenario that affects a very large number of companies. According to the latest statistics, up to 70% of IT projects fail or do not fully succeed.
That is why, in today’s episode, I will show you how to prevent IT project failure and what you can do to avoid budget overruns and delivery delays in IT projects.
Who I Am and What This Episode Is About
Hi, my name is Kamil Tarczyński, and on a daily basis I help entrepreneurs use technology effectively so their companies can grow faster and operate more efficiently.
In this episode, we will talk about how to avoid risks in IT projects, how to manage complexity, and how to reduce the likelihood of project overruns. Let’s begin.
Are IT Project Overruns Really a Common Problem?
Let’s start by answering a fundamental question:
Are budget and timeline overruns in IT projects really a widespread issue, or are they just isolated cases?
Let’s look at the data.
Only 31% of IT projects are considered fully successful. This means that nearly 70% of projects experience partial or significant failure, usually in the form of budget overruns, scope creep, or schedule delays.
Of course, not all of these projects are total failures. In many cases, the project is delivered, but with smaller or larger deviations from the original plan.
Only about one-sixth of all analyzed IT projects exceeded their original estimates by more than 200%. While this is not the majority, it is still a significant number and cannot be ignored.
It is also important to emphasize that these are recent studies, not outdated statistics from a decade ago. The data comes from modern IT projects across companies of different sizes and industries.
If Overruns Are the Norm, What Is the Root Cause?
If we already know that IT project overruns are more the rule than the exception, the next logical question is:
What are the main causes of IT project failure?
If we understand the root causes, we can react properly, reduce risks, and minimize budget and timeline overruns, or in some cases, avoid them entirely.
Poor Scope Definition and Incomplete Requirements
One of the most common problems in IT projects is poor scope definition, incomplete requirements, or an imprecisely documented scope of work.
This is something many of us know from experience. We want to act quickly. We believe we understand our own product or application perfectly.
However, once development starts, it turns out that certain scenarios were not anticipated. Legal requirements appear, internal procedures must be considered, or edge cases emerge.
What was initially estimated at a certain number of hours suddenly expands. As a result, both the project budget and delivery timeline increase.
Lack of Project Management and PM Competencies
Another frequent issue is the lack of proper project management or insufficient project management competencies.
Yes, IT projects can technically be run without a dedicated project manager, relying on direct communication with the development team. In practice, however, this approach often fails.
When business stakeholders and developers both have their own daily responsibilities, there is rarely enough time to manage the project thoroughly. Details are missed, dependencies are overlooked, and no one is fully responsible for coordination.
This is why the role of a Project Manager (PM) is absolutely critical in IT project delivery.
Missing Business Ownership on the Client Side
Another major risk factor is the lack of clear business ownership.
From the very beginning, there must be one decision-maker on the client side who is ultimately responsible for business decisions in the project.
This does not mean that collaboration with the broader team is not allowed. It means that final decisions must come from one accountable person.
Otherwise, developers receive conflicting instructions from different stakeholders, leading to duplicated work, wasted time, and unnecessary costs.
Once again, this is where a strong PM plays a key role by stopping decision chaos and enforcing alignment.
Technological Complexity and Module Dependencies
Another common cause of IT project overruns is technological complexity and hidden dependencies between system modules, or the selection of an inappropriate technology stack.
Sometimes, in order to finish one module, another module must first be completed—even if it has not yet been started. What seems like “almost done” suddenly turns into a much larger effort.
These dependencies directly impact estimations, timelines, and budgets.
This is why early risk identification and dependency mapping are so important in IT projects.
Business Analysis vs. a Rapidly Changing Market
In real life, it is extremely difficult to predict everything upfront without a detailed business and functional analysis. Such an analysis requires time and budget.
Very often, companies consciously accept the risk of future changes in exchange for faster execution. This means that unexpected activities and risks may appear during development.
This is not necessarily a mistake. It is often a strategic decision.
Moreover, today’s business environment is highly dynamic. A three-month business analysis may already be partially obsolete by the time it is finished. That is why many companies prefer iterative delivery and ongoing risk management.
Is Exceeding the IT Project Budget Always a Bad Thing?
In my opinion, not always.
If budget overruns result from new functionalities, evolving business requirements, or better customer alignment, they are a natural consequence of project growth.
If the organization is financially and operationally prepared for this, it should be seen as part of doing business, not as a failure.
Problems arise when the scope is fixed, yet overruns occur on simple functionalities. This is when trust starts to erode—toward the vendor, the team, or the project itself.
Consequences of Uncontrolled IT Project Overruns
Uncontrolled overruns can lead to burning contingency budgets that were meant for other business initiatives.
Projects get delayed, time-to-market increases, and competitors may launch earlier. In extreme cases, teams are forced to compromise on quality or functionality.
The most severe scenario is the complete failure and cancellation of the IT project.
IT Project Failure Is Not Just a Technology Problem
Most IT project failures are not purely technical.
They are often caused by organizational issues: missing documentation, legal constraints, poor communication, or lack of domain knowledge transfer.
Building an application is not only about development. It includes design, legal considerations, business knowledge, and continuous communication.
Communication is the single most important factor in successful IT project delivery.
How to Avoid Risks and Overruns in IT Projects
The foundation is transparent and continuous communication.
If developers ask questions, that is a good sign—it means they want to understand the product deeply.
An iterative delivery approach, frequent demos, and small release increments allow issues to be detected early.
Budgets, timelines, and risks should be reviewed regularly. Developers are on the frontline and often spot risks first—they must feel safe to raise concerns.
What You Can Do Immediately
Start with a mini audit of your current IT projects.
Check whether you have:
- Clear communication processes
- Risk and change management
- Defined roles and responsibilities
Introduce project management standards, especially if you are running multiple IT projects simultaneously.
Talk to your project teams, build a culture of transparency, and scale improvements iteratively, step by step.
Final Thoughts
IT project budget overruns are not a matter of bad luck. They are usually the result of systemic issues in project management, communication, and decision-making.
The good news is that these problems can be anticipated, monitored, and managed.
In the next episode, we will discuss how to implement KPIs and real-time project monitoring to control budgets and timelines proactively.
That’s all for today. Thank you for listening.
