The Costly Consequences of Project Delays and How To Prevent Them
Project delays come with a high cost – both financially and in terms of employee morale – for any organization.
Unforeseen delays can quickly add up, resulting in abandoned projects that leave a company worse off than when they started.
But there are ways to avoid or reduce project delays, making it possible to minimize their costly consequences.
Explore the costs of project delays and strategies for how to prevent them.
What is project abandonment?
Project abandonment is when a company decides to no longer pursue or invest in a project. This can be due to budget constraints, development issues, a lack of resources, and other factors that prolong or hinder the progress of the project.
When this happens, the cost of the abandoned project typically exceeds any profit that it could have achieved – leading to significant losses for the company.
What are the costs of project delays?
Project delays can cause a chain reaction of costly consequences for an organization that include increased expenses, project overruns, reduction in morale, and increased turnover.
Delayed projects often require resources to be repurposed or reallocated, which results in increased labor and materials costs.
For example, companies that remain short-staffed spend up to $28,000 per year more than if they had hired two new employees. [source: Murray Resourcing: The Hidden Costs of Understaffing]
On average, large IT projects run 45% over budget and 7% over time, while delivering 56% less value than predicted.
Software projects run the highest risk of cost and schedule overruns.
Loss of confidence from stakeholders
Stakeholders may lose trust in the organization’s ability to deliver on its promises if deadlines are consistently missed, which could lead to a loss of business.
Reduction in morale
When deadlines are not met, it can cause employee morale to drop and lead to disengagement from the project.
This can be damaging to productivity and the organization as a whole.
Project delays can lead to employee burnout and dissatisfaction, which in turn increases the likelihood of turnover.
Employees feeling overworked and unfulfilled in their roles leads to higher turnover, which can cost companies 2x the amount of the existing employee’s salary.
How to prevent project delays
Project delays are often unavoidable, but there are strategies that can reduce their impact including establishing clear goals and milestones, hiring contract workers, developing timelines, monitoring progress, and having contingencies in place.
Establish clear goals and milestones
Setting realistic goals and establishing clearly defined milestones helps to ensure that the project is kept on track.
Hire contract workers
Bringing in contract workers with specialized skills can help to fill any gaps and get projects back on track.
And since they’ll only work for the duration of the project they’re assigned to, the smaller upfront cost outweighs the potential of losses from project abandonment.
Develop a detailed timeline
A timeline should be created that outlines all tasks, their deadlines, and what resources they require.
This makes it easier to identify potential issues early on and address them before they become a problem.
Monitor progress regularly
Regularly monitoring the progress of the project can help to identify any issues that may arise, allowing teams to take corrective action.
Have contingencies in place
In case something does go wrong, it is important to have contingency plans in place that provide guidance on how to move forward.
This includes having backup resources like contract or gig workers available or being prepared to adjust the timeline as needed.
Avoiding project delays
By taking steps to prevent project delays, organizations can reduce their costly consequences and ensure the successful completion of projects.
By establishing clear goals, timelines, and contingencies, teams will be better equipped to avoid costly delays and achieve success.
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