This is Why You Need CapEx Management Automation To Help Prevent Capital Project Overrun in IT

  • This is Why You Need CapEx Management Automation To Help Prevent Capital Project Overrun in IT

    This is Why You Need CapEx Management Automation To Help Prevent Capital Project Overrun in IT

    Large-scale IT projects are a possibility at any company and become more prevalent every year. Capital project management is always a complicated endeavor, and for IT projects it can be even more complicated than usual. IT projects usually cover multiple departments with differing needs. Everyone’s contribution is valuable, but that also means you’ll need to find a way to coordinate multiple departments and stay on-budget as everyone involved collaborates on the project.

    Many businesses struggle with the intricate aspects of IT projects. This results in issues such as scheduling delays and inadequate testing. Another common problem is “scope creep” as the project spreads beyond its original requirements. All of these problems cost time and money.

    Research collected by McKinsey Digital and the University of Oxford indicates that half of all large-scale IT projects (which they define as a project with an initial price tag exceeding $15 million) go over budget in a major way. They say that “On average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted.” These finds are consistent across industries. Most companies weather the problems fairly well. But in 17% of the cases this research looked at, “IT projects go so bad that they can threaten the very existence of the company.”

    In order to avoid spending overrun and possible project derailment, it’s important to take extra precautions and stay diligent about managing IT projects. In today’s article, we’re going to look at several tips for helping you avoid capital project overrun in IT.


    Planning, Planning, Planning

    When you’re dealing with a large-scale IT project, such as new software implementation, it’s difficult to plan too much. There are thousands of considerations of all sizes across the company. To bring this type of capital expenditure (CapEx) project through to completion, it’s important that you put effort into managing your strategy and stakeholders in addition to focusing on budgeting and scheduling.

    Often, the scope of this type of project is defined primarily by the IT department for cost estimation purposes. Although it may appear easy enough for IT to gather the needed information, the “tech team only” strategy is too limited to encompass the entire organization’s needs. Large-scale IT projects typically affect multiple departments and it makes sense for multiple departments to be involved in planning.

    It’s a good idea to set up a steering committee to handle project deployments. This committee should incorporate regular input from stakeholders in all the affected departments. To make sure implementation goes smoothly, the committee should gather all of this information in the earliest possible phases of the project. This ensures that the project plan considers all the important elements in its initial architecture.


    Document Everything

    Defining all of the requirements at the outset of the project is critical. However, that’s not where the responsibility to document things ends. An adage in the project management world is if no one writes it down, it isn’t a requirement. After a long meeting, the last thing most of us want to do is write up the details. However, if you take the time to document as you go it’ll be a big help in the long-term. Even for documentation specialists, repeated revisions are often tedious and sometimes frustrating. Design documents are long and exceptionally detailed for a very good reason.

    The larger your project, the more important it is that you note all the details and alterations. Trying to hunt back through email chains for changes is time-consuming and unreliable. Some alterations to your original plan are simple, but they may still change the way the underlying design needs to be configured. Rather than make assumptions, it’s best to have all of your information centralized and accessible to major stakeholders. This helps ensure that everyone involved has a chance to review and approve before work begins on the project.

    Documentation is one place where automated capital project management software can really help with planning. NextProcess’s CapEx software makes it simple for you to manage all the details related to your capital projects in one central program. We make documenting everything easy. Our program also gives everyone involved access to project details that update in real-time. Plus, we don’t charge for additional user licenses so you can grant access to as many people as you like without increasing the costs.


    Teams and Technical Preparation

    Having IT resources available is essential for this type of CapEx project to succeed. Strangely, that’s not always a priority when companies are designing the timelines for a large-scale IT project. Some companies may take for granted how much their internal IT teams can accomplish independently. Others may simply have too much disorganization for IT to adequately plan.

    It’s critically important for everyone to commit to their deliverables early in the project to avoid any unnecessary delays where resources or momentum could be lost. This also means organizing your project team so that everyone can work together. Make sure you account for differences in personality and availability when assembling the project team.

    As you build your teams, be sure to choose people who excel at core project-management practices. Those involved in keeping your project on-track should be committed enforcing to short delivery cycles and rigorous quality checks. Also, make sure everyone on the team is on-board with the overall goals of projects and that you’re keeping them up-to-date on project priorities. Finally, if there’s a needed skill area that’s lacking within your company don’t be hesitant to bring in an outside expert to consult on the project.

    Thorough planning, good documentation, and team preparation will help you prevent costly project overruns in large-scale IT projects. You can make this process simple by tracking all the details related to each piece of the project through effective budgeting tools.

    NextProcess’ Capital Expense Management software lets you monitor and manage all the details related to a project’s budget and scope, and customizable reporting tools make it easy to get the full picture. Contact us today to see how software tools and better practices can improve your next IT project.