There are four steps that can be used to investigate the causes of errors in cost estimation. One of them is the investigation of transportation and infrastructure costs that are involved in the course of implementing a project. According to one of the eight listed common causes of Government IT project failure by the National Audit Office and the Office of Government Commerce in 2002, it says that evaluation of proposals driven by initial price rather than long term value for money (delivery of business benefits) can cause project failure. A project cannot be based on previous proposals and prices because different projects are implemented in different historical periods and in different geographical locations. This implies that different projects will have different financial considerations based on geographical locations. Before any feasibility taste of an IT project is carried, the current infrastructure and transportation should be considered to eliminate risks and failure.
One of the reasons of cost underestimation in a project is the technical factors issue. Technical factors mainly relate to technical issues that cause underestimation problems. These factors include mistakes and insufficient data. They also include lack of experience, which is necessary in forecasting (Morris & Hough 1987). The technical factors affecting the Government IT projects are the fast moving technology, complexity, interoperability, defining requirements, oversight and limited skills. Poorly defining requirements and oversight in the IT project can be as a result of, lack of experience and insufficient data provided during budgeting. Such factors usually cause IT projects to be vulnerable to time and cost and hence such projects are unlikely to meet the requirements of the user. For this problem to be solved, users of the IT services need to be involved so that the initial requirements are based on users’ needs and testing should accurately reflect the demands on the service. Therefore end users must be identified first.
Lack of experience in the advanced technology as a technical factor, can lead to Government IT project failure. This is because some of these projects are complex in that they contain millions of codes. In this regard they are difficult to manage (especially in non-technical management of government departments). Officials in government departments lack the experience to manage such complex projects and the project might fail due to this. The issue project complexity can be dealt with using division of labor. This technique is effective in breaking down the project in simple codes which can be implemented easily. Also trained personnel needs to be hired.
Pickrell (1990) claimed that most problems of underestimation are caused by forecasters and promoters’ deception. He was supported by Thomas and Allport. Wach (1990) also supported Pickrell’s argument; he claimed that the cause of estimation errors is mainly intentional deception. Deception by Government officials has been a hindrance to the success of Government IT project. Among the common factors identified by the National Audit Office and the Office of Government Commerce in 2002, the following can be as a reason of intentional deception:
- Lack of understanding of and contact with the supply industry at senior levels in the organization;
- Lack of effective engagement of stakeholders because some of the government would not want that to be done so that they can manipulate the whole project due to selfish interests.
From the comparison of the Government IT project and the literature review on failure of a project, the major issue that comes out strong is the estimation error. This leads to underestimation in cost and time of the project. As seen above, the Government IT project attributed its failure for several reasons as mentioned in the literature review.