5 common reasons for project failure within agencies and how to avoid them

There isn’t just one reason behind project failure—you could fill a notebook with them. 

Whether it's a blown budget, staff shortages, missed deadlines, or just bad planning, projects (especially complex ones) can fail when managers don’t anticipate the problems they may run into. 

Data from the PMI Pulse of the Profession 2021 report found 34% of projects experience scope creep. Additionally, 35% of all projects fail due to inadequate budget, which means you must learn how to proactively plan for all outcomes to steer clear of project failure.

This article will walk you through five of the most common reasons for project failure and give you some tips on how to avoid them. 

Let’s get started. 

Deliver work on time

Keep track of the time spent working on tasks and stay on schedule with the Teamwork Timer. Import tasks or log billable and non-billable hours directly to Teamwork.

Download Teamwork Timer app

The main reasons why projects fail over and over again

Figuring out why a project has failed is like popping the hood of your car. There are several moving parts that make it run. But if one part fails, the car won’t work.

It's the same with a project workflow as every part—from budgeting to planning and communication—needs to be in sync for it to succeed. 

When a car is about to break down, you often see warning lights on your dashboard to catch your attention. It's the same for successful project managers who spot the warning signs that a project is about to fail. 

An earlier PMI Pulse of the Professional 2018 report found the most common project failure warning signs to watch out for.

To break this list down a little more, we're going to focus on five specific reasons behind project failure and provide some tips to avoid them. Let's dive deeper.

1. Not enough resources for the project

Your pipeline is busy, your company has plenty of work to divvy out, and you've never had this many clients.

Sounds amazing, right?

Well, it is pretty nice if you've got enough resources to handle the workload. When we talk about resource planning, we mean the people working on your projects—your team. 

You can plan a project perfectly and make sure that every task, deadline, and budget item matches your project scope. But naturally, your team can't work every minute of their day at full speed to finish a project. 

They need time to reply to emails, brainstorm with the rest of the team, and eat their lunch. If you don't think about these things, you risk overutilizing your team's calendars and burning them out.

It can be extra challenging if you're managing remote teams or juggling numerous projects at the same time. On top of that, you're trying to see who on your team has the capacity to take on more tasks and who is drowning in work.

How to avoid resource allocation issues

Check your team's schedules and make sure there is enough availability to take on another project before saying yes to a client. A couple of simple questions should give you a yes/no answer of whether your team can take the extra work on: 

• How many people do you need to take the project on?

• What is your team’s actual utilization rate right now?

• Is the client’s preferred deadline realistic with the resources you have available?

• Would you need to hire external contractors or stretch utilization rates to deliver the project on time? 

The Teamwork Utilization Report automatically tracks how much free space your team members have on their calendars. And at the same time, it calculates whether or not you’ve given specific individuals too much work.

Let's say you want your team to work on project tasks for 80% of their day. And the other 20% is their time to connect with clients, brainstorm ideas, and deal with any admin tasks on their to-do lists.

The Utilization Report allows team leaders to set utilization rates and track how individuals actually use their time. Think of this less as Big Brother and more as who is running the risk of burnout.

If someone is showing up in the red, this means you're overloading or underloading their schedule. You want to hit the sweet spot that shows up in green. Then you know the team member has enough on his or her plate to get the allocated tasks done without overworking.  

2. Poor collaboration and communication

Ugh, communication breakdown. 

It’s one of the biggest culprits of project failure, which shouldn’t come as a surprise. But if you prioritize team collaboration so everyone works together to get their tasks done, it’s a lot easier to deliver projects on time. 

There are many reasons why communication breaks down. Either some folks don't have enough time to talk to each other – which is a red flag that they're overloaded – or they don't have the right tools needed to collaborate. 

Beyond these reasons, collaboration can also hit a brick wall if your project workflows are too complex or poorly planned. It's easy for your team to fall into project paralysis and not know which tasks and deadlines they own. 

How to avoid insufficient collaboration

Give your team clear instructions about how to properly collaborate during a project. And make sure they have the right tools to follow through.

This is exactly why project management software was invented. It’s not just a hub that houses every important task and deadline within a project.

Project management software like Teamwork gives your team a centralized working space to share ideas, check up on progress, and send each other updates. Additionally, Teamwork makes it simple to efficiently communicate with co-workers or clients.

Whether you need to break projects down into Board Views or use Project Milestones and Status Updates, Teamwork helps you keep everything essential to the project better organized.

3. Lack of a shared vision on a project

If you read our blog, we talk a lot about getting your team on the same page before starting a project. Transparency with your clients and team members is crucial toward achieving the same goal.

When teams are not on the same page or if the client’s vision doesn’t align with the end goal of a project, there’s a huge chance that it’ll end up failing. If you aren't completely honest with a client about realistic project timelines or goals, you set yourself up for failure.

Without a guiding principle behind the project, nobody will fully understand what they're working toward.

How to avoid setting unrealistic expectations 

Don't be afraid to set honest and realistic goals with clients. Your clients need to be aware of specific project deliverables and timelines before you start. Inviting clients to a digital project workspace, for example, lets them see how a project is progressing and can help with overall project clarity.

That's why Teamwork allows you to give access to as many of your client users as you need without paying for extra seats. Inviting clients lets them see the full scope of the project and get real-time updates on what tasks have been completed.

Just choose what permissions a client will have inside the project workspace, and invite them to join. This lets clients easily communicate with your team and get a better picture of the overall project.

It's a great way to keep clients in the loop without handing over total project control to them. As for getting your team on the same page? Well, that all comes down to planning.

4. Too many modifications to project objectives

When deadlines are pushed back and the end goal is frequently changing on a project, it's pretty difficult to reach any project objective at all. This happens when a team starts a project without a plan.

Without careful planning, it's easy for teams to start modifying the project, which ultimately increases the chances of project failure. If your team doesn't know which tasks or milestones are assigned to them, how can the project progress to the next stage?

Let’s say your team has a new project in your pipeline: building a website from scratch for a client. You need to plan every single stage, milestone, and task so your team can work productively and meet a deadline.

Your design team should finish the wireframe before the DevOps team begins their work. And without a proper plan or deadlines, no one knows when to start or what to finish.

How to avoid constant project changes  

Get specific. 

The best way to plan a project is to start early, be thorough, and ensure every task and deadline is covered. Once again, having the right toolkit here helps a lot.

Within the Teamwork platform, project managers can create Project Milestones to plan for deliverable outcomes like website testing or design approvals. All you have to do is add a description to each milestone, set a deadline, and tag the team members responsible for delivering it on time.

Kanban boards are also a great way to plan projects and make sure everyone knows what's happening. Project managers can assign tasks and subtasks within a project and add columns to the board like ready for editing or in progress.

This helps everyone get a quick visual update of how each piece of the project is progressing. It also allows team members or clients to see what still needs to be done to reach the project end goal.

5. Poorly planned project cost estimation

Underestimating how much a project will cost won’t just lead to it failing—it can cost your agency revenue. 

Project cost estimation will never be a perfect science, but project managers too often rush through this process to get a project locked in. Other factors like estimating project costs too far in advance or poorly planning your project scope can also throw the budget way off track.

Your project estimates can't simply copy a figure from a previous project. Instead, you need to calculate cost assumptions, check team workloads, and factor in any indirect costs that could lead to the project running over budget. 

How to avoid inaccurate project cost estimates

Spend some time crunching the numbers. We sound like a broken record but investing in tools that automatically track every project budget and your team’s utilization rates helps you estimate project costs much more accurately. 

Inside Teamwork’s ​​Project Time Budget, features like real-time progress reports and time utilization trackers help you understand the accuracy of your current project estimate. If you haven't allocated enough billable time to a project or you've underestimated the amount of time it'll take, Teamwork can flag it.

This knowledge then helps project managers learn from past estimation mistakes to ensure they don’t happen again. And the Teamwork Profitability Report also tracks in real-time the estimated time vs. actual time your team is spending on a project and then calculates overall profitability. 

This is handy for creating cost estimates for a new project. 

Looking into the number of billable/non-billable times across similar projects in the past can help you estimate how much to charge a client. It also helps you know whether your team has the capacity to take it on. 

If you don't have the capacity, you'll have to choose between hiring external contractors (which will cost your client more) or declining the project if you want to avoid having a project failure on your hands.

Wrapping up

Avoiding project failure is at the top of every project manager's list—one wrong move with planning, budgeting, or alignment can throw an entire job off track.

Figuring out how to spot the warning signs of a project at risk of failing is a great start. An overworked team or a rushed plan are all risks of a project not reaching the end of your funnel. 

A project management tool can make all the difference and help your agency overcome the most common reasons behind project failures. It’s simple. Invest in the right tools, and say goodbye to project failure forever.

Want to make quotes more accurate and your project pipeline more profitable? Try Teamwork for free today!