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In the United States, we spend more than $250 billion each year on IT application development of approximately 175,000 projects.
The average cost of a development project for a large company is $2,322,000; for a medium company, it is $1,331,000; and for a small company, it is $434,000. A great many of these projects will fail.
Software development projects are in chaos, and we can no longer imitate the three monkeys — hear any failures, see no failures, speak no failures.
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The Standish Group research shows a staggering 31.1% of projects will be canceled before they ever get completed. Further results indicate that 52.7% of projects will cost 189% of their original estimates.
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The cost of these failures and overruns is just the tip of the proverbial iceberg. The lost opportunity costs are not measurable, but could easily be in the trillions of dollars. One just has to look to the City of Denver to realize the extent of this problem.
The failure to produce reliable software to handle baggage at the new Denver airport is costing the city $1.1 million per day. Based on this research, The Standish Group estimates that in 1995 American companies and government agencies will spend $81 billion on canceled software projects.
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These same organizations will pay an additional $59 billion for software projects that will be completed but will exceed their original time estimates.
Risk is always a factor when pushing the technology envelope, but many of these projects were as ordinary as a driver’s license database, a new accounting package, or an order entry system.
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