Information technology projects have a poor track record in meeting budget goals. The
Standish Group s CHAOS studies reported an average cost overrun the additional percentage or dollar amount by which actual costs exceed estimates for unsuccessful IT projects ranged from 180 percent in 1994 to 56 percent in 2004. Although academic researchers question the validity of these numbers, more rigorous, scientifically reviewed studies acknowledge the problem of cost overruns for IT projects. For example, three separate surveys of software project cost overruns done by Jenkins, Phan, and Bergeron in 1984, 1988,and 1992, respectively, found that the average cost overrun for all of the projects in their survey samples (not just unsuccessful projects) was 33 34 percent. 1 Obviously, there is room for improvement in meeting cost goals for IT projects. This chapter describes important concepts in project cost management, particularly, creating good estimates and using earned value management (EVM) to assist in cost control.
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