Friday, March 23, 2012

Risk and Impact

Walter Hekala writing recently in Devex notes:

A recent McKinsey-Devex survey reports “only 36 percent of those surveyed said that most aid projects achieve their intended impact,” suggesting only 36 percent of donor-funded projects are what we would define in the project management discipline as “successful.” To me, a 36 percent success rate is not at all surprising, having worked in the field of international development for the last 14 years. In fact, a 36 percent success rate may even be optimistic.

Why? International development projects are inherently high risk. They have many factors that are simply beyond the control of the project implementer, even employing project management best-practices. International development projects’ inherent risks should not deter donors, yet they can be better managed and controlled because two principal causes of project failure are 1) poor project planning and 2) inadequately skilled project managers.

If 64 percent of international development projects are not meeting established objectives, the delivery of those projects needs to change. Taxpayers are demanding greater accountability from their governments, and thus donors funded by governments are demanding greater accountability and returns on investment. 

As noted in a recent Devex article, a private funding organization like the Bill & Melinda Gates Foundation, with a much smaller pool of contributors and a higher risk tolerance, can tolerate a 10 percent success rate, but donors using public funds must be more conservative and accountable.