PULLING THE PLUG - SOFTWARE PROJECT-MANAGEMENT AND THE PROBLEM OF PROJECT ESCALATION

Information technology (IT) projects can fail for any number of reason s and in some cases can result in considerable financial losses for th e organizations that undertake them. One pattern of failure that has b een observed but seldom studied is the IT project that seems to take o n a life of its own, continuing to absorb valuable resources without r eaching its objective. A significant number of these projects will ult imately fail, potentially weakening a firm's competitive position whil e siphoning off resources that could be spent developing and implement ing successful systems. The escalation literature provides a promising theoretical base for explaining this type of IT failure. Using a mode l of escalation based on the literature, a case study of IT project es calation is discussed and analyzed. The results suggest that escalatio n is promoted by a combination of project, psychological, social, and organizational factors. The managerial implications of these findings are discussed along with prescriptions for how to avoid the problem of escalation.