Project Failure: A Case Study

From dodgy surveys to well-designed academic studies, a lot of energy has been devoted to the study of project failure, with the results reported as “failure rates.”  And those rates are high enough to cause a lot of concern.  Lately, I’ve seen a lot of articles, blog posts, and discussions on LinkedIn on the subject, contemplating failure in abstract terms. So, I’d like to contribute a case study that might help put things in focus.

The Fontainebleau Las Vegas is an incomplete $2.9 billion, 3,889-room, 68-story hotel/condo/casino development, situated near the north end of the Las Vegas Strip on the 24.5-acre site previously occupied by the El Rancho and Algiers hotels.  Construction was begun in early 2007, and the tower was topped out in November, 2008.  However, with the collapsed economy came significantly lowered gaming revenue and visitation to Las Vegas; Bank of America, the largest lender on the project, refused further funding.  Construction was halted when the project was 70% complete, and after nearly two years of legal maneuvering, Carl Icahn paid $150M for part ownership.  In October 2010, Icahn ordered the furnishings sold off.

While the Fontainebleau project was on schedule, on budget, met all regulatory, quality, and functional requirements, and would have produced a world-class resort, there is no conceivable definition of “successful” that would apply.  In retrospect, the project should never have been approved, in a city that already had too much capacity, with the impending mega-recession.  Call it a failure of portfolio management; call it a failure by Nevada Gaming Control for approving yet one more mega-casino; call it a zoning failure by Clark County.  But it is indubitably a failure.

If you’re managing a project, you need to have a solid understanding of how success will be judged.  Don’t assume that delivering on time, on budget, on scope, with the required quality level is the definition of success.  Understand the business case, the operating environment, and the stakeholders.  Understand who actually controls the financing, and what might be competing for the remainder of your funding. Understand the life cycle of what you’re building, and how it might be impacted by external and internal events.  And be prepared to recommend the project be halted, if it’s going to fail, because the only thing worse than failure is throwing good money after bad.

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About Dave Gordon

Dave Gordon is a project manager with over twenty five years of experience in implementing human capital management and payroll systems, including SaaS solutions like Workday and premises-based ERP solutions like PeopleSoft and ADP Enterprise. He has an MS in IT with a concentration in project management, and a BS in Business. In addition to his articles and blog posts, he curates a weekly roundup of articles on project management, and he has authored or contributed to several books on project management.