{"id":26281,"date":"2026-06-11T12:28:56","date_gmt":"2026-06-11T00:28:56","guid":{"rendered":"https:\/\/www.psoda.com\/global\/?p=26281"},"modified":"2026-06-11T13:07:34","modified_gmt":"2026-06-11T01:07:34","slug":"hidden-costs-project-failure","status":"publish","type":"post","link":"https:\/\/www.psoda.com\/global\/2026\/06\/11\/hidden-costs-project-failure\/","title":{"rendered":"The Real Cost of Project Failure: What Your CFO Doesn’t See"},"content":{"rendered":"

Project failures cost infrastructure operators millions annually but the visible budget overruns are just the tip of the iceberg.<\/em><\/p>\n

$4M+<\/strong><\/span><\/p>\n

That’s what a single failing $10M infrastructure project actually costs. The CFO sees a $1M overrun. The real bill is three to five times that.<\/p>\n

When a project fails, the CFO sees a $10M project that cost $11M. The $1M overspend is painful but manageable. What almost nobody sees is that the visible $1M has dragged a much larger bill behind it in costs that never make it into the report. Using that $1M as an example, the three to five times multiplier pushes the true cost to somewhere between $3M and $5M. This isn’t an isolated incident either. This pattern repeats across every failed, delayed or troubled project in your portfolio. The Project Management Institute found that organisations ineffective at project management waste 21 times more money than high-performing ones. For a lines company managing a $50M capital works programme, a council running a long-term infrastructure plan or a government agency delivering a complex transformation programme, that’s not a footnote. It’s the difference between hitting your targets and explaining to stakeholders why you didn’t.<\/p>\n

In over two decades working with NZ infrastructure operators across energy networks, councils and government agencies, we’ve analysed the cost of project failure across hundreds of projects and found nine major cost categories that rarely, if ever, make it into the post-project report. This article will share each one, show you how to measure it and give you practical strategies to prevent it, whether you use a PPM tool like Psoda or not.<\/p>\n

Why it matters for NZ infrastructure operators<\/span><\/h2>\n

The NZ Infrastructure Commission, Te Waihanga<\/a>, put it plainly in its 2026 National Infrastructure Plan: New Zealand invested around 5.8% of GDP annually on infrastructure over the past 20 years, making us one of the top-spending countries in the OECD. Yet we rank towards the bottom for efficiency, or ‘bang for buck’. (Te Waihanga, National Infrastructure Plan, 2026<\/a>)<\/p>\n

It gets worse. New Zealand ranks last in the OECD for infrastructure procurement governance; the processes and systems organisations use to scope, contract and deliver projects. Not near the bottom. Last. (Te Waihanga, National Infrastructure Plan, 2026) Te Waihanga’s own research has found that organisational and leadership factors, not technical issues, are the primary driver of cost overruns on major NZ infrastructure projects. It’s not the geology or the weather. It’s how projects are run.<\/p>\n

The scale of what’s at stake is enormous. The National Infrastructure Pipeline currently tracks 11,925 projects worth $275 billion in planning or delivery across New Zealand, with a workforce of more than 100,000 people delivering it across the infrastructure sector. (Te Waihanga, National Infrastructure Plan, 2026) That workforce will need to grow to 130,000 by 2035 to meet investment demand while already struggling to retain experienced people. Around 30% of electrical engineering and telecommunications technicians are already older than 55, concentrating the knowledge loss risk in exactly the occupations infrastructure operators need most (Te Waihanga, National Infrastructure Plan, 2026)<\/p>\n

The delivery track record against that pipeline is sobering. Infrastructure New Zealand reports that across projects of this type, just 27% come in on budget, 3% on budget and on time and only 0.2% on budget, on time and to the original quality specification. (Infrastructure NZ, Delivery of Megaprojects position paper, 2023<\/a>) An Ipsos survey found that only 17% of New Zealanders believe NZ has a good record of delivering national infrastructure projects, placing us tied last with Hungary across 32 countries. (Ipsos Global Infrastructure Index, 2024<\/a>) Infrastructure Minister Chris Bishop said the state of NZ’s public asset management would ‘shock’ people. (Stuff, February 2026<\/a>) He was right.<\/p>\n

The regulatory and reputational stakes<\/span><\/h3>\n

NZ’s infrastructure organisations face a level of public and regulatory scrutiny that most private sector businesses don’t. Lines companies have Commerce Commission disclosure obligations and price-quality path targets. Councils answer to elected members and ratepayers on every dollar of capital spend. Government agencies are accountable to Ministers and Treasury on project delivery and benefits realisation. Poor project management in this environment doesn’t just cost money. It creates regulatory exposure, damages public trust and puts long-term asset management plans at risk. As Te Waihanga noted, the public and the construction sector are becoming increasingly sceptical about announced project timeframes and budgets. That scepticism has a direct cost: it makes it harder to secure funding, harder to maintain stakeholder confidence and harder to deliver the next project.<\/p>\n

The pressure is growing. National infrastructure spending will climb from just over $20 billion per year today to more than $40 billion per year over the next 30 years, with around 60% of that investment targeting renewals and replacements rather than new builds (Te Waihanga, National Infrastructure Plan, 2026) The MBIE National Construction Pipeline Report 2025<\/a> forecasts infrastructure activity growing from $16.9 billion in 2024 to $19.6 billion by 2030, with electricity and gas projects accounting for 17.4% of total infrastructure project value commencing in 2025 despite representing just 3% of project numbers. (MBIE, National Construction Pipeline Report, 2025) For the energy networks, councils and government agencies running capital programmes right now, the cost of poor project management is not shrinking. It’s compounding.<\/p>\n

Most organisations try to fix this with tactical responses:<\/p>\n