There are many factors that can compromise software development leading to investment loss and exposure to risk that may itself dwarf the cost of the software itself.

The most common are imprecise client specifications, insufficient planning and analysis, poor project management, continually moving goalposts, unrealistically short timescales, weak quality assurance and underestimated costs.

With shrinking deadlines, spiraling costs and a need to get the "product" to market quicker it is often the software testing and the validation processes that are sacrificed. In our experience, only 30 per cent of organisations allocate a separate testing budget when implementing new technology, even though over 70 per cent of them recognise the crucial role of testing in the development process.

Without having undergone rigorous de-bugging, projects may be delivered with high levels of errors (as high as 45 per cent). If the application works at all (and often it doesn't, in which case it is quietly shelved) errors may only be discovered when transactional breakdown occurs.

The high cost of bugs

No-one really knows the real cost of failed software projects, but in the US alone it is estimated to be upwards of US$75 billion a year in re-work costs and abandoned systems.

A few years ago, poorly tested software caused transaction processing problems for millions of online customer accounts at one large multinational bank leading to wide-scale email phishing attacks that cost the bank over £50million.

Then there was the FBI initiative to enable agents to share case files electronically. The computer code was so bug-ridden the bureau was forced to abandon the project and lose US$170 million. There is also the famous case in 1999 when a US$125 million NASA spacecraft was lost in space because of one simple data conversion error.

Where good quality assurance procedures are in place, a newly completed application may still contain 10 per cent to 15 per cent errors.

These are usually passed on to the customer who then has the burden of finding and correcting them - hopefully before any major risk episodes.

Despite testing procedures, even a best-of-breed product usually still contain a margin of error, typically around 5 per cent. At this point it may be deemed by both vendor and customer that trying to reduce this percentage is a case of diminishing returns and not worth the additional Investment.