11.2. Reasons for Closing Projects
If an audit reveals the painful truth that it’s time to terminate a project, then it’s important to realize that this is not necessarily a bad thing. Cancelling a project may seem like a failure, but for a project to be successful, it must provide value to all parties. The best value is to minimize the project’s overall negative impact on all parties in terms of both time and money. If the only option is to proceed with a scaled-down project, one that delivers late, or one that costs significantly more, the result may be worse than cancelling the It may be more prudent to invest the time and resources on an alternate endeavour or to reconstitute the project in the future using a different team and revised parameters. (Williams, 2011)
When considering terminating a project, it’s helpful to ask the following questions:
- Has the project been made obsolete or less valuable by technical advances? For instance, this might be the case if you’re developing a new cell phone and a competitor releases new technology that makes your product undesirable.
- Given progress to date, updated costs to complete, and the expected value of the project’s output, is continuation still cost-effective? Calculations about a project’s cost-effectiveness can change over time. What’s true at the beginning of the project may not be true a few months later. This is often the case with IT projects, where final costs are often higher than expected.
- Is it time to integrate the project into regular operations? For example, an IT project that involves rolling out a new network system will typically be integrated into regular operations once network users have transitioned to the new system.
- Are there better alternative uses for the funds, time, and personnel devoted to the project? As you learned in Chapter 2, on project selection, the key to successful portfolio management is using scarce resources wisely. This involves making hard choices about the relative benefits of individual projects. This might be an especially important concern in the case of a merger when an organization has to evaluate competing projects and determine which best serves the organization’s larger goals.
- Has a strategic inflection point, caused by a change in the market or regulatory requirements, altered the need for the project’s output?
- Does anything else about the project suggest the existence of a strategic inflection point—and therefore a need to reconsider the project’s fundamental objectives?
Determining whether to terminate a project can be a very difficult decision for people close to a project to make. Your perspective on a project has a huge effect on your judgment of its overall success. That is why a review conducted by an objective, external auditor can be so illuminating.
Common Reasons for Project Termination
- Low profitability and or lowered market potential
- Competing projects become a higher priority
- Severe delays to the schedule
- Change of market needs
- Technical issues that can not be resolved
- Low profitability and or lowered market potential
- Increase in damaging cost
- High uncertainty of technical success or commercial gain
“13.3 Correcting Course or Shutting a Project Down” from Technical Project Management in Living and Geometric Order by Jeffrey Russell, Wayne Pferdehirt and John Nelson is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.
