Chapter 9 – Project Closure and Evaluation

9.2. Reasons for Closing Projects

Terminating 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:

Canceling 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 canceling the project.   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).

Common Reasons for project Termination:

  1. Low profitability and or lowered market potential
  2. Competing projects become a higher priority
  3. Severe delays to schedule
  4. Change of market needs
  5. Technical issues that can not be resolved
  6. Increase in damaging cost
  7. High uncertainty of technical success or commercial gain

When considering terminating a project, it’s helpful to ask the following questions:

  1. 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.
  2. 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.
  3. 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.
  4. Are there better alternative uses for the funds, time, and personnel devoted to the project? As you learned in 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 serve the organization’s larger goals.
  5. Has a strategic inflection point, caused by a change in the market or regulatory requirements, altered the need for the project’s output?
  6. 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?

Human Resources Specialists, through monitoring the project with the Project Team, could assist with the decision to terminate a project.  Not in a direct manner, however, they can facilitate the process with the team and/or the stakeholders. The HR Specialists would want to know the history of the project.  They would help the group reach a decision, plan a different outcome and ensure a process where everyone agrees and commits to a certain outcome.  They would act as guides in this situation, rather than a participant by facilitating a workshop and getting answers to the above questions.

HR in Focus: Supporting Team through Termination of Projects

Determining whether to terminate a project can be a very difficult decision for people close to a project to make. Everyone’s 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.  Human Resources Specialists need to be sensitive to the feelings of the group/team.  The characteristics of the HR Specialist would be to listen, use verbal and nonverbal communication, show empathy, focus on the issues not feelings, and provide a structure and process that leads to a shared conclusion about the project.

The HR Specialists needs to control the flow of the meeting as it may be emotional, ask questions for clarity from all participating members, and may provide direct interventions.  They need to remain neutral, use an encouraging tone, and de-escalate members who may be angry or just sad about the possibility of termination.

If the project is terminated as agreed to by stakeholders, at this point, HR Specialists may offer individual facilitation to resolve one-to-one issues about the termination.  Perhaps, the individual wishes to set personal goals for themselves post project, simply debrief about the project, the process and their personal experience.

The HR Specialist wants to help create a culture of respect and teamwork going forward that aligns with strategic goals of the organization.  One way to achieve this is to empower the employees to move forward with new goals.