Is Project Cancellation Always Bad?

Posted by Brad Egeland

Having your project canceled sounds like such a horrible thing.  A career killer.  But, as strange as it may sound, this is a situation that should actually happen more often than it does.  There’s a good reason why this is true. Projects are investments that your organization makes, from which they expect a return. In real life, investments can sometimes go bad.

The same thing can certainly apply to a project. Conditions can change in such a way that the project ceases to become the winner it seemed to be at the outset. Simply stated, management no longer expect the project to have the business impact required to make it wise to keep spending money on it. In many cases, a project such as should be terminated, though in far too many cases, it isn’t.

There are at least three reasons why early project termination usually doesn’t occur, even though it should:

Plodding ahead

You should be testing project viability—or financial justification—on a continuous basis throughout the life of the project. Some organizations don’t do this very well. Others don’t do it at all. Once management approves a project, it simply moves ahead until it’s completed. In today’s fast-paced and constantly changing world, it’s always possible that there will be changes that undermine the original business case for the project. That means that you need to reconsider the economic viability of every project periodically. And the organization should terminate projects that have lost their business case underpinnings.

Fear of Failure

In many people’s minds—and in many of the organizations I am familiar with—early project termination is linked with failure. This really shouldn’t be the case. Early project termination (for the right business reasons) can actually be smart management. It’s really just a process of reallocating funds from a relatively poor investment to a relatively good one. The leaders of the project, however, take it personally.  If you’re the project sponsor, executive with the idea, or the project manager, it’s hard to separate yourself so easily after having invested so much money and time and effort into an engagement.

Pride of ownership

Once a project is underway, a certain amount of “inertia” is created by the work that has already gone into a particular project. Pride swells, and a feeling that “we must see this thing through ’til the end” begins to take command of peoples’ minds. Unfortunately, it can dull them to a point where judgment is impaired. Even though a team (or organization) senses that a project is on shaky ground, emotional issues such as not being viewed as quitters, and finishing what we started, seem to become part of the process of determining whether or not to terminate the project. Couple these feelings with the sweat equity that’s been invested, and under these circumstances the project is almost certain to continue even when it doesn’t make sense any more.

The earlier the better

Normally, there should be no shame in canceling a project that’s already underway.  The only exception occurs when the project was originally initiated in a flurry of excitement, or was launched for the wrong reason in the beginning, and someone is just now getting around to figuring out that it’s a loser. The sooner a bad project is killed, the better—from the standpoint of wasted time, money, and resources, at least. That’s why you should perform business cases as early in the project life cycle as possible.

This article is based on information derived from Gary Heerkens’ book “Project Management.”

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2 Comments to “Is Project Cancellation Always Bad?”

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  • A major reason why poor projects are not terminated early is the emotional attachment of the project sponsor – compelling project teams to continue when indications show future failure. I know of an instance where a finance director wanted a new ERP system and the project continued despite being 4 years late and exceeding the initial budget by 600%. His motivation? To have the right credentials on his CV.

    To overcome this problem critical sucess factors need to be established at the start of the project and these should be reviewed regularly as part of project management.

    There are many reasons why projects can become no longer viable:

    1 At the start of a project there are more assumptions and fewer facts. As the project progresses the assumptions are tested and may be no longer valid.

    2 The benefits of one project may be dependent on the delivery or success of another.

    3 External factors such as exchange rates etc can change reducing the ROI.

    It is critical to build project assessment in from the beginning, actively monitor this and prepare to be objective in deciding the future of a project.

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