The Decision to Kill a Project

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As a Program Manager you need to keep an eye out for Projects that are trending negatively. Negative Trending could mean the project is not doing well on Schedule, Costs or Scope getting completed (or all of them). Such Projects could be impacted from underlying reasons ranging from Technology Changes to something as big as Business Case or a Leadership change.

Project managers need to reflect on losses when deciding if a project is worth pursuing or whether it’s a lost cause. And only by this, when handling their tasks, will they make the correct decisions.

Sunk Cost Fallacy: If people continue projects based on false premises, such as the concept that it will get solved if you throw money at a problem, then we call this SUNK COST FALLACY. And, this is another way of saying, “throwing good money after poor.” There is a point at which recovery is unlikely no matter how much you spend. There are so many sunk costs at a certain amount that you cannot recover, but for some reason, some people believe that the more money you throw at it, the better it’ll be. But when it is never getting better, it is then called a sunk cost.

Commitment Fallacy: The fallacy of dedication is when individuals or project managers are so committed to a project that they refuse to accept defeat to their project, credibility, and business to the point of catastrophic harm. And this is another error that project executives must stop.

Projects Change

The reality is that the trajectory you have designed for projects does not always follow. Changing circumstances and conditions. There are some lists of forces that can shift a project’s path.

These forces are listed below:

Financial crisis

Natural disaster

Technology change

Management change

Skill resources

Federal mandates

Administration changes

Compliance

National emergency

The project will be affected by either one or more of these changes. They will have their impact on the nature of the project or on the project cost and time involved. They could affect the project’s efficiency. A project will bounce back, not from others, from any of these changes.

How can one know When to Kill a Project?

There are several suggestions that have been given as to how to say that a project is no longer worth pursuing. It’s a tough decision to make, but it’s easier to quickly take the Band-Aid off than prolong the pain.

 

Here we offer five times when a project needs to end:

  1. If it no longer satisfies the criteria of the project, the original intent of the project has changed and cannot be fulfilled.
  2. The expenses are out of reach, and there is no way for the return on investment to recover.
  3. The cost of completion exceeds the budget, and the cost gap is difficult to compensate.
  4. The circumstances affect the probability, such as those mentioned above, of completion.
  5. Ethical and/or legal problems still exist.
Project Closure

Consider the above example. The schedule is trending negatively, Business Case has changed. Should the Project Manager wait or review the Project for re-initiating or closure?

Waiting & hoping for a positive thing to happen out of the box is not a great thing to do!! You should always review the Project with Program & Portfolio Manager to draw a conclusion on the Project continuation.

 

These are not, of course, the only reasons why projects have failed. Inside the team, there can be disputes that cannot be resolved or differences that can stymie progress on how to move forward.

Today, we are talking about how to know when a project should be killed and losses reduced. Well, this is a very hot subject, with the amount of troubled projects and failed projects. I submit, however, that the key word here is loss.

You really need to understand the reality of, do I need to destroy this thing when you start taking a loss in your project?

So, we need to consider the fact that there are circumstances sometimes, there are circumstances that change over the course of a project that we have to look at, so some projects can be short in length, but some can go long, and they can last for many years.

So, what could happen during a project is that there might be a financial crisis. So, no matter what region of the globe that you belong, we have all noticed this.

There are also times, or even natural disasters, where national emergencies occur.

Over the course of time, a major technology may also alter the project’s effect.

There may also be changes in management, key management who could endorse becoming a stakeholder, or a key person on the team, whether they change, which can also affect the project’s progress.

There could be professional resources, too. Often during the course of a project, again, it can be restricted to have access to the professional resources that know how to pull it off if technology evolves or if it’s anything new.

Even, during a project, there are occasions when federal mandates happen. Almost every sector has some sort of governmental guidelines and compliance that they have to comply with, and often the progress of a project is really affected by these mandates.

Alterations in management as well. There are times when the leaders of the world change and with that they change their government, the people that follow them, no matter what country you live in. The complexities of such projects may also alter that.

And enforcement. If there are rules that the project does not follow, it also needs to be looked at in order to be killed.

So, these project components often shift as these conditions arise. They usually affect the scope of the project when these changes, often the expense, the time, or the schedule, and then sometimes the project quality.

And when they do, in brief, when number one, a project has to be killed, it no longer satisfies the need for the project.

So, the original intent of the project is changing, and it needs to be destroyed if this project can no longer fulfil it. If the costs are out of reach and there is no way to recover the ROI, this is one of the reasons for killing a project again, several times with troubled projects or failed projects.

In addition, the cost of completion exceeds the budget and there is no way to cover those expenses. Again, there are several times where a re-evaluation needs to take place to decide, well, we have not fulfilled the deadline or the budget to finish the job, due to the existence of some projects spanning too long and the cost changes.

So now at this point, how long is it going to take?

So, it has to be shut down if the amount of time and the amount of cost exceeds what the stakeholders of that project would pay for.

The circumstances can also impact the opportunity. Again, these factors have an effect on the probability of completion. There are times you need to think about it, if any of these things are happening, if there is a building project and you have had a natural disaster, it might be in an environment where there’s no way to finish it.

If there is a significant technological transition that affects the whole project, it does not have the ability to be completed. So, there are things that have to be looked at and taken into consideration.

And it is proposed that a project has to be killed if there are ethical and legal problems.

So, in making the hard decision to destroy the project and not get swept up in the commitment fallacy, there are some things to think about.

Conclusion

Continual review of Projects and Programs again comes out at forefront when you consider improving your Project Management Efforts. The more value addition takes place for a particular Project from Project Manager, the further difficult it becomes to exit the project. Also, Project Manager’s become attached to their successful projects and would want to continue with them for as long as possible.

The role of Program Manager also comes to the forefront in ensuring the Project Management time is appropriately utilized. Project Manager’s time is limited, and time is money!

Therefore, ground rules should be built around Project Management teams that if a Project is negatively trending for 3 successive sprints or reviews then it should be referred to The Program Board for a reassessment.