Have you ever been in a situation where a project you were managing (or assigned to) was facing the possibility of cancellation? For many project professionals, the notion of terminating their project is assumed to be a direct assault on their career and competency. I would like to suggest that, in some cases, cancellation of a project may make good economic sense and should not necessarily be attributed to project failure.
I am reminded of a recent weekend project I undertook involving the kitchen sink. Since I can be handy around the house on occasion, I was asked by my wife to replace our white porcelain kitchen sink with a gently used stainless steel sink that had been offered by my Mother-in-Law. I had a reasonable level of confidence since I had disassembled kitchen sinks and garbage disposals before. So after taking a few key measurements, I determined the feat could be accomplished.
I toiled for a few hours removing the old sink, dropping the new sink in the countertop and making trips to both local home improvement warehouses. I soon discovered that the new sink drain hole was offset just enough from the old sink drain hole that the tailpiece was not going to screw on to the new sink. Conclusion: any solution to get this sink to fit was going to require sawing PVC and glue and significantly more work and risk than I was willing to sign up for. As dirty dishes were piling up next to the dishwasher, a decision needed to be made – proceed with the project by calling a plumber and paying weekend rates, or cancelling the project and re-installing the old sink. We chose the latter option as the benefits of the new sink were no longer a match for the increasing cost of its installation.
Like home projects, business and IT projects of all sizes should be driven by sound economics. Will the benefits realized be acceptable based on the cost to implement? There are numerous ways to measure this… return on investment (ROI), payback period and net present value (NPV – especially when compared to NPV’s of other projects). When project economics look favorable (especially compared to the overall portfolio) then we proceed. Otherwise, it might be time to call it a day.
A project’s business case can deteriorate for two reasons – and which may lead to project cancellation:
- Evaporation of business benefits. This may be due to changes in the market or changes to the company’s strategy or direction. For long projects, it is especially important to review project benefits on a regular basis to ensure they are still relevant.
- Escalation of project costs. I dont’ have to go into all the reasons why project costs can increase in this space. Some of them may be beyond the control of the project team – for example, lack of engagement on the part of the user community. However, this also presents an opportunity to determine if the project could have been managed and executed in a more efficient manner to reign in costs.
Finally, if we are faced with project cancellation, how do we address the emotional angst that all too often accompanies this event? I have witnessed (and perhaps you have as well) the spreading of blame and mud slinging that happens between the project team, executive sponsor, steering committee and user organization. I would suggest a key strategy to implement at the beginning of each project … that is to decide ahead of time how project continuation and termination decisions will be made. If the project community knows what economic thresholds have been previously agreed to, there will be much less stress when it comes time to make a decision. The collective organization can then focus on moving forward with the best interests of the organization in mind.
Do you have any good examples of project termination?
How did the organization handle it?
What were the lessons learned?
I look forward to hearing from you!