Project Termination! When Should You Terminate Your Project?

STOP! There are many reasons why a Project Manager, Sponsor, or Project Board may decide to terminate a project before completion. Not all are bad. But, of course, some are. Let’s look at when to terminate your project.

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Project Termination

Terminating a project should be a deliberate decision. It may be your recommendation, as Project Manager, but it needs to be endorsed higher up the governance chain, by a boss, a client, a sponsor, a steering group, or a Project Board.

There are many reasons why this decision may be appropriate. I will group them into six categories:

1. The Value Proposition is No-longer Sound
2. There are Wider Commercial Reasons
3. Overwhelming Technical Challenges
4. Wider Delivery Reasons
5. High- or Low-level Politics and Perceptions
6. Reasons External to the Project or even its Sponsoring Organization

The Value Proposition is No-longer Sound

The value proposition of a project is dependent on the relationship between the costs and the benefits. A simple and useful definition of value is the ration of total benefit to total cost. It needs to be sufficiently greater than one.

So, we need to cancel a project if it becomes clear that the projected future costs will exceed the projected benefits. This can arise in a number of ways.

Benefits… If:

• You can no longer achieve the benefits you envisaged in your business case
• Or, you no longer have sufficient confidence that you will achieve the benefits you envisaged in your business case
• There is a significant risk to the achievement of the benefits you envisaged in your business case
• Your revised completion date is too late to realize sufficient benefits
• The benefits you envisaged are no longer as valuable as you considered in your business case
• Indeed, the project may no longer meet the organization’s needs

Costs… If:

• Costs have risen – or you expect them to rise – to a level that would render the value marginal or worse
• Significant risks have emerged that threaten to destroy the benefits case
• Long-term maintenance, service, or operating costs have risen
• Decommissioning and other whole-life costs have risen

There are Wider Commercial Reasons to Terminate Your Project

There are other economic reasons beyond the project’s costs and benefits. Commercial reasons to pause your project include those internal and external to the sponsoring organization.

Internal to the Sponsoring Organization

• A change in strategic direction or priorities within the sponsoring organization
• Your organization may suffer cash flow difficulties, making it hard to fund even worthwhile projects
• Alternative projects may offer more value (portfolio management)
• Intractable commercial disputes with suppliers, contractors, consultants, or other vendors. This may be a breakdown in relationships but, usually, these can be fixed with sufficient goodwill on both sides
• Key suppliers or contractors may no longer be available to you – or may not be able to service your project’s needs. This could be for many reasons

External to the Sponsoring Organization

• The competitive market has shifted. The effects of demand or competition render the value of the project’s deliverables diminished or nil
• Your competitors may have or be expected to deliver a superior product or service, rendering your project obsolete

Overwhelming Technical Challenges Mean You Must Terminate Your Project

Technology never goes wrong. As if!

Technical difficulties may drive you to pause your project – at least while you resolve what you will do to resolve them. Examples include:

• Technical problems that the team is unable to solve, for example:
  • The complexity of the technical requirement
  • Failures at testing
  • Continuing quality issues
• Technical surprises that have a substantive impact on the value proposition 
• Core assumptions turn out to be flawed or simply wrong
• The project encounters unanticipated Health & Safety issues
• Core elements of the technology platform or other infrastructure become obsolete
• Commercial Off-the-Shelf (COTS) solutions become available at a reduced price, rendering the development unnecessary

Project Management: Wider Delivery Reasons to Terminate Your Project

Technical challenges are just one part of delivery. There is also a wide range of other project-related reasons why you may need to pause your project.

Resource Challenges

• The project cannot access the resources it needs, to proceed:
  • Team members
  • Specialists
  • Consultants or contractors
  • Materials
  • Equipment or other assets
  • Funding
• Suppliers, consultants, or contractors fail to meet their delivery obligations
• You’ve run out of contingency funds
• Loss of key personnel or expertise

Management and Control

• A disaster or substantial failure in the project
• The project manager has lost control of the project. It is so far off-plan that sponsors lose confidence, and the project manager has little idea how to proceed to bring the project back under control. This is a fundamental breakdown of project management.
• The project runs into a roadblock that the team cannot overcome. For example: 
  • Technical (see above) 
  • Legal/regulatory
  • Compliance/quality control
  • Policy/approvals
  • The emergence of major risks or issues
• You’re not seeing results, or you’re unable to deliver on your promises

Requirements Issues

• There is a lack of clarity in the project definition, its goal, objectives, or scope
• Changes to requirements render the project no longer viable or exceed the approved parameters of the Business Case
• The 80:20 (Pareto) Principle kicks in. There are diminishing returns for additional functionality and the marginal cost of meeting these requirements exceeds the marginal value. This is especially relevant in adaptive (agile) projects
• Failure of change control processes leads to ballooning scope creep, with associated implications for cost, risk, and schedule

Governance Problems

• The products you are creating cannot meet compliance or quality standards
• Significant failings emerge from either project audit and assurance processes or at a stage-gate review

Finally, your project may evolve into a substantively new project. This can happen when:

• the project acquires a new status, sponsor, or mission
• two or more projects are to be integrated
• the project is split into two or more smaller projects

High- or Low-level Politics and Perceptions: Political Reasons to Terminate Your Project

This covers the small-p politics within the organization, alongside the broad organizational strategy.

Reasons for failure include:

• The project no longer aligns with the organization’s vision, goals, or strategy
• The organization is no longer able to make available the resources or budget that the project needs
• Other projects have greater priority in a competition for limited resources
• The social or environmental impacts of the project are no longer acceptable
• A change in organizational leadership leads to a re-assessment of project priorities
• The project suffers a loss of sponsorship as its main supporter moves on (or is moved on!)
• Conflict or disinterest among stakeholders

Reasons for Project Termination that are External to the Project or even its Sponsoring Organization

The last category is for things that come out of the left field and are wholly outside of the domain of the project. Indeed, most are also outside of the control of the sponsoring organization. These include:

• National or regional political shifts, leading to changes (or anticipated changes) in legislation or regulation
• A major national, regional, or international crisis – the most obvious examples include:
  • Epidemic or pandemic
  • Political turmoil
  • Conflict and warfare
  • Civil unrest
  • Environmental disasters, like fire, weather, earthquake…
• Project success is contingent on another project (within or outside the sponsoring organization) that either fails or is canceled.

Recommended Videos and Articles to Help with Major Project Challenges

Carefully curated recommendations for you:

• Project Closure: How to Miss Nothing when You Shut-down Your Project
• One Day You’ll Need Our Ultimate Secrets to Project Takeover
• Project Takeover Formula: How to Take Over a Started Project | Video
• Project Turnaround: How to Rescue a Failing Project
• Project Turnaround: How to Turn around a Failing Project | Video
• Impossible Project: 8 Principles ​to Take it on and Deliver it
• How to Deliver an Impossible Project | Video
• How to Do a Project Handover… and When to do it! | Video
• What are the 3 Phases of an Effective Project Handover?

What Kit does a Project Manager Need?

I asked Project Managers in a couple of forums what material things you need to have, to do your job as a Project Manager. They responded magnificently. I compiled their answers into a Kit list. I added my own. 

Check out the Kit a Project Manager needs

Note that the links are affiliated.

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