Smartpedia: A project cancellation refers to the premature termination of a project, whereby the reasons for the termination can be manifold.
Project cancellation – when it does not make sense to continue the project
There are a number of reasons why projects fail: Incorrect mission clarification at the beginning of the project, unclear requirements, unclear or changed priorities, lack of resources, lack of management support, misjudgements, changing parameters, new laws, too many partners, lack of communication, etc. The list can easily be extended. And accordingly, numerous reasons can be found why projects are repeatedly aborted. A project termination marks the premature end of a project. It is the immediate stop of project implementation. It is a declaration of intent to no longer continue the project. And it is the admission that a continuation makes less sense than an early end of the project.
Reasons for project termination
DIN 69905:1997, which is no longer valid today, described project cancellation as the “cessation of project execution before the project objectives have been achieved”. However, in addition to the failure to achieve possible project goals, there is a whole range of reasons that can lead to project abortion:
- With given means and resources, the project cannot be realised at the planned time. If the timing is critical with regard to agreements with clients or market opportunities, and at the same time there is no willingness to invest further funds or resources, then a project cancellation is obvious.
- The continuation of the project is or becomes uneconomical. This can happen, for example, if efforts are underestimated or necessary activities are overlooked.
- The assessment of risks in terms of extent of damage and probability of occurrence changes to the disadvantage of opportunities.
- Priorities in the organisation change, other projects gain strategic importance.
- Central project members, experienced colleagues or knowledge carriers drop out and equivalent replacements cannot be organised.
- Partners cannot deliver promised, important services in the defined quality or quantity, so that continuation becomes technically, logistically and logically difficult or impossible.
Why do organisations find it difficult to cancel projects?
Essentially, there are five reasons why organisations struggle with project cancellation:
- Project termination is equated with failure. Failure is generally considered bad and nobody likes to be bad. For many organisations, and therefore also for the employees of the organisations, Thomas Edison’s statement “I have not failed. I have just found 10,000 ways that do not produce the desired result” is just a nice anecdote.
- In addition, there is the fear of a loss of image among employees and customers, suppliers and partners, trade unions, associations and consumer organisations, among investors, shareholders or competitors. And the more advanced a project is, the greater the (actual or perceived) damage to its image.
- When considering profitability, many organisations contrast investments already made with future investments. This leads to positive project progress decisions because “a lot of money and time” has already gone into the project. However, organisations are subject to the sunk cost fallacy, because an economic analysis should only answer the question whether the further investment in the project is worthwhile.
- The strategic and/or political importance of the project is so great that a project cancellation seems to lie outside the decision-making spectrum.
- And last but not least, there are organisations that shy away from making difficult decisions and secretly hope that a project imbalance will disappear overnight. True to the motto: “Basically, every misfortune is just as difficult as you make it.” (Marie von Eber-Eschenbach)
Tips on project cancellation
The following tips and recommendations are positive experiences for organisations when it comes to project abortion:
- Clearly analyse and name the causes that contributed to the premature end of the project.
- Open communication by the steering committee, the PMO or the project managers within the affected organisation and to involved partners, if necessary coordinated communication to other stakeholders.
- Conduct lessons learned with all stakeholders to gain insights from the experience that can be used in the next project.
- Ideally, (further) use of the content produced and thus securing the value created. Just because the project ends prematurely does not mean that the results are worthless; often parts of them can be used in other projects.
- Thank the staff involved, because most of them will have invested a lot of time and effort in the success of the project. Even if the project is terminated prematurely, the effort put in deserves attention and a sincere thank you.
- Conducting premortems in early phases of future projects to better adjust to possible challenges.
And last but not least, the gradual establishment of a learning culture in the company. This means that mistakes happen and not everything always works out 100%. What is important is how one deals with this. As an organisation and as an individual. Mistakes offer the opportunity for improvement. And that brings us back to Thomas Edison.
Impulse to discuss:
If you had the choice, would you choose a project manager for a new project who has successfully completed all his projects so far or one who has had to cancel several projects in his career?
It is conceivable that projects are terminated at so-called phase transitions, e.g. when milestones are reached or not reached. It is also possible that a project is cancelled within a project phase.
Here you can find a German podcast by Frank Hampe on project termination – opportunity or disaster?
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