When can a project be considered a failure?

When do you have to admit that a project has no future? When is the right time to stop it in order to limit the losses? Often, the senior manager does not realise that the project has long since failed. So how do you know if the project is merely in a crisis or if it is at the end? Certainly not an easy decision! Jennifer Bridges explores this question in an article on projectmanager.com. In the following we summarise her theses and ideas for you.
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Project termination: When is the right time?

To decide whether a project should be continued or whether it has already irrevocably failed, the project manager should focus on the losses incurred so far. This is the only way to make the right decision. Many managers have fallen for the idea that they can save any project if they just keep putting enough money and resources into it. But this is a fallacy. There are simply projects where even huge sums of money won't help.

Bridges also points out that many project managers have become so attached to their project and put so much heart and soul into it that they simply don't want to admit to themselves that the project has failed. Unfortunately, not every project goes the way the manager envisioned at the beginning. Often circumstances and needs change. In the worst case, natural disasters, financial crises and national emergencies can derail the project. But also a change in management, technology or available resources, such as personnel, can affect a project to such an extent that it can no longer continue. From some influences a project can recover, from others it cannot. The project manager must recognise exactly that: When does the project have to be terminated?

Identifying failed projects

Five possible indicators of failed projects according to Bridges:

  1. The project no longer meets the project requirements. Its original goal has become obsolete or cannot be achieved.
  2. Costs are spiralling out of control and there is no way to recover what has been invested.
  3. Costs exceed the budget in a significant way and the additional costs can no longer be absorbed.
  4. External circumstances affect the project so much that its fulfilment becomes impossible.
  5. There are legal or ethical reasons for abandoning the project.

Of course, there are other reasons that justify project termination. These include conflicts within the project team that persist even after persistent attempts to resolve them. Bridges reiterates that financial losses should be at the forefront of any analysis first. Even at the first losses, budget overruns and cost problems, the question of the project's future should always appear in the back of the manager's mind. Abandonment is always a possibility. Jennifer Bridges warns against "throwing good money after bad money". A lot of money has already been lost. So you should think very carefully about whether you really want to pump further investment into what may already be a fruitless venture. The thought "Now I have already invested so much, it would be a disaster to end the project and write off all these costs" is wrong and will be expensive. After all, if you don't admit to yourself now that the money is lost and instead spend even more money, it will only lead to higher losses. The risk of not recognising a failed project is higher the longer the project lasts. In addition, the risk of one of the above-mentioned external influences occurring is higher for long projects than for projects that only last a few weeks or months. But even in short projects, various factors change the project and may cause it to fail.

Making decisions

As a project manager, you have the task of checking at regular intervals whether your project still has a future or not. Demolition must always be a real option in your mind. In the case of projects like the new Capital Airport in Berlin, demolition is of course no longer a real option after many years and a building that is 95% complete. Serious mistakes were made here at a number of earlier stages. Your project should not end like this! Therefore, you must always keep an eye on your costs. It is best to check where you stand cost-wise every week. What have you spent? What do you expect to spend? How is your progress shaping up? Of course, not every cost overrun justifies a project termination. Think about your customers and shareholders. Can you credibly assure them that an investment of an additional 10% of the project costs will ensure success? Or are you just buying yourself more time to try to turn around a failing project? Be honest with yourself and, if necessary, also ask your team members for their opinion. It may also make sense to ask for an external opinion in case of doubt.
Author: IAPM internal

Key words: Project management, Resource management, Safety, Tip

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