Pulling the Plug on a Project

Few organizations want to admit that a large project is failing. But some projects will never meet their deadlines or deliver the expected benefits. When the possibility of success is gone, these projects often must be euthanized for the health of the corporation.

Killing a major project is a difficult decision requiring complex and objective analysis. It also requires a plan for dealing with potential ramifications. Before pulling the plug, be prepared to address the following issues:

Political fallout. Most large projects have politically powerful advocates who become emotionally invested in the effort. When their favorite projects are killed, these advocates may point fingers or mount campaigns to identify and punish the guilty (or even the innocent, but usually IT). Design a response to creatively mute the critics without being overly defensive.

Associated expenses. Canceling a project can result in considerable expense. Severance packages are costly. Previously capitalized expenses must be written off against current earnings. The project may also have contractual obligations for hardware, software or services. Many contracts also contain early-termination penalties. Be prepared to discuss the financial repercussions with your CFO and CEO.

Unexpected behavior. Canceling a project can lead to unanticipated (and sometimes undesirable) behavior. One company wanted desperately to avoid taking a write-off in its current fiscal year. It reduced the size of the project team, making it impossible for the remaining members to complete the project. The company successfully postponed the write-off for 15 months, but the tactics it engaged in skirted the boundaries of ethical financial reporting.

Supplier relationships. Project cancellations affect your suppliers, too, and will seriously damage your working relationships. Trying to wiggle out of your contractual agreements may result in litigation. Offended suppliers might refuse to work with your organization again. In addition, they will tell everyone they know, resulting in potential damage to your corporate reputation.

Lost business opportunity. Whenever a project is killed, the associated business opportunity is lost (or, at best, postponed). If the canceled project was expected to enable the company to enter new markets, the effects on revenue and earnings may be significant. Be sure to evaluate the long-term business impact during the decision-making process.

Morale. Project teams can become emotionally invested in a project's success. If the project is eliminated, morale can suffer. Remaining team members may become unproductive, and those with highly marketable skills may decide to leave (particularly if only a few undesirable projects are offered as alternatives). Derogatory comments from disillusioned employees can make it difficult to retain other IT staffers for future projects or to attract new employees. Clearly communicate the reasons for eliminating a project, as well as opportunities for other interesting work within the company. Enlist your company's communications department to minimize fallout.

Media coverage. Years ago, disgruntled employees had limited outlets for expressing their dissatisfaction. Even if a whistle-blower got media coverage, the story would be quickly replaced by other news. But social networking and electronic publishing are changing this. The permanence of blogs, wikis and archives (combined with comprehensive search capabilities) make it easy to keep a story alive forever. It is increasingly important to deal with employee complaints openly, fairly, and in a timely and straightforward manner.

Making the decision to kill a large project is never easy. Weigh the trade-offs carefully, and evaluate all the potential ramifications. And have a comprehensive plan to address anticipated political, financial and employee issues.

Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners Inc., which helps organizations invest well in IT. Contact him at BartPerkins@LeveragePartners.com.

Copyright © 2008 IDG Communications, Inc.

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