Cancel or Save a Troubled Project: How to Decide
If your project is going nowhere—or if it’s going somewhere, but that somewhere is rapidly downhill—sometimes there’s no choice but to scrap it. Of course, that’s easier said than done because the issue of sunk costs often kicks in. Sunk costs refer to money that’s already been spent and can’t be recovered. It’s gone forever. Sunk costs apply as well to time and effort that’s been invested in the project.
As Julie Galef, president of the Center for Applied Rationality, notes, the sunk cost fallacy leads people to continue to move forward with a project (or career, or many other things) because of a desire not to see all the time, money, and effort go to waste.
Still, canceling may be the only sound decision if the project is doomed, as determined by clear criteria. These criteria might include that the buyer’s commitment has withered to zero, it’s been established that the project won’t deliver the anticipated benefits, or the project has exceeded the planned timeframe or budget by more than some specified amount.
If the criteria haven’t been met and the benefits still outweigh the investment, then perhaps the project can still go forward. If that’s the case, it’s important (though very difficult) to steer clear of blaming and finger-pointing.
Despite the additional cost and time, it may be worthwhile to undertake a project audit to uncover relevant issues or to conduct a root-cause analysis to determine the physical, human, and organizational contributors to the project. However you analyze what’s transpired, focus on the facts and resist the temptation to jump to conclusions and be steered by false assumptions.
In addition to determining the current state of the project and assessing what caused the problems, a third important step is to validate the scope of the work still to be done. These three activities make it possible to recommend what needs to change—as well as what needs to remain the same—if the project is to continue. Be sure to admit reality both as it concerns what has already taken place and the prospects for moving forward. Bad as it is to have a major project deemed at risk once, it’s best not to have it happen twice.
Whether your failing project is canceled or rescued, there’s much to be learned from the experience. It’s sometimes said that we learn more from failure than from success. Fortunately (or unfortunately), enough projects fail or run into serious problems to enable us to learn lots. So we might as well do so.
