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The Success of Canceled Projects

April 6, 2012 | Author: PM Hut | Filed under: Project Portfolio Management

The Success of Canceled Projects
By Steve Romero

This article was inspired by one of my favorite Project Governance cohorts on Twitter, Woody Williams, who once tweeted, “Canceling a project is often a highly “successful” outcome.”

Successful outcome?!? When was the last time your organization celebrated a project being canceled? The answer is likely never.

OK, how about this question: When was the last time your organization canceled a project - at all?

If you have canceled a project, do you recall the reason why? It was likely due to a funding cut. Either the money ran out for the specific effort or a department-level budget was reduced and the project was one of the “unlucky.” These reasons fall much more in the “We had no choice” category as opposed to the focus of this post - Killing projects as a specific outcome of sound Project and Portfolio Management (PPM).

That’s right - killing projects. I prefer the term “kill” over “cancel” because it connotes the act of a predator over that of prey. “Killing a project” sounds deliberate. “Canceling a project” sounds apologetic.

Semantic preferences aside, this topic is a critical imperative for every Enterprise. Many of my articles have been devoted to the subject of project failure rates - which have never been less than 50% in any study I have ever seen. Given the high rate of failure, the advantages of killing projects are obvious. I much prefer a $1M mistake over a $5M mistake. And rather than throwing good money after bad I could redirect my precious resources to an effort that yields promise.

As I mentioned earlier, killing/canceling projects is a function of PPM. Sound PPM continues beyond the project investment decision, it provides more than just go/no-go. Approved investments should be managed actively by Leadership on a continuing basis and not only considered when approval is sought. This involves continued analysis of the portfolio, monitoring each investment for its relative contribution to enterprise goals versus other portfolio investments. This oversight continually asks and answers the fundamental questions:

  • Is the project performing below expectations? (schedule or cost overruns, benefit erosion)

  • Is the project still aligned to business objectives? (which constantly change)

With the timely fact-based project/portfolio data only good PPM can provide, Management must decide:

  • To make the necessary project/portfolio adjustments to improve performance

  • To make the necessary project/portfolio adjustments to maintain alignment

  • To kill projects to eliminate further investment and redirect resources towards other projects that better fulfill enterprise strategy and business objectives

So the idea of killing projects is one I whole-heartedly advocate. Which is why I so enjoyed Woody’s tweet I referenced at the beginning of this article: “Canceling a project is often a highly ‘successful’ outcome. ” I like his statement because it sounded celebratory and unapologetic. To me, it implied a level of awareness born of the realization that investment decisions are sometimes wrong. This realization enables and fosters successful PPM by including the constructs and mechanisms for the “successful” cancelation of projects.

This positive-spin on project cancelation brings me to a related subject, the 2009 Standish Chaos Report. Their report (which I highly recommend - at the very least, the Summary) showed a recent decrease in project success rates, with 32% of all projects succeeding (delivered on time, on budget, with required features and functions); 44% were challenged (late, over budget, and/or with less than the required features and functions); and 24% failed (cancelled prior to completion or delivered and never used).

Notice they have 3 categories as opposed to my 2 categories (success and failure). The studies to which I earlier referred placing project failure rates at 50% also do so with a 2-category system. In fact, each of those studies considers the Standish “challenged” category of projects to be failures. In doing so, the 2009 Standish Chaos Report could be interpreted as exposing a 68% project failure rate (by combining the challenged and failed categories).

Not so fast. Before we simply combine the two categories, let’s first consider the Standish Chaos definition of failed projects - “cancelled prior to completion or delivered and never used.” “Canceled prior to completion”…a killed project. Given I obviously agree that a canceled project can be considered a successful outcome, I don’t necessarily agree with the Standish Group that it is a “failed project.” I suggest it may be or may not.

I can think of a number of reasons why a reasoned and rational investment decision (a good decision) may eventually turn into a bad decision. Unforeseen economic, business, or customer circumstances could alter an investment’s value proposition, especially when compared to competing alternatives. And I fully expect Enterprises accepting a reasonable amount of investment risk will occasionally be wrong.

Sure, even with good PPM we will eventually reflect on a go/no-go decision that was wrong for the wrong reasons, and it is fair to call this a “failure.” But good PPM increases the potential this will be the exception as opposed to the norm. Most killed projects will be the result of the effective oversight required to spot the variances and anomalies. This will then trigger the reasoned and rational decision-making born of the essential investment governance only PPM can provide. In these cases, I find it difficult to call this project failure. It means we’re watching. It means we know what’s going on. It means we have the courage and humility to ask the question, “Is the investment decision still valid?”

So if Martha Steward was a PMO Director I am sure she would say, “Excel at canceling projects. It’s a good thing.”

Steve Romero is a published and globally recognized IT governance evangelist and IT business value activist. His mission is to help enterprises realize the full potential of their IT investments for strategic and competitive advantage. He speaks around the world to companies in every business sector, federal and state government agencies, industry organizations, students, and information technology and business luminaries to identify and communicate leading advances in business governance and business management of IT. You can read more from Steve on http://www.itgevangelist.com/.

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This entry was posted on Friday, April 6th, 2012 and is filed under Project Portfolio Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 people have left comments

A cancelled project is a success if it is cancelled EARLY before the sponsoring organization has made huge investments of money, time, and lost opportunity. Once vast effort has been expended it becomes unacceptable for responsible executives to face the consequences of canceling it, admitting that the money and time have been wasted. That’s why a phased development life cycle remains essential for non-trivial projects.
http://www.idinews.com/waterfall.html

Conrad Weisert wrote on April 18, 2012 - 12:59 pm | Visit Link

It is best to make the decision to cancel/kill any project as objective as possible, regardless of how long into a project lifecycle you are. If the cost of continuing with the project is less than the benefits to be gained, taking account of dis-benefits, e.g. resourced tied up that could more effectively be used on other work, then cancel it. Of course consider partial delivery of objectives as a business option; However if the Sponsoring Organisation and “Responsible” Executives are themselves mature and effective in their roles, they should understand that their main concern should not be “egg-on-face”.
Money and time should only be considered as “wasted” if there had been an opportunity to minimise the “waste”, and this wasn’t taken.

Project Manager, effectively managing projects to agreed successful outcomes for 10 years.
(I like the “Killed” status and will use this in future - thanks!)

Janet Loughran wrote on April 19, 2012 - 8:12 am | Visit Link

Conrad and Janet, you are both correct. First, Conrad is correct in noting that not every “cancelled” project should necessarily be considered a “successful outcome.” If it indeed takes too long and huge amounts of investment are lost, it could hardly be considered a success. The tweet I quoted simply wanted to point out that cancelling projects shows success in project or investment decision-making - success in project and portfolio management (PPM). The spirit of this success characterization would not hold up under habitual cancellations or cancellations occurring far later than they should.

And Janet is correct in saying the decision to cancel should always be objective and based on fact - uninfluenced by anticipated “consequences.” Minimizing waste is the successful outcome of which I speak. With that said, Conrad’s comments convey the unfortunate reality that exists in many organizations - objective decisions are not always made because of the fear of failure and the “consequences” that result from it.

The ability to apply fact-based objectivity to project investment decision-making and realize the “success” described in the tweet is entirely dependent on the organizations attitude toward “failure.” Most organizations (and most humans for that matter) have an absolute aversion to “failure” because it is perceived as “egg on face” vs. “opportunity to learn and improve.” I addressed this pervasive problem in the following post http://www.itgevangelist.com/blog/2011/10/9/embracing-and-learning-from-failure.html.

And I like the idea of “phased” approaches for complex and lengthy project efforts. It makes it much easier to pull the plug and minimize the waste.

Steve Romero wrote on April 21, 2012 - 3:14 pm | Visit Link

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