Termination of a project – cause and convenience

Termination of a project – cause and convenience

A project is initiated by an organization to generate more revenue and increase its profit margins. Most of the projects are taken in alignment with the strategic goals and objectives of the firm. However, there are a variety of factors depending on which an organization may decide to terminate a project. It can be either due to a specific cause, barriers, convenience, or disasters.

Projects terminated due to a cause

There are specific reasons that may force an organization to terminate a project at an early stage. It may be the case that the goals set for the project cannot be achieved or that its outcomes are creating a conflict of interest with any other projects taken in by the organization (Boehm, 2000). Despite extensive efforts put forward by the project management team to predict, plan, and execute projects, specific unavoidable causes may strike up, resulting in the organization to go against the steps it took. Below mentioned are a few examples.

• Budget: One of the most common causes for a project to be terminated or being put to a halt is that the expenses have gone beyond the expected budget. It refers to the expected expenses of the project for raw materials, developing the required infrastructure, paying additional employees handling the project, and many more. Under such conditions, it becomes tough for the organization to continue with the project at that specific point of time. The organization may decide to pause it temporarily or terminate it permanently.
• Fail reports in the testing phase: Before a project is successfully completed and launched in the market, the team takes it through extensive testing to ensure its quality and viability. In case the team notices that the project is not sustainable, the organization may decide to terminate it (Statman & Sepe, 1989).

Projects terminated for convenience

Convenience also plays a crucial role in project management. Organizations often terminate a project early if it finds it convenient to do so. Some examples of a project terminated due to convenience include:

• Customer demands and better use of resources: It is often the case that the customer needs to be based on which the project was initially started has changed, and the customer is not interested in the current status of the project. Under such conditions, companies often prefer to terminate a project early and use the resources for another project (De, 2001). It ensures that the resources are not wasted, and the profitability of the firm is not impacted.
• External factors: The outcome of any project is influenced by a variety of external factors. Some of the common ones include the political state of the host nation, legal regulations, environmental obstacles, and many more. If any such condition is not favorable for the project, the organization may decide to terminate it. It may be the introduction of a new law or that the political favor has changed for the organization.

The termination of a project before its maturity is done only when the organization sees it as a burden or finds a better way to boost its profit. Whatever may the factor be, they must have a solid ground for making such decisions.

Reference

Boehm, B. (2000). Project termination doesn’t equal project failure. Computer, 33(9), 94-96.

De, P. K. (2001). Project termination practices in Indian industry: a statistical review. International journal of project management, 19(2), 119-126.

Statman, M., & Sepe, J. F. (1989). Project termination announcements and the market value of the firm. Financial Management, 74-81.