Instructor S Resource Manual s2

INSTRUCTOR’S RESOURCE MANUAL

CHAPTER FOURTEEN

Project Closeout and Termination

To Accompany

PROJECT MANAGEMENT:

Achieving Competitive Advantage

Jeffrey K. Pinto

CHAPTER 14

Project Profile: Navy Scraps Development of its Showpiece Warship

INTRODUCTION

14.1 TYPES OF PROJECT TERMINATION

PROJECT MANAGERS IN PRACTICE – Mike Brown, Rolls-Royce Corporation

14.2 NATURAL TERMINATION – THE CLOSEOUT PROCESS

What Prevents Effective Project Closeouts?

14.3 EARLY TERMINATION FOR PROJECTS

Making the Early Termination Decision

Project Profile: Spain Cancels Major Water Project

Project Management Research in Brief – Project Termination in the IT Industry

Shutting Down the Project

Allowing for Claims and Disputes

14.4 PREPARING THE FINAL PROJECT REPORT

CONCLUSION

Summary

Key Terms

Discussion Questions

Case Study 14.1 – Project Libra: to Terminate or not to Terminate

Case Study 14.2 – The Project that Wouldn’t Die

Internet Exercises

PMP Certification Sample Questions

Bibliography

TRANSPARENCIES

14.1 TYPES OF PROJECT TERMINATION

1. TERMINATION BY EXTINCTION

2. TERMINATION BY ADDITION

3. TERMINATION BY INTEGRATION

4. TERMINATION BY STARVATION

14.2 THE SEVEN ELEMENTS OF PROJECT CLOSEOUT MANAGEMENT

Source: Cooke-Davies (2001)

14.3 EARLY WARNING SIGNS OF PROJECT FAILURE

1. LACK OF VIABLE COMMERCIAL OBJECTIVES

2. LACK OF SUFFICIENT DECISION-MAKING AUTHORITY

3. MARKET VOLATILITY

4. LOW PRIORITY ASSIGNED TO THE PROJECT

Source: Green, Welch, and Dehler, 1993.

14.4 WHEN SHOULD WE CONSIDER CANCELLING THE PROJECT?

1. WHEN COSTS EXCEED BUSINESS BENEFITS

2. WHEN THE PROJECT NO LONGER MEETS STRATEGIC FIT CRITERIA

3. WHEN DEADLINES CONTINUE TO BE MISSED

4. WHEN TECHNOLOGY EVOLVES BEYOND THE PROJECT’S SCOPE

14.5 WORK BREAKDOWN FOR PROJECT TERMINATION ISSUES

14.6 ELEMENTS TO BE INCLUDED IN THE FINAL PROJECT REPORT

1. PROJECT PERFORMANCE

2. ADMINISTRATIVE PERFORMANCE

3. ORGANIZATIONAL STRUCTURE

4. TEAM PERFORMANCE

5. TECHNIQUES OF PROJECT MANAGEMENT

6. BENEFITS TO THE ORGANIZATION AND THE CUSTOMER

DISCUSSION QUESTIONS

1. Why is the decision to terminate a project often as much an emotional one as an intellectual one?

When termination occurs without completing objectives, there are several emotional elements involved for those connected to the project. The most obvious is that the termination represents a failure for those involved. For the visionary or originator of the project concept, their personal vision has to be relinquished (at least for the time being). Additionally, the ego, pride, reputation of project team members may be injured. Lastly, there may be anxiety over job loss or transfers when the team is dismantled.

2. Comment on the different methods for project termination. How have you seen an example of one of these methods, through either your school or work experience?

This is a question that requires students to respond to individually. Some with extensive project management experience will easily recognize how to answer this, while other students will need to reflect on a variety of their activities that could be considered examples of “projects” before they can respond.

3. Why do so many projects end up terminated as a result of “termination through starvation?” Discuss the role that ego and power and politics play in this form of termination.

Termination through starvation, or deliberate lack of resources, may occur for several reasons causing projects to be terminated before completion. One reason for starvation results from changes in upper management priorities or organizational goals. When priorities change, what once may have been a top project may become insignificant. Therefore, funding is allocated elsewhere leaving the other project to starve. There may be a decrease in funding (for a multitude of reasons) causing insufficient resources for existing projects. Another cause of starvation relates to power and influence. Those who hold powerful positions in organizations, but may not necessary act functionally within the organization, often have “pet projects.” In the event that those who allocate resources do not see these projects as highly desirable, the projects may be allowed to exist on paper, but in reality they are not giving the resources they need to survive. Over time, they starve and eventually are terminated. In these cases, power struggles may ensue between those who sponsor the projects and those who have to create budgets and project timelines. Politics may also influence which projects are starved. Outside of personal politics involving the pet projects, “community friendly” projects may be allowed to exist with minimal funding in order to create harmony between the company and the surrounding community. Again, these projects tend to exist on paper but are allocated few to no resources.

4. Refer back to <OLINK LOCALINFO="CH.00.003">Chapter 2</OLINK>. How does the concept of escalation of commitment factor into decisions of whether or not to terminate projects?

Remember that escalation of commitment is an emotional, psychological perspective that supports the continuation of a bad decision once it has been made. That is, people tend to continue to pursue poor choices in spite of contradictory evidence that suggests a better course would be to stop. This same concept holds true to termination decisions because egos are often involved, key organizational members may be supporting the decision and they are loath to be proved wrong, and so forth. In short, escalation of commitment demonstrates why many projects are pursued against all available evidence of their pending failure.</P</DIS>

5. Consider the case of the Navy’s Zumwalt-class destroyer from the introductory vignette. Take the position that terminating this project after having invested so much in research and development represented a good or bad decision by the Navy. Argue your case.

This question requires students to take either a pro or con position on the Navy’s decision to terminate the Zumwalt-class destroyer program. Instructors should encourage students to research the topic via the internet to develop a comprehensive understanding not just of the Zumwalt, but of the problems inherent in large defense programs. The costs of new ship classes are so high that it requires a strong case be made for the need for such a platform. In this case, there are so many counter-arguments to each of the original needs that were cited that it makes for an interesting in-class discussion. Clearly, the decision to pursue additional destroyers of this class is open to question, given their cost, the obvious flaws in the strategic thinking that drove their development, and current economic conditions. As a result, a reasonable case can be made that the ship class does not support an obvious and immediate critical need in the Navy’s inventory, leading to its cancellation. One final point to ask students to consider is the political question that emerges when powerful senators from the states where the shipbuilding occurs (e.g., Maine and Mississippi) work to get additional funding for the program – not for additional ships, per se, but to keep people at the shipbuilding yards employed.

6. Why do “lessons learned” programs often fail to capture meaningful information that could help guide future projects?

Lessons learned programs are aimed at documenting problems from past projects to be used as problem predictors for future projects. However, those in charge of closing out the project often fail to properly document. This sometimes occurs during closeout. For instance, members performing the closeout assume that a problem was a one-time, non-recurring event. Therefore, there is no need to document it for future reference. Other times, the source of the error is misinterpreted making it difficult to learn from the experience. Or, there may be the belief that the project is too unique to be beneficial for future use. Another problem that makes lessons learned inefficient is that future PMs do not look at the documents prior to beginning new projects. This may be due to a lack of procedure, time, or care for performing research of past projects.

7. Comment on the following statement: “In deciding on whether or not to kill a project, it is critical to continually monitor the environment for signs it may no longer be viable.”

There are internal and external reasons that may render a project no longer viable. When considering external reasons, it is vital to scan the environment for potential obsolescence or other changes in the operating environment that signal a necessary shut down. Signs such as reduced market opportunity, changes in consumer demands, and rapid technological advancements may allow call for project termination. Failing to heed these warnings could result in the failure of the project upon completion or continued investment into an unattainable project goal.

8. Refer to the box on Research in Brief. In your opinion, why is it so difficult to bring IT projects to successful completion? In other words, identify some reasons why their cancellation rate is 40%.

Information technology is subject to a great deal of change associated with technological advancements. Many projects run the risk of being obsolete if they do not operate under extremely short time frames. In addition to potential obsolescence, there are additional risks that run high in IT project management. For the sake of time, projects are rushed causing oversights and inadequate planning which would use up extra time, a luxury these projects do not seem to have. The lack of planning leads to poor definition of customers needs and project scope. Furthermore, reviewing past projects for “lessons learned” is often skipped, leading to redundant problems.

9. Imagine you are a project team member on a project that has been missing deadlines, not producing the technological results hoped for, and is a source of problems between your team and the customer. You have just been informed that the project is being cancelled? In what ways is this good news and how would you view it as bad news?

Missing deadlines and milestones are warning signs the project needs to be terminated. As a member of the project team, the project’s cancellation would therefore be good news, since it would be a waste of time and talent to continue pouring resources into a project that likely will not meet its objectives. However, personally the project failure may be detrimental. The dismantling of the project may mean you will be transferred (possibly to a position you do not desire) or you may no longer be needed. Moreover, depending on the reasons for the failure, the termination may reflect badly on your own reputation and impede the possibility of promotion or reassignment.

CASE STUDIES

Case Study 14.1 – Project Libra: to Terminate or not to Terminate

This case is about on ongoing true-story disaster being experienced by the British government with regard to a huge IT-based project (Libra) that combines office infrastructure and a new casework system linking magistrates’ courts. Despite successive financial bail-outs, the project is nowhere near completion and the British government finally announced that they would not pour any additional funding into it. The case allows for instructors to set up a debate regarding the ongoing viability of the project. Students can either argue in favor of continuing or against. It is useful for instructors to make note of the problems of “escalation of commitment” discussed in Chapter Two with regards to this case.

Questions:

1) Log on at http://itweek.co.uk/News/11329438 to see the string of news stories related to Project Libra. Identify some of the sources of the problems the project faces.

There are a number of potential sources of the problems that can be teased out from these news stories, including poor initial specifications, poor user communications, escalating costs and bad scope management, and so forth. In short, the case presents a laundry list of ways in which IT projects can overrun budget and schedule.

2) If you were to make the decision on whether or not to terminate this project, what would your decision be? Justify your position.

As noted above, this question gives the instructor the opportunity to create a debate on the viability of Project Libra. Should it be pursued because so much has already been poured into it, or should the British government distance itself (as it appears to be doing) in order to cut their losses from this point? The “answer” to this question is not nearly as important as getting students to understand all issues that should be considered as the debate moves forward.

Case Study 14.2 – The Project that Wouldn’t Die

This case tells the story of a powerful individual’s pet project that has been allowed to continue, despite a complete lack of productive results, for the past 20 months. Alice is explaining to Ben, recently appointed to the project, some of the reasons why the Regency Project has been kept alive and how Ben can make the best of the situation he faces.

Questions:

1) What termination method does it appear to company is using with the Regency Project?

It appears that they are using Termination by Starvation. No one wants to be in the position to kill the pet project of a Vice-President, but on the other hand, the case notes that top management has noticed the lack of productive results coming from the project and appears to have decided that the politically smart thing to do is kill it, but slowly so as not to offend its original project manager and current sponsor.

2) What are the problems with motivation when project team members perceive that a project is earmarked for termination?

It is extremely difficult to get personnel motivated to serve on a project that is either rumored to be ripe for termination or in fact, is being slowly killed, as in the case of the Regency Project. Personnel do not perceive service on such a project as a good career step and often, will work hard to get themselves removed from these projects so they are not associated with the projects termination and perceived failure. Motivation in this instance is very hard to maintain because of natural feelings of self-preservation. Alice’s advice to Ben is good, when she suggests that because the project is one of high visibility, his efforts to do his best may get him noticed, despite the likely Termination by Starvation that the project faces.

3) Why would you suspect Harry Shapiro has a role in keeping the project alive?

The simplest reason is often the most powerful – human ego. Harry was the originator of the project and served as its first project manager before getting promoted; thus, the project will always have great visibility to him and a strong emotional attachment. Top management must be aware of this fact because rather than killing the project directly, they are opting for a less-direct approach that slowly whittles away at its funding to the point where, they hope, it simply dies of this neglect.