According to the 2018 PMI Pulse of the Profession Report, 9.9% of every dollar is wasted due to poor project performance. This wastage mainly occurs due to project inefficiencies and failures. These projects fail in varying levels of severity, but the common thread among them is that they fail to meet the goals, objectives or deadlines that were set out at the beginning of project.
While this statistic is of concern, it is not a surprise to many IT professionals. What is surprising is the length of time that struggling projects are allowed to continue before they are eventually cancelled. During this time a lot of money, effort and resources are wasted while businesses either ignore the problems on the project or unsuccessfully attempt to salvage it.
Identifying and cancelling failing projects is an important competency that mature businesses need to possess. While it can be a very difficult decision to cancel a project after a large amount of investment has already been put in, there can be significant value in stopping the project early before even more time and resources are wasted.
Here are three main benefits of cancelling failing projects early:
One of the biggest benefits to cancelling failing projects early is that it enables companies to save financially. In February 2018 it was revealed that the American Veterans Affairs wasted close to $2 billion over three attempts to modernize their electronic health record system which is used to provide healthcare services to veterans. $1.1 billion was lost between 2011 and 2016 alone, before the project was eventually cancelled. If the employees and the accountable parties had been more effective in identifying this as a failing project, this project could have been cancelled earlier and much less money would have been wasted. The money that would have been saved could then have been used for other strategic initiatives within the business.
Increases team morale
When people are working on a project that is struggling, this can have a significant impact on their morale. Team members can quickly become disengaged from their work when they can sense that the project is not succeeding and the right course of action needed to address the situation is not being taken. When the team is disengaged, this has a knock-on effect in that it adds additional challenges to a project that was already struggling. While it may seem counter-intuitive, cancelling a failing project early can boost team morale. It is important to carefully explain why it is necessary to cancel the project to all stakeholders and to provide everyone with a platform to voice their opinions. This will enable the team to have an understanding of why the project should not continue, and of the benefits that cancelling the project will bring to the company. Another boost to morale is that the team members are freed up to be placed on new projects, allowing the team to focus their efforts on projects or activities that are more likely to succeed.
Creates opportunities to succeed at other projects
Once a project has been cancelled, several opportunities immediately become available as the different teams are no longer tied up in trying to salvage the project. The first opportunity is to learn from the mistakes and the challenges of the cancelled project. Once the project has been officially terminated, conducting a project retrospective with the entire team presents an opportunity for each stakeholder to share their lessons learned. These lessons can then be taken and applied to future projects. This puts the business in a better position to proactively address and navigate these kinds of challenges going forward. The second opportunity is that it frees up key resources to work on other strategic projects within the business. If the business determines that the problem the cancelled project was trying to fix is still a business requirement, the teams are able to go back to the drawing board and tackle the problem in a new and creative way.
While enduring a project failure can be difficult for a business, it is important that companies always remain objective and focussed on taking the best course of action for their business moving forward. Companies that are equipped to manage project failures quickly and efficiently with minimal cost and expense to the business, will be more likely to be successful with future projects.
Dorothy Mhlanga is a Consultant at Saratoga, and will be presenting a talk on this topic at the 2018 Business Analysis Summit in Johannesburg.