How not to kill a project

(This is a companion piece to Avoiding sunk cost syndrome on your project)

Making a sensible decision to ‘kill’ an uneconomic project or to support an ‘over budget’ project that still has a viable return on investment is always difficult and requires access to reliable data.

There are many factors affecting the kill/continue decision process. Three of the most common and worst are:

Focusing on easy to measure, irrelevant facts. Killing a project because it is overspending its budget, or overrunning time is simplistic stupidity. Just because these two factors are easy to measure does not make them important or significant. The cost and time needed to complete the project is only part of the equation; the benefits expected as a result of completing the work complete the picture.

Most of these bad decisions are made after the project has moved into the third scenario above and completing the work minimises the overall loss. Similarly, de-scoping the project to reduce the project costs and the benefits is highly unlikely to help (see: Value is in the eye of the stakeholder).

Not killing because of an emotional attachment. Every project is loved by somebody, the problem is emotional attachment rarely leads to pragmatic decisions. Good project managers and project team members are always emotionally committed to ‘their project’. Very often sponsors and project champions have a similar attachment, either from a positive aspect, or from a desire not to have their reputation tarnished from being associated with a failure.

Emotions are particularly significant when personal conflict, contractual claims and other forms of dispute are mixed up in the decision making process. As soon as there is a level of conflict, protagonists can quickly become emotionally committed to winning ‘the fight’ at the expense of all other considerations. Winning may be a grand objective, but Pyrrhic victories that damage the winner are of little practical value.

Generally the greater the person’s level of input to the work (emotional, financial, personal effort, etc), the more attached they become to ‘the cause’ and their ability to step back and make a rational decision is severely diminished. This type of emotional commitment is highly desirable from the aspect of building a motivated team committed to achieving project success but needs to be carefully managed when making the hard ‘kill’ decisions, usually by involving other authorities in the process.

Optimism, loss aversion, confirmation bias, hyperbolic discounting and other types of innate bias. Everyone is biased. Some of the more dangerous include confirmation bias (only hearing ‘facts’ that support a predetermined belief), optimism, loss aversion and hyperbolic discounting (a focus on the near-term). These innate traits make taking a near-term loss to avoid the probability of a much greater loss in the longer term very difficult.

The decision making process requires a level of detachment that is hard to achieve in the absence of both an effective project controls system and a rigorous governance system focused on achieving the best outcome for the organisation. In the absence of these two factors, emotions and biases have unfettered opportunities to influence people to make bad decisions.