BUSI 682: Project Analysis

BUSI 682-The Project Exit Story
Cc von
Liberty University
Dr. David G. Duby

April 6, 2014

Key Concept and Why You Are Interested In It

How do you know when it is time to exit a project? What performance measures do

project leaders use to make the decision? Or do project managers go with your instincts? What is

the process use to put a project out of everyone 's misery? These questions project managers must

convey to upper management when telling the project exit story. According to Moran and

Youngdahl (2008), telling the project exit story may actually take more courage than any other

aspect of project leadership (p.83). The reason for researching this topic is to find out why
project managers exit projects and why the project exit story is essentially the converse of the

rest of the project story.

Explanation of the key concept Terminating a project is a difficult decision for project managers. A project may be

terminated for many reasons. According to Moran and Youngdahl, some common reason for

terminating projects are: Cumulative cost increases or schedule delays can no longer be tolerated,

the strategy for which the project was intended as changed, budget cuts, experts have determined

that the project will not meet it objectives, and other higher priority projects have been

introduced (2008). It is a fact that most project management professionals are not aware that

project termination procedures are critically important for successful as well as failed or

prematurely abandoned projects (Bowen, 2009). The project exit story needs delicate handling

and sensitivity. Successfully closing out a terminated project should be viewed as a greater

achievement than closing out a successful one and the project team should be made aware of the

rationale behind the termination well before the official announcement.

Major article summary

In the article, Killing Mushrooms: The Real Politik of Terminating, written by John Daly,

Alf Saetre, and Eric Brun discusses how successful companies depend not only on highly

successful ideas and projects, but also on terminating bad projects so that they do not drain their

intellectual and other resources. Also, the authors’ explain how organizations let many projects

go on for too long before terminating them. Project managers have two main concerns when

terminating innovative ideas and projects.

One is that the idea is actually terminated and the other is that whoever came up with the

idea does not become de-motivated when a project is dismissed. The authors’ explain that it can

take some adjustment to realize that terminating projects can be natural and even healthy. One

could argue that a distinctive mark of successful innovative organizations is their ability to

separate the bad from the good ideas and quickly kill the bad ones (Khan and Katzenbach, 2009).

Discussion

The project exit story is a necessary evil not only locally and globally.
It causes

frustration for those stakeholders who sincerely believed and in most cases still believe that the

project could produce the results they expected, or still expect. It is terrible a project must early,

but good reasons exist for exiting projects early before they are finished. Not all stem from poor

management.

Projects that ended early produced important knowledge gains; involved integrated

planning for research, development, and business activities that may have some benefit to

participating companies, and entailed substantive cross disciplinary contact among scientists and

other researchers, cross-talk among technical and business staff, and negotiations among

executives at different companies. Prior studies suggest that timely loss recognition in accounting

earnings enables lenders, shareholders, and boards of directors in identifying unprofitable projects;

thereby, enabling them to force managers to discontinue such projects before large value erosion

occurs (Srivastava, Tse, Sunder, 2010). Project failure is likely to generate a negative
emotional

response for those involved in the project. The emotion framework of project failure that relies

on self-determination to explain variance in the intensity of the negative emotions triggered by

project failure (Shepherd & Cardon, 2009). There is no model in telling the project exit story and

it depends on what influences played a part in causing a project manager to exit a project.

Annotated References

Bowen, R (2009). Project Termination: The Day the Project Died. Retrieved from

http://www.brighthubpm.com/monitoring-projects/51010-project-termination-the-day-the project-died

Ronda Bowen, who works at W.R.E. Consulting Services and attended Michigan State

University, states that most project managers are not aware that project termination

procedures. She states that every project must come to an end sometime, but project

termination need not necessarily mean project failure or premature abandonment. A

project may be terminated for a variety of reasons, including successful completion of the

endeavor. The author list reasons for project termination before it natural closing date

such as: Project is completed ahead of schedule and handed over to the sponsors/users,

Premature abandonment due to technical grounds that impede achievement of core goals,

The principal investigator or an equivalent person suddenly quits and the project cannot

continue as planned and the project has to terminated, as putting on hold will be counter-

productive, and it is suddenly found that another group publishes results in same core

area of interest.

Daly, J. A., Sætre, A., & Brun, E. (2012). Killing Mushrooms: The Real Politik of Terminating

Innovation Projects. International Journal of Innovation Management, 16(5) Retrieved from

http://search.ebscohost.com.ezproxy.liberty.edu:2048/login.aspx?direct=true&db=bth&AN=83811281&site=ehost-live&scope=site

Authors John Daly, who is a professor in the Department of Communication Studies and

Management at the University of Texas, Austin, Alf Saetre, who is a professor in the

Department of Industrial Economics and Technology Management at Norwegian

University of Science and Technology, and Eric Brun, who is a professor at University of

Stavanger discuss how Successful organizations depend not only on highly successful

ideas and projects, but also on terminating poorer projects so that they do not drain their

intellectual and other resources. The article investigates managers’ termination behaviors

in the energy industry along two dimensions termination and accommodation. The

authors group their finding into seven major categories of termination strategies that vary

with respect to accommodation and then discuss three major features of accommodation

strategies. A question that the authors ask is why bad projects prosper. Project managers

must understand the signs of when projects are bad.

Khan, Z. & Katzenbach, J. (2009). Are You Killing Enough Ideas? Retrieved from

http://www.strategy-business.com/article/09303?pg=all

Zia Khan is a Booz & Company partner based in San Francisco. He has expertise in

helping clients build the formal and informal organizational capabilities needed to realize

major transformations. He previously led the San Francisco office of Katzenbach Partners

LLC. Jon Katzenbach is a Booz & Company senior partner based in New York. A

cofounder of Katzenbach Partners LLC, he is the author of Peak Performance: Aligning

the Hearts and Minds of Your Employees (Harvard Business School Press, 2000) and

Why Pride Matters More than Money: The Power of the World’s Greatest Motivational

Force (Crown Business, 2003). He has expertise in helping clients mobilize their informal

organization to realize performance advantages. The authors discuss are businesses

killing enough projects in order to work on better ones. Companies often waste time on

ideas that people do not believe in and the idea has been effectively killed, it still remains

on the agenda, with nobody fully willing to learn from the mistake, put it to rest, and

move on to other endeavors. Regardless of industry or company size, deciding on the right time to kill a project is one of the hardest decisions managers must make, especially

if they’ve invested personal effort in the venture.

Moran, R. T., & Youngdahl, W. E. (2008). Leading global projects: for professional

and accidental project leaders. Amsterdam: Butterworth-Heinemann/Elsevier.

Shepherd, D.A., & Cardon, M. S. (2009). Negative Emotional Reactions to Project Failure and

the Self-Compassion to Learn from the Experience. Journal of Management Studies,

46(6), p. 923-949. Retrieved from

https://webspace.utexas.edu/neffk/pubs/project%20failure.pdf

Dean Shepherd is a professor in the Kelley school of Business at Indiana University, and

Melissa S. Cardon is a professor in the Department of Management and Management

Science at Pace University. The authors explain that emotional side of project failure.

Project failure is likely to generate a negative emotional response for those involved in

the project. The emotional framework of project failure that relies on self-determination

to explain variance in the intensity of the negative emotions triggered by project failure

and self-compassion to explain variance in learning from project failure. Given these

implications of negative emotions generated from project failure, it is important to

understand why some project failures generate a more intense negative emotional

reaction than others. It is also important to understand why some individuals’ negative

emotional reactions have a more detrimental impact on subsequent learning than do

others.

Srivastava, A., Tse, S, Y. & Sunder, S. V. (2010). Timely Loss Recognition and the Early

Termination of Unprofitable Projects p. 1-39. Retrieved from

http://papers.ssrn.com/sol3/papers.fm?abstract_id=1465980

Authors Anup Srivastava who is a professor at Northwestern University - Kellogg School

of Management, Senyo Y. Tse who is professor at Texas A&M University - Lowry Mays

College & Graduate School of Business and Shyam Vallabhajosyula Sunder who is a

professor at University of Arizona talks about how companies should discontinue

projects that become unprofitable and early termination of project should not be met with

such negativity. The authors states that prior studies that timely loss recognition increases

the likelihood of timely closures of unprofitable projects. Moreover, project managers, by

announcing late discontinuations of such projects, reveal their inability to select good

projects and/or to contain losses, when projects turn unprofitable.