For no rhyme or reason a project can be terminated. There are always different criteria for project termination which have to go through the approval of all or a majority of stakeholders. Note that while one project may be similar to another project, it does not necessarily mean that it functions the exact same way. Hence, termination of a project is unique and personalized, in a way.
Project Scope: Scope is the backbone of the project. It remains constant and sacrosanct from the beginning of the project until the end. It is because of the scope of the project that the project has been in existence. Should there be any change to the scope, above and beyond minor scope creep, the project as such ceases to exist and demands a termination.
Objectives: One of the main criteria for project termination is the lack of clarity of objectives. When project objectives are not systematically documented, indicating the main details of the project and what one is to expect from it, it becomes a mess and confusion. Each department that is involved will not be able to understand the exact extent of the work, with some part of the work overlapping by teams, where as some part of the work being omitted. Clarity in project objectives arises from proper project initiation, with the Project Scope Statement and Project Charter drafted. If work is not allocated according to necessary tools such as the Work Breakdown Structure, objectives may not be clear enough to lead the project to completion and may call for a termination.
Cost: Most business projects are run on funds. If there is no monetary investment, there is likely to be no profit out of the project. However, when Cost is involved it should result in some profitable turnover. When the investment values more than the profits, or if the investment is much higher than the predicted profits, the project is best scrapped. In this light, a majority vote will have to be taken by all the stakeholders if the sponsor wavers in a decision to terminate the project. There is no use carrying out a project if only losses are in the forecast.
Resources: Projects are of varying kinds and likewise, the resources to be used for a project are also varied. What is necessary for one project is not necessarily required for another. Construction and engineering projects are different from business or IT projects and hence use different resources. At times, resources may be in short supply than when initially planned. This might have a huge impact upon the project. When resources have a negative effect on the project, the project might have to be terminated. However, this will have to be decided upon after evaluating the odds related to going ahead with the project or with terminating the project.
- For example, the availability of iron ore in January 2011 was abundant in the market. Your company was able to procure this material for the required use. The available funds allocated for the procurement of iron ore to cover four months' work was $20,000 and amounted to 500 tons. With the second wave of funds allocated for the project four month later, it might have been noticed that there was a shortage of iron ore availability, which made the cost price of iron ore shoot up to almost double. In a sense, What one could purchase for $20,000 in January 2011, will have to be purchased for $40,000 or half the initial quantity (250 tons) after the fourth month. When the impact of resources is too serious a factor to go unnoticed, the project might call for an urgent termination, before more resources are purchased or more funds allocated to handicap the project.
Time: Time is money. If the project is not running as per schedule, affecting the overall functioning of the project, there may be a need to look into the termination of the project. Since the many work packages are so interrelated and inter-dependent, a major time-related hurdle can affect the remainder of the project.