What Are the Different Criteria for Project Termination?

Opting for a Project Termination

Termination of Project

Is your project suffering from a major set back by lack of funds or not being able to keep up with resource demand? Or is your project being pressured by external factors?

There may be a time in a project when the entire assemble, package and project as such has to come to a close. This may be seen as the termination of the project. While a project may be terminated, it does not necessarily mean that the project is a failure. However, many reasons for termination may be determined on how successful (or unsuccessful) the project has been up to that given time.

Project-Related Factors

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.

External Factors

Technical reasons: Many times, although the project starts out well, it might be noticed that a lot of details hamper the project. Some of these hurdles may be technical related, owing to the lack of IT infrastructure, inadequate technical information, inefficient technical back up or lack of a technical team to support the project. Since an all round planning will have to be taken into consideration at the start of the project, if this component is not present, the project can face a major setback.

Damage and Disaster Recovery: Every project should have a back up plan should something go wrong in a project. If there is no damage control that can kick in immediately or a Disaster Recovery Plan for any form of disaster, be it for technical or business reasons, or even acts of God, it becomes imperative that some form of action be taken to curb the mess and control loss of funds to over-ride the damage. This may hence be a major criteria for the immediate termination of the project.

Change of Company or Company Structure: When the company changes management hands, the project might cease to exist. There may not be any further requirement for the project and hence it may be terminated.

Project ceases to exist: In some cases, the project might just not be relevant, viable or necessary. In such cases, the project might be unanimously terminated.

Project completion: While all above points serve as relevent criteria for project termination, one of the most important criteria is to evaluate how much the project has progressed. If it has reached completion with no further requirement of the triple constraints (cost, time and resources), then it is in need of termination. For this, the project manager will have to carry out the necessary project termination steps before handing over the completed project to the project sponsor.