Figure 7‑1: Impact of Termination
A project may be cancelled for a variety of reasons, including lack of funding, technological obsolescence,
changes in consumer trends, mergers and acquisitions, loss of the “champion”, and negative cost/benefit
relationships. Although the reasons may vary, the impact is frequently the same. Project cancellation can
affect employee productivity, the reputation of the firm, and the value of the firm’s stock. Although hardly
any research on the topic of employee productivity and project cancellation has been done, experienece
suggests that a project team’s perception of the cancellation may influence their productivity for the
next several years. However, there are guidelines to help soften the impact of cancellation on the team.
To begin with, it is essential that the project team is included in the cancellation process and should be
made aware of the rationale behind the cancellation well before the official announcement. Moreover,
this rationale should be consistent with the perceptions of the project team