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14.03.2011Why Projects Are Cancelled For The Wrong Reasons

A disproportionate large number of projects are cancelled by management at 18 months.


Forbes.com

As with any project, there is a natural ebb and flow.  A natural rhythm.  What I find interesting is that the rhythm seems to settle into what I call the Rule of 18 Months.  The rule states that:

A disproportionate large number of projects are cancelled by management at 18 months.

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Let’s not forget that many areas have a natural rhythm.  One example is technology.  The most famous technology rhythm is Moore’s Law which predicts the growth in the number of transistors per chip will double every twenty four months.  Other technology laws that have a natural rhythm includes Kydler’s Law for disk storage (~12 months) and Haitz’s Law for the output from LED’s (~18 months).

Why is there a Rule of 18 Months for projects?  Is there some natural law at work?  In a simple answer – yes.  Human nature.

Looking back on the projects I’ve managed in my career, the 18 month cycle of cancelling projects reappears across industries, context, technology, size of organization and nationalities.  The rule seems universal.  Why?  Eighteen is the maximum number of months that management can suffer pain.  The pain is the repeated re-justification a project goes through while waiting for the benefit.

Why is it 18 and not 12 or 24?  Think about a given project.  Most projects start mid-year with funding and resources scraped together by management based on the potential merit and impact.  When the next full budget cycle comes around, the project is well underway and the funding is all but assured given that it’s been less than a year and no one expects the project to have impact – yet.  The result is that resources are kept in place and the project keeps going.

The second cycle is a different issue.  When the budget cycle comes around, there are questions raised about the project:  Is this project still important?  Are there more important projects we should be funding instead? Are we making the progress we should?

Why the questions? Because everyone in the management chain has to re-justify the project for yet another year of funding.  It’s this second round that causes all of the angst.  The result is that management will trade off whether to fight for another year of funding or to simply let the project die and avoid the pain.  As we can all appreciate, avoiding pain is a natural human reaction.

If management could see the value (something that justifies the pain), approving the project to continue would not be an issue.  Where most project teams get themselves into trouble is they don’t grasp this pain avoidance reaction from management.  In their minds, management should just get it and trust the team.  The result is a large percentage of projects are killed at 18 months because the value has not been shown.

Wait you say.  We had an agreement that this would be a multi-year project and the benefit would come at the end.  Isn’t this proof that the Rule of 18 Months doesn’t apply?  No.  If you truly believe that you can avoid the issue by getting an upfront agreement, then you don’t understand human nature.  In the event that your project does make it past the 18 month mark, the pain grows with each subsequent cycle which means you need to show ever increasing value and impact to keep it going.  The pain doesn’t go away.  It actually increases.

It’s not management’s fault.  It’s the project team’s fault for failing to understand management’s desire to avoid pain.  How does a team avoid the rule?  By following a few simple steps:

1) Understand your organization (or your customer’s) cycle to ensure you understand the timing.  When are budgets and/or strategies locked each year?

2) Define your project scope and deliverables to ensure you deliver impact/value before the rule gets applied.

3) For projects that extend beyond 18 months, break them down and make each part a distinct project.  Why?  To dodge the escalating pain avoidance problem.  Each project resets the clock.

In my experience, I’ve seen the rule applied to projects that should have been killed at the beginning and to those that should never have been killed.  This appearance of random decision making from management can be disruptive and demoralizing to an organization.

If you’re in management, look yourself in the mirror and understand the role human nature is playing in your decision-making to kill projects.  Help your teams understand.

If you are leading a project, use the simple project management strategies to avoid what in the past you had attributed as the whims of management.

By understanding the Rule of 18 Months, you can ensure that your projects will have the impact you intend.

Good luck!


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