Project Governance and Cancellation

Let’s consider a potentially common product development scenario as outlined in the following paragraphs.

A product is envisioned which complements an existing product line, but has somewhat limited potential in the form of market size / sales volumes.  For various reasons, product management believes the company needs this product offering to complement existing product lines. 

Minimal competitive analysis is performed and product critical-to-quality characteristics aren’t determined (ie, no key differentiators ensuring product competitiveness were established).  The project is approved in the definition phase-gate review, but it is eventually canceled. 

Let’s look at some project governance rules-of-engagement, failure modes and effects. (Our example project followed a phase and gate structure and was canceled during the design phase).

Well-executed project governance, and timely cancellation of projects when necessary, prevents unprofitable projects and misallocation of resources.

It is apparent from the effects listed above, a project can continue to waste time, money and resources if it lingers without cancellation. Reiterating the project governance failure modes:

• Project documentation and pre-reads were not read ahead of gate review
• No key differentiators were apparent which ensured product competitiveness
• Preliminary product cost was too high, but no action was taken to return to the steering committee with updated estimates
• Complaints during gate review about schedule duration, but no additional resources were approved or scope reduced
• Decision was “go” without considering “redirect” to clarify product cost and schedule
• Project did not return to steering committee for re-assessment of the business decision
• Project was not canceled by the steering committee (it was cancelled in one-on-one meetings instead). No post project analysis identified lessons learned.

What would it take to address these failure modes? Let’s consider some countermeasures in the spirit of “blame the process”.

1.  Clear Roles and Responsibilities (some key roles are as follows):
   • Steering Committee Chairperson
   • Steering Committee Facilitator
   • Opportunity Champion (generally a product manager who stays close to the project execution and monitoring)
   • Product Development Core Team Leader / Project Manager (executes and monitors) 
2. Training:
   • All process participants are trained in the governance process
   • Training includes what to look for in pre-read materials  
3. Project Constraint Recognition and Alleviation:   
   • There are only three levers: scope, resources and schedule 
4. Rules of Engagement
   • For example, project returns to the steering committee if the gate schedule slips by more than 4 weeks
5. Tools and Templates
   • Standardized deliverables and steering committee pre-reads
   • Post project analysis template

One can see it is a fair amount of work-effort to put a governance process in place, something generally done by a project management office (PMO).

However, the alternative is likely project quality ‘escapes’ and delayed cancellation, potentially costing a company millions. Any company with multiple product development projects should consider project governance as a key business decision-making process and continuously improve that process accordingly.