Project Closure & Benefits Realization
Project Closure and
Benefits Realization
Chapter 13, Project Management: A Managerial Approach,
by Meredith & Mantel, 10ed, John Wiley & Sons, Inc.
Introduction
All projects end
• The objectives have been completed
• It no longer makes sense to finish
Closure is never easy, always complicated
Some teams move on to other projects
Other times, members go their own way
The client may be happy, mad, or anywhere in between
Even after closure, it’s not done. Benefits realization should take place.
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Project Closure & Benefits Realization
The Varieties of Project Closure
Closure by extinction
Closure by addition
Closure by integration
Closure by starvation
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Closure by Extinction
Extinction occurs in any scenario where the project goes away
• Successful
• Unsuccessful
• Take too long
• Changes in environment
• Termination of key personnel
When work on a project stops, some organizational work continues
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Project Closure & Benefits Realization
Closure by Addition
Applies to an in-house project
When the project is successful, it is institutionalized
While the project goes away, project personnel and assets are
transferred to the new business
Some personnel may request transfers to other projects instead
The transition is challenging for the PM
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Closure by Integration
The most common way to close a successful project
The project comes into the business
• It is absorbed into the existing structure
That structure absorbs the assets of the project
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Project Closure & Benefits Realization
Aspects of the Transition from
Project to Integrated Operation
Personnel Information systems
Manufacturing Marketing
Accounting/finance Purchasing, distribution, legal, etc.
Engineering Risk ID and management
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Closure by Starvation
• “Slow starvation by budget decrement”
• Used when it is politically dangerous to cancel a project
• Bad manners to inquire into the status of the project
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Project Closure & Benefits Realization
When to Close a Project
• Projects take on a life of their own
• It may be easy to close a project that is finished
• It can be very difficult to close a project prior to its
completion
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Important Factors for Termination
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Project Closure & Benefits Realization
Critical Success Factors
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Project Success and Failure
Factors and their importance are idiosyncratic to:
•Industry
•Project type
•Possibly the firm
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Project Closure & Benefits Realization
Fundamental Reasons
Why Some Projects Fail
• A project organization is not required
• Insufficient support from senior management
• Naming the wrong person as project manager
• Poor planning
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Termination Decision: How and Who
• How the decision is made and who makes it
• Broadly based committee of reasonably senior execs
• To diffuse and withstand political pressure
• Criteria to close should be written and explained
“There are times when hunches should be followed (or rejected)
and blind faith should be respected (or ignored). It depends on
whose hunches and faith are under consideration (Baker, 1997)”
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Project Closure & Benefits Realization
Non-Technical Reasons for Closure
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The Closure Process
1. Must first decide to close
2. If the decision is to close the project, the decision
must be carried out
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Project Closure & Benefits Realization
The Decision Process (Slide 1 of 2)
Three categories of decision-aiding models
1. Base decision on degree to which project qualifies against set of factors
generally associated with success
2. Base decision on degree to which project meets the goals and objectives
set for it
3. Have fallen far enough behind their schedules and planned progress that
completion costs are too high
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The Decision Process (Slide 2 of 2)
Sunk costs are not relevant to the decision about closing a
project
Primary concern for project continuance or closure is whether or
not the organization is willing to invest the estimated time and
cost required to complete the project
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Project Closure & Benefits Realization
The Implementation Process
Closure can be orderly or a “hatchet job”
Planning for implementing an orderly shut down yields
better results
Who leads the shut down project?
A special closure manager may be used
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Things to Do
Ensure tasks are completed Clear with legal counsel
Notify the client Determine what records to keep
Finish the paperwork Assign support
Send out final invoices to the client Close the project books
Redistribute resources
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Project Closure & Benefits Realization
The Final Report – A Project History
(Slide 1 of 2)
Good project management The Final Report is a history of
systems have memory the project
• Organization Process Assets • What went right/wrong
• Who served
A key element of this memory • What was done
is Project Final Report • How managed
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The Final Report—A Project History
(Slide 2 of 2)
Project performance
Administrative performance
Organizational structure
Project and administrative teams
Techniques of project management
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Project Closure & Benefits Realization
Benefits Realization
Closure includes: Next, official benefits realization
begins for PM
• resources properly transferred
• Contractual and legal docs and Three primary phases for this
payments completed stage:
• Implementing outputs as intended
• Admin affairs
• Handoff to functional manager
• Final report written
• Routine use of outputs
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Implementation
Implementation is difficult
• Customers/users don’twant to change
• Customers/users may revert to old system
Why?
• Systemdoesn’t work as supposed to
• New manager/exec arrives
Training is necessary
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Project Closure & Benefits Realization
Handoff
The PM hands off to the functional manager
Don’t want customers/users to slip back, so handoff is slow
• PM may stay around until production reaches 80% utilization
Routine Use
At this point, the PM’s job is complete
At some point, the PM has to be satisfied that benefits have been
achieved
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Afterword
Does anyone really use this stuff?
Research project completed to see which knowledge areas were focused on
in real-life projects
• Practices associated with time, scope, and cost were widely used
• Practices associated with integration, HR, and procurement were used somewhat
less used
• Practices related to communication, quality, and risk tend to be used least
frequently.
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