How To Terminate a Project Effectively in 4 Steps

By Indeed Editorial Team

Published November 23, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Projects sometimes require termination before their completion date due to a variety of reasons. It's important to manage project resources, timelines and participants during the termination process to ensure a smooth, effective transition to the end of the project. Understanding how to end a project can help you implement project termination properly. In this article, we define project termination, examine the two main types, explore how to terminate a project in four steps and discuss reasons to do so.

What is project termination?

Project termination is when a project ends, regardless of whether it's complete. This can mean that all resources for the project become unavailable and personnel may migrate to other projects or end their contracts. Choosing to terminate a project at the right time can potentially save a company or team time and money. Projects terminate for a variety of reasons, but ultimately, the project manager or leader makes the decision to terminate a project.

Read more: How To Structure a Project and Types of Project Organization

Types of project termination

Exploring the different types of project termination can help you better understand why it occurs. Here are the two main types of project termination:

1. Natural project termination

Natural project termination occurs when a project reaches its end goals and closes naturally. For example, a development team might terminate their software development project when they deliver the final software design to the customer. Successfully completing a project allows the team to close all project needs and migrate to another project or take a rest period before starting another task. It also allows the team to save project files, deliver reports and measure the speed and efficiency at which the project has progressed.

Related: Project Plans To Use for Your Next Project (With Examples)

2. Unnatural project termination

An unnatural project termination occurs when a project reaches a premature end for many reasons. Financial reasons like the end of funding, a sudden change in investors or company cuts often cause unnatural project termination. For example, a software development project might end prematurely because the initiator of the project decides to hire another development firm with greater resources to finish the project.

How to terminate a project

Terminating a project can require several steps to ensure you notify the right people or departments, account for all the project's resources and properly end the project according to company procedures. Here's how you can terminate a project effectively in four steps:

1. Notify everyone about the project's termination

Notify the project managers, staff and clients about the project's termination and explain the reason for the project's termination honestly. Good communication is important when terminating a project so that everyone understands why the project is ending and what they can do next. If you're speaking with clients, it's important to be patient and explain why you're unable to deliver the final product. It might be helpful to suggest another company or services you can offer to help them transition. You may also consider hosting a meeting to talk in person for a more personal approach.

2. Pause all progress on the project

Once you notify everyone of the project's termination, you can pause all progress. This can mean shutting down programs or removing access to certain tools to prevent any further progress on the project. It's important to pause progress quickly to ensure there are few financial losses for the terminated project. For example, a remote employee might receive a termination notice and end their work on a project to help save the company time and money.

Related: Project Sponsor vs. Project Manager: Key Differences

3. Account for all the project's resources

After you pause the project, account for all its resources, including any tools, programs or physical resources you dedicated to the project. These resources typically have a financial value, and recovering them might allow you to use them in future projects. Compare the resources you account for with the original estimate to determine how much the team already used and what's left for future projects. This can also help you create a more detailed and accurate termination report for the project.

4. Gather project reports and submit documents

Typically, a terminated project includes a report that describes the project's progress and termination. It can be helpful to gather as much information as possible about the project before drafting and submitting your report. Some companies don't require documentation for terminated projects, but keeping detailed documents for yourself can help you establish a record of each project. Having these records can also allow you to identify patterns in the company's projects to potentially prevent future terminations.

Related: What Is Project Scope? 7 Steps for Defining Project Success

Reasons to terminate your project

Here are some common reasons to terminate a project:

  • Lack of funding: Sometimes, the initial estimate for a project is incorrect, and the project may end prematurely due to a lack of funds. A project manager might terminate a project when the cost of that project exceeds the available funding or the estimate for the completion of the project.

  • Client sentiment: Clients may change their minds about a company or a project at any time. Sometimes, clients realize the price of a project exceeds their budgets, and they require a project termination to save financial resources or meet their expectations with another business.

  • Project length: When projects exceed their initial time frames, they might become more costly, requiring a termination. Ending a project with no foreseeable end can help alleviate the cost of the project and allow you to reposition employees in other projects that require attention.

  • Unrealistic expectations: Sometimes, a client can have expectations that exceed the capabilities of the company or team completing a project. Terminating such projects helps keep client expectations more realistic and team members less fatigued.

  • Natural occurrences: Nature can be a component in project termination because it's often unpredictable. Natural disasters like hurricanes or earthquakes might prevent project completion due to potential damage to infrastructure or buildings.

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