BPM 412: PROJECT TERMINATION, CONCLUSION AND REPORTING

INTRODUCTION
What is project?
A project is any undertaking that has a definite beginning and definite end. It consists of specific
resources set aside to be consumed for a specific duration. It is a temporary venture that
combines both human and non-human resources pulled together in a temporary organization to
achieve specific purposes. It is a discrete and a distinct package of investment chosen to be
separately planned, analyzed, appraised and administratively implemented to alleviate various
development constraints in order to achieve benefits (outputs) in terms of increased productivity
and or improved quality of life for target beneficiaries over a given period of time.
A project can also be defined as an undertaking that has definite beginning and definite end and
carried out to meet established goals within cost, schedule and quality objectives.
A project refers to a sequence of unique, complex and connected activities that have one goal
and purpose and that must be completed within a specific time and budget and according to
specifications.
‘we can also state that it is a unique process, consisting of a set of coordinated and controlled
activities with start and finish dates, undertaken to achieve an objectives conforming to specific
requirements, including constraints of time, cost and resources.’

Key features of a project:

1. Has a definite start and end.
2. Have organized plans. A planned, methodical approach is used to meet project objectives.
3. Have separate resources. Projects are allocated time, people and money on their own
merits.
4. Involves teamwork. Projects usually require a team of people to get the job done.
5. Have established goals. Projects bring results in terms of quality and or performance.
Project management is the planning, directing and controlling resources (people, equipment,
materials) to meet the technical, cost and time constraints of the project. It brings together and
optimizes the resources necessary to successfully complete the project. It is the process of
developing substantive data about each project parameter so that decision making between the
parameters is more effective.
Project management is the process of managing the complex set of activities in order to achieve
specific objectives within the constraints of cost, quality, performance of timeliness ( Nyandemo
and Kongere,2000
Project Management can also be defined as the application of knowledge, skills, tools and
techniques to project activities to meet project requirements. The skillful application of those
skills, tools, and techniques will come only after you’ve had a significant amount of education
and on-the-job experience. The project management process calls for the creation of a small
organizational structure (the project team), which is often a microcosm of the larger

1
organization. Once the team has produced the desired outcome, the process then calls for the
decommissioning of that small organizational structure.

Characteristics of projects
The main characteristics of a project as an instrument of change are:

1. LIFE SPAN- Each project is time bound through schedules. They are expected to deliver
specified quantified results within predetermined parameters, for example, quality-related
parameters;
2. FOCUS- Projects have fixed set of objectives, mission/goal. Project ceases to exist once
the mission is achieved.
3. Novel/Uniqueness- No two projects are alike in their execution even if the plans are
duplicated. They are unique, non-repetitive phases consisting of processes and activities;
4. FLEXIBILITY- Projects are dynamic in nature and therefore modifications /changes in
the original plans and budgets are normal.
5. Risk: They have some degree of risk and uncertainty;
6. They have planned start and finishing dates, within clearly specified cost and resource
constraints;
7. Projects are temporary. Personnel may be temporarily assigned to a project organization
for the duration of the project [the project organization may be assigned by an originating
organization and may be subject to change asthe project progresses];they may be of a
long duration, and subject to changing internal and external influences over time.
8. TEAM SPIRIT, It requires teamwork and effective leadership. Implementation, life cycle
and statement of work which is a written description of objectives /rules/
regulations/constraints/restrictions/procedures to be followed while executing a project
activity.
9. They are organizationally complex, requiring the interaction of many people, departments
and other organizations.
10. Projects are multi-disciplinary. They require the involvement of different skills.
11. Projects involve multi-faced resources mobilization.

QUESTION: The characteristics of projects are fundamentally different from those of

other activities. Explain.

CHARACTERISTICS/FEATURES OF A GOOD PROJECT

1. Feasible i.e. viable or manageable in terms of technical, financial and managerial
requirements.
The questions thus to be asked if a project is feasible are:
 Do we have the manpower?
 Financially, can we get the money to meet the project budget?
 Is it manageable within our resources? For example, people to mobilize resources,
ensure the project become a reality.

2
 2. Meet community needs, solve their problems and exploit available opportunities.
3. Environment friendly. The project should not emit harmful substances into the
environment.
4. Sustainable. It should be able to continue with its activities even after donor fund
withdrawal thus bring development that last.
5. Assist government development efforts and have government support and adheres with
government objectives which should also be in conformity with donor objectives.
6. Help in poverty alleviation.
7. Cost effective.
8. Gender inclusive and sensitive.
9. Promote active participation of all stake holders/members.
10. Enhance linkages/partnership/networking.
11. Encourage self-reliance/institutional building.

TYPES OF PROJECTS.
Projects can be classified in various ways:
1. Based on scope and significance i.e can be classified as national and international
projects. National projects can further be categorized as Development projects and
maintenance projects.
2. Based on size and scale i.e large, medium and small scale projects.
3. Based on ownership and control i.e public sector projects, the private sector projects and
joint sector projects ( owned by both the government and the public)
4. Based on the sector on which they belong e.g. Agricultural, industrial, Education,
Transport, and Health projects etc.
5. Based on the speed of execution i.e Normal (carried out within the specified period),
Crash and Disaster projects.
6. Research and development projects
7. Manufacturing projects
8. Construction projects

PROJECT FINANCING

Project financing is a term used to describe a range of financing activities. It has evolved
into primarily a vehicle for assembling for a consortium of investors, lenders and other
participants to undertake infrastructure projects that would be too large for individual
investors to underwrite.
World Bank – the “use of non-recourse or limited recourse financing”.
Nonrecourse financing – when lenders are repaid only from the cash flow generated by
the project, or in the event of complete failure, from the value of the project assets,
lenders may also have limited recourse to the assets of a parent company sponsoring a
project.

Features of project financing

3
1. Capital intensive – PF tends to be large scale projects that require a lot of debt and
equity capital from hundreds of millions to billions of dollars.
2. Highly leverage – theses transactions tend to be highly leveraged with debt
accounting for 65%-80% of capital.
3. Long term – the period of project financing can easily reach 15-20 years or even
more.
4. Independent entity with a finite life – they rely on a newly established legal entity
known as the project company which has the sole purpose of executing the project
and which has a finite life, so it cannot outlive its original purpose. For example, in a
Build-Operate-Transfer (BOT) project, the project company (borrower) ceases to
exist after the project assets are transferred to the local company.
5. Nonrecourse or limited recourse financing. The project company is the borrower. In
nonrecourse, the repayment is derived from the project cash flow.
6. Controlled dividend policy – to support a borrower without any credit history in a
highly leveraged project with significant debt service obligations, lenders demand
receiving cash flows (repayment) from the project as they are generated. The
project’s income goes to servicing the debt, covering operating expenses and
generating a return on the investors equity (profit). This arrangement is usually
contractually binding, thus the reinvestment decision is removed from management’s
hands.
7. Many participants – theses transactions demand the participation of many
international partners/participants eg 10 or more different players playing major roles
in the project implementation.
8. Proper allocation of risks. The allocation of risks is codified in the contractual
agreement arrangement between the project company and the other participants. This
is aimed at matching risks and corresponding returns to the parties most capable of
successfully managing them.
9. Costly. Raising capital through PF is generally costly /expensive than through typical
corporate finance avenues. The greater needs for information, monitoring and
contractual agreements increases the transaction costs. The highly specific nature of
the financial structures also involves higher costs and can reduce the liquidity of the
project debt. Margins for PF are also often include premiums for country and political
risks since many of the projects are in relatively high risk countries or the cost of
political risk insurance is factored into overall costs.

Question
1. What is corporate finance?
2. Differentiate between corporate finance and project finance in a table.
CF – PF Continum
Dimension Corporate finance Project finance
Financing vehicle
Type of capital
Dividend policy and reinvestment
decisions
Financial structures
Transaction costs for financing

4
 Size of financing
Basis for credit evaluation
Cost of capital
Investor/lender base

Advantages of Project Financing

1. Can raise large amounts of long term, foreign equity and debt capital for a project.
2. It protects the project sponsors balance sheet.
3. Allows a sponsor to undertake a project with more risks than the sponsor is
willing to underwrite independently.
4. Enhance discipline to the contracting process and operations through proper risk
allocation and private sector participation.
5. Can provide a de facto political insurance.
6. Investors as opposed to managers make the reinvestment decisions.

Disadvantages of Project Financing

1. It is a complex financing mechanism.
2. Require significant lead time.
3. Highly costly.
4. Contractual arrangements often prescribe intrusive supervision of management and
operations that would be resented in a corporate finance environment.

A project generally has four phases

a) Conception phase - includes pre- appraisal preparation

b) Planning phase - comprising appraisal and post- appraisal preparations
c) Execution phase – comprising implementation, monitoring and control
d) Termination - comprising project closure and future sustainability.

PROJECT TERMINATION
This is the withdrawal or ending of project activities. It brings a project to a planned or orderly
conclusion and is concerned with fair and efficient re-assignment of project team.
Reasons for Project Termination
a) Project success. This is done when the set objectives, cost, schedules and performance
standards and levels have been met as planned. In this case project results have been
delivered to the target beneficiaries.
b) Project failure. Failure to make satisfactory progress towards attaining performance
objectives due to overrun on its cost and schedule objectives. Some project constraints
have been violated and performance inadequate.
c) Project owners plans or strategy has changed such that it is no longer necessary for the
organization to continue with the project (goals no longer relevant to overall needs)
d) When funds are not available to meet project financial obligations.

5
 e) Project priorities not high enough to survive competition with high priority projects.

Objectives of Project Termination

(i) The liquidation of project commitments
(ii) Transfer of continuing activities to other units/organizations.
(iii) Re-assignment or release of personnel.

PROJECT PLAN FAILURE

Why do project plans fail?

One should be able to differentiate between the failure of a project plan and failure of a project to
meet set objectives. Project plans are very crucial; however, at times these meticulous plans fail.
No matter how hard we try, planning is not perfect, and sometimes plans fail. Another plan may
be employed.

Typical reasons for project plan failure include:

1. Corporate goals are not understood at the lower organizational levels.

2. Plans encompass too much in too little time.

3. Financial estimates are poor.

4. Plans are based on insufficient data.

5. No attempt is being made to systematize the planning process.

6. Planning is performed by a planning group.

7. No one knows the ultimate objective.

8. No one knows the staffing requirements.

9. No one knows the major milestone dates, including written reports.

10. Project estimates are best guesses, and are not based on standards or history.

11. Not enough time has been given for proper estimating.

12. No one has bothered to see if there will be personnel available with the necessary skills.

13. People are not working toward the same specifications.

14. People are consistently shuffled in and out of the project with little regard for schedule.

6
PROJECT FAILURES

Reasons why projects fail to achieve set objectives:

1. Resistance from stakeholders.
2. An ill-conceived project.
3. Change in government policies.
4. Inadequate resources including withdrawal of funds by funding agencies or donors. You
do not have enough people, the right skill sets, or team is not committed to the project.
Tasks therefore take longer than expected to complete, deadlines and milestones get
missed, project completion dates come into jeopardy and you end up working double
shifts to complete all the work.
5. Change in direction of purpose.
6. Lack of involvement of stakeholders.
7. Natural calamities.
8. Poor planning of both the inputs and deliverables. Customer wants more saying you
didn’t do it to their specifications. Ensure the milestones or deliverables are clearly
defined and are measurable or quantifiable.
9. Appointing wrong or unqualified project managers.
10. Lack of change management plans; that is not having a method to handle or recognize
changes.
11. Poor communication. Team members do not get the information they need when they
need it causing delays in project reporting and therefore control is sluggish.
12. Poorly defined requirements. This occurs when what the customer wants is no clearly
documented.
13. Inaccurate estimates. The problem is that unrealistic timeline or budget is agreed to.
14. Poor risk management. List al he work as well as possible, figure out what can go wrong
with each piece of work, prioritize each risk and create a plan to deal with the risks.
15. Over optimism. The task you agree to turns out to be more than what was expected. It
takes you longer and jeopardizes other deliverables.
16. Lack of training-the “Accidental project manager” phenomenon. Lack of formal training
to deal with complexities of today’s projects.Here it deals mainly with technical
knowledge; project managers need to understand different models used for developing
and designing systems; recurrent training is also important due to fast technological
advances; knowledge of management tools is necessary to facilitate planning and
tracking of project tasks.
17. Lack of clear vision and objectives. Not understanding the true needs of the company can
prompt supervisors and project managers to jump to a quick solution, decreasing the
chances for selecting the best solution.
18. Lack of management support especially top management. In order to get all the key
players involved, project managers need top management support to schedule meetings or
activities and to use the company’s resources.

7
Why do project plan failure situations occur?

Situations of failure occur due to a myriad of project omissions and commissions;

 If corporate goals are not understood, it is because corporate executives have been
negligent in providing the necessary strategic information and feedback.
 If a plan fails because of extreme optimism, then the responsibility lies with both the
project and line managers for not assessing risk. Project managers should ask the line
managers if the estimates are optimistic or pessimistic, and expect an honest answer.
 Erroneous financial estimates are the responsibility of the line manager.
 If the project fails because of a poor definition of the requirements, then the project
manager is totally at fault.
 Sometimes plans fail because the project manager “bites off more than he can chew,”
and then something happens, such as his becoming ill. Many projects have failed because
the project manager was the only one who knew what was going on and then got sick.
 Sometimes project plans fail because simple details are forgotten or overlooked.

Examples of where projects fail because simple details are overlooked are:

1. Neglecting to tell a line manager early enough that the prototype is not ready and that
rescheduling is necessary.
2. Neglecting to see if the line manager can still provide additional employees for the next
two weeks because it was possible to do so six months ago.

STOPPING PROJECTS

There are always situations in which projects have to be stopped. Nine reasons for stopping are:

1. Final achievement of the objectives

2. Poor initial planning and market prognosis
3. A better alternative is found
4. A change in the company interest and strategy
5. Allocated time is exceeded
6. Budgeted costs are exceeded
7. Key people leave the organization
8. Personal whims of management
9. Problem too complex for the resources available

Today most of the reasons why projects are not completed on time and within cost are
behavioral rather than quantitative. They include:

1. Poor morale

8
 2. Poor human relations
3. Poor labour productivity
4. No commitment by those involved in the project
5. Poor teamwork

The last item appears to be the cause of the first three items in many situations. Once the reasons
for cancellation are defined, the next problem concerns how to stop the project.

Some of the ways of stopping projects are:

1. Orderly planned termination

2. The “hatchet” (withdrawal of funds and removal of personnel)
3. Reassignment of people to higher priority tasks
4. Redirection of efforts toward different objectives
5. Burying it or letting it die on the vine (i.e., not taking any official action)

There are three major problem areas to be considered in stopping projects:

1. Worker morale

2. Reassignment of personnel

3. Adequate documentation and wrap-up

HANDLING PROJECT PHASE OUTS AND TRANSFERS

By definition, projects (and even life cycle phases) have an end point. Closing out is a very
important phase in the project life cycle, which should follow particular disciplines and
procedures.

Objectives of project phase outs

1. Effectively bringing the project to closure according to agreed-on contractual

requirements
2. Preparing for the transition of the project into the next operational phase, such as from
production to field installation, field operation, or training
3. Analyzing overall project performance with regard to financial data, schedules, and
technical efforts
4. Closing the project office, and transferring or selling off all resources originally assigned
to the project, including personnel
5. Identifying and pursuing follow-on business

Although most project managers are completely cognizant of the necessity for proper planning
for project start-up, many project managers neglect planning for project termination.

9
Planning for project termination includes the following activities:

1. Transferring responsibility
2. Completion of project records
3. Post-project analysis
4. Documenting results to reflect “as built” product or installation
5. Acceptance by sponsor/user
6. Satisfying contractual requirements
7. Releasing resources
8. Reassignment of project office team members
9. Disposition of functional personnel
10. Disposition of materials
11. Closing out work orders (financial closeout)
12. Preparing for financial payments
13. Ensure completion of work. Close out all work authorities and contracts.
14. Notify the client of product completion. Ensure delivery and installation is accomplished
and obtain formal client acceptance.
15. On financial close out, settle outstanding accounts receivable and payable.
16. On termination documentation, post implementation audit and prepare final project
report.
17. Release resources. Release/ reassign personnel as their planned activities cease and
distribute other resources appropriately.
18. Project records. Collate, ensure delivery and installation is complete and oversee final
disposition.
19. Support. Determine ongoing support requirements and assign responsibilities.

Project success or failure often depends on management’s ability to handle personnel issues
properly during this final phase. If job assignments beyond the current project look undesirable
or uncertain to project team members, a great deal of anxiety and conflict may develop that
diverts needed energy to job hunting, foot dragging, or even sabotage. Project personnel may
engage in job searches on their own and may leave the project prematurely. This creates a
glaring void that is often difficult to patch. Given business realities, it is difficult to transfer
project personnel under ideal conditions.

The following suggestions may increase organizational effectiveness and minimize personal
stress when closing out a project:

1. Carefully plan the project closeout on the part of both project and functional managers.
Use a checklist to prepare the plan.
2. Establish a simple project closeout procedure that identifies the major steps and
responsibilities.

10
 3. Treat the closeout phase like any other project, with clearly delineated tasks, agreed-on
responsibilities, schedules, budgets, and deliverable items or results.
4. Understand the interaction of behavioral and organizational elements in order to build an
environment conducive to teamwork during this final project phase.
5. Emphasize the overall goals, applications, and utilities of the project as well as its
business impact.
6. Secure top-management involvement and support.
7. Be aware of conflict, fatigue, shifting priorities, and technical or logistic problems. Try
to identify and deal with these problems when they start to develop. Communicating
progress through regularly scheduled status meetings is the key to managing these
problems.
8. Keep project personnel informed of upcoming job opportunities. Resource managers
should discuss and negotiate new assignments with personnel and involve people already
in the next project.
9. Be aware of rumors. If a reorganization or layoff is inevitable, the situation should be
described in a professional manner or people will assume the worst.
10. Assign a contract administrator dedicated to company-oriented projects. He will protect
your financial position and business interests by following through on customer sign-offs
and final payment.

PROJECT TERMINATION APPROACHES

(a) Integration. Project assets are distributed and absorbed by the parent organization i.e.
among existing functions. Project activities are assimilated as part of the normal
operations of the parent or client business (project product is integrated into operations of
client or parent organization).
(b) By murder. Project activities cease intentionally suddenly usually without warning
typically for a cause not related to the project purpose. It occurs due to a major
unforeseen external event such as economic necessity, political upheaval, development of
new technologies, industry consolidation etc.
(c) By starvation. Ending project by cutting its budget sufficiently to halt progress without
actually killing the project. This may be done to hide unsuccessful project objective
attainment.
(d) By extinction (by decision). Project activities intentionally stop slowly (planned and
procedural), typically for a cause related to the project purpose e.g. it has successfully
completed its scope that has been accepted by the client or project is no longer relevant,
has failed, has been supersede by external developments, no longer has sufficient support
of top management or lack of interest. In this mode, project team members are reassigned
or released, project materials and equipment disbursed.
(e) By addition (for successful projects). Ending the project by bringing it into the
organization as a separate ongoing entity e.g. department, unit, and the project resources
are transferred to the newly born business entity. Gradually it is expected to stand on its
own.

11
 (f) By inclusion:
The following are ways projects end by inclusion approach:
 Normal- a project that ends normally is the one that is completed as planned.
 Premature- a project may be pushed to complete early even though the system may not
include all the envisioned features or functionality.
 Perpetual- some projects seem to take on a “life of their own” and are known as runaway
or perpetual projects.
 Failed- unsuccessful projects.
 Changed priority- financial or economic reasons may dictate that resources are no longer
available to the project.

TIMING OF PROJECT TERMINATION

(i) Upon successful objective attainment. Integration and addition.

(ii) Early e.g. murder, starvation, extinction.
(iii) When there is inconsistency with organizational goals.
(iv) Loss of top management support.
(v) Project scope inconsistent with organizational finances(financial constraints)
(vi) Presence of better investment alternatives.
(vii) Change in external environment increasing likelihood of project failure.

Terminating a project
Indicate the closeout functions and responsibilities and do not overlook important factors. Allow
closeout progress to be monitored and help team members with little or no experience in closing
out a project.
Inform project team members of project activities e.g. documentation, contract administration,
financial management, marketing and final management review.
Plan termination to:
(a) Discourage disappearance or loss of key people upon termination.
(b) Provide assistance and guidance to members of the project team.
In the closeout report address:
(i) Final cost, schedule and technical performance and accomplishments
(ii) Comprehensive final cost report
(iii) Closeout approvals.
Impact of project termination
It helps in making decision in the design and execution of organizational strategies hence achieve
its objectives and accomplish its goals.
Project termination challenges
1. It is always met with stiff resistance.
2. Termination involves changing the state of development and people are generally
conservative and naturally skeptical to change especially after being used to some kind of
routine or way of doing things.
3. They would always want to maintain the status quo.

Circumstances that would warrant extension of projects include:

12
 i) Unaccomplished goals/underfunded projects i.e. donors weakness leading to
underfunding.
ii) Unfulfilled project objectives.
iii) Unforeseen arising hindrances to carry out certain activities e.g. bandits, elephant
invasion
iv) Emerging needs
v) Replication i.e. extension of the same project to other locations.

PROJECT REPORTS
Qualities of a good project report
1. Should be understandable. The language used should be simple enough for the intended
audience to understand lest it may not communicate.
2. Timely. It should be provided in good time (early enough) to facilitate decision making.
3. Should be participatory. Not an opinion of only a few individuals and presented in an
appropriate form e.g. oral, visual (charts, drawings, photographs) and written (reports,
newsletters. In written reports, stick to the theme and use appropriate language trying to
identify and avoid communication barriers such as are found in the use of jargons,
proverbs, sensitive issues etc
4. Well organized with some technical depth.
5. Attractive and professional in appearance.
6. Possible to implement the same elsewhere (in other communities i.e. replicate)
Challenges in report writing
1. Language barrier. Most users may not be conversant with the project language.
2. Lack of adequate communication skills to technically express the project intentions.
3. Extra information. At times too much information that is not necessary is included that
consume resources for no gain.
Factors to consider in report writing.
1. Knowledge of target audience. Choose suitable language and mode of communication.
2. Information analysis. Steps to information analysis are reviewing the questions, organize
the information, decide how to analyze the information and integrate the information.

13