Lessons Learned

Introduction

Source: Adam Farag, https://ecampusontario.pressbooks.pub/essentialsofprojectmanagement/part/chapter-11-project-closure/
This work is licensed under a Creative Commons Attribution 4.0 License.

Reasons for Closing Projects

If an audit reveals the painful truth that it's time to terminate a project, then it's important to realize that this is not necessarily a bad thing. Cancelling a project may seem like a failure, but for a project to be successful, it must provide value to all parties. The best value is to minimize the project's overall negative impact on all parties in terms of both time and money. If the only option is to proceed with a scaled-down project, one that delivers late, or one that costs significantly more, the result may be worse than cancelling the It may be more prudent to invest the time and resources on an alternate endeavour or to reconstitute the project in the future using a different team and revised parameters. (Williams, 2011)

Determining whether to terminate a project can be a very difficult decision for people close to a project to make. Your perspective on a project has a huge effect on your judgment of its overall success. That is why a review conducted by an objective, external auditor can be so illuminating.

Common Reasons for Project Termination

• Low profitability and or lowered market potential
• Competing projects become a higher priority
• Severe delays to the schedule
• Change of market needs
• Technical issues that can not be resolved
• Low profitability and or lowered market potential
• Increase in damaging cost
• High uncertainty of technical success or commercial gain

Contract Closing

Just as a project comes to a close contract also comes to a close. Contract closure is concerned with completing and settling the terms of the contracts for the project. It supports the project completion process because the contract closure process determines if the work described in the contracts was completed accurately and satisfactorily. Keep in mind that not all projects are performed under contract, so not all projects require the contract closure process. Obviously, this process applies only to those phases, deliverables, or portions of the project that were performed under contract.

Contract closure updates the project records, detailing the final results of the work on the project. Contracts may have specific terms or conditions for completion. You should be aware of these terms or conditions so that project completion isn't held up because you missed an important detail. If you are administering the contract yourself, be sure to ask your procurement department if there are any special conditions that you should be aware of so that your project team doesn't inadvertently delay contract project closure.

One of the purposes of the contract closure process is to provide formal notice to the seller, usually in written form, that the deliverables are acceptable and satisfactory or have been rejected. If the product or service does not meet the expectations, the vendor will need to correct the problems before you issue a formal acceptance notice. Before the contract is closed, any minor items that need to be repaired or completed are placed on a punch list, which is a list of all the items found by the client team or manager that still remain to be done.

Hopefully, quality audits have been performed during the course of the project, and the vendor was given the opportunity to make corrections earlier in the process than the closing phase. It's not a good idea to wait until the very end of the project and then spring all the problems and issues on the vendor at once. It's much more efficient to discuss problems with your vendor as the project progresses because it provides the opportunity for correction when the problems occur.

The project team will then work on all of the items on the punch list, building a small schedule to complete the remaining work. If the number of items on the punch list is too large or the amount of work is significant, the project team continues to work on the project. Once the punch list becomes smaller, the project manager begins closing down the project, maintaining only enough staff and equipment to support the team that is working on the punch list.

If the product or service does meet the project's expectations and is acceptable, formal written notice to the seller is required, indicating that the contract is complete. This is the formal acceptance and closure of the contract. It's your responsibility as the project manager to document the formal acceptance of the contract. Many times, the provisions for formalizing acceptance and closing the contract are spelled out in the contract itself.

If you have a procurement department handling the contract administration, they will expect you to inform them when the contract is complete and will in turn follow the formal procedures to let the seller know the contract is complete. However, you will still note the contract completion in your copy of the project records.

Procurement Contracts

The performance of suppliers and vendors is reviewed to determine if they should still be included in the list of qualified suppliers or vendors. The choice of contract for each is reviewed to determine if the decision to share risk was justified and if the choice of incentives worked.

Releasing the Resources

Releasing the Project Team

Releasing project team members is not an official process. However, it should be noted that at the conclusion of the project, you will release your project team members, and they will go back to their functional managers or get assigned to a new project. You will want to keep their managers, or other project managers, informed as you get closer to project completion so that they have time to adequately plan for the return of their employees. Let them know a few months ahead of time what the schedule looks like and how soon they can plan on using their employees on new projects. This gives the other managers the ability to start planning activities and scheduling activity dates.

Final Payments

The final payment is usually more than a simple percentage of the work that remains to be completed. Completing the project might involve fixing the most difficult problems that are disproportionately expensive to solve, so the final payment should be large enough to motivate the vendor to give the project a high priority so that the project can be completed on time.

If the supplier has met all the contractual obligations, including fixing problems and making repairs as noted on a punch list, the project team signs off on the contract and submits it to the accounting department for final payment. The supplier is notified that the last payment is final and completes the contractual agreement with the project.

Lesson Learned

Project closure is traditionally considered the final phase of a project. It includes tasks such as

• Transferring deliverables to the customer
• Cancelling supplier contracts
• Reassigning staff, equipment, and other resources
• Finalizing project documentation by adding an analysis summarizing the project's ups and downs
• Making the documentation accessible to other people in your organization as a reference for future projects
• Holding a close-out meeting
• Celebrating the completed project

The Close-Out Meeting is an opportunity to end a project the way you started it - by getting the team together. During this important event, the team should review what went well, and what didn't go well, and identify areas for improvement. All of this should be summarized in the final close-out report. A final close-out meeting with the customer is also essential. This allows the organization to formally complete the project and lay the groundwork for potential future work.

The Close-Out Report provides a final summary of the project performance. It should include the following:

• Summary of the project and deliverables
• Data on performance related to schedule, cost, and quality
• Summary of the final product, service, or project and how it supports the organization's business goals
• Risks encountered and how they were mitigated
• Lessons learned

Exactly where your work falls in the project's life cycle depends on your perspective as to what constitutes "the project" in the first place. The designers and constructors of a building might consider the acceptance of the building by the owner as project closure. However, the results of the project - that is, the building - live on. Another contractor might be hired later to modify the building or one of its systems, thus starting a new project limited to that work.

If project closure is done thoughtfully and systematically, it can help ensure a smooth transition to the next stage of the project's life cycle, or to subsequent related projects. A well-done project closure can also generate useful lessons learned that can have far-reaching ramifications for future projects and business sustainability. The closeout information at the end of a project should always form the basis of initial planning for any future, similar projects.

Although most project managers spend time and resources on planning for project start-up, they tend to neglect the proper planning required for project closure. Ideally, project closure includes documentation of results, transferring responsibility, reassignment of personnel and other resources, closing out work orders, preparing for financial payments, and evaluating customer satisfaction. Of course, less complicated projects will require a less complicated close-out procedure. As with project audits, the smooth unfolding of the project closure phase depends to a great degree on the manager's ability to handle personnel issues thoughtfully and sensitively. In large, ongoing projects, the team may conduct phase closures at the end of significant phases in addition to a culminating project closure.

Business Case

The following are some examples of situations where projects have been terminated. Please read through the articles and answer the questions below.

• The End of an Era  –  Greyhound Canada ends its operation in South Western Ontario.
• $2.4B Nuclear waste project terminated. 
• Renewable Energy Projects terminated in Ontario.

Questions

After reading the articles, conduct additional research and then write  a paragraph (less than 500 words) incorporating the following:

1. State the reason(s) of termination.
2. Were they justifiable reasons?
3. Was the cause(s) of termination avoidable?
4. What steps a project manager will take to close the project?
5. Suggest lessons learned from these cases.

Key Terms

• Close-Out Meeting: is an opportunity to end a project the way you started it - by getting the team together. During this important event, the team should review what went well, and what didn't go well, and identify areas for improvement. 
• Close-Out Report: provides a final summary of the project performance.
• Contract Closure: Concerned with completing and settling the terms of the contracts let for the project. It supports the project completion process because the contract closure process determines if the work described in the contracts was completed accurately and satisfactorily.
• Project Closure: is traditionally considered the final phase of a project.
• Punch List: List of issues/items that require immediate attention; and building a small schedule to complete the remaining work.
• Purposes of The Contract: The closure process is to provide formal notice to the seller, usually in written form, that the deliverables are acceptable and satisfactory or have been rejected.