R&D Project Termination Decisions: Processes, Communication, and Personnel Changes

Abstract

The decision to terminate a project can demoralize project managers and team members, and increase concerns about job security. For these reasons, managers tend to delay project termination decisions. However, delaying project termination diverts scarce R&D resources from higher potential projects.Ramaiya Balachandra, Klaus K. Brockhoff, and Alan W. Pearson describe the results of a study that explores the manner in which managers inform staff of the decision to terminate or continue a project. Survey respondents are the highest ranking R&D managers in 78 large German, British, and U.S. companies. Respondents were asked to describe the procedures they use for monitoring R&D projects and deciding whether to continue a project. Underlying this research is the belief that more effective management of these processes can improve project team effectiveness, employee relations, and morale.All survey respondents use project monitoring procedures. Most use formal procedures, often supplemented with informal procedures. More than one person usually monitors projects. Project managers, their immediate superiors, and project staff typically have these responsibilities, but respondents also indicate that marketing managers often monitor projects. Compared to U.S. companies, European firms typically involve fewer people in project monitoring. U.S. firms involve more non‐R&D personnel in these tasks.Most firms focus on monitoring such variables as time, technical success, and probability of technical success. Staff motivation is the least used monitoring variable. Cost control was mentioned more frequently by German respondents than by respondents from other countries. Decisions regarding the fate of a project usually come from individuals not directly involved with the project.Termination decisions are typically communicated in writing; no respondents use staff meetings to relate such decisions. Following the decision to terminate a project, management faces the difficult task of finding suitable jobs for project team members. Rather than assign an entire team to a new project, management typically disbands a team and assigns its members to other teams. The inherently uneven progress of R&D projects complicates these scheduling problems, and thus compounds the career uncertainty caused by project termination decisions.