Why projects in distress are rather written off than recovered

Imagine a company gets into distress, writes losses for a long time and is threatened to fail. What would a responsible entrepreneur or manager probably do to avoid insolvency? He acquires counsel from experts, purchases a restructurer, tries to save what is left, the turn-around.

With distressed projects it’s totally different

Now imagine the majority of troubled projects, which write massive losses, exceed their schedules by far, are threatened to not meeting their objectives and to be written off. What will many of the managers in charge of these projects do?

Having to admit failures is the biggest obstacle to rescue

First of all it is hard for them to admit that not only the project lead and the team but they themselves have a problem. To hold someone guilty and consider it a question of commitment and effort is the easiest conclusion. To whip on the crew is the most obvious, but mostly least sustainable resolution approach, because short-term performance peaks will usually be followed by higher illness absences and demotivation.

Ignorance and fear of transparency also keep away from recovery

Many managers also shun the transparency of their own responsibility, may be are too far away from the course of events at the project due to a lack of control and communication procedures, or they seek the causes primarily in technical/professional problems, not in the way how the project is conducted. Well, on executive level project management often is considered to be a commodity, something e.g. every well skilled engineer should be able to do as a sideline. Does he, and does he want to do it, or will he rather naturally turn back to and concentrate on the subjects he knows best when things get rough, and the “unloved” project management will suffer?!

Problems hardly solve themselves

And that is how in most projects in distress all hopes are on self-healing, and they wait too long until the situation is really messy. An expert assessment or project recovery as a resolution approach is fairly unknown to many managers or unimaginable. In many cases a total write-off of the sunk cost and the desired business benefit is preferred over involving the management early in responsibility and purchase an experienced restructurer – from external, because it is proven that internally there is no working resolution at hand. How could this person cost a fortune compared to what will be burned if the project is continued as is or even fails?!

The earlier you act, the bigger the chances

The lines above only describe the “general” part of causes why troubled projects often get to where they are. In addition there are actually many industry or project subject specific reasons which I come across in my expert assessments all over again. It is obvious that the chances for project success and return on investment in a project recovery are the bigger the earlier the management determine to do this step. That leaves finally to appeal to them to decide near-term and responsibly !

What are your experiences with this? Join our discussion and enlarge upon the topic. I’m looking forward to your comment.