The Cost of Not Doing a Project
It’s easy to think that cancelling a project will save the money that would have been spent on it. But what about the hidden costs that will be incurred because of the project’s cancellation? It’s easy to spend more money not doing the project than the project would have cost to do. Illogical? Sure—but many companies do exactly that. Why do they do that, how do you avoid it?
Justifying a Project

Saving money is often the prime justification for undertaking a project. Perhaps it is an IT project to build an integrated video conference system. Costs include hardware to equip a conference room, software to allow off- site participants to join in and perhaps an in-house server system. The alternative of everyone “doing it themselves” becomes the justification for a corporate solution.
Cutbacks
When the corporate “belt-tightening” begins, all projects deemed non- essential are axed. It’s a simple way for the business to get quick savings.
Consequences
Except that life is not that simple. The need that started the project in the first place has not gone away. The project users-to-be still need video conferencing.
So what do they do? Well, they go back to plan A - what they were going to do before your corporate project stepped in to “save money.” There is the Law of Unintended Consequences rearing its head, and showing that cancelling a project that aimed to save money will, not surprisingly, cost money.
The corporate execs may think that belt
-tightening is the only path to cost savings, but there is always room for a bit of slack if you are clever enough.
The Issue
It may be tempting to say that this is the fault of the execs who cancelled the project—as if they should have foreseen the cost of doing that. But did your project plan tell them what they needed to know?
A good Project Plan should clearly show:
a) the projected cost of doing nothing
b) the projected cost of doing the project
Then it is clear that the business faces cost (a) if it does nothing and cost (b) if the project is implemented. Importantly it also shows the implicated costs (a) of cancelling the project, which just might persuade the execs that doing the project as proposed is the best way to save money.
Lessons to be Learned
To start with, a project manager must make sure that the current cost-of- doing-business is clearly established and stated. This provides a foundation on which the project is built—and to which it will fall back if cancelled. Then the cost of doing the project must be shown with a clear split between one- time implementation costs and ongoing running costs. That will naturally lead to the justification for the project.
However, don’t let your enthusiasm for cost savings lead you to the assumption that the project will be implemented. That is never a given. There are many reasons for abandoning projects so be clear what costs will be incurred should the project be abandoned. That may mean the project plan has to contain two sections—one showing the way forward without the project and the other with the project.
This is called planning for all eventualities.” Good project managers should include plans for failure, including over-runs, in their plans.
If you’d like to comment on this article or explore these ideas further, contact me at peter.
This article was published in the
June 2022
edition of The TMC Advisor
- ISSN 2369-663X Volume:9 Issue:2
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