Excel Electronics Excel Electronics is nearing completion of a three-year project to develop and produce a new pocket Phone-Fax-Internet device (PFI). The PFI is no larger than a cigarette pack but has all the power and features of full sized devices. The assembly line and all the production facilities will be completed in six months and the first units will begin production in seven months. The plant manager believes it is time to begin winding the project down. He has three methods in mind for terminating the project: extinction, addition, and integration, but he is not sure which method would be best. Question: Which of the three methods would you recommend, and why

Excel Electronics

Recommended Method for Terminating the PFI Project:

I recommend addition. The way the PFI project is described shows that it is a major success. Production facilities are still being built and units of the PFI will start rolling off the production line in seven months' time. In such a situation, the PFI should naturally become a new division. It should become part of the organization and all required resources should be transferred to it to enable the division to take off smoothly and become self-sustaining and profit-generating.

Explanation:

There are four ways to terminate a project. They include:

a) Termination by Extinction: Here the project is murdered naturally. Budget support is withheld without actually calling the project off in its entirety.

b) Termination by Addition: The project becomes a new division of the organization with more resources and assigned responsibility.

c) Termination by Integration: Resources of the project are distributed to all parts of the organization.

d) Termination by Starvation: The project in this situation suffers kwashiorkor. It is starved to death by being deprived of resources. The budget for the project is withdrawn.

The chosen method depends on the project outcome, outlook, and opportunities. For example, the development of an advanced technology in manufacturing can render a formerly shining project commercially unprofitable. In such a situation, the best management decision may be to terminate it by extinction.

Essentially, the following may be reasons to terminate a project:

#1: Project outruns estimated cost and looks unlikely to recover investments.

#2: Competitors may be doing a better job in the project line.

#3: Failure is witness during the testing process.

#4: Company's strategic plan (goal) will not be met with continuation.

#5: Another priority project crops up during the process.