Project Termination Practices in Indian Industry

Project termination phase, the last phase of the project lifecycle, plays a vital role in successful completion of a project. The process of project termination is not an easy task. It has to he planned, budgeted and scheduled like any other phase of the project lifecycle. Sometimes special termination managers are put in to complete the termination process.

Though project termination constitutes a significant part in the total project, it is often overlooked by project managers. A case study was conducted to analyse the problems faced by project managers while terminating projects in India.

The case study revealed that project managers loosen their grip on monitoring the time-bound projects as soon as the installed plants or services start functioning. The last few defects continue to get rectified for long periods in the process of handing over the projects to clients.

By the time these defects are rectified, new problems crop up which require further time to stabilize. It has been observed that plants are formally handed over with preliminary acceptance certificates, pending rectification of some last few problems.

This becomes a vicious cycle before obtaining the final acceptance certificate from the client. Due to non-realization of the last contractual amount, project organizations face shortage of funds, particularly when they are engaged in multiple projects.

For example, a company manufacturing material-handling equipment ran a coal-handling plant for a power project of a leading power generating firm for almost 10 years before it could successfully terminate the project due to the project manager’s inability to meet the performance guarantee tests.

Another difficult aspect is the identification of the beginning of the termination phase of a project. Project managers use their perception and judgement to identify the starting of termination phase after completion of execution, commissioning, and testing activities.

An analysis of the case study data revealed that the following problems are considered most significant by Indian industry during the project termination phase:

  • Negotiating claims with clients.
  • Compliance of statutory requirements.
  • Receipt of the final instalment of payment.
  • Performance guarantee tests.
  • Handling claims of suppliers.
Source: De. P. K. Project Termination Practices in Indian Industry: A Statistical Review, February 2001.

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