How to Know When to Say No to a Project

Posted by Wendy Smith on Apr 19, 2016 2:12:36 PM

 Walking away from projects

Sometimes, the right thing to do is say "no" and walk away. 

When you are in business, especially in sales, the object is to win or sell as many jobs as you can, but sometimes it is better to turn down the opportunity if it is not a good match for your business or if the risk is too high.

We have talked about the importance of understanding the requirements for a project and how it is required to have a successful project.  What happens when you understand the requirements and realize that the job is not the right fit for your company?  Saying no to a large opportunity that is staring you in the face can be difficult, but it may be the best thing for your company.

When a project is not well defined with sound requirements it is very difficult to estimate the work.  We’ve talked before about asking the right questions to define the job, doing preliminary engineering, etc.

These things help define the scope, so that both the customer and the supplier have the same expectations around the finished product. When the requirements are not defined, it can be very difficult to come to agreement on project closure – how does either party know when the project is done?

The customer may say that their expectation was one thing, but it was not clear in the requirements or specifications and the vendor quoted the job under a different set of assumptions, thus leaving a painful gap between expectations and what was actually delivered.

The next phase can get very ugly. Who pays to close the gap? Some suppliers intentionally bid to the minimum requirements in the specification to try and win the job by being the low bidder. After they have “won” the job and start the execution phase, they begin flagging items as “out of scope” and ask for Project Change Notifications (PCNs). This can create tension between the customer and the supplier with potential disagreements over what should be included in the scope.

Sure, they “win the job,” but they may create an adversarial environment and may never be asked to do work for that customer again. Or in extreme cases the project could get shut down and the vendor could be asked to stop work while the customer may find another supplier to finish the work. This is the worst case scenario for both parties, but it can get to this.

At Optimation, we would rather understand the requirements up front and write our proposal to reflect what the customer truly wants and specifies. Granted there are always going to be some changes, but we don’t want to build our business model on arguing over the scope and writing PCNs. If we cannot agree on the requirements, that is the point where you have to look at the project and decide to say “NO” and walk away if the risk is too high.

There are other reasons to say “No” to a potential opportunity as well.

Sometimes you will be asked to bid on a project that is very enticing.  It may be a large project, or something using a new technology. You may be asked to do something that has never been done before, or the solution or path to the solution may not be clearly defined.  It may be complex with multiple contractors each providing different aspects, the schedule or timeline may be aggressive, or the cost/pricing expectations of the customer may be unrealistic.

In project management, there are three main aspects of any project: Budget, Quality, and Schedule.  You need to meet the requirements for all of these for a project to be truly successful. You need to understand the risks associated with each aspect and determine if you can eliminate or manage them. The project may look exciting and draw you in, but you need to understand the risks associated at each stage of the project and determine if you can overcome them before you dive in. 

What risk are you willing to take to win the job and what risk comes with winning the job? It doesn’t matter what size the job is, there is always risk. The question is do you have a plan to deal with it? If you can reduce or manage the risk then it makes sense to proceed. But sometimes it makes sense to just say “no” and walk away.

Topics: About Optimation, Business, Project Management

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The goal of this blog is to be helpful to readers by providing useful information about applications in industrial engineering, design and skilled trades, as well as industry knowledge. We're passionate about manufacturing in the United States. We have a little fun with it too.  

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