"Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them?"
—Hamlet, William Shakespeare
Management consultant Jimmy Gauterman suggests another reason that may cause a runaway project. He claims that an insidious psychological bias leads to a sunk-cost trap, where the managers chase after sunk costs and make incremental investments that are no longer recoverable. Professor Max Bazerman of the Harvard Business School likens this irrational escalation to standing at a bus stop hour after hour. At some point, it becomes obvious that the bus is not coming.
Other significant factors that encourage decision makers to get locked into losing courses of action include:
• The perception that the project setbacks are temporary or transient
• The innate reluctance of managers to accept failure as an acceptable outcome to either themselves or, more importantly, to others within the organization
• Old-fashioned administrative inertia
Not all of the above factors apply to every runaway project and not all are of equal importance. They do, however, explain in some part why projects continue beyond their rational point of termination.
Abdul
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