The sunk-cost dilemma

The sunk-cost dilemma means choosing between continuing a project that already has considerable sunk costs, or discontinuing the project altogether; sunk costs lie at the heart of one of the biggest issues in today's project business environment: the improper termination of projects. This article discusses how to ignore sunk costs and the past when deciding to cancel a project. In doing so, it overviews how sunk costs are used to terminate a project, notably when projects aren't performing well from a cost perspective. It then looks at project cancellations based on past impressions like anger, dissatisfaction, and embarrassment. The article overviews the role of forward thinking by weighing the project's future costs against its anticipated future benefits. It identifies an important rule of thumb when considering the benefits in the analysis of a project's profitability, effective yield or any other measurement of financial strength.
registered user content locked

Log in or join PMI to gain access

or Register



Related Content

  • PM Network

    Change of Current member content locked

    By Parsi, Novid As the busiest inland commercial shipping route in the United States, the Ohio River is a valuable link in the country's economy. More than 80 million tons of grain, coal and other commodities pass…

  • PM Network

    Safety Net member content locked

    By Parsi, Novid Each year, more than 10 million people drive or walk across the Golden Gate Bridge in San Francisco, California, USA. But for some, the draw isn't postcard views of the bay and Pacific Ocean. About…

  • Project Management Journal

    Determining Contingencies in the Management of Construction Projects member content locked

    By Ortiz, José I. | Pellicer, Eugenio | Molenaar, Keith R. This research describes the managerial approaches that contractors follow to determine different types of contingencies in construction project management. Two large Spanish general contractors were…

  • PM Network

    The Science of Uncertainty member content locked

    By Thomas, Jen Project estimates can sometimes take on a life of their own. The budget for the new international arrivals facility being built at Seattle-Tacoma International Airport in Seattle, Washington, USA…

  • PM Network

    Monumental Success member content locked

    By Elton, Catherine For more than a half century, the Gateway Arch in St. Louis, Missouri, USA has been an iconic guidepost. As the tallest man-made monument in the Western Hemisphere, it towers above the Mississippi…


Publishing or acceptance of an advertisement is neither a guarantee nor endorsement of the advertiser's product or service. View advertising policy.