The Frozen Tranche
You are project manager for a 14-month, EUR 1.2m replacement of a regional water utility's billing system. It is month 5. The CFO who signed the business case has left after a merger announcement; the incoming CFO told a town hall she "hasn't seen a compelling case" and has frozen the next EUR 300k tranche pending her review. The vendor contract carries a EUR 90k cancellation clause and a delivery milestone in eight weeks. Your team of nine has already completed the data-migration layer. A regulator requires tariff-transparency reporting by month 13, which this system enables. The new CFO's review is in 10 working days; your steering group next meets in six weeks.
1. What is your objective for the ten working days before the CFO's review, and what will you put in front of her?
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Objective: get a decision, not defend the project.
- Ask for a 30-minute pre-read meeting with the CFO before the formal review. Do not let her first exposure to the case be a governance forum where she must either capitulate or kill it in public.
- Re-express the benefits in her language, not the departed sponsor's. She inherited a merger and a cost agenda, so lead with: penalty and compliance exposure if tariff reporting is not in place by month 13; the cost of running dual billing and manual workarounds; and what the merger's target operating model implies for this system.
- Bring a one-page option paper, not a status report: (a) continue as planned, (b) descope to the regulatory minimum only, (c) suspend three months, (d) cancel now. For each: remaining cost, date consequences, the EUR 90k cancellation exposure and the imminent vendor milestone liability.
- State the decision required and the date it is needed so the eight-week milestone and the vendor commitment are not decided by default.
She is entitled to challenge the case. Your job is to supply evidence, not loyalty.
2. Your delivery manager says the paper must stress that EUR 480k is already spent and stopping now 'wastes' it. How do you handle that?
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Exclude it from the comparison and say why, in one line.
The EUR 480k is gone in every one of the four options. Including it makes cancellation look expensive and continuation look cheap, which is exactly backwards: it biases the decision toward the option that has already consumed money rather than the option that produces the most future value.
Practical handling:
- Cost only forward-looking spend and forward-looking benefit in the option table.
- Keep a single line of spend to date for transparency, labelled "sunk - not a decision criterion".
- Tell the delivery manager directly that a sunk-cost argument will be dismantled by any competent finance reviewer and will cost the project credibility on the arguments that do hold.
The legitimate version of his instinct is a different argument: "the remaining cost to deliver is now lower than it was at approval because 40% of the build exists." That is forward-looking and defensible. Use that one.
3. What would make you recommend suspension or cancellation, even though you are the project manager?
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Test whether the benefit exists independently of the sponsor who signed it.
I would recommend suspension or cancellation if:
- The regulatory requirement has moved, been softened, or would be met by a cheaper interim manual process - that was the hard, non-discretionary driver.
- The merger means this platform will be replaced within the payoff period, so the benefit is double-counted.
- The remaining cost to deliver (say EUR 750k) exceeds the realistic cost of the compliance workaround plus penalties over the same horizon.
- The quantified benefits only make sense under assumptions the new CFO has already rejected.
If none of those hold - the regulator still needs tariff reporting in month 13 and no other route exists - then I recommend continuation and argue it on that single ground. Recommending your own project's cancellation when the evidence supports it is not disloyalty; withholding that analysis is.