Your project is in trouble.
You've spent all the money and have little to show for it.
There's a decision to be made: Shut it down, or take a gamble on resurrection?
A gamble on resurrection is a financial theory about risk taking that posits taking on more risk or leverage in a hope that circumstances -- mostly beyond your control -- will turn favorably and bail you out. (When visiting casinos, I remind myself that the glitz and glamour was all paid for by losers; so there must be a lot of them, and they must lose a lot of money).A gamble on resurrection is also a management theory that posits inventing or prioritizing an unrelated event in order to divert attention from the problem at hand. (so called "wag the dog" tactic)
Leaving aside any management diversions -- which risk reputation and integrity-- the economic practices at a decision point about shutting down, or not, modify the gamble in these ways:
Sunk cost rule:
The usual PM rule invoked at this decision point is to ignore sunk cost because you can't do anything about it. Focus only on the future. Is there a viable plan or not? If not, shut it down.
Moral hazard rule:
If the decision is to shut down, that can't be made without consequences of accountability, else there is a moral hazard created that failure has no cost.
Of course, the degree of moral hazard is a function of whether or not the project was planned as a high-risk adventure with an anticipated high rate of failure. Such is the essence of the "fail fast; fail often" theory that drives extreme risk takers.
Deleverage rule:
When developing a go-forward resurrection plan, rather shutting it down, the usual planning doctrine is to actually take less risk than the risk that got you here. In other words, you "deleverage" the risk-to-reward ratio and plan more conservatively.
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