A senior executive in a fast-paced, high-technology company is faced with making a decision on whether to terminate a troubled product development project. He knows from information received through the company's variance reporting procedure that the project is costing far more than expected, and the schedule has slipped so much that they may not meet a critical marketing time window. At the moment the development work is about half-complete, but the cost variance is -61 percent and the schedule variance is -42 percent. In addition, from summary reports he receives of design review meetings, he has the sense that there may be some difficult technical problems with the project.

The project involves development of a next-generation model in a product line that provides a significant share of the company's revenues and profits. Not only does the executive expect the model to capture new customers, but he also anticipates that many users of the current and older models will upgrade. Moreover, there is strong competition in the marketplace, and the company must protect its position.

Should the senior executive terminate this project, why?