Methods for Ending a Contract or a Project

A contract can end in one of three ways:

• Successful performance

• Mutual agreement

• Breach

Successful performance is what we think of as "getting the work done." All the work specified in the contract was performed by the seller and formally accepted by the buyer. The term contract termination refers to the other two ways a contract can end: mutual agreement and breach.

If there is mutual agreement, the contract is terminated because both the buyer and seller involved in the project agree that the project work should not continue. However, if a project contract is terminated due to breach, a party involved in the project work has failed to obey its side of the contract.

Although this describes how a contract can be completed or terminated, a contract closeout will not always signify the end of a project. However, the end of a project will almost always force a related contract to end. Reference Table 8.2 as a reminder of the various ways a project can be terminated.

Table 8.2. Methods of Project Termination

Method	Description
Completion	Successful performance; getting the work done.
Displacement	The project becomes obsolete due to another project.
Collapse	The project ends due to external factors, such as natural disasters, corporate mergers, and so on.
Absorption	The project becomes a permanent part of the sponsoring organization (a new department or division).
Deterioration	A "slow death." The sponsoring organization gradually reduces its support and budget for the project.

Contract termination refers to the end of a project contract through mutual agreement or breach.