When you know that you have a seriously troubled software project at your hands the first step in the process of recovery is halting all development activity.
Would it not be better to have the project, which is already late and over budget, continue while the recovery process is being implemented? There are five good reasons why the recovery process will have more difficulty to succeed if development continues in parallel.
1) The recovery process requires the full involvement of the key project members. Project Manager, Developers, Scrum Master, Product Owner, Product Manager, Business Analysts, Stakeholders, and so on. If development is not halted those key persons will be scrambling to keep the project going. Halting the project ensures that everyone is completely focused on the recovery process, and thus increase the likelihood that this process will succeed.
2) Project recovery requires painful decisions to be made by the key stakeholders and team members. Reducing scope, increasing budget, rebuilding the team, hiring and firing, and so on. It is only natural that there will be resistance to these changes. Experience shows that it is highly unlikely that the necessary decisions will be made and a feasible project will be re-defined unless everyone involved understands that the project will not be allowed to continue in the current mode that has led to this situation.
3) Troubled projects will have a large amount of sunk costs. Continuing development on a scope that will be disregarded in the Tradeoff and Negotiation Phase will just add to these sunk costs and frustration of the development team.
4) In my experience often part of the reason why software development projects end in a disaster is the software development process and practices that are used. Unless they are validated as decent or better, continuing development makes to problem worse instead of better.
5) Halting the project sends a very strong message that this time «we are serious». It clearly sets the recovery process apart from all previous attempts to get the project back on track by conventional means like adding people, working overtime, extending the schedule, and so on.
After the project is halted the Review Phase of the recovery process can start.