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Do you give him help and guide lines to help him to correct the issues or do you assign his Project to some one else?
I will him help him and guide him to bring the project back on track..
Help him immediately (out of my time utilized for communicating with stakeholders) , why :
Project management is a culture , his failuire will impact my environment (my stakeholders) and my team (perception that they will fail too).
First thing to do is to find the cause of the problem. Answer the questions like "Why is it failing?" "Was there negligence involved?", "Is the project manager responsible for the failure or was it because of a chain reaction coming from the failure of the people under him?" With enough data gathering, you can easily justify whether a project manager is competent in completing a task. If time is of the essence and you have a strict deadline for the project, teach him how to do it properly but don't do it for him. A good leader will always help a team member and be easily approachable and accessible to help and questions coming from the team members. Assigning it to someone else only means that you don't have the100% trust in your project manager and will only make the completion time longer since a new manager has to start and review everything about the project from the bottom. Always remind the project manager to ask questions when in doubt.
His failure will affect the overall management, I will guide to bring him in correct method/track....................
First of all discuss what is problem by discussing one to one and sort out the problems . If Project manager do not happy with assign work or project than it is better to give project to another person who is very interested to work in this project.
Talk one on one with the Project manager and ask how he is doing , if there are any problems, give him space to talk and if the problems comes up , steer the conversation so he gives the solutions , not You! That will motivate people and make them stronger, and will make you more accepted....LEAN Management
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