The risk of taking on the wrong project not only impacts directly on the profitability of that project, but it impacts on other projects and the company as a whole. When a project is in trouble management spends more time on it than they normally would, trying to rectify and solve the problems. This time could be better spent on maximising profits on other more successful projects. In fact, the absence of management on the other projects sometimes results in them also turning bad.
Working on a project should not be about being employed. The only reasons you want to be doing a project is so the company can make money, or occasionally so it can win further work which will make money. Frequently I see contractors win projects just because they’re desperate for work, or, sometimes contractors take on large and prestigious projects, believing it will enhance their standing with the public and their shareholders. Unfortunately, many of these projects end up costing the company large amounts of money.