I worked for about a year on an application before it got cancelled by the company. I am quite proud of the work I did, and am considering adding a description of it along with some screenshots of the unfinished product to the Projects section of my portfolio.
The project scope was pretty impressive and the screenshots look great, however it's pretty obvious that the product is unfinished.
When starting the project, I was young and optimistically said "Sure I can have this done in a year", and a year or so later we realized it would require much more time and manpower to finish completing the project. The company decided they didn't want to hire more programmers, and that they wanted me back on my regular duties full-time, so they cancelled it. So I suppose it was kind of my fault for not understanding the scope of the project and giving a bad estimate, however, I am quite proud of the work that got finished, and think it is a great showcase of my skills.
Would adding an unfinished and cancelled project to my portfolio make a bad impression?