Last week in our blog post on insurance project management we discussed the background to why insurance projects fail and listed out the “seven deadly sins” to be avoided. Insurance projects are not fundamentally different from projects in other industries. Here we look at the first three of these points in more detail:
Mistaking “half-baked” ideas for insurance projects
In insurance companies, it is senior management who are charged with formulating business strategies that will lead to profitability and industry leadership. Hence there is an immense pressure on senior management in insurance companies to identify those opportunities that are aligned with these strategies and turn these opportunities into products or services that deliver profit and competitive advantage. It is very common for these business strategies and business objectives not to be properly communicated to the project management team. Many of these ” half-baked” ideas slip through and mutate into projects. Most of these projects do not have any clear business objectives and eventually fail.
Insurance companies need to filter out ” half-baked” ideas from viable insurance projects. As a minimum, the project management team should check if the opportunity is aligned with the business strategy, if it is economically/technically feasible, if it is compelling and viable, the consequences of not doing the project, and if the organisation has enough resources to pursue it.
Dictated deadlines for insurance projects
Missed deadlines for insurance projects are fairly endemic and most IT/business projects suffer from schedule delays. A root cause of this problem is management’s practice of specifying unrealistic and over-stretched targets including artificially tight deadlines. Some of the reasons for these deadlines are:
- strategic pressures override risks to sanction projects
- there is lack of confidence that the teams are able to develop realistic estimates
- management has a desire to challenge the team to work harder
- in order to get projects approved, project teams are set over-stretched targets that are unrealistic
- targets are set with no real benchmarks for comparison
- trade-offs between cost, quality, and schedule are neither in balance nor clear
Insurance projects are no different from projects in other industries and the project sponsor(s) is key to a successful insurance project. They must create an environment in which project managers/teams are open and transparent with estimates and not estimate to please. Otherwise, there will be constant disappointments as projects come in late, over budget, lack functionality, are of poor quality or indeed complete failures.
In addition, they need to put in place projects assurance activities that will increase their confidence in project targets. Examples of project assurance activities are:
- estimates are checked against external/internal benchmarks.
- estimates are reviewed by external entities such as peer reviews or external benchmarking organisations
Ineffective sponsorship and leadership
The project sponsor role is essential for insurance project success. Without a competent sponsor, insurance projects will suffer severely leading in most cases to failure. Some of the symptoms of ineffective sponsorship or leadership are:
- project team roles and responsibilities are not clearly defined
- the project management team is not aware of the business objectives of the project or the link between business strategy and the project
- the project is not getting the right people at the right time
- access to the sponsor by the project manager/team is very difficult
- boundaries for decision-making or zone of empowerment of the project management team are not defined
- project sponsor changes during the life of the project
Examples of the sponsor roles and responsibilities:
- communicating the business objectives and the business strategy to the project management team
- establishing the boundaries for decision-making or zone of empowerment of the project management team
- ensuring the timely availability of the right resources
A review of the above list demonstrates that effective sponsorship requires specific skills and commitment. Being a project sponsor is not a spectator sport. It involves time, effort, and commitment.
Watch out for the concluding blog post in this three part series next week where we will complete the “seven deadly sins” which contribute to insurance project failure.
We have worked very successfully with some of our major clients to
deliver fairly complex business projects. Here at JMR Consulting UK Ltd we promote the use of PRINCE 2 best practices on all our projects. If you want advice or help with your projects please contact us.